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 March 31, 2003
|_| TRANSITON REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
Commission File Number: 0-11883
TELEBYTE, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 11-2510138
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
270 Pulaski Road, Greenlawn, New York 11740
(Address of principal executive offices)
(631) 423-3232
(Issuer's telephone number)
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
As of May 15, 2003, there were outstanding 1,253,631 shares of Common Stock,
$.01 par value.
Transitional Small Business Disclosure Format (check one);
Yes |_| No |X|
TELEBYTE, INC. & SUBSIDIARY
INDEX
PART I FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
Consolidated Balance Sheet
March 31, 2003 (Unaudited)
Consolidated Statements of Operations
Three months ended
March 31, 2003 and 2002 (Unaudited)
Consolidated Statement of Shareholders' Equity
Three months ended
March 31, 2003 (Unaudited)
Consolidated Statements of Cash Flows
Three months ended
March 31, 2003 and 2002 (Unaudited)
Notes to Condensed Consolidated Financial
Statements (Unaudited)
ITEM 2. Management's Discussion and
Analysis or Plan of Operation
ITEM 3. Controls and Procedures
PART II OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
SIGNATURES
CERTIFICATIONS
Part I Financial Information
Item 1. Financial Statements
TELEBYTE, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEET
MARCH 31, 2003
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 77,890
Accounts receivable, net of allowance of $48,000 536,002
Inventories 1,690,997
Prepaid expenses 54,681
Refundable income taxes 171,000
Deferred income taxes 208,000
-----------
TOTAL CURRENT ASSETS 2,738,570
PROPERTY AND EQUIPMENT, net 1,056,980
INTANGIBLE ASSETS, net 78,803
OTHER ASSETS 36,777
-----------
$ 3,911,130
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 518,691
Accrued expenses 177,172
Borrowings under line-of credit 48,134
Current maturities of long-term debt 99,360
Current maturities of capital lease obligations 10,184
-----------
TOTAL CURRENT LIABILITIES 853,541
LONG-TERM BORROWINGS UNDER LINE OF CREDIT 398,327
LONG-TERM DEBT, less current maturities 516,377
DEFERRED SERVICE REVENUE 22,350
DEFERRED INCOME TAXES 76,000
SHAREHOLDERS' EQUITY
Common stock - $.01 par value; 9,000,000 shares authorized;
1,253,631 shares issued and outstanding 12,536
Capital in excess of par value 1,781,672
Retained earnings 250,327
-----------
2,044,535
-----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,911,130
===========
The accompanying notes are an integral part of this financial statement.
TELEBYTE, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months
Ended March 31,
----------------------------
2003 2002
----------- -----------
NET SALES $ 976,565 $ 1,283,318
COST OF SALES 555,427 781,064
----------- -----------
GROSS PROFIT 421,138 502,254
----------- -----------
OPERATING EXPENSES
Selling, general and administrative 388,981 597,748
Research and development 290,028 190,128
----------- -----------
679,009 787,876
----------- -----------
Operating Loss (257,871) (285,622)
----------- -----------
OTHER INCOME (EXPENSE)
Other income 113,185 --
Rental income 12,049 12,049
Interest income 131 228
Interest expense (20,257) (22,916)
----------- -----------
Loss before income taxes (152,763) (296,261)
Income tax provision (benefit) 3,000 (118,500)
----------- -----------
NET LOSS $ (155,763) $ (177,761)
=========== ===========
Loss per common share:
Basic $ (0.12) $ (0.14)
=========== ===========
Diluted $ (0.12) $ (0.14)
=========== ===========
Weighted-average shares:
Basic 1,253,631 1,253,631
=========== ===========
Diluted 1,253,631 1,253,631
=========== ===========
The accompanying notes are an integral part of these financial statements.
TELEBYTE, INC. & SUBSIDIARY
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2003
(Unaudited)
Number of Capital in
shares Common excess of Retained
issued stock par value earnings Total
----------- ----------- ----------- ----------- -----------
Balance at January 1, 2003 1,253,631 $ 12,536 $ 1,781,672 $ 406,090 $ 2,200,298
Net loss (155,763) (155,763)
----------- ----------- ----------- ----------- -----------
Balance at March 31, 2003 1,253,631 $ 12,536 $ 1,781,672 $ 250,327 $ 2,044,535
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of this financial statement.
TELEBYTE, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months
Ended March 31,
2003 2002
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(155,763) $(177,761)
Adjustments to reconcile net loss to
net cash used in operating activities:
Provision for bad debt expense 3,000 3,000
Depreciation and amortization 47,616 41,447
Provision for inventory obsolescence 12,000 9,999
Decrease (increase) in operating assets:
Accounts receivable (33,707) 64,440
Inventories (95,210) 9,625
Prepaid expenses, taxes and other (20,405) (24,459)
Increase (decrease) in operating liabilities:
Accounts payable 188,832 (121,806)
Accrued expenses and taxes payable (13,082) (52,895)
Deferred service revenue 600 7,388
--------- ---------
Net cash used in operating activities (66,119) (241,022)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (741) (5,673)
--------- ---------
Net cash used in investing activities (741) (5,673)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long term debt (27,176) (18,591)
Principal payments on capital lease obligations (2,914) (2,674)
Net (payments) borrowings under line of credit agreement 48,134 (48,192)
Net borrowings under long-term line of credit agreement 4,217 150,432
--------- ---------
Net cash provided by financing activities 22,261 80,975
--------- ---------
Net decrease in cash and cash equivalents (44,599) (165,720)
Cash and cash equivalents at beginning of period 122,489 245,057
--------- ---------
Cash and cash equivalents at end of period $ 77,890 $ 79,337
========= =========
The accompanying notes are an integral part of these financial statements.
TELEBYTE, INC. & SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet as of March 31, 2003, the consolidated statements
of operations, stockholders' equity and cash flows, for the three-months in the
period ended March 31, 2003 and 2002, have been prepared by us without audit. In
the opinion of management, all adjustments (which include only normal recurring
accrual adjustments) necessary to present, fairly, the financial position,
results of operations and cash flows have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted. It is suggested
that these financial statements be read in conjunction with the financial
statements and notes thereto included in our Annual Report on Form 10-KSB for
the fiscal year ended December 31, 2002. The results of operations for the
periods ended March 31, 2003 and 2002 are not necessarily indicative of the
operating results for the full year.
2. EARNINGS PER SHARE
The number of shares used in the Company's basic and diluted earnings per share
computations for three months ended March 31, 2003 and 2002 are as follows:
2003 2002
--------- ---------
Weighted average common shares outstanding
for basic earnings per share 1,253,631 1,253,631
Common stock equivalents from stock options -- --
--------- ---------
Weighted average common shares outstanding
for diluted earnings per share 1,253,631 1,253,631
========= =========
Excluded from the calculation of diluted earnings per share are 616,250 and
524,000 options to purchase the Company's common stock at March 31,2003 and
2002, respectively, as their inclusion would be anti-dilutive.
The Company applies APB Opinion No. 25 in accounting for its fixed price stock
options. Accordingly, no compensation cost for options has been recognized in
the financial statements. The chart below sets forth the Company's net loss and
net loss per share for three months ended March 31, 2003 and 2002, as reported
on a pro forma basis as if the compensation cost of stock options had been
determined consistent with SFAS 123.
2003 2002
---------- ----------
Net Loss, as reported $ (155,763) $ (177,761)
Deduct: Total stock-based employee
compensation expense determined
under fair value based method for
all awards, net of related tax effects (22,673) (1,451)
---------- ----------
Pro forma net loss $ (178,436) $ (179,212)
========== ==========
Basic Loss Per Share:
As Reported $ (0.12) $ (0.14)
Pro forma $ (0.14) $ (0.14)
Diluted Loss Per Share:
As Reported $ (0.12) $ (0.14)
Pro forma $ (0.14) $ (0.14)
3. BUSINESS SEGMENTS
The Company has two reportable segments: Telebyte is a manufacturer of
technology products and Nextday.com distributes Telebyte and other
manufacturer's products through e-commerce.
The Company's chief operating decision maker utilizes net sales and net earnings
(loss) information in assessing performance and making overall operating
decisions and resource allocations. The accounting policies of the operating
segments are the same as those described in the summary of significant
accounting policies as set forth in the December 31, 2002 Annual Report on Form
10-KSB. Information about the Company's segments for three months ended March
31, 2003 and 2002 are as follows:
2003 2002
----------- -----------
Net sales from external customers
Telebyte $ 968,675 $ 1,144,285
Nextday.com 7,890 139,033
----------- -----------
$ 976,565 $ 1,283,318
=========== ===========
Intersegment net sales
Telebyte $ -- $ 1,221
Nextday.com -- --
----------- -----------
$ -- $ 1,221
----------- ===========
Operating loss
Telebyte $ (253,985) $ (272,155)
Nextday.com (3,886) (13,467)
----------- -----------
$ (257,871) $ (285,622)
=========== ===========
Loss before income taxes
Telebyte $ (148,902) $ (282,907)
Nextday.com (3,861) (13,354)
----------- -----------
$ (152,763) $ (296,261)
=========== ===========
Identifiable assets
Telebyte $ 3,881,853 $ 4,492,766
Nextday.com 82,277 177,417
----------- -----------
$ 3,964,130 $ 4,670,183
=========== ===========
4. NEW ACCOUNTING PRONOUNCEMENTS
In January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46).
"Consolidation of Variable Interest Entities." FIN 46 requires certain variable
interest entities to be consolidated by the primary beneficiary of the entity if
the equity investors in the entity do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. FIN 46 is required to be applied to preexisting
entities of the Company as of the beginning of the first quarter after June 15,
2003. FIN 46 is required to be applied to all new entities with which the
Company becomes involved beginning February 1, 2003.
ITEM 2. Management's Discussion and Analysis or Plan of Operation.
When used herein, the words "believe," "anticipate," "think," "intend," "will
be," "expect" and similar expressions identify forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are not guarantees of future performance and involve certain risks
and uncertainties discussed herein and under the caption "Risk Factors" in our
Annual Report on Form 10-KSB for the year ended December 31, 2002, which could
cause actual results to differ materially from those in the forward-looking
statements. Readers are cautioned not to place undue reliance on the
forward-looking statements, which speak only as of the date hereof. The Company
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as required by law. Readers are also urged carefully to review and
consider the various disclosures made by us which attempt to advise interested
parties of the factors which affect our business, including, without limitation,
the disclosures made under the caption "Management's Discussion and Analysis or
Plan of Operation." All references to a fiscal year are to our fiscal year,
which ends December 31.
CRITICAL ACCOUNTING POLICIES
Management's discussion and analysis of our financial conditions and results of
operations are based on our Consolidated Financial Statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. On an ongoing basis, we evaluate our estimates, including those
related to revenue recognition, bad debts, inventories, asset impairments,
income taxes, contingencies, and litigation. We base our estimates on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values for assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
For additional information regarding our critical accounting policies and
estimates, see the section entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in our Annual Report on Form
10-KSB for the year ended December 31, 2002.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2003 and 2002
Net sales during the first quarter ended March 31, 2003 decreased 23.9% to
$976,565 compared to sales of $1,283,318 for the same period in 2002. This
decrease in sales is due primarily due to the general downturn in the economy.
With respect to the sales in each of the Company's product lines results are as
follows. For the Data Communications products; the sale of interface converters
represented 48% of Telebyte's revenue in the first quarter of 2003 as compared
to 37% for the same period in 2002, the sale of short haul modems represented
14% of Telebyte's net sales in the first quarter of 2003 as compared to 13% for
the same period in 2002, the sale of LAN products represented 2% of Telebyte's
net sales in the first quarter of 2003 as compared with 2% for the same period
in 2002, the sale of Surge/Lightning Protectors represented 1% of Telebyte's net
sales in the first quarter of 2003 as compared with 6% for the same period in
2002. For the Broadband Test Equipment product line, Broadband test
equipment represented 31% of Telebyte's net sales in the first quarter of 2003
as compared with 38% for the same period in 2002.
Cost of sales for the first quarter ended March 31, 2003 was $555,427 as
compared to $781,064 during the same period in 2002. Cost of sales as a
percentage of net sales was 56.9% for the first quarter ended March 31, 2003 as
compared to 60.9% of net sales during the same period in 2002. The decrease in
cost of sales was primarily due to product sales mix and improved efficiencies
in manufacturing.
Selling, general and administrative expenses for the first quarter of 2003 were
$388,981 compared to $597,748 during the first quarter of 2002 a decrease of
$208,767. The decrease was the result of aggressive cost reduction measures
taken by management. These measures included reduction of salary and benefits of
selected Company personnel and reduction of outside contractor services. The
cost cutting measures were designed to have minimal affect on operations.
The Company began a program of translating its website www.telebytedatacom.com
into foreign languages so as to broaden its presence in the international
marketplace and provide stronger support for its international distributors.
During this quarter the Company completed the translation of this website into
Russian, Italian and Spanish. Other translation projects are either underway or
planned for the future.
Research and development expenses for the first quarter of 2003 increased to
$290,028 compared to $190,128 during the same quarter in 2002. During this
quarter the Company's research and development efforts principally focused on
the Model 4101-J, a new entry in the broadband product line. The Model 4101-J
will be employed during the design and development of modems and signaling
devices used for the new ADSL+ broadband access strategy in Japan. This unit
simulates the attenuation, phase, impedance and DC resistance of Japanese local
loop used for ADSL+ signaling.
During the first quarter of 2003, the Company had other income totaling
$113,185, of which $113,000 represents income from customer funded Research and
Development. There was no such income during the first quarter of 2002.
The effective tax rate in first quarter of 2003 was 2%, compared with 40% in the
same quarter of 2002. The reduction in effective tax rate is due to the tax
benefit of net operating loss carry backs in the first quarter of 2002. There
was no tax benefit of net operating loss carry backs in the first quarter of
2003.
The net loss was $(155,763), or $(.12) diluted per share, for the first quarter
of 2003 compared to a net loss of $(177,761) or $(.14) diluted per share, in the
same quarter of 2002. The net loss during the first quarter of 2003 is primarily
attributed to the decrease of 23.9% of sales.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used by operating activities for the three months ended March 31, 2003
was $66,119 compared to net cash used of $241,022 in the same period of 2002.
The decrease in net cash used
during the first quarter of 2003 resulted from increased utilization of trade
credit to fund the increase in inventories.
Working capital decreased to $1,885,029 as of March 31, 2003 as compared with
$2,019,502 as of December 31, 2002. The current ratio as of March 31, 2003
decreased to 3.21:1 compared to 4.21:1 as of December 31, 2002.
The Company has an agreement with a financial institution (the "Agreement"),
expiring May 31, 2003, which provides us with a line of credit of up to $500,000
based on our eligible accounts receivable, purchased components and materials
and finished goods inventories, as defined in the Agreement. Further, the
Agreement contains certain financial covenants, which require us to maintain a
minimum level of tangible net worth and places limitations on the ratio of our
total debt to our tangible net worth, as defined in the Agreement. Borrowings
under the line of credit bear interest at the bank's specified prime rate plus
1%. Net borrowings under this line of credit totaled $48,134 at March 31, 2003.
While the Company believes that the Agreement will be renewed upon its
expiration on May 31, 2003, the Company has no guarantee of a renewal and,
accordingly, there is a risk that the corresponding line of credit could be
eliminated as a resource on May 31, 2003. If the line of credit is not renewed,
the Company believes it can obtain alternative financing; however, there can be
no assurances that alternative financing will be available.
In January 1999, we secured an additional reducing revolving line of credit from
the same institution that provides for initial borrowings up to a maximum of
$1,000,000. Availability under the reducing revolving line of credit decreases
by approximately $11,900 per month and the line expires January 2006.
Availability under this line at March 31, 2003 was approximately $404,000.
Borrowings under this loan agreement bear interest at the 30-Day Commercial
Paper Rate plus 2.90%. Net borrowings under this line of credit totaled $398,327
at March 31, 2003.
We believe that cash generated by our future operations, current cash and cash
equivalents, and the existing lines of credit should supply the cash resources
to meet our cash needs for at least the next 12 months. However, this
expectation is not at all guaranteed and it may be that these cash resources
fall short of the Company's cash needs over the next 12 months.
ITEM 3. Controls and Procedures
The Company's management, including the Chief Executive Officer and Chief
Financial Officer, has evaluated the effectiveness of the design and operation
of the Company's disclosure controls and procedures within 90 days prior to the
filing of this quarterly report, and based on their evaluation, the Chief
Executive Officer and Chief Financial Officer have concluded that these
disclosure controls and procedures are effective. There have been no significant
changes in the Company's internal controls or in other factors that could
significantly affect these controls subsequent to the date of their evaluation,
nor were any significant deficiencies or material weaknesses found in the
Company's internal controls.
PART II -- OTHER INFORMATION
ITEM 1. Legal Proceedings
Not applicable.
ITEM 2. Changes in Securities
Not applicable.
ITEM 3. Defaults Upon Senior Securities
Not applicable.
ITEM 4. Submission of Matters to a Vote of Security Holders
Not applicable.
ITEM 5. Other Information
Not applicable.
ITEM 6. Exhibits and Reports on Form 8-K
(i) Exhibits
99.1 Certification of the CEO and the CFO Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TELEBYTE, INC.
By: \s\ Kenneth S. Schneider
------------------------
Kenneth S. Schneider
Chairman of the Board
(Principal Executive Officer)
By: \s\Michael Breneisen
------------------------
Michael Breneisen, President
(Principal Financial and Accounting Officer)
Date: May 15, 2003
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002
I, Dr. Kenneth S. Schneider certify that:
(1) I have reviewed this quarterly report on Form 10-QSB of Telebyte,
Inc., a Delaware Corporation (the "registrant");
(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 officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
(a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
(5) The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of the registrant's board of directors (or
persons performing the equivalent functions):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
(6) The registrant's other certifying officer 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: May 15, 2003
By: /s/ Kenneth S. Schneider
----------------------------
Kenneth S. Schneider
Chairman and Chief Executive Officer
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
Pursuant to Section 302 of the Sarbanes -Oxley Act of 2002
I, Michael Breneisen certify that:
(1) I have reviewed this quarterly report on Form 10-QSB of Telebyte,
Inc., a Delaware Corporation (the "registrant");
(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 officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
a. designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
(5) The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of the registrant's board of directors (or
persons performing the equivalent functions):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
(6) The registrant's other certifying officer 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: May 15, 2003
By: /s/ Michael Breneisen
-------------------------
Michael Breneisen
President and Chief Financial Officer