UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM 10-Q
(Mark One)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange act of 1934
For the quarterly period ended September 30, 2002
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ____________ to ____________
Commission File No. 0-10634
---------------------------
Nevada Chemicals, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Utah 87-0351702
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9149 So. Monroe Plaza Way, Suite B
Sandy, Utah 84070
(Address of principal executive offices, zip code)
(801) 984-0228
(Registrant's telephone number, including area code)
---------------------------
Indicate by check mark whether the registrant (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
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. Yes x No__
The number of shares outstanding of the registrant's par value $0.001
Common Stock as of October 25, 2002 was 7,065,643.
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Nevada Chemicals, Inc.
Table of Contents
Page No.
Part I Financial Information --------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 2002
and December 31, 2001 1
Condensed Consolidated Statements of Operations for the Three
Months Ended September 30, 2002 and September 30, 2001 2
Condensed Consolidated Statements of Operations for the Nine
Months Ended September 30, 2002 and September 30, 2001 3
Condensed Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 2002 and September 30, 2001 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 6
Item 3. Quantitative and Qualitative Disclosure About Market Risk 10
Item 4. Controls and Procedures 10
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
Certifications 12
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NEVADA CHEMICALS, INC.
Condensed Consolidated Balance Sheets
(In Thousands)
September 30, 2002
ASSETS (Unaudited) December 31, 2001
-------------------------------------------
Current assets:
Cash and cash equivalents $ 5,246 $ 7,011
Short-term investments 3,008 -
Receivables 508 1,348
Prepaid expenses 25 49
Current portion of notes receivable 317 490
-------------------------------------------
Total current assets 9,104 8,898
Investment in and advances to joint venture 13,923 12,603
Property and equipment, net 919 950
Notes receivable 440 965
Other assets 218 245
-------------------------------------------
$ 24,604 $ 23,661
===========================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities - accounts payable and accrued expenses $ 1,357 $ 1,873
Deferred income taxes 1,474 1,474
-------------------------------------------
Total liabilities 2,831 3,347
-------------------------------------------
Stockholders' Equity:
Common stock 7 7
Capital in excess of par value 4,660 5,312
Net unrealized gains on investments 10 -
Retained earnings 17,096 15,568
Treasury stock - (573)
-------------------------------------------
Total stockholders' equity 21,773 20,314
-------------------------------------------
$ 24,604 $ 23,661
===========================================
See accompanying notes to condensed consolidated financial statements
1
NEVADA CHEMICALS, INC.
Condensed Consolidated Statements of Operations
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)
Three Months Ended September 30
2002 2001
----------------------------------------
Revenues:
Equity in earnings of joint ventures $ 1,273 $ 740
Other 221 120
----------------------------------------
Total revenues 1,494 860
General and administrative expenses 501 225
----------------------------------------
Income from continuing operations before
provision for income taxes 993 635
Provision for income taxes 349 343
----------------------------------------
Income from continuing operations 644 292
Loss from discontinued operations, net of
income tax benefit of $543 - (938)
----------------------------------------
Net income (loss) $ 644 $ (646)
========================================
Earnings (loss) per common share - basic:
Continuing operations $ 0.09 $ 0.04
Discontinued operations - (0.13)
----------------------------------------
Total $ 0.09 $ (0.09)
========================================
Earnings (loss) per common share - diluted:
Continuing operations $ 0.09 $ 0.04
Discontinued operations - (0.13)
----------------------------------------
Total $ 0.09 $ (0.09)
========================================
Weighted average number of shares outstanding
Basic 7,199,000 7,314,000
Diluted 7,360,000 7,314,000
See accompanying notes to condensed consolidated financial statements
2
NEVADA CHEMICALS, INC.
Condensed Consolidated Statements of Operations
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)
Nine Months Ended September 30
2002 2001
--------------------------------------
Revenues:
Equity in earnings of joint ventures $ 2,320 $ 1,390
Other 653 337
--------------------------------------
Total revenues 2,973 1,727
General and administrative expenses 1,062 598
--------------------------------------
Operating income from continuing operations 1,911 1,129
Other income - gain on sale of assets 460 -
--------------------------------------
Income from continuing operations before
provision for income taxes 2,371 1,129
Provision for income taxes 843 552
--------------------------------------
Income from continuing operations 1,528 577
Loss from discontinued operations, net of
income tax benefit of $755 - (1,229)
--------------------------------------
Net income (loss) $ 1,528 $ (652)
======================================
Earnings (loss) per common share - basic:
Continuing operations $ 0.21 $ 0.08
Discontinued operations - (0.17)
--------------------------------------
Total $ 0.21 $ (0.09)
======================================
Earnings (loss) per common share - diluted:
Continuing operations $ 0.21 $ 0.08
Discontinued operations - (0.17)
--------------------------------------
Total $ 0.21 $ (0.09)
======================================
Weighted average number of shares outstanding
Basic 7,206,000 7,314,000
Diluted 7,366,000 7,314,000
See accompanying notes to condensed consolidated financial statements
3
NEVADA CHEMICALS, INC.
Condensed Consolidated Statements of Cash Flows
(In Thousands)
Nine Months Ended September 30
2002 2001
--------------------------------------
Cash flows from operating activities:
Net income (loss) $ 1,528 $ (652)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 31 884
Equity in earnings of joint ventures (2,320) (2,167)
Gain on sale of assets (460) (101)
Other 219 281
Changes in assets and liabilities:
Receivables 835 (1,076)
Inventories - (89)
Prepaid expenses 24 13
Other assets 27 (23)
Accounts payable and accrued expenses (516) 2,187
--------------------------------------
Net cash used in operating activities (632) (743)
--------------------------------------
Cash flows from investing activities:
Distribution from joint venture 1,000 1,000
Purchase of short-term investments (2,998) -
Increase in notes receivable (1,000) -
Payments of notes receivable 1,461 100
Proceeds from sale of assets 460 253
Purchase of property and equipment - (405)
Investment in joint ventures - (15)
--------------------------------------
Net cash used in investing activities (1,077) 933
--------------------------------------
Cash flows from financing activities:
Purchase of treasury stock (56) -
Proceeds from debt - 34
Repayment of debt - (478)
--------------------------------------
Net cash used in financing activities (56) (444)
--------------------------------------
Net decrease in cash (1,765) (254)
Cash and cash equivalents, beginning of period 7,011 2,113
Cash included in net assets held for sale - (496)
--------------------------------------
Cash and cash equivalents, end of period $ 5,246 $ 1,363
======================================
See accompanying notes to condensed consolidated financial statements
4
NEVADA CHEMICALS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
The interim financial information for the three-month and nine-month
periods ended September 30, 2002, and September 30, 2001, respectively, included
herein is unaudited, and the balance sheet as of December 31, 2001 is derived
from audited financial statements. These condensed consolidated financial
statements are presented in accordance with the requirements for interim
financial statements, and consequently may not include all the disclosures
normally required by generally accepted accounting principles. Such financial
information reflects all adjustments, which are, in the opinion of management,
necessary for a fair presentation of results for the interim periods. These
adjustments are of a normal recurring nature.
In November 2001, the Company sold its explosives business. As a
result, the explosives business is accounted for as a discontinued operation,
with amounts in the financial statements for the three-month and nine-month
periods ended September 30, 2001 restated to reflect discontinued operations
accounting.
The results of operations for the three-month and nine-month periods
ended September 30, 2002 are not necessarily indicative of the results to be
expected for the full year.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents - For purposes of the statement of cash
flows, cash includes all cash and investments with original maturities to the
Company of three months or less.
Short-Term Investments - Investments with scheduled maturities greater
than three months but not greater than one year are recorded as short-term
investments. These investments at September 30, 2002 consisted primarily of
certificates of deposit classified by management as available for sale, and are
recorded at fair value with net unrealized gains or losses reported within
stockholders' equity. Realized gains and losses are included in the statements
of operations.
NOTE 3. INVESTMENT IN JOINT VENTURE
The Company, through its wholly owned subsidiary, Winnemucca Chemicals,
Inc., has a fifty percent interest in Cyanco Company ("Cyanco"), a non-corporate
joint venture engaged in the manufacture and sale of liquid sodium cyanide. The
Company accounts for its investment in Cyanco using the equity method of
accounting. Summarized financial information for Cyanco is as follows (amounts
in thousands):
5
Three Months Nine Months
Ended Sept. 30 Ended Sept. 30
-------------- ---------------
2002 2001 2002 2001
---- ---- ---- ----
Revenues $ 8,932 $ 8,005 $ 22,243 $ 21,783
Costs and expenses 6,386 6,526 17,603 19,004
Net income before taxes 2,546 1,479 4,640 2,779
Company's equity in earnings 1,273 740 2,320 1,390
NOTE 4. GAIN ON SALE OF ASSETS
During the quarter ended June 30, 2002, the Company and its joint
venture partner completed the sale of the assets of West Coast Explosives
Limited, a joint venture that manufactures and supplies explosives in West
Africa. Previously, the Company wrote off its investment in this joint venture,
including a note receivable, due to the joint venture's continuing operating
losses. The Company's share of net cash proceeds from the sale of assets was
approximately $460,000, which gain is included in other income for the quarter
ended June 30, 2002.
NOTE 5. PURCHASE AND RETIREMENT OF COMMON STOCK
In November 2001, the Company's Board of Directors authorized a stock
repurchase plan that provides for the purchase of up to 500,000 shares of the
Company's currently issued and outstanding shares of common stock. Purchases
under the stock repurchase plan may be made from time to time at various prices
in the open market, through block trades or otherwise. These purchases may be
made or suspended by the Company from time to time, without prior notice, based
on market conditions or other factors.
During the nine-month period ended September 30, 2002, the Company
retired 128,617 shares of treasury stock with a total cost basis to the Company
of $652,000. Of these shares, 101,411 shares had been acquired in November 2001
from former employees in connection with the sale of the Company's explosives
business at a cost of $572,000. As part of the stock repurchase program, the
Company purchased and retired 21,497 shares at a cost of $58,000: 1,200 shares
purchased for cash of $2,000 in 2001 and 20,297 shares purchased for cash of
$56,000 during the nine month period ended September 30, 2002. In addition, a
note receivable from an officer of $22,000 was paid in full in June 2002 by the
transfer to the Company of 5,709 shares of the Company's common stock. The
common shares received from the officer were subsequently retired.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
On November 15, 2001, the Company completed the sale of its explosives
business to Union Espanola de Explosivos ("UEE"). The name of the Company was
changed from Mining Services International Corporation to Nevada Chemicals, Inc.
6
as part of this transaction. The operating results of the explosives business
have been presented in the accompanying financial statements as discontinued
operations for all periods prior to the sale. In June 2002, the Company and its
joint venture partner completed the sale of the assets of West Coast Explosives
Limited, and the Company received net proceeds from the sale of approximately
$460,000. Other than the gain on sale of these assets, the Company's share of
earnings of West Coast Explosives Limited was immaterial during all periods
presented.
Continuing operations consist primarily of the Company's proportionate
share of the operating results from its 50% interest in Cyanco, management fee
income from Cyanco, the rental of an office building in Sandy, Utah, investment
income, and related general and administrative expenses. Since the Company does
not own more than 50% of Cyanco, the financial statements of Cyanco are not
consolidated with the financial statements of the Company.
In March 2002, Cyanco announced that it had reached an agreement with
FMC Corporation ("FMC") to purchase the commercial and certain distribution
assets related to FMC's sodium cyanide business. As a result of this
transaction, FMC exited the business, ending its role as a supplier of sodium
cyanide to the Nevada gold mining industry. Cyanco assumed FMC's on-going
contractual obligations under its existing sodium cyanide contracts and began
supplying these customers in April 2002. In addition to the transferred
contracts, Cyanco purchased certain equipment including distribution tank
trailers and storage tanks.
The following discussion of results of operations includes only
continuing operations. For discussions of historical results of operations of
the discontinued explosives business, refer to the Company's Annual Report on
Form 10-K for the year ended December 31, 2000 and Quarterly Reports on Form
10-Q for the quarters ended March 31, 2001 and June 30, 2001.
Results of Operations
Summarized financial information for Cyanco for the three months and
the nine months ended September 30, 2002 and 2001is presented in Note 3 to the
Condensed Consolidated Financial Statements.
Three months ended September 30, 2002
- -------------------------------------
Equity in earnings of joint ventures increased $533,000, or 72%, in the
three months ended September 30, 2002 compared to the three months ended
September 30, 2001. Cyanco revenues increased $927,000, or 12%, in the three
months ended September 30, 2002 compared to the three months ended September 30,
2001. The increase in revenues is due primarily to the additional volume of
sodium cyanide supplied by Cyanco to customers under contracts acquired from FMC
and increased sales to existing customers in response to increased mining
activity resulting from higher prices of gold and seasonal variations. The
increase in revenues was tempered somewhat by lower sales prices to some
customers due to market pressures and to certain contracts containing cost plus
pricing, since the cost of certain key raw materials decreased from levels
experienced in the third quarter of 2001. Even with the increase in revenues and
resultant production increases, Cyanco costs and expenses decreased $140,000, or
2%, in the three months ended September 30, 2002 compared to the three months
ended September 30, 2001. The decrease in operating costs resulted primarily
from improvement in variable manufacturing costs as the cost of certain key raw
materials decreased. As a result, Cyanco net income before taxes increased
$1,067,000, or 72%, during the three months ended September 30, 2002 compared to
the three months ended September 30, 2001.
7
Other revenues increased $101,000, or 84%, in the three months ended
September 30, 2002 compared to the three months ended September 30, 2001. The
increase is attributable to interest and investment income from the Company's
cash equivalents and short-term investments, and income from the rental of an
office building owned by the Company that commenced in November 2001.
General and administrative expenses increased $276,000, or 123%, in the
three months ended September 30, 2002 compared to the three months ended
September 30, 2001. This increase is due to $206,000 of compensation expense
incurred during the third quarter of 2002 to two members of the Company's Board
of Directors, $103,000 each for services and the directors' surrender of all
their outstanding stock options. Also, an additional $94,000 in bad debt
reserves was recorded during the third quarter of 2002 related to possible
uncollectible accounts and notes receivable transferred back to the Company by
UEE pursuant to the terms of the agreement to sell the Company's explosives
business to UEE.
Nine months ended September 30, 2002
- ------------------------------------
Equity in earnings of joint ventures increased $930,000, or 67%, in the
nine months ended September 30, 2002 compared to the nine months ended September
30, 2001. Cyanco revenues increased $460,000, or 2%, in the nine months ended
September 30, 2002 compared to the nine months ended September 30, 2001 due
primarily to those factors discussed above for the three months ended September
30, 2002, including the additional volume of sodium cyanide supplied under
contracts acquired from FMC and increased mining activity and seasonal
variations. Again, the increase in revenues was tempered by lower sales prices
to some customers due to market pressures and to certain contracts containing
cost plus pricing, since the cost of certain key raw materials decreased from
levels experienced in the first three quarters of 2001. Even with the increase
in revenues and resultant production increases, Cyanco costs and expenses
decreased $1,401,000, or 7%, in the nine months ended September 30, 2002
compared to the nine months ended September 30, 2001. The decrease in operating
costs resulted primarily from improvement in variable manufacturing costs as the
cost of certain key raw materials decreased. As a result, Cyanco net income
before taxes increased $1,861,000, or 67%, during the nine months ended
September 30, 2002 compared to the nine months ended September 30, 2001.
Other revenues increased $316,000 or 94% in the nine months ended
September 30, 2002 compared to the nine months ended September 30, 2001. The
increase is attributable to interest and investment income from the Company's
cash equivalents and short-term investments, and income from the rental of the
office building that commenced in November 2001.
General and administrative expenses increased $464,000 or 78% in the
nine months ended September 30, 2002 compared to the nine months ended September
30, 2001. This increase is due primarily to $206,000 of compensation expense
incurred during the third quarter of 2002 to two members of the Company's Board
of Directors who surrendered all their outstanding stock options, as discussed
above. In addition, $219,000 in bad debt reserves was recorded during the nine
months ended September 30, 2002 related to possible uncollectible accounts and
notes receivable transferred back to the Company by UEE pursuant to the terms of
the agreement to sell the Company's explosives business to UEE.
8
Liquidity and Capital Resources
All long-term debt, the Company's line of credit and substantially all
trade accounts payable were assumed by UEE in the sale of the Company's
explosives business. As a result, as of September 30, 2002, current liabilities
consist only of accounts payable and accrued expenses of $1,357,000. These
current liabilities compare favorably to total current assets of $9,104,000 as
of September 30, 2002. Current assets are comprised primarily of cash and cash
equivalents of $5,246,000 and short-term investments that are available for sale
of $3,008,000. The Company received cash of $6,350,000 from the sale of its
explosives business in November 2001.
Cash in excess of short-term operating needs has been invested
primarily in interest bearing investment accounts with maturities ranging from
30 days to one year. The Board of Directors of the Company is currently
evaluating alternative uses for the cash of the Company, including continuing a
stock buy-back program, optimizing short-term investment results,
diversification of the Company's business, further investment in Cyanco and its
expanding operations, distributions to shareholders and other strategies.
Net cash used in operating activities for the nine months ended
September 30, 2002 was $(632,000) compared to net cash used in operating
activities of $(743,000) for the nine months ended September 30, 2001. The
decrease in cash used in operating activities during the first nine months of
2002 is primarily the result of the exclusion of the discontinued explosives
business during the current year.
Net cash used in investing activities for the nine months ended
September 30, 2002 was $(1,077,000) compared to net cash provided by investing
activities of $933,000 for the nine months ended September 30, 2001. The use of
cash in the first nine months of 2002 is attributable to purchases of short-term
investments of $2,998,000, offset by the receipt of a $1,000,000 distribution
from Cyanco, net payments of notes receivable of $461,000 and proceeds from the
sale of assets of $460,000. During the nine months ended September 30, 2002, the
Company advanced Cyanco $1,000,000, which advance was repaid with interest
within a period of two months. In addition, the Company received a $1,000,000
distribution from Cyanco during the second week of October 2002.
Net cash used in financing activities for the nine months ended
September 30, 2002 consisted of $(56,000) used to purchase treasury stock. Net
cash used in financing activities for the nine months ended September 30, 2001
consisted of net debt repayments of $(444,000). As indicated above,
substantially all debt was assumed by UEE in the sale of the explosives
business.
Forward Looking Statements
Within this Quarterly Report on Form 10-Q, there are forward-looking
statements made in an effort to inform the reader of management's expectation of
future events. These expectations are subject to numerous factors and
assumptions, any one of which could have a material effect on future results.
The Company, through its investment in Cyanco, is principally engaged in the
manufacture and sale of liquid sodium cyanide primarily to gold mining
operations in the State of Nevada. If gold mining activities in Nevada, over
which the Company has no control, ceased or substantially decreased, the
business and operations of the Company would be materially adversely affected. A
decrease in the use of liquid sodium cyanide in the processing of gold ore would
have a similar impact. Additional factors which may impact future operating
results include, but are not limited to, decisions made by Cyanco's customers as
to the continuation, suspension, or termination of mining activities in the area
9
served by Cyanco; changes in world supply and demand for commodities,
particularly gold; political, environmental, regulatory, economic and financial
risks; major changes in technology which could affect the mining industry as a
whole or which could affect sodium cyanide specifically; competition; and the
continued availability of qualified technical and other professional employees
of the Company and Cyanco. Actual results could differ materially from those
indicated in the statements made.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
A significant portion of the Company's cash equivalents and short-term
investments bear variable interest rates that are adjusted to market conditions.
Changes in market rates will affect interest earned on these instruments. The
Company does not utilize derivative instruments to offset the exposure to
interest rates. The cash equivalents and short-term investments are placed in a
variety of products with different institutions. Changes in the interest rates
are not expected to have a material impact on the Company's results of
operations.
Item 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures
Based on their evaluations as of a date within 90 days of the filing
date of this report, the principal executive officer and principal financial
officer of the Company have concluded that the Company's disclosure controls and
procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities
Exchange Act) are effective to ensure that information required to be disclosed
by the Company in reports that the Company files or submits under the Securities
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the SEC.
(b) Changes in internal controls
There were no significant changes in the Company's internal controls
or in other factors that could significantly affect these internal controls
subsequent to the date of their most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
1. Exhibits
Exhibit 99.1 - Certification Pursuant to 18 U.S.C. Section
1350 as adopted pursuant to Section 906 of the Sarbanes -
Oxley Act of 2002
Exhibit 99.2 - Certification Pursuant to 18 U.S.C. Section
1350 as adopted pursuant to Section 906 of the Sarbanes -
Oxley Act of 2002
2. Reports on Form 8-K:
No reports on Form 8-K have been filed during the quarter
ended September 30, 2002.
10
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.
NEVADA CHEMICALS, INC.
----------------------
(Registrant)
October 29, 2002 /s/ John T. Day
- ---------------- ----------------
(Date) John T. Day, President (principal
executive officer)
October 29, 2002 /s/ Dennis P. Gauger
- ---------------- ---------------------
(Date) Dennis P. Gauger,
Chief Financial Officer (principal
financial and accounting officer)
11
CERTIFICATION PURSUANT TO RULE 13A-14
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES - OXLEY ACT OF 2002
I, John T. Day, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Nevada
Chemicals, 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
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 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 officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee or registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in
this quarterly report whether or not there were significant changes in internal
12
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.
October 29, 2002 /s/ John T. Day
- ---------------- ----------------
(Date) John T. Day, President (principal
executive officer)
CERTIFICATION PURSUANT TO RULE 13A-14
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES - OXLEY ACT OF 2002
I, Dennis P. Gauger, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Nevada
Chemicals, 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
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 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 officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee or 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,
13
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.
October 29, 2002 /s/ Dennis P. Gauger
- ---------------- ---------------------
(Date) Dennis P. Gauger,
Chief Financial Officer (principal
financial and accounting officer)
14