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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Period Ended
June 30, 2003 Commission File No. 0-24696
NANOBAC PHARMACEUTICALS, INC.
-----------------------------
(Exact name of Registrant as specified in its Charter)
Florida 59-3248917
------- ----------
(State or jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2707 W. Martin Luther King Blvd, Ste 850, Tampa, Florida 33609
- --------------------------------------------------------- -----
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (813) 264-2241
Former name, former address and former fiscal year, if changed since last
report:
AMERICAN ENTERPRISE CORPORATION
-------------------------------
Indicate by check mark whether the registrant (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 12 months (or for a 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 [ ]
The number of shares issued and outstanding of the Registrant's Common Stock, no
par value, as of August 22, 2003 was 82,588,395.
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NANOBAC PHARMACEUTICALS, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements
Accountant's review report 3
Condensed Consolidated Balance Sheet as of June 30, 2003 4
Condensed Consolidated Statements of Operations for the three and
six months ended June 30, 2003 5
Condensed Consolidated Statements of Changes in Stockholders'
Equity for the period ended June 30, 2003 6
Condensed Consolidated Statements of Cash Flows for the six months
ended June 30, 2003 7
Notes to the Condensed Consolidated Financial Statements 8-13
2
ACCOUNTANTS' REVIEW REPORT
--------------------------
Board of Directors and Stockholders'
NanobacLabs Pharmaceuticals Inc. & Subsidiaries
We have reviewed the accompanying consolidated balance sheet of NanobacLabs
Pharmaceuticals Inc. & Subsidiaries as of June 30, 2003, and the related
consolidated statements of operations, stockholders' deficit, and cash flows for
the period then ended in accordance with Statements on Standards for Accounting
and Review Services issued by the American Institute of Certified Public
Accountants. All information included in these financial statements is the
representation of the management of NanobacLabs Pharmaceuticals Inc. &
Subsidiaries.
A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
/s/ Baumann, Raymondo & Company PA
- ----------------------------------
BAUMANN, RAYMONDO & COMPANY PA
September 3, 2003
3
NANOBAC PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
BALANCE SHEETS
(UNAUDITED)
As of As of
June 30, 2003 December 31, 2002
------------- -----------------
ASSETS
CURRENT ASSETS
Cash $ 83,604 $ --
Account receivable, net of allowance of $147,585 and 0 respectively 12,363 5,223
Inventory 68,600 --
Prepaid expenses 137,648 --
Other current assets 8,095 --
----------- -----------
Total current assets 310,309 5,223
----------- -----------
FIXED ASSETS, at cost less accumulated depreciation 111,264 --
INVESTMENT 693,778 --
OTHER ASSETS
Deferred offering costs 18,418 --
Security deposits 86,766 --
Goodwill 4,855,794 --
----------- -----------
Total other assets 4,960,978 --
----------- -----------
TOTAL ASSETS $ 6,076,329 $ 5,223
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 507,032 $ 263,916
Accrued interest payable 32,015 --
Accrued expenses 258,535 82,229
Notes payable 905,413 --
Advances from shareholders 20,469 --
Line of credit 51,407 --
Other current liabilities 4,507 --
----------- -----------
Total current liabilities 1,779,378 346,145
MINORITY INTEREST (36,920) --
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, no par value, 100,000,000 6,484,177 1,134,377
shares authorized, 63,000,395 issued and outstanding
Preferred stock, no par value, 50,000,000 -- --
shares authorized, 0 issued and outstanding
Additional Paid in Capital 359,000 --
Retained (deficit) (2,509,306) (1,475,299)
----------- -----------
Total stockholders' (deficit) 4,333,871 (340,922)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 6,076,329 $ 5,223
=========== ===========
The accompanying notes are an integral part
of these financial statements.
4
NANOBAC PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Six Months
Ending Ending
June 30, 2003 June 30, 2003
------------- -------------
NET REVENUES $ 84,049 $ 88,926
COST OF GOODS SOLD 81,015 88,514
------------ ------------
GROSS PROFIT 3,034 412
------------ ------------
OPERATING EXPENSES
Sales and marketing 36,419 114,306
Research and development 97,845 187,369
General and administrative 357,938 771,987
Depreciation and amortization 2,387 2,387
------------ ------------
Total Operating Expenses 494,588 1,076,049
NET OTHER EXPENSES (INCOME) 3,618 3,618
LOSS BEFORE INCOME TAXES & MINORITY INTEREST (495,173) (1,079,256)
PROVISION FOR INCOME TAXES -- --
------------ ------------
LOSS BEFORE MINORITY INTEREST (495,173) (1,079,256)
MINORITY INTEREST (45,249) (45,249)
------------ ------------
NET LOSS $ (449,924) $ (1,034,007)
============ ============
LOSS PER COMMON SHARE
Basic $ (0.010) $ (0.025)
------------ ------------
Fully Diluted $ (0.010) $ (0.025)
------------ ------------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic 45,943,802 41,384,612
------------ ------------
Fully Diluted 45,943,802 41,384,612
------------ ------------
The accompanying notes are an integral part
of these financial statements.
5
NANOBAC PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM JANUARY 1, 2003
THROUGH JUNE 30, 2003
(UNAUDITED)
Common Stock Preferred Stock Additional
------------------------- ------------------------- Paid-in Retained
Shares Value Shares Value Capital (Deficit) Total
----------- ----------- ----------- ---------- ----------- ----------- -----------
December 31, 2002 Balance 19,982,965 $ 1,134,377 368,815 $ -- $ -- $(1,475,299) $ (340,922)
Conversion of 16,268,430 -- (368,815) -- -- -- --
Preferred Stock to
Common Stock
Common stock issued 500,000 100,000 -- -- -- -- 100,000
for services at
$0.20 per share
Conversion of shareholder 285,000 57,000 -- -- -- -- 57,000
debt to shares of common
stock at $0.20 per share
Conversion of shareholder 575,000 115,000 -- -- -- -- 115,000
debt to shares of common
stock at $0.20 per share
Capital infusion by affiliate -- -- -- -- 359,000 -- 359,000
Net Loss -- -- -- -- -- (584,083) (584,083)
----------- ----------- ----------- ---------- ----------- ----------- -----------
March 31, 2003 Balance 37,611,395 1,406,377 -- -- 359,000 (2,059,382) (294,005)
----------- ----------- ----------- ---------- ----------- ----------- -----------
Conversion of shareholder 815,500 163,100 -- -- -- -- 163,100
debt to shares of common
stock at $0.20 per share
Conversion of shareholder 173,500 34,700 -- -- -- -- 34,700
debt to shares of common
stock at $0.20 per share
Common stock issued in 24,400,000 4,880,000 -- -- -- -- 4,880,000
acquisition of NanobacLabs
Pharmaceuticals, Inc.
Net loss -- -- -- -- -- (449,924) (449,924)
----------- ----------- ----------- ---------- ----------- ----------- -----------
June 30, 2003 Balance 63,000,395 6,484,177 -- -- 359,000 (2,509,306) 4,333,871
=========== =========== =========== ========== =========== =========== ===========
The accompanying notes are an integral part
of these financial statements.
6
NANOBAC PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JANUARY 1, 2003
THROUGH JUNE 30, 2003
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $(1,034,007)
Adjustments to reconcile net loss to cash
(used) in operating activities
Depreciation and amortization 2,387
Common stock issued for services 100,000
Minority interest in net loss (45,249)
Net (increase) decrease in assets: --
Accounts receivable (7,140)
Inventory (68,600)
Prepaid expenses (137,648)
Other current assets (8,095)
Net increase (decrease) in liabilities: --
Accounts payable 243,116
Accrued interest payable 32,015
Accrued expenses 176,306
Advances from shareholders 20,469
Line of credit 51,407
Other current liabilities 4,507
-----------
Total adjustments 462,441
-----------
Net cash provided (used) in operating activities (571,566)
-----------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of fixed assets, net book value as of date of acquisition (113,651)
Investment in affiliate (693,778)
Capitalized offering costs (18,418)
Long term deposits (86,766)
Acquisition of NanobacLabs Pharmaceuticals, Inc. (4,880,000)
Net change in Minority Interest 32,535
-----------
Net cash provided (used) in investing activities (5,859,043)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in notes payable 905,413
Common stock issued for the conversion of debt 369,800
Common stock issued for cash --
Common stock issued in acquisition 4,880,000
Capital infusion from affiliate 359,000
-----------
Net cash provided (used) in financing activities
-----------
Change in cash 83,604
Cash balance, beginning of period --
-----------
Cash balance, end of period $ 83,604
===========
Supplemental disclosures of cash flow information:
Interest expense - paid in cash $ --
-----------
The accompanying notes are an integral part
of these financial statements.
7
NANOBAC PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO JUNE 30, 2003
(UNAUDITED)
1. Nature of operations and summary of significant accounting polices:
Nature of business and basis of presentation:
Nanobac Pharmaceuticals, Inc. ("Nanobac" or the "Company") is in the
business of pharmaceutical drug research and development, research and
development of medical diagnostics, nanobiotechnology and nanotechnology.
Recent studies indicate that the Company's proprietary regimen may be
effective as a treatment for reducing atherosclerotic coronary artery
calcified plaque, and other calcifications found in human diseases.
Development of Nanobac's treatments is related to the potential existence
of a novel infectious disease pathogen termed Nanobacterium Sanguineum
("nanobacteria").
The Company has developed the nanobiotics(R), NanobacTX(R) (heart disease
and atherosclerosis), UroBac(R) (urology) and DermaBac(R) (dermatology),
which are patent-pending prescription compounds targeted to treat what are
believed to be nanobacterial infections in humans. Nanobac Pharmaceuticals'
nanobiotics(R) are the only such treatments available on the market at this
time. The Company has additional nanobiotics(R) in its development
pipeline.
Nanobac's researchers have developed a blood test (NanobacTEST-S(R)) for
nanobacterial antigen and IgG antibodies as well as a rapid urine-screening
test for nanobacterial antigen (NanobacTEST-U/A(R)).
Acquisition:
An acquisition of the majority ownership of NanobacLabs Pharmaceuticals,
Inc. ("Labs") was completed by American Enterprise Corporation ("AMER" or
the "Company") partially on June 2 and concluding on June 4, 2003. On June
4, 2003, AMER acquired 6,100,000 shares from Gary S. Mezo and Nancy M.
Schriewer-Mezo, representing approximately 74.4% of Labs in exchange for
24,400,000 restricted AMER no par value common shares together with a loan
to LABS in the amount of $300,000 and a commitment to provide additional
equity capital to LABS during the twelve months following the acquisition.
Together with the 37,650,395 AMER no par value common shares previously
issued, as of June 4, 2003, the Company had 62,050,395 no par value common
shares issued and outstanding. Dr. Mezo is Chairman of Lab's Board of
Directors.
In addition, the Company has agreed to acquire the remaining 2,089,500
outstanding shares of Labs for 9,238,000 AMER shares and, if exercised,
500,000 options to acquire Labs shares, for 3,000,000 AMER shares. The
option holder is not obligated to exercise the option.
8
NANOBAC PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO JUNE 30, 2003
(UNAUDITED)
1. Nature of operations and summary of significant accounting polices
(continued):
In the event all Labs shares are converted, AMER will have issued an
aggregate of 36,638,000 shares and shall have issued and outstanding a
total of 94,826,395 shares. In such an event, the former owners of Labs
will then own approximately 38.6% of AMER. The Company expects the
remaining Labs shares to convert before March 31, 2004.
Effective June 20, 2003, the Company had announced a name change from
American Enterprise Corporation to Nanobac Pharmaceuticals, Inc. Effective
July 21, 2003, Nanobac Pharmaceuticals, Inc. began trading under the symbol
"NNBT."
Reporting periods:
The financial information is presented on a calendar year-end.
Use of estimates:
The preparation of financials statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumption that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Interim financial information:
The financial statements for the quarter ended June 30, 2003 and notes
thereto should be read in conjunction with the financial statements and
notes thereto for the year ended December 31, 2002 for the Company as filed
in the annual report on Form 10-KSB, the quarter ended March 31, 2002 as
filed on Form 10-QSB, and the pro forma financial statements as filed on
Form 8-K/A.
In the opinion of management, all adjustments necessary for a fair
presentation of the results of operations for the periods presented have
been included. The results of operations for the six months ended June 30,
2003 and 2002 are not necessarily indicative of the results for a full
year.
9
NANOBAC PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO JUNE 30, 2003
(UNAUDITED)
1. Nature of operations and summary of significant accounting polices
(continued):
Financial instruments:
The carrying value of the Company's financial instruments, including cash,
accounts payable and notes payable approximate their fair market values
Furniture and equipment:
Furniture and equipment is depreciated using the straight-line method over
the estimated useful life of 5 years.
Stock option based compensation:
The Company accounts for compensation costs associated with stock options
issued to employees under the provisions of Accounting Principles Board
Opinion No. 25 whereby compensation is recognized to the extent the market
price of the underlying stock at the grant date exceeds the exercise price
of the options granted. There have been no options granted to employees
since inception. Stock option based compensation to non-employees is
accounted for using the fair-value based method prescribed by Financial
Accounting Standard No. 123 - Accounting for Stock-Based Compensation.
Research and development costs:
Research and development costs are expensed in the period in which they
occur.
Income taxes:
The Company records its federal and state tax liability in accordance with
Financial Accounting Standards Board Statement No. 109 "Accounting for
Income Taxes". The deferred taxes payable are recorded for temporary
differences between the recognition of income and expenses for tax and
financial reporting purposes, using current tax rates. Deferred assets and
liabilities represent the future tax consequences of those differences,
which will either be taxable or deductible when the assets and liabilities
are recovered or settled.
Since its inception, the Company has accumulated a loss of $2,509,306 for
income tax purposes, which can be used to offset future taxable income
through 2022.
Estimated future tax benefit $ 878,257
Valuation allowance (878,257)
---------
Estimated future tax benefit $ --
As of June 30, 2003, no deferred taxes were recorded in the accompanying
financial statements.
10
NANOBAC PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO JUNE 30, 2003
(UNAUDITED)
1. Nature of operations and summary of significant accounting polices
(continued):
Net loss per share:
Net loss per share represents the net loss attributable to common
stockholders divided by the weighted average number of common shares
outstanding during the period. Diluted earnings per share reflect the
potential that could occur if the remaining shares of Labs are acquired as
expected. The company has no warrants or options outstanding. Diluted net
loss per share is considered to be the same as basic net loss per share
since the effect of the issuance of common stock associated with the
convertible debt is anti-dilutive.
2. Management's plan of operation:
Prior to its acquisition of NanobacLabs Pharmaceuticals, Inc., the
Company's sole operating subsidiary was Healthcentics, Inc. As part of the
Company's Plan of Reorganization, effective December 6, 2002, the Company
executed an Acquisition Agreement with HealthCentrics, Inc., a
privately-held Florida corporation. HealthCentrics is a development-stage
Florida corporation formed February, 2002 to organize, develop and market a
suite of Web-based medical accounting, billing and management information
services to third party billing companies, practice management and
healthcare provider organizations. Under the terms of the Acquisition
Agreement, the Company exchanged 17,732,965 restricted common shares for
100% of the issued and outstanding shares of HealthCentrics. The
acquisition of HealthCentrics was accounted for using the reverse-merger
accounting method. The Current Report on Form 8-K filed December 12, 2002
included the audited financial statements of HealthCentrics for the period
from inception on February 22, 2002 through June 30, 2002 taken together
with the unaudited balance sheet and statement of income for the quarter
ended September 30, 2002.
In the period from January 1, 2003 through June 30, 2003, the
HealthCentrics subsidiary had revenue of $11,289, cost of revenue of
$28,051, operating expenses of $584,014, and a net loss of $601,073.
Management is currently reviewing its strategy for the HealthCentrics
subsidiary. During this same period the parent company had no revenues and
total operating expenses of $301,430.
The purchase of 74.4% of NanobacLabs Pharmaceuticals, Inc. ("Labs") was
completed on June 4, 2003. For the first six months of 2003, Labs had
revenues of $719,269, costs of revenue of $356,359, total operating
expenses of $1,556,213, other expenses of $28,920, and a net loss of
$1,222,222. Labs has been funded primarily through operations and equity
injections by its shareholders.
Management's plan of operations for fiscal 2003 is for the Company to raise
additional capital of up to $2 million in order to complete the acquisition
of Nanobac Oy, launch new clinical trials, fund research and development
for new treatment areas, and general working capital requirements. Capital
may be raised through further sales of equity securities, which may result
in dilution of the position of current shareholders. At this time, there
11
NANOBAC PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO JUNE 30, 2003
(UNAUDITED)
are no firm commitments to invest in the Company. If the Company is unable
to obtain such financing, the business might not attain profitability. The
Company has issued a term sheet to several interested individuals with the
intention of raising up to $2 million.
There can be no assurances that the Company will be successful in obtaining
debt or equity financing in order to achieve its financial objectives and
continue as a going concern. The financial statements do not include any
adjustments to the carrying amount of assets and the amounts and
classifications of liabilities that might result from the outcome of this
uncertainty.
3. Notes payable and long-term debt:
The Company had no long-term debt to third parties as of June 30, 2003.
4. Advances from related parties:
As of June 30, 2003, the Company had $20,469 in advances from shareholders.
5. Subordinated convertible debentures:
The Company had no subordinated convertible debentures as of June 30, 2003.
6. Stockholders' deficit:
Common stock:
On December 31, 2002, the Company had 19,982,965 shares of common stock
issued and outstanding. During the period from January 1, 2003 through June
30, 2003 certain shareholders converted $369,800 which had been advanced to
the Company into 1,849,000 shares of common stock of the Company. The
Company also issued 500,000 shares as compensation for services rendered.
On June 4, 2003, the Company issued 24,400,000 shares of its common stock
to acquire 74.4% of the total issued and outstanding common stock of
NanbacLabs Pharmaceuticals, Inc.
The Company had 63,000,395 shares of common stock issued and outstanding as
of June 30, 2003.
12
NANOBAC PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FROM INCEPTION (APRIL 24, 2000) TO JUNE 30, 2003
(UNAUDITED)
Preferred stock:
The Company had no shares of preferred stock issued and outstanding as of
June 30, 2003.
Incentive stock option plan
The Company has no incentive stock option plan.
7. Income taxes:
Deferred tax assets consist of the following at June 30, 2003:
Estimated future tax benefit $ 878,000
Valuation allowance (878,000)
---------
$ --
=========
8. Subsequent events:
Shares issued in acquisition of Nanobac:
The Company issued 6,598,000 restricted shares of its common stock on
August 11, 2003 to shareholders of NanobacLabs Pharmaceuticals, Inc.
("Labs") bringing its total ownership of Labs to approximately 95%.
Shares issued for services:
On July 11, 2003 the Company issued 350,000 restricted shares of its common
stock to its Corporate Secretary for services rendered. On the same date
the Company issued 12,000,000 restricted shares of its common stock to
entities controlled by its Chairman and Chief Executive Officer for
services rendered.
Share issued for cash:
On July 11, 2003 the Company issued 116,000 restricted shares of its common
stock for $23,200. On August 11, 2003 the Company issued 526,000 restricted
shares of its common stock for $105,200.
13
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
Background
- ----------
Nanobac Pharmaceuticals, Inc., (f/k/a American Enterprise Corporation) ("we",
"our", "us" the "Company", "AMER", "NNBP") was formed as a Florida corporation
during June, 1994. At that time, our corporate name was National Diagnostics,
Inc. and through our wholly-owned subsidiaries, we provided diagnostic imaging
services through several outpatient centers in Florida. During 1998, we changed
our corporate name to American Enterprise.Com, Corp and continued to provide
diagnostic imaging services through several outpatient centers located in the
State of Florida.
On May 1, 2001, American Enterprise.Com, Corp filed for voluntary reorganization
under Chapter 11 of the Bankruptcy Code. On November 20, 2002, the Middle
District of Florida Court confirmed the Company's Plan of Reorganization (the
"Confirmed Plan" or "Plan"). At time of the Plan confirmation, the Company had
no assets and no liabilities. During the period May 1 2001 through November 20,
2002, administrative fees including legal, accounting and consulting relating to
the bankruptcy proceedings and maintenance of AMER were paid by our Chairman of
the Board and Chief Executive Officer. We filed a copy of our confirmed Plan via
the Securities and Exchange Commission EDGAR system on a Current Report Form 8-K
on December 12, 2001. Copies of the Confirmed Plan are available to shareholders
through the SEC's EDGAR System or by contacting our business office during
normal working hours.
On November 20, 2002, following our Confirmed Plan, we had 2,250,000 no par
value common shares and 368,318 Series A Preferred Shares issued and
outstanding. This is the same number of common and preferred shares which were
outstanding at the time we filed our voluntary reorganization
During the two-year period of our bankruptcy we conducted no activities except
those matters required to complete the bankruptcy process. During that two-year
period, we changed our Board of Directors and operating Officers. As a part of
our Confirmed Plan, we developed a business strategy to consolidate through
acquisition, merger and joint-venture, Application Service Provider (ASP)
delivered software and services. Initially, we intend to consolidate ASPs
relating to the healthcare industry. Once acquired, we intend to organize the
healthcare related ASP delivered software and services into five distinct
categories and to act as the hub through which users exchange information,
conduct transaction and communicate in real-time.
As a part of executing our strategy and as a part of our Plan, effective
December 6, 2002, we executed an Acquisition Agreement with HealthCentrics,
Inc., a privately-held Florida corporation. HealthCentrics is a
development-stage Florida corporation formed February, 2002 to organize, develop
14
and market a suite of Web-based medical accounting, billing and management
information services to third party billing companies, practice management and
healthcare provider organizations. Under the terms of the Acquisition Agreement,
we exchanged 17,732,965 restricted common shares for 100% of the issued and
outstanding shares of HealthCentrics. We accounted for the acquisition of
HealthCentrics using the reverse-merger accounting method. Essentially this
method of accounting mandates that the financial statements of the acquired
company, HealthCentrics, reflect our financial position.
In our Current Report on Form 8-K filed December 12, 2002, we included the
audited financial statements of HealthCentrics for the period from inception on
February 22, 2002 through June 30, 2002 taken together with the unaudited
balance sheet and statement of income for the quarter ended September 30, 2002.
A complete discussion of our HealthCentrics acquisition including a copy of the
acquisition agreement is included in our Current Report Form 8-K filed December
12, 2002.
In the period from January 1, 2003 through June 30, 2003, HealthCentrics had
revenue of $11,289, cost of revenue of $28,051, operating expenses of $584,014,
and a net loss of $601,073. Management is currently reviewing its strategy for
the HealthCentrics subsidiary.
We completed the acquisition of the majority ownership of NanobacLabs
Pharmaceuticals, Inc. ("Labs") partially on June 2 and concluding on June 4,
2003. On June 4, 2003, AMER acquired 6,100,000 shares from Doctor Gary S. Mezo
and Mrs. Nancy M. Schriewer-Mezo representing approximately 74.4% of Labs in
exchange for 24,400,000 restricted AMER no par value common shares together with
a loan in the amount of $300,000 to Labs and a commitment to provide additional
equity capital to Labs during the twelve months following the acquisition.
Together with the 37,650,395 AMER no par value common shares previously issued,
as of June 4, 2003, the Company had 62,050,395 no par value common shares issued
and outstanding. Dr. Mezo is Chairman of Lab's Board of Directors.
In addition, the Company has agreed to acquire the remaining 2,089,500
outstanding shares of Labs for 8,358,000 AMER shares and, if exercised, 500,000
options to acquire Labs shares, for 2,000,000 AMER shares. The option holder is
not obligated to exercise the option.
For the first six months of 2003, Labs had revenues of $719,269, costs of
revenue of $356,359, total operating expenses of $1,556,213, other expenses of
$28,920, and a net loss of $1,222,222. Labs has been funded primarily through
operations and equity injections by its shareholders.
In the event all Labs shares are converted, AMER will have issued an aggregate
of 34,758,000 shares and shall have issued and outstanding a total of 94,826,395
shares. In such an event, the former owners of Labs will then own approximately
38.6% of AMER.
Effective June 20, 2003, the Company had announced a name change from American
Enterprise Corporation to Nanobac Pharmaceuticals, Inc. Effective July 21, 2003,
Nanobac Pharmaceuticals, Inc., began trading under the symbol "NNBT."
Managements' plan of operations for fiscal 2003 is for the Company to raise
additional capital of up to $2 million in order to complete the acquisition of
Nanobac Oy, launch new clinical trials, fund research and development for new
15
treatment areas, and general working capital requirements. Capital may be raised
through further sales of equity securities, which may result in dilution of the
position of current shareholders. At this time, there are no firm commitments on
anyone's part to invest in the Company and if the Company is unable to obtain
such financing, the business may never reach profitability. The Company has
issued a term sheet to several interested individuals with the intention of
raising up to $2 million.
Plan of Operations
- ------------------
Managements' plan of operations for fiscal 2003 is for the Company to raise
additional capital of up to $2 million in order to complete the acquisition of
Nanobac Oy, launch new clinical trials, fund research and development for new
treatment areas, and general working capital requirements. Capital may be raised
through further sales of equity securities, which may result in dilution of the
position of current shareholders. The Company has issued a term sheet to several
interested individuals with the intention of raising up to $2 million. At this
time, there are no firm commitments to invest in the Company and if the Company
is unable to obtain such financing, the business may never reach profitability.
There can be no assurances that the Company will be successful in obtaining debt
or equity financing in order to achieve its financial objectives and continue as
a going concern. The financial statements do not include any adjustments to the
carrying amount of assets and the amounts and classifications of liabilities
that might result from the outcome of this uncertainty.
Liquidity and Capital Resources
- -------------------------------
Since emerging from Chapter 11, Nanobac has financed its activities primarily
from advances from John D. Stanton, its Chairman and CEO, and from other
shareholders, which advances were subsequently converted into shares of the
Company's common stock, and from private placements of common stock. As of June
30, 2003 the balance of such advances due shareholders was $20,469. For the
period of April 1, 2003 through June 30, 2003, $197,800 of advances from
shareholders was converted into 989,000 shares of common stock.
As of June 30, 2003, Nanobac had total assets of $6,076,329 of which $310,309
were current assets. At June 30, 2003, Nanobac had total current liabilities of
$1,779,378 and no long-term liabilities. Nanobac's working capital deficit at
June 30, 2003 was $1,469,069 and the Company had a retained deficit of
$2,509,306. Nanobac is dependent on raising additional funding necessary to
implement its business plan as outlined above.
16
Forward Looking Statements. This report contains certain forward-looking
statements that are based on current expectations. In light of the important
factors that can materially affect results, including those set forth above and
elsewhere in this report, the inclusion of forward-looking information herein
should not be regarded as a representation by the Company or any other person
that the objectives or plans of the Company will be achieved. The Company may
encounter competitive, technological, financial and business challenges making
it more difficult than expected to continue to market its products and services;
competitive conditions within the industry may change adversely; the Company may
be unable to retain existing key management personnel; the Company's forecasts
may not accurately anticipate market demand; and there may be other material
adverse changes in the Company's operations or business. Certain important
factors affecting the forward looking statements made herein include, but are
not limited to (i) accurately forecasting capital expenditures and (ii)
obtaining new sources of external financing. Assumptions relating to budgeting,
marketing, product development and other management decisions are subjective in
many respects and thus susceptible to interpretations and periodic revisions
based on actual experience and business developments, the impact of which may
cause the Company to alter its capital expenditure or other budgets, which may
in turn affect the Company's financial position and results of operations.
Trends, Risks and Uncertainties
We have sought to identify what we believe to be the most significant risks to
our business. However, we cannot predict whether, or to what extent, any of such
risks may be realized nor can we guarantee that we have identified all possible
risks that might arise. Investors should carefully consider all of such risk
factors before making an investment decision with respect to our Common Stock.
Cautionary Factors that may Affect Future Results
We provide the following cautionary discussion of risks, uncertainties and
possible inaccurate assumptions relevant to our business and our products. These
are factors that we think could cause our actual results to differ materially
from expected results. Other factors besides those listed here could adversely
affect us.
Reliance on our Chairman of the Board, Chief Executive Officer and Majority
Shareholder; Possible Future Dilution
We have limited working capital and are primarily relying upon notes (borrowed
funds) to operate. During the past two years, principally since May 1, 2001, our
Chairman of the Board, Chief Executive Officer and majority shareholder Mr. John
Stanton provided for all of our management and capital needs. Further, since
February, 2002, Mr. Stanton has provided the majority of the capital needs of
HealthCentrics and AMER. While Mr. Stanton continues to provide for the majority
of our capital requirements, he is under no obligation to continue such
financing and/or strategic guidance. In the event Mr. Stanton should discontinue
his support, we may have difficulty in continuing our operations. In such an
event, shareholders could lose their investment in its entirety. Historically,
Mr. Stanton has provided his capital to us on a debt basis after which he may
convert his debt into shares of our common stock. If, in the future we require
additional capital, Mr. Stanton may contribute some or all of our requirements.
We anticipate that as a part of any such loan, Mr. Stanton would have rights to
convert into additional shares of our common stock. In such an event and to the
degree of which we require Mr. Stanton's support, shareholders may experience
dilution. At present, we do not maintain key man insurance for Mr. Stanton.
17
Liquidity and Working Capital Risks; Need for Additional Capital to Finance
Growth and Capital Requirements
In addition to the financial support we may receive from Mr. Stanton, we may
seek to raise capital from public or private equity or debt sources to provide
working capital to meet our general and administrative costs until net revenues
make the business self-sustaining. We cannot guarantee that we will be able to
raise any such capital on terms acceptable to us or at all. Such financing may
be upon terms that are dilutive or potentially dilutive to our stockholders. If
alternative sources of financing are required, but are insufficient or
unavailable, we will be required to modify our growth and operating plans in
accordance with the extent of available funding.
Limited Operating History Anticipated Losses; Uncertainty of Future Results
We have a limited operating history upon which an evaluation of our Company and
our prospects can be based. Our prospects must be evaluated with a view to the
risks encountered by a company in an early stage of development, particularly in
light of the uncertainties relating to the new and evolving software programs
and methods which we intend to develop and market, and the acceptance of our
business model. We will be incurring costs to: (i) further develop and market
our products; (ii) establish distribution relationships; and (iii) build an
organization. To the extent that such expenses are not subsequently followed by
commensurate revenues, our business, results of operations and financial
condition will be materially adversely affected. We, therefore, cannot insure
that we will be able to immediately generate sufficient revenues. We expect
negative cash flow from operations to continue for the next 12 months as we
continue to develop and market our business. If cash generated by operations is
insufficient to satisfy our liquidity, we may be required to sell additional
equity or debt securities. The sale of additional equity or convertible debt
securities would result in additional dilution to our stockholders. Our initial
operations may not be profitable, since time will be required to build our
business to the point that our revenues will be sufficient to cover our total
operating costs and expenses. Our reaching a sufficient level of sales revenues
will depend upon a large number of factors, including availability of sufficient
working capital, the number of customers we are able to attract and the costs of
continuing development of our product line.
Competition
The market in which the Company competes includes successful and
well-capitalized competitors that vary in size and scope. Principal competitors
include Pfizer, Merck and other pharmaceutical companies having unique
treatments for cardiovascular disease. All of these competitors are more
established, benefit from greater name recognition and have substantially
greater resources than the Company. Moreover, the Company could face additional
competition as other established and emerging companies enter the market and new
products and technologies are introduced. Increased competition could result in
price reductions, fewer customer subscriptions, reduced gross margins and loss
of market share, any of which could materially adversely affect the Company's
business, financial condition and operating results. In addition, current and
potential competitors may make strategic acquisitions or establish cooperative
relationships among themselves or with third-parties, thereby increasing the
18
ability of their products to address the needs of the Company's prospective
consumers. While the Company believes it can differentiate its own product from
these current and future competitors, focusing on the products' functionality,
flexibility, adaptability and features, there can be no assurance that the
Company will be able to compete successfully against current and future
competitors. The failure to effectively compete would have a material adverse
effect upon the Company's business, financial condition and operating results
Government Regulation
Healthcare in general and the pharmaceuticals industry in particular are highly
regulated markets, subject to both federal and a multitude of state regulations
and guidelines. The majority of the Company's business is still in clinical
research applications and is governed by the medical community. The Company
sells its nanbacTX as a prescription compound and is governed by the normal
rules of pharmacy management. There can be no assurance that changes to state or
federal laws will not materially restrict our ability to sell our products or
develop new product lines.
Potential Fluctuations in Quarterly Operating Results
Our quarterly operating results may fluctuate significantly in the future as a
result of a variety of factors, most of which are outside of our control,
including: the demand for our software; seasonal trends in purchasing; the
amount and timing of capital expenditures and other costs relating to the
development of our software; price competition or pricing changes in the
industry; technical difficulties or system downtime; general economic
conditions, and economic conditions specific to the healthcare industry. Our
quarterly results may also be significantly impacted by the accounting treatment
of acquisitions, financing transactions or other matters. Particularly at our
early stage of development, such accounting treatment can have a material impact
on the results for any quarter. Due to the foregoing factors, among others, it
is likely our operating results will fall below our expectations or those of
investors in some future quarter.
Lack of Independent Directors
We cannot guarantee our Board of Directors will have a majority of independent
directors in the future. In the absence of a majority of independent directors,
our executive officers, who are also principal stockholders and directors, could
establish policies and enter into transactions without independent review and
approval thereof. This could present the potential for a conflict of interest
between the Company and its stockholders generally and the controlling officers,
stockholders or directors.
Limitation of Liability and Indemnification of Officers and Directors
Our officers and directors are required to exercise good faith and high
integrity in our management affairs. Our Articles of Incorporation and By Laws
provide, however, that our officers and directors shall have no liability to our
shareholders for losses sustained or liabilities incurred which arise from any
transaction in their respective managerial capacities unless they violated their
duty of loyalty, did not act in good faith, engaged in intentional misconduct or
knowingly violated the law, approved an improper dividend or stock repurchase,
or derived an improper benefit from the transaction. Our Articles and By-Laws
also provide for the indemnification by us of the officers and directors against
any losses or liabilities they may incur as a result of the manner in which they
operate our business or conduct the internal affairs, provided that in
connection with these activities they act in good faith and in a manner they
reasonably believe to be in, or not opposed to, the best interests of the
Company, and their conduct does not constitute gross negligence, misconduct or
breach of fiduciary obligations.
19
Continued Control by Current Officers and Directors
The present officers and directors own approximately 65% of the outstanding
shares of Common Stock, and therefore are in a position to elect all of our
Directors and otherwise control the Company, including, without limitation,
authorizing the sale of equity or debt securities of the Company, the
appointment of officers, and the determination of officer's salaries.
Shareholders have no cumulative voting rights.
Limited Market Due To Penny Stock
The Company's stock differs from many stocks, in that it is a "penny stock." The
Securities and Exchange Commission has adopted a number of rules to regulate
penny stocks. These rules include, but are not limited to, Rules 3a5l-l, 15g-1,
15g-2, 15g-3, 15g-4, 15g-5, 15g-6 and 15g-7 under the Securities and Exchange
Act of 1934, as amended. Because our securities probably constitute penny stock
within the meaning of the rules, the rules would apply to us and our securities.
The rules may further affect the ability of owners of our stock to sell their
securities in any market that may develop for them. There may be a limited
market for penny stocks, due to the regulatory burdens on broker-dealers. The
market among dealers may not be active. Investors in penny stock often are
unable to sell stock back to the dealer that sold them the stock. The mark-ups
or commissions charged by the broker-dealers may be greater than any profit a
seller may make. Because of large dealer spreads, investors may be unable to
sell the stock immediately back to the dealer at the same price the dealer sold
the stock to the investor. In some cases, the stock may fall quickly in value.
Investors may be unable to reap any profit from any sale of the stock, if they
can sell it at all. Stockholders should be aware that, according to the
Securities and Exchange Commission Release No. 34- 29093, the market for penny
stocks has suffered in recent years from patterns of fraud and abuse. These
patterns include: - Control of the market for the security by one or a few
broker-dealers that are often related to the promoter or issuer; - Manipulation
of prices through prearranged matching of purchases and sales and false and
misleading press releases; - "Boiler room" practices involving high pressure
sales tactics and unrealistic price projections by inexperienced sales persons;
- - Excessive and undisclosed bid-ask differentials and markups by selling
broker-dealers; and - The wholesale dumping of the same securities by promoters
and broker- dealers after prices have been manipulated to a desired level, along
with the inevitable collapse of those prices with consequent investor losses.
Furthermore, the penny stock designation may adversely affect the development of
any public market for the Company's shares of common stock or, if such a market
develops, its continuation. Broker-dealers are required to personally determine
whether an investment in penny stock is suitable for customers. Penny stocks are
securities (i) with a price of less than five dollars per share; (ii) that are
not traded on a "recognized" national exchange; (iii) whose prices are not
quoted on the NASDAQ automated quotation system (NASDAQ-listed stocks must still
meet requirement (i) above); or (iv) of an issuer with net tangible assets less
than $2,000,000 (if the issuer has been in continuous operation for at least
three years) or $5,000,000 (if in continuous operation for less than three
years), or with average annual revenues of less than $6,000,000 for the last
three years. Section 15(g) of the Exchange Act, and Rule 15g-2 of the Commission
require broker-dealers dealing in penny stocks to provide potential investors
with a document disclosing the risks of penny stocks and to obtain a manually
20
signed and dated written receipt of the document before effecting any
transaction in a penny stock for the investor's account. Potential investors in
the Company's common stock are urged to obtain and read such disclosure
carefully before purchasing any shares that are deemed to be "penny stock." Rule
15g-9 of the Commission requires broker-dealers in penny stocks to approve the
account of any investor for transactions in such stocks before selling any penny
stock to that investor. This procedure requires the broker-dealer to (i) obtain
from the investor information concerning his or her financial situation,
investment experience and investment objectives; (ii) reasonably determine,
based on that information, that transactions in penny stocks are suitable for
the investor and that the investor has sufficient knowledge and experience as to
be reasonably capable of evaluating the risks of penny stock transactions; (iii)
provide the investor with a written statement setting forth the basis on which
the broker-dealer made the determination in (ii) above; and (iv) receive a
signed and dated copy of such statement from the investor, confirming that it
accurately reflects the investor's financial situation, investment experience
and investment objectives. Compliance with these requirements may make it more
difficult for the Company's stockholders to resell their shares to third parties
or to otherwise dispose of them.
Item 3: Controls and Procedures
Under the supervision and with the participation of our management, including
our principal executive officer and principal financial officer, we have
evaluated the effectiveness of the design and operation of our disclosure
controls and procedures within 90 days of the filing date of this quarterly
report, and, based on their evaluation, our principal executive officer and
principal financial officer have concluded that these controls and procedures
are effective. There were no significant changes in our internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation.
Disclosure controls and procedures are our controls and other procedures that
are designed to ensure that information required to be disclosed by us in the
reports we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by us in the reports that we file under the
Exchange Act is accumulated and communicated to our management, including our
principal executive officer and principal financial officer, as appropriate to
allow timely decisions regarding required disclosure.
21
PART II - OTHER INFORMATION
Item 1: Legal Proceedings
During January 2003 we engaged in arbitration with a software outsourcing firm,
AdiTech, Inc. over disputes arising from programming services. Subsequently, an
arbitration meeting was held in July and we expect a decision before the end of
2003. We are unable at this time to predict the outcome of this arbitration.
Should AdiTech prevail, we would be required to remit approximately $180,000.
On May 1, 2001, American Enterprise Corporation (formerly American
Enterprise.Com, Corp) filed for voluntary reorganization under Chapter 11 of the
Bankruptcy Code. On November 20, 2002, the Middle District of Florida Court
confirmed the Company's Plan of Reorganization (the "Plan"). At time of Plan
confirmation (November 20, 2002), the Company had no assets and no liabilities.
Administrative fees including legal, accounting and consulting were paid by Mr.
John Stanton, the Company's Chairman of the Board and Chief Executive Officer.
There were no priority creditors. Equipment leases were treated as unsecured
creditors. Unsecured creditors determined to represent approximately $7,000,000
were allowed to choose between (a) a cash payment on a pro rata basis from a
$50,000 unsecured claim fund, or (b) a stock payment on a pro rata basis from a
4,500,000 common share unsecured claim treasury stock fund. All unsecured
creditors opted to receive a pro rata portion of the $50,000 cash unsecured
claim fund. None of the unsecured creditors opted to accept any of the 4,500,000
shares allocated to the treasury stock fund. We have filed objections to a
number of the unsecured creditors seeking their pro rata portion of the $50,000
cash unsecured claim fund. We are unable at this time to predict the outcome of
these objections. However, the $50,000 cash unsecured claim fund has already
been provided to an escrow account established for these purposes and the
outcome of the objections to claims will have no further impact on the Company.
The Company's Common Stock holders representing 2,250,000 of our Common Shares
were unaffected by the bankruptcy process. As a component of the Plan, the
Company was to acquire HealthCentrics, Inc. through an exchange of up to
20,000,000 common shares. Subsequently, the Company acquired HealthCentrics,
Inc. for 17,732,965 common shares.
Item 2: Changes in Securities and Use of Proceeds
(a) Not Applicable.
(b) Not Applicable.
22
(c) During the period from April 1, 2003 through June 30, 2003, the
Company issued 989,000 shares of its common stock to effect the
conversion of $197,800 in debt to equity. The shares were issued at a
price of $0.20 per share and are restricted.
Also during the period the Company issued 24,400,000 shares of its
common stock to effect the purchase of 74.4% of NanobacLabs
Pharmaceuticals, Inc. The shares were issued at a price of $0.20 per
share and are restricted.
(d) Not Applicable
Item 3: Defaults upon Senior Securities
None.
Item 4: Submission of Matters to a Vote of Security Holders
None
Item 5: Other Information
None
Item 6: Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
99.1 Certification pursuant to 18 U.S.C. Section 1350
99.2 Certification pursuant to 18 U.S.C. Section 1350
(b) Reports on Form 8-K
A Current Report on Form 8-K was filed on June 19, 2003 to report the
Acquisition of NanobacLab Pharmaceuticals, Inc. and the change of its name
from American Enterprise Corp to Nanobac Pharmaceuticals, Inc.
A Current Report on Form 8-K was filed on July 18, 2003 to report that
effective July 21, 2003, Nanobac Pharmaceuticals will trade under the
symbol "NNBT".
23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Dated: August 18, 2003 NANOBAC PHARMACEUTICALS, INC.
By: /s/ John D. Stanton
---------------------------------------
John D. Stanton, President and Chief
Executive Officer
By: /s/ John D. Stanton
---------------------------------------
John D. Stanton, Chief Financial Officer
24
CERTIFICATION
I, John D. Stanton, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Nanobac
Pharmaceuticals, 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
respect the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.
4. I am 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, is made known to me
by others, 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. 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. 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.
August 18, 2003
By: /s/ John D. Stanton
----------------------------------------
John D. Stanton, President and Chief
Executive Officer
CERTIFICATION
I, John D. Stanton, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Nanobac
Pharmaceuticals, 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
respect the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.
4. I am 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, is made known to me
by others, 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. 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. 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.
May 19, 2003
By: /s/ John D. Stanton
----------------------------------------
John D. Stanton, Chief Financial Officer