UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 2002 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from ____________ to ________________ Commission file number 001-14503 DECTRON INTERNATIONALE INC. (Exact name of Small Business Issuer as Specified in Its Charter) Quebec, Canada N\A - ----------------------------------- ------------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 4300 Poirier Blvd. Montreal, Quebec H4R 2C5 - ----------------------------------- ------- (Address of principal executive offices) (Zip Code) (514) 334-9609 (Issuer's telephone number, including area code) Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| The number of shares outstanding of the registrant's Common Stock, No Par Value, on December 12, 2002 was 2,916,500 shares. Transitional Small Business Disclosure Format (check one): Yes |_| No |X| DECTRON INTERNATIONALE INC. QUARTERLY REPORT ON FORM 10-QSB OCTOBER 31, 2002 TABLE OF CONTENTS - -------------------------------------------------------------------------------- PART I - FINANCIAL INFORMATION Page Number Item 1. Financial Statements Interim Consolidated Balance Sheets as of October 31, 2002 and January 31, 2002...................3 Interim Consolidated Statements of Earnings for the nine months ended October 31, 2002 and 2001..............................................5 Interim Consolidated Statements of Earnings for the three months ended October 31, 2002 and 2001.............................................6 Interim Consolidated Statements of Cash Flows for the nine months ended October 31, 2002 and 2001..............................................7 Interim Consolidated Statements of Stockholders' Equity for the nine months ended October 31, 2002 and 2001.............................................10 Notes to Interim Consolidated Financial Statements...............................................11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................................................................13 Item 3. Controls and Procedures..........................................................................14 2 DECTRON INTERNATIONALE INC. Interim Consolidated Balance Sheets As at October 31, 2002 and January 31, 2002 (Amounts Expressed in United States Dollars) - -------------------------------------------------------------------------------- October 31, January 31, 2002 2002 ------------ ------------ Assets Current Cash $ 602,368 $ 86,727 Accounts receivable 9,626,126 8,056,304 Income taxes receivable -- 58,313 Inventory 8,935,798 9,186,114 Prepaid expenses and sundry assets 570,425 555,327 Deferred income taxes 46,546 46,546 ------------ ------------ 19,781,263 17,989,331 Loans receivable 522,904 517,164 Property, plant and equipment 10,153,186 9,804,587 Intangibles 193,827 139,048 Goodwill 1,326,729 1,298,942 Deferred income taxes 812,791 811,566 ------------ ------------ $ 32,790,700 $ 30,560,638 ============ ============ The accompanying notes are an integral part of these interim consolidated financial statements. 3 DECTRON INTERNATIONALE INC. Interim Consolidated Balance Sheets As at October 31, 2002 and January 31, 2002 (Amounts Expressed in United States Dollars) - -------------------------------------------------------------------------------- October 31, January 31, 2002 2002 ------------ ------------ Liabilities Current Bank loans $ 8,634,752 $ 8,326,166 Accounts payable and accrued expenses 4,877,112 4,341,533 Current portion of long-term debt 929,380 1,336,058 Income tax payable 171,837 -- ------------ ------------ 14,613,081 14,003,757 Long-term debt 5,453,834 5,170,364 Loan payable 124,322 192,355 Deferred revenue 1,760,685 1,343,816 ------------ ------------ 21,951,922 20,710,292 ------------ ------------ Stockholders' equity Capital stock 6,962,836 6,752,933 Treasury stock (88,780) (88,780) Accumulated other comprehensive loss (402,122) (591,822) Retained earnings 4,366,844 3,778,015 ------------ ------------ 10,838,778 9,850,346 ------------ ------------ Total liabilities and stockholders' equity $ 32,790,700 $ 30,560,638 ============ ============ The accompanying notes are an integral part of these interim consolidated financial statements. 4 DECTRON INTERNATIONALE INC. Interim Consolidated Statements of Earnings For the Nine Month Period Ended October 31, 2002 and 2001 (Amounts Expressed in United States Dollars) - -------------------------------------------------------------------------------- Nine Nine Months Months Ended Ended October 31, October 31, 2002 2001 ------------ ------------ Net Sales $ 29,738,616 $ 28,299,060 Cost of sales 21,260,162 18,159,308 ------------ ------------ Gross profit 8,478,454 10,139,752 ------------ ------------ Operating expenses Selling 3,806,318 3,886,551 General and administrative 2,010,008 2,418,703 Depreciation and amortization 1,028,214 1,148,136 Interest expense 816,096 1,170,819 ------------ ------------ 7,660,636 8,624,209 ------------ ------------ Earnings before income taxes 817,818 1,515,543 Income taxes 228,989 189,443 ------------ ------------ Net Earnings $ 588,829 $ 1,326,100 ============ ============ Net earnings per common share, basic and diluted 0.21 0.47 ============ ============ Weighted average number of common shares outstanding 2,814,444 2,795,000 ============ ============ The accompanying notes are an integral part of these interim consolidated financial statements. 5 DECTRON INTERNATIONALE INC. Interim Consolidated Statements of Earnings For the Three Month Period Ended October 31, 2002 and 2001 (Amounts Expressed in United States Dollars) - -------------------------------------------------------------------------------- Three Three Months Months Ended Ended October 31, October 31, 2002 2001 ------------ ------------ Net Sales $ 10,193,297 $ 9,965,921 Cost of sales 7,170,524 6,366,345 ------------ ------------ Gross profit 3,022,773 3,599,576 ------------ ------------ Operating expenses Selling 1,427,858 1,299,141 General and administrative 713,216 972,287 Depreciation and amortization 334,097 374,952 Interest expense 265,961 349,722 ------------ ------------ 2,741,132 2,996,102 ------------ ------------ Earnings before income taxes 281,641 603,474 Income taxes 78,860 75,351 ------------ ------------ Net earnings $ 202,781 $ 528,123 ============ ============ Net earnings per common share, basic and diluted 0.07 0.19 ============ ============ Weighted average number of common shares outstanding 2,814,444 2,795,000 ============ ============ The accompanying notes are an integral part of these interim consolidated financial statements. 6 DECTRON INTERNATIONALE INC. Interim Consolidated Statements of Cash Flows For the Nine Month Period Ending October 31, 2002 and 2001 (Amounts Expressed in United States Dollars) - -------------------------------------------------------------------------------- Nine Nine Months Months Ended Ended October 31, October 31, 2002 2001 ------------ ------------ Operating activities: Net earnings $ 588,829 $ 1,326,100 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 1,028,214 1,148,136 Increase in accounts receivable (1,569,822) (3,047,024) Decrease in income taxes receivable 58,313 193,250 Decrease (increase) in inventory 250,316 (208,275) Increase (decrease) in prepaid expenses and sundry assets (15,098) 15,102 Increase (decrease) in accounts payable and accrued expenses 535,579 47,608 Increase in income taxes payable 171,837 -- Increase in deferred revenue 416,869 909,558 Increase in deferred income taxes 1,225 171,161 ------------ ------------ Net cash provided by operating activities 1,466,262 555,616 ------------ ------------ The accompanying notes are an integral part of these interim consolidated financial statements. 7 DECTRON INTERNATIONALE INC. Interim Consolidated Statements of Cash Flows For the Nine Month Period Ending October 31, 2002 and 2001 (Amounts Expressed in United States Dollars) - -------------------------------------------------------------------------------- Nine Nine Months Months Ended Ended October 31, October 31, 2002 2001 ------------ ------------ Investing activities: Acquisition of property, plant and equipment (1,174,107) (111,987) Acquisition of patents and trademarks (63,658) (44,152) ------------ ------------ Net cash used in investing activities (1,237,765) (156,139) ------------ ------------ Financing activities Issuance of capital stock 278,800 -- Advances from long-term debt 400,000 -- Repayments (Advances) from share purchase plan receivable (68,897) 106,394 Repayments from directors -- (14,020) Advances from loans receivable (5,740) (113,975) Advances from bank loans 308,586 1,320,525 Repayments of note payable -- (83,394) Repayments of long-term debt (523,208) (976,894) Advances from (repayments of) loan payable (68,033) 36,398 ------------ ------------ Net cash provided by financing activities 321,508 275,034 ------------ ------------ Effect of foreign currency exchange rate changes (34,364) (655,075) ------------ ------------ The accompanying notes are an integral part of these interim consolidated financial statements. 8 DECTRON INTERNATIONALE INC. Interim Consolidated Statements of Cash Flows For the Nine Month Period Ending October 31, 2002 and 2001 (Amounts Expressed in United States Dollars) - -------------------------------------------------------------------------------- Nine Nine Months Months Ended Ended October 31, October 31, 2002 2001 ------------ ------------ NET INCREASE IN CASH AND CASH EQUIVALENTS 515,641 19,436 Cash and cash equivalents, beginning of period 86,727 145,448 ------------ ------------ CASH AND CASH EQuIVALENTS, END OF PERIOD $ 602,368 $ 164,884 ============ ============ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest paid $ 556,890 $ 901,751 ============ ============ Income taxes paid $ 142,224 $ 413,829 ============ ============ The accompanying notes are an integral part of these interim consolidated financial statements. 9 DECTRON INTERNATIONALE INC. Interim Consolidated Statements of Stockholders' Equity For the Nine Month Period Ending October 31, 2002 (Amounts Expressed in United States Dollars) - -------------------------------------------------------------------------------- Cumulative Other Retained Comprehensive Treasury Number Amount Earnings Income Stock ------------ ------------ ------------ ------------- ------------ Balance January 31, 1999 2,795,000 $ 6,867,529 $ 1,746,761 $ (67,667) $ -- ============ ============ ============ ============ ============ Purchase of 20,000 common shares -- $ -- $ -- $ -- $ (88,780) Share purchase plan receivable -- (499,946) -- -- -- Deferred tax benefit -- 482,026 -- -- -- Foreign currency translation -- -- -- 356,788 -- Net earnings for the year -- -- 1,126,763 -- -- ------------ ------------ ------------ ------------ ------------ Balance January 31, 2000 2,795,000 $ 6,849,609 $ 2,873,524 $ 289,121 $ (88,780) ============ ============ ============ ============ ============ Share purchase plan receivable -- $ (131,099) $ -- $ -- $ -- Foreign currency translation -- -- -- (303,856) -- Net earnings for the year -- -- 857,426 -- -- ------------ ------------ ------------ ------------ ------------ Balance January 31, 2001 2,795,000 $ 6,718,510 $ 3,730,950 $ (14,735) $ (88,780) ============ ============ ============ ============ ============ Share purchase plan receivable -- $ 34,423 $ -- $ -- $ -- Foreign currency translation -- -- -- (577,087) -- Net earnings for the year -- -- 47,065 -- -- ------------ ------------ ------------ ------------ ------------ Balance January 31, 2002 2,795,000 $ 6,752,933 $ 3,778,015 $ (591,822) $ (88,780) ============ ============ ============ ============ ============ Issuance of 50,000 shares 50,000 $ 278,800 $ -- $ -- $ -- Share purchase plan receivable -- (68,897) -- -- -- Foreign currency translation -- -- -- 189,700 -- Net earnings for the period -- -- 588,829 -- -- ------------ ------------ ------------ ------------ ------------ Balance October 31, 2002 2,845,000 $ 6,962,836 $ 4,366,844 $ (402,122) $ (88,780) ============ ============ ============ ============ ============ The accompanying notes are an integral part of these interim consolidated financial statements. 10 DECTRON INTERNATIONALE INC. Notes to Interim Consolidated Financial Statements As at October 31, 2002 and January 31, 2002 (Amounts Expressed in United States Dollars) - -------------------------------------------------------------------------------- 1. Summary of significant accounting policies a) Basis of Consolidated Financial Statements Presentation These consolidated financial statements include the accounts of Dectron Internationale Inc., Dectron Inc. Consolidated, Circul-aire Group and International Water Maker's Inc.. Dectron Inc. Consolidated is comprised of Dectron Inc. and of its wholly-owned subsidiaries, Refplus Inc., Thermoplus Air Inc., Dectron U.S.A. Inc., and IPAC 2000 Inc. As of February 1st, 2002, Fiber Mobile Ltd. and Le Groupe Prodapec (2000) Inc. were wound up in Dectron Inc. Circul-aire Group is comprised of Cascade Technologies Inc., and of its wholly-owned subsidiaries, Circul-Aire Inc. Purafil Canada Inc. As of February 1st, 2002, 9048-3140 Quebec Inc. was wound up into Dectron Internationale Inc. and 122248 Canada Inc. was wound up into Cascade Technologies Inc. All inter-company profits, transactions and account balances have been eliminated. b) Foreign Currency Translation The company maintains its books and records in Canadian dollars. The operation of the company's subsidiary in the United States is an integrated corporation. As a result, monetary assets and liabilities in foreign currency are translated into Canadian dollars at exchange rates in effect at the balance sheet date, whereas non-monetary assets and liabilities are translated at the average exchange rates in effect at transaction dates. Income and expenses in foreign currency are translated at the average rate effective during the year with the exception of depreciation and amortization, which is translated at the historical rate. Gains and losses resulting from the translation of foreign currency transactions are included in earnings. The translation of the financial statements from Canadian dollars into United States dollars is performed for the convenience of the reader. Balance sheet accounts are translated using closing exchange rates in effect at the balance sheet date and income and expense accounts are translated using an average exchange rate prevailing during each reporting period. No representation is made that the Canadian dollar amounts could have been, or could be, converted into United States dollars at the rates on the respective dates and or at any other certain rates. Adjustments resulting from the translation are included in the accumulated other comprehensive income in stockholder's equity. 11 DECTRON INTERNATIONALE INC. Notes to Interim Consolidated Financial Statements As at October 31, 2002 and January 31,2002 (Amounts Expressed in United States Dollars) - -------------------------------------------------------------------------------- 2. Segmented information October 31, October 31, 2002 2001 ------------ ------------ a) The breakdown of sales by geographic area is as follows: Canada $ 10,798,036 $ 8,215,669 United States of America 17,638,443 17,995,219 International 1,302,137 2,088,172 ------------ ------------ $ 29,738,616 $ 28,299,060 ============ ============ b) The breakdown of identifiable assets by geographic area is as follows: Canada $ 24,703,745 $ 25,270,904 United States of America 8,086,955 8,424,120 ------------ ------------ $ 32,790,700 $ 33,695,024 ============ ============ 3. Subsequent Event Subsequent to October 31, 2002, Dectron Internationale sold a division for a total consideration of $2,200,000 CDN. 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with the financial statements and notes thereto and the other historical financial information of Dectron Internationale Inc. contained elsewhere in this Form 10-QSB. The statements contained in this Form 10-QSB that are not historical and are forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, including statements regarding Dectron Internationale Inc. expectations, intentions, beliefs or strategies regarding the future. Forward-looking statements include Dectron Internationale Inc.'s statements regarding liquidity, anticipated cash needs and availability and anticipated expense levels. All forward-looking statements included in this Form 10-QSB are based on information available to Dectron Internationale Inc. on the date hereof, and Dectron Internationale Inc. assumes no obligation to update any such forward-looking statement. It is important to note that Dectron Internationale Inc's actual results could differ materially from those in such forward-looking statements. All dollar amounts stated throughout this Form-10QSB are in US dollars unless otherwise indicated. Results of Operations Nine-month period ended October 31, 2002 compared to Nine-month period ended October 31, 2001. Revenues for the nine-month period ended October 31, 2002 were $29,738,616 a 5.09% increase over the nine- month period ended October 31, 2001 of $28,299,060. Gross profit decreased for the nine-month period ended October 31, 2002 by $1,661,298 to $8,478,454 over the same period in 2001. This represents a decrease of 16.38%, expressed in relation to sales. Selling expenses decreased by $80,233 for the nine-month period ended October 31, 2002 from $3,886,551 to $3,806,318. As a percentage of revenues, selling expenses decreased from 13.73% to 12.80% during the nine-month period ended October 31, 2002. General and administrative expenses decreased by $408,695 from $2,418,703 to $2,010,008. As a percentage of revenues, general and administrative decreased from 8.55% to 6.76%. Depreciation and amortization expenses decreased by $119,922 from $1,148,136 to $1,028,214. As a percentage of revenues, depreciation and amortization expenses decreased from 4.06% to 3.46%. Financing expenses decreased by $354,723 from $1,170,819 to $816,096. As a percentage of revenues, financing expenses decreased from 4.14% to 2.74%. Earnings before income taxes were of $817,818, a decrease of $697,725 compared to the nine-month period ended October 31, 2001. Relative to sales, earnings before income taxes decreased from 5.36% for the nine-month period ended October 31, 2001 to 2.75% in the nine-month period ended October 31, 2002. Provision for Income taxes as a percentage of taxable earnings increased from 12.50% for the nine-month period ended October 31, 2001 to 28% for 2002. Tax expenses increased by $39,546 because of the increase in tax rate applicable. As a result of the above factors, the Company's net earnings decreased from $1,326,100 to $588,829 a decrease of $737,271 or 55.60%. Three-month period ended October 31, 2002 compared to Three-month period ended October 31, 2001. Revenues for the three-month period ended October 31, 2002 were $10,193,297 a 2.28% increase over revenue for the three-month period ended October 31, 2001 of $9,965,921. Gross profit decreased by $576,803 to $3,022,773 over the same period. Gross profit decreased by 16.02% compared to an increase in sales of 2.28%. 13 Selling expenses increased by $128,717 in the three-month period ended October 31, 2002. As a percentage of revenues, selling expenses increased from 13.04% to 14.01% General and administrative expenses decreased by $259,071 to $713,216. As a percentage of revenues, general and administrative decreased from 9.76% to 7.00%. Depreciation and amortization expenses decreased by $40,855 from $374,952 to $334,097. As a percentage of revenues, depreciation and amortization expenses decrease from 3.76% to 3.28%. Financing expenses decreased by $83,761 from $349,722 to $265,961. As a percentage of revenues, financing expenses decreased from 3.51% to 2.61%. Earnings before income taxes were of $281,641, a decrease of $321,833 compared to the three-month period ended October 31, 2001. Relative to sales, income before income taxes decreased from 6.06% for the three-month period ended October 31, 2001 to 2.76% in the three-month period ended October 31, 2002. Provision for income taxes as a percentage of taxable earnings increased from 12.49% for the three-month period ended October 31, 2001 to 28.00% for the three-month period ended October 31, 2002. As a result of the above factors, the Company's net earnings decreased from $528,123 to $202,781, a decrease of 61.60%. Liquidity and Capital Resources The Company had a positive net change in cash of $515,641 for the nine-month period ended October 31, 2002. The principal sources of cash were net earnings in the amount of $588,829, and depreciation and amortization of $1,028,214. Principal uses of cash were an increase in accounts receivable in the amount of $1,569,822 and acquisition of equipment in the amount of $1,174,107. As at October 31, 2002, the Company had an available line of credit of $10,400,00 of which $7,920,010 was used bearing interest at the Canadian prime lending rate plus 0.25% per annum. ITEM 3. CONTROLS AND PROCEDURES Immediately following the signature page of this report is the Certification that is required under Section 302 of the Sarbanes-Oxley Act of 2002. This section of the report contains information concerning the controls evaluation referred to in the Section 302 Certifications and the information contained herein should be read in conjunction with the Certification. Internal controls are designed with the objective of ensuring that assets are safeguarded, transactions are authorized, and financial reports are prepared on a timely basis in accordance with generally accepted accounting principles in the United States. The disclosure procedures are designed to comply with the regulations established by the Securities and Exchange Commission. Internal controls, no matter how designed, have limitations. It is the Company's intent that the internal controls be conceived to provide adequate, but not absolute, assurance that the objectives of the controls are met on a consistent basis. Management plans to continue its review of internal controls and disclosure procedures on an ongoing basis. The Company's principal executive officer and principal financial officer, after supervising and participating in an evaluation of the effectiveness of the Company's internal and disclosure controls and procedures as of October 31, 2002 (the "Evaluation Date"), have concluded that as of the Evaluation Date, the Company's internal and disclosure controls and procedures were effective. There were no significant changes in the Company's internal and disclosure controls or in other factors that could significantly affect such internal and disclosure controls subsequent to the date of their evaluation. 14 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DECTRON INTERNATIONALE INC. Dated: December 13, 2002 By: /s/ Mauro Parissi ------------------------ Mauro Parissi Chief Financial Officer 15 CERTIFICATION I, Ness Lakdawala, Chairman of the Board, Chief Executive Officer and President, of Dectron Internationale Inc., certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Dectron Internationale 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; and 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report. 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date. 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls. 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. Date: December 13, 2002 By: /s/ Ness Lakdawala ------------------ Ness Lakdawala, Chairman of the Board, Chief Executive Officer and President 16 CERTIFICATION I, Mauro Parissi, Chief Financial Officer, of Dectron Internationale Inc., certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Dectron Internationale 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; and 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report. 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date. 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls. 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. Date: December 13, 2002 By: /s/ Mauro Parissi ----------------- Mauro Parissi Chief Financial Officer 17