SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Quarter Ended: March 31, 2003
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Transition Period from _____________ to ____________
Commission File Number 0-10147
-------
DIATECT INTERNATIONAL CORPORATION
----------------------------------------------
(Name of Small Business Issuer in its charter)
California 82-0513109
- ------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
875 S Industrial Parkway, Heber City, Utah 84032
-----------------------------------------------------
(Address of principal executive offices and Zip Code)
(435) 654-4370
----------------------------------------------------
(Registrant's telephone number, including area code)
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 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.
(1) Yes X No (2) Yes X No
--- --- --- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, No Par Value 46,736,667
- --------------------------- ----------------------------
Title of Class Number of Shares Outstanding
as of March 31, 2003
2
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DIATECT INTERNATIONAL CORP.
FINANCIAL STATEMENTS
(UNAUDITED)
The accompanying financial statements have been prepared by the
Company, without audit, in accordance with the instructions to Form 10-QSB
pursuant to the rules and regulations of the Securities and Exchange
Commission and, therefore may not include all information and footnotes
necessary for a complete presentation of the financial position, results of
operations, cash flows, and stockholders' equity in conformity with generally
accepted accounting principles. In the opinion of management, all adjustments
(which include only normal recurring accruals) necessary to present fairly the
financial position and results of operations for the periods presented have
been made. These financial statements should be read in conjunction with the
accompanying notes, and with the historical financial information of the
Company.
3
Diatect International Corp.
Consolidated Balance Sheets
March 31,
2003 December 31,
(Unaudited) 2002
------------ ------------
ASSETS
CURRENT ASSETS
Cash $ 3,442 $ 4,509
Cash in escrow 400,000
Accounts receivable 356,954 352,643
Employee receivable 3,016 1,270
Prepaid interest 22,781 108,048
Prepaid royalties 2,486
Prepaid expenses 48,488 56,399
Inventories 1,189,313 1,259,149
------------ ------------
Total Current Assets 1,626,479 2,182,018
------------ ------------
PROPERTY, PLANT AND EQUIPMENT
Mining property 940 940
Land 150,000
Building 725,500
Equipment 435,043 420,839
Less accumulated depreciation (121,247) (97,142)
------------ ------------
Total Property, Plant and Equipment 1,190,236 324,637
------------ ------------
OTHER ASSETS
Deposits 28,500
Investment in EPA labels 1,736,322 1,736,322
------------ ------------
Total Other Assets 1,736,322 1,764,822
------------ ------------
TOTAL ASSETS $ 4,553,038 $ 4,271,477
============ ============
See condensed notes to interim consolidated financial statements.
4
Diatect International Corp.
Consolidated Balance Sheets
March 31,
2003 December 31,
(Unaudited) 2002
------------ ------------
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 1,331,824 $ 1,400,610
Accounts payable - related party 11,877 37,710
Line of credit 100,410 351,048
Lease payable 16,792 18,067
Interest payable 339,277 310,434
Settlements payable 181,357 181,357
Other accrued liabilities 166,067 190,951
Royalty payable 113,623 113,623
Notes payable 2,228,415 2,132,181
------------ ------------
Total Current Liabilities 4,489,643 4,735,981
------------ ------------
LONG-TERM DEBT
Mortgage note payable 847,000
Lease payable-net of current portion 3,392
------------ ------------
847,000 3,392
------------ ------------
COMMITMENTS AND CONTINGENCIES 134,739 134,739
------------ ------------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, no par value; 100,000,000
shares authorized; 46,736,667 and
45,013,414 shares issued and outstanding 15,391,958 14,971,327
Common stock subscribed (20,000) (20,000)
Stock options 36,070 36,070
Accumulated deficit (16,326,373) (15,590,032)
------------ ------------
Total Stockholders' Equity (Deficit) (918,345) (602,635)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 4,553,038 $ 4,271,477
============ ============
See condensed notes to interim consolidated financial statements.
5
Diatect International Corp.
Consolidated Statements of Operations
Three Months Ended
March 31,
2003 2002
(Unaudited) (Audited)
----------- -----------
REVENUES $ 130,453 $ 46,260
COST OF SALES 67,639 20,817
----------- -----------
GROSS PROFIT 62,814 25,443
----------- -----------
OPERATING EXPENSES
Salaries, wages and benefits 211,551 99,968
Executive compensation 53,503 48,462
Registration fees 9,964 11,025
Depreciation and amortization 24,105 10,970
Legal and professional fees 41,771 24,821
Contract labor 36,870 34,867
Advertising and promotion 68,610 19,636
Travel and promotion 43,190 12,836
Bad debts 45,000 17,450
Other operating expense 69,065 95,122
----------- -----------
Total Operating Expenses 603,629 386,002
----------- -----------
OPERATING LOSS (540,815) (360,559)
----------- -----------
OTHER INCOME (EXPENSES)
Interest expense (195,682) (63,684)
Miscellaneous 156 75
----------- -----------
Total Other Income (Expenses) (195,526) (63,609)
----------- -----------
LOSS BEFORE INCOME TAXES (736,341) (424,168)
INCOME TAXES - -
----------- -----------
NET LOSS $ (736,341) $ (424,168)
=========== ===========
BASIC AND DILUTED
NET LOSS PER SHARE $ (0.02) $ (0.01)
=========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING,
BASIC AND DILUTED 46,187,058 37,916,550
=========== ===========
See condensed notes to interim consolidated financial statements.
6
Diatect International Corp.
Consolidated Cash Flow Statements
For the Three Months Ended
March 31, 2003
2003 2002
(unaudited) (audited)
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (736,341) $ (424,168)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 24,105 10,970
Issuance of stock for services 5,040
Changes in assets and liabilities:
Cash in escrow 400,000 -
Accounts receivable (4,311) 12,236
Employee receivable (1,746) -
Prepaid interest 85,267 10,276
Prepaid royalties (2,486) 245
Prepaid expenses 7,911 -
Inventories 69,836 (723,835)
Deposits 28,500 -
Accounts payable (68,786) 559,908
Accounts payable - related parties (25,833) 5,652
Bank overdraft - 5,448
Interest payable 69,186 32,843
Other accrued liabilities (24,884) 34,667
------------ ------------
NET CASH FLOWS USED BY OPERATING
ACTIVITIES (174,542) (475,758)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (889,704) (28,486)
------------ ------------
NET CASH FLOWS USED BY INVESTING ACTIVITIES (889,704) (28,486)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock for cash 3,000 413,565
Proceeds from stock subscriptions - 50,000
Payment of settlements - (2,000)
Proceeds from lines of credit _ 5,030
Net payment of lease payable (4,667) -
Payments of line of credit (250,638) -
Net payments of notes payable (400,516) (22,500)
Net proceeds from mortgage payable 847,000 -
Net proceeds from notes payable 869,000 60,000
------------ ------------
NET CASH FLOWS PROVIDED BY FINANCING
ACTIVITIES 1,063,179 504,095
------------ ------------
NET INCREASE IN CASH (1,067) (149)
CASH AT BEGINNING OF PERIOD 4,509 888
------------ ------------
CASH AT END OF PERIOD $ 3,442 $ 739
============ ============
See condensed notes to interim consolidated financial statements.
7
Diatect International Corp.
Consolidated Cash Flow Statements
Three Months Ended
March 31, 2003
2003 2002
(Unaudited) (audited)
------------ ------------
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest expense paid $ 6,884 $ -
Income taxes paid $ - $ -
NON-CASH FINANCING ACTIVITIES:
Issuance of common stock for debt and interest $ 412,591 $ 256,695
Issuance of stock for services $ 5,040 $ -
See condensed notes to interim consolidated financial statements.
8
Diatect International Corp.
Notes to the Interim Consolidated Financial Statements
March 31, 2003
NOTE 1 BASIS AND PRESENTATION
The foregoing unaudited interim financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Regulation S-B as
promulgated by the Securities and Exchange Commission. Accordingly, these
financial statements do not include all of the disclosures required by
generally accepted accounting principles for complete financial statements.
These unaudited interim financial statements should be read in conjunction
with the audited financial statements for the period ended March 31, 2003. In
the opinion of management, the unaudited interim financial statements
furnished herein include all adjustments, all of which are of a normal
recurring nature, necessary for a fair statement of the results for the
interim period presented.
The preparation of financial statements in accordance with generally accepted
accounting principles requires the use of estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities known to exist as of the date the financial
statements are published, and the reported amounts of revenues and expenses
during the reporting period. Uncertainties with respect to such estimates and
assumptions are inherent in the preparation of the Company's financial
statements; accordingly, it is possible that the actual results could differ
from these estimates and assumptions that could have a material effect on the
reported amounts of the Company's financial position and results of
operations.
Operating results for the three-month period ended March 31, 2003 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2003.
GOING CONCERN UNCERTAINTY
These financial statements have been prepared on a going concern basis, which
contemplated the realization of assets and the satisfaction of liabilities in
the normal course of business. For the three months ended March 31, 2003, the
Company sustained a net loss of $736,341. As of March 31, 2003 the Company's
accumulated deficit was $16,326,373. These factors, among others indicate
that the Company may be unable to continue as a going concern for a reasonable
period of time. These financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts or
the amounts and classification of liabilities that may be necessary should the
Company be unable to continue as a going concern. The Company's continuation
as a going concern is contingent upon its ability to obtain additional
financing, and to generate revenue and cash flow to meet its obligations on a
timely basis.
9
Diatect International Corp.
Notes to the Interim Consolidated Financial Statements
March 31, 2003
NOTE 2 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Diatect International Corp's principal business activities primarily consist
of developing and marketing pesticide products. Diatect International has its
principal business located in Heber, Utah with Manufacturing, Marketing,
Sales, and Corporate offices located there. At the beginning of 2003 Diatect
International has abandoned all dormant shells to include Enviro-Guard
Corporation, Diatect International, Inc. and D.S.D.
NOTE 3 INVENTORIES
Inventories at March 31, 2003 and December 31, 2002 consist of the following:
March 31, December 31,
2003 2002
----------- -----------
Raw Materials $ 72,696 $ 78,169
Packaging Materials 11,720 12,874
Finished Goods 1,104,897 1,168,106
----------- -----------
Total $ 1,189,313 $ 1,259,149
=========== ===========
Finished goods consist of different forms of application of pesticide
products.
10
Diatect International Corp.
Notes to the Interim Consolidated Financial Statements
March 31, 2003
NOTE 4 NOTES PAYABLE
All of the Company's notes payable are considered short-term. At March 31,
2003 notes payable consisted of the following:
Creditor and Conditions March 31, 2003
- ----------------------- --------------
Balance, December 31, 2002 $ 2,132,181
RCK, LLC, (a shareholder of the Company) unsecured, interest
at 12%, dated September 28, 2001, due on demand, paid by
return of funds and issuance of stock. (600,000)
Kyle Baird, (a shareholder of the Company), unsecured,
interest at 10%, dated July 5, 2002, due on September 30,
2002, paid by issuance of stock. (74,000)
Ronald Davis, (a shareholder of the Company), unsecured,
interest at 10%, dated July 10, 2002, due on December 31,
2002, paid by issuance of stock. (79,250)
Hyrum L. & Helen Mae Andrus, (shareholders of the Company),
interest at 8%, dated April 24, 2002, due on June 24, 2002,
delinquent, partial payment by issuance of stock. (516)
George Ann Pope Charitable Trust, (a shareholder of the
Company), secured by inventory security agreement whereby
$0.25 of each dollar of gross proceeds from the sale of
inventory is allocated and set aside until the note is paid,
interest at 10%, dated January 15, 2003, due on July 15, 2003. 750,000
Stonefield, Inc., secured by deed of trust, interest at
13% with monthly payments of interest only commencing February
17, 2003, dated January 15, 2003, due on January 17, 2005. 847,000
LaJolla Cove Investors, Inc., (a shareholder of the Company),
unsecured, interest at 8%, interest only payments monthly,
convertible to common stock, dated March 19, 2003, due
on demand. 100,000
--------------
Total $ 3,075,415
--------------
Less current portion 2,228,415
--------------
Total long term notes payable $ 847,000
==============
11
Diatect International Corp.
Notes to the Interim Consolidated Financial Statements
March 31, 2003
NOTE 5 LINES OF CREDIT
At July 19, 2002, the Company secured a $250,000 line of credit with Zion
Bank. As of December 31, 2002, the Company has borrowed $250,000. This line
of credit was secured by Company assets and carries a stated interest rate of
6.75%, and paid in full during January 2003.
NOTE 6 LITIGATION
From time to time the Company is subject to various legal proceedings that
arise in the ordinary course of business. Although the Company cannot predict
the outcome of these proceedings with certainty, the Company does not believe
that the disposition of these matters will have a material adverse affect on
its financial position, results of operations or cash flows.
The status of pending legal proceedings against the Company is detailed in
Part II, Item 1. Legal Proceedings, later in this report.
NOTE 7 COMMON STOCK
During the three months ended March 31, 2003, the Company issued 1,680,253
shares of its common stock for debt and interest valued at $412,591 and 28,000
shares of its common stock to directors for services valued at $5,040. The
stock was valued at it fair market value on the date of issuance. The Company
also sold 15,000 shares of its common stock for $3,000 during the same fiscal
period.
NOTE 8 STOCK OPTIONS
There were no options exercised or issued during the quarter ended March 31,
2003.
NOTE 9 COMMITMENTS AND CONTINGENCIES
Purchase of Facilities
During October 2001, the Company relocated both its office and operating
facilities to Heber City, Utah. During January 2003, the Company completed
negotiations for the purchase of its new facilities at a total cost of
$875,500. Terms of the financing agreement call for approximately $9,200 in
interest only payments at 13% annual interest rate. (See Note 4.) Under
terms of the original agreement, the Company occupied the facilities with no
charge until closing. Other terms of the agreement called for a down payment
of $28,500, escrow deposit in the amount of $384,000 and a letter of credit in
the amount of $412,500. The Company paid the down payment of $28,500 during
the fourth quarter of the year ended December 31, 2001 and this amount is
reflected in the attached financial statements as deposits at December 31,
2002. During the same period, the Company also secured cash in the amount of
$400,000, which was considered restricted for an escrow deposit. These funds
were returned to the lender in January 2003. The Company has occupied the
facilities since October 10, 2001.
NOTE 10 SUBSEQUENT EVENTS
Subsequent to the date of these financial statements, the Company sold 15,000
shares of its common stock for $3,000 cash. Other subsequent stock issuances
included 105,105 shares of common stock for debt and interest, 23,000 shares
for services, and 35,000 shares as loan incentives.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-looking Statements
- ---------------------------------------------------------
This report may contain "forward-looking" statements. Examples of forward-
looking statements include, but are not limited to: (a) projections of
revenues, capital expenditures, growth, prospects, dividends, capital
structure and other financial matters; (b) statements of the plans and
objectives of our management or Board of Directors; (c) statements of future
economic performance; (d) statements of assumptions underlying other
statements and statements about us and our business relating to the future;
and (e) any statements using the words "anticipate," "expect," "may,"
"project," "intend" or similar expressions.
Three Months ended March 31, 2003 compared to March 31, 2002
- -----------------------------------------------------------------------------
During the three months ended March 31, 2003 and 2002, our revenues were
$130,453 and $46,260, respectively, with costs of sales of $67,639 and $20,817
with gross profits of $62,814 and $25,443. The increase in our revenues in
the three months ended March 31, 2003 compared to 2002 is attributable to a
number of factors. First, new business has been created with the addition of
various key employees. Second, our base business has been broadened with the
inclusion of several new distribution networks that are aggressively placing
product in their customer base. Third, we have agreements with two new
independent distributors, which service the commercial sector in strategic
areas.
We feel the 282 percent increase in revenues for the three months period ended
March 31 2003 compared to the same periods in the preceeding year is
indicative of our future prospects for the balance of the fiscal year.
Operating Expenses. For the three months ended March 31, 2003 and 2002, total
operating expenses were $603,629 and $386,002, respectively, for total
operating losses of $540,815 and $360,559.
The operating expenses for the three months ended March 31, 2003 were
considerably higher than the prior year period for a number of reasons. We
had large increases in salaries, wages and benefits of $111,583, which is
attributed to increased sales and administrative staffing needed to meet
current demands. The majority of this increase is related to the increased
frequency of shipping, promotions and advertising (especially due to increased
marketing efforts), as well as additional consulting and travel expenses
related to those marketing efforts. The company has also taken a conservative
stance to account for related bad debts.
Other Income and Expenses. Other income/expenses showed a loss of $195,526
and $63,609, respectively, for the three months ended March 31, 2003 and 2002.
Interest expense was the primary component of other expenses for the
respective periods and was higher in 2003 due to increased borrowing and debt
service.
For the three months ended March 31, 2003 and 2002, we had net losses of
$736,341 and $424,168 and loss per share was $0.02 and $0.01, respectively.
13
Liquidity and Capital Resources
- -------------------------------
In the three months ended March 31, 2003, our liquidity was substantially
derived from the issuance of notes payable and the issuance of common stock
for cash. Cash used in operations far exceeded revenues. We hope that the
remainder of the fiscal year will demonstrate the effectiveness of our
marketing and distribution efforts and we continue to anticipate increases in
market development and sales, which will bring us closer to profitability.
At March 31, 2003, we had current assets of $4,553,038, consisting primarily
of accounts receivable of $356,954, prepaid interest of $22,781, and
$1,189,313 in inventory. We had current liabilities of $4,489,643, consisting
primarily of accounts payable of $1,331,824, a line of credit of $100,410,
interest payable of $339,277, and current notes payable of $2,228,415, plus
other accrued liabilities of $166,067, and other long term debt of $847,000,
consisting of the mortgage note payable for the purchase of our facilities.
Accordingly, we have a working capital deficit of $2,863,164. At March 31,
2003, we had property, plant and equipment totaling $1,190,236, net of
depreciation, and other assets of $1,736,322, consisting primarily of our
investment in EPA labels.
Cash used in operations for the quarter ended March 31, 2003 was $174,542. In
2003, our operations have been funded primarily by proceeds from notes
payable.
Cash used by investing activities for the quarter ended March 31, 2003 totaled
$889,704 for the purchase of property plant, and equipment.
Cash flows from financing activities for the quarter ended March 31, 2003
totaled $1,063,179, consisting of cash received from the sale of common stock,
proceeds from newly issued notes payable, offset by payments on previously
issued notes payable and line of credit. Non-cash financing activities
included the issuance of common stock for notes payable and interest totaling
$412,591, and issuance of common stock for services totaling $5,040.
On December 27, 2002 Diatect International entered into a 8% convertible
debenture to raise operating capital for the ongoing operations of the
company. The principal sum of the debenture is $150,000 of which $100,000 was
advanced to the company, $50,000 was placed into escrow for the legal and
registration fees associated with the potential registration. This
registration will include convertible debenture, exercisable warrants. On
April 22, 2003, Diatect International received a draft of the registration
statement. In reviewing the statement it was determined that revisions needed
to be made. It is Diatect International's intent to reduce the number of
shares registered and to maintain the exercise option. At the time of this
filing Diatect International Board of Directors has not ratified the
registration statement.
As a result of our past production increase and delays in scheduled shipments,
we currently have over 700,376 finished product units with a potential
wholesale value of over $4.1 million. We are continuing to market our products
into the wholesale; retail and commercial outlets which is expected to
continue to absorb the excess inventory.
During the balance of fiscal year 2003, we may seek working capital from
several sources, including the equity markets and private investors.
14
We believe that in the remainder of fiscal 2003, we will increase revenues
from operations as we continue to move from the development stage of our
products to a full marketing and sales program. We have initiated an
aggressive marketing campaign to the thousands of small retail stores within
Southern region. With our current inventory and our ability to manufacture
60,000 + units per day, we believe we can rapidly meet the potential demand
for large quantities of our products.
We believe two of the largest and most important markets for our products are
the agricultural and home and garden markets. When we obtain sufficient
working capital, we plan to conduct affordable advertising and maintain a
sales force that can effectively reach these markets. Accordingly, although
we anticipate more revenue from the sale of our products than we have received
in the past, we will not be as profitable without additional cash to fund our
advertising and marketing campaign.
Impact of Inflation
- -------------------
We do not anticipate that inflation will have a material impact on our current
or proposed operations.
Seasonality
- -----------
We have not experienced significant variations in sales of products
attributable to seasonal factors.
ITEM 3. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures. We believe our
disclosure controls and procedures (as defined in Sections 13a-14(c) and 15d-
14(c) of the Securities Exchange Act of 1934, as amended) are adequate, based
on our evaluation of such disclosure controls and procedures on May 14,2003.
(b) Changes in internal controls. 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.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not aware of any other threatened litigation against it or its
subsidiaries.
ITEM 2. CHANGES IN SECURITIES
During the three months ended March 31, 2003, we issued 1,680,253 shares of
our common stock valued at $412,591 in payment of notes payable and accrued
interest. We have sold 15,000 shares of our common stock for cash proceeds of
$3,000. We issued 28,000 shares of our common stock to directors and others
for services valued at $5,040. The above securities have been issued pursuant
to an exemption from registration under Section 4(2) of the Securities Act of
1933, as amended. (See Consolidated Statements of Stockholders' Equity in the
interim financial statements and the notes thereto.)
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
15
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) Exhibits.
Exhibit 99 - CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(b) Reports on Form 8-K.
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated:
DIATECT INTERNATIONAL CORPORATION
Date: May 19, 2003
/s/ Jay W. Downs, Chief Executive Officer, Principal Accounting Officer
/s/ Margie Humpries, Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated:
Date: May 19, 2003
/s/ Jay W. Downs, Director
/s/ David Andrus, Director
/s/ Michael McQuade, Director
/s/ M. Stewart Hyndman, Director
/s/ Frank S. Priestley, Director
/s/ Robert E. Crouch, Director
16
CERTIFICATIONS
I, Jay W. Downs, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Diatect
International Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a)
designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared; b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and c) presented in this
quarterly report our conclusions about the effectiveness of the disclosure
controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function); a) all significant deficiencies in the design or
operation of internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in internal
controls; and b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's internal
control.
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether of 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 19, 2003 /S/Jay W. Downs
Principal Executive Officer
Principal Financial Officer