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 Quarter Ended March 31, 2003
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the transition period from _________________ to ________________
Commission File Number 0-9273
MOCON, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 41-0903312
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
7500 Boone Avenue North, Minneapolis, Minnesota 55428
(Address of principal executive offices) (Zip code)
(763) 493-6370
(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.
YES __X__ NO ___
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
YES ____ NO __X__
5,414,919 Common Shares were outstanding as of March 31, 2003
MOCON, INC.
INDEX TO FORM 10-Q
For the Quarter Ended March 31, 2003
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 2003 (Unaudited) and December 31, 2002 1
Consolidated Statements of Income (Unaudited)
Three months ended March 31, 2003 and 2002 2
Consolidated Statements of Cash Flows (Unaudited)
Three months ended March 31, 2003 and 2002 3
Notes to Consolidated Financial Statements (Unaudited) 4-7
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 8-10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 11
Item 4. Controls and Procedures 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
Certifications 14-15
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MOCON, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
ASSETS 2003 2002
----------- -----------
Current assets:
Cash and temporary cash investments $ 1,802,847 $ 3,082,610
Marketable securities, current 3,230,757 2,215,870
Accounts receivable, net 3,031,570 3,965,444
Other receivables 39,089 37,836
Inventories 3,762,457 3,754,789
Prepaid expenses 288,247 323,050
Deferred income taxes 265,741 265,741
----------- -----------
Total current assets 12,420,708 13,645,340
----------- -----------
Marketable securities, noncurrent 1,953,195 861,418
----------- -----------
Net property, plant and equipment 1,976,184 2,087,669
----------- -----------
Other assets:
Software development costs, net 603,927 638,660
Goodwill, net 1,346,795 1,346,795
Technology rights and other intangibles, net 1,018,152 1,095,876
Other 146,703 145,198
----------- -----------
Total other assets 3,115,577 3,226,529
----------- -----------
TOTAL ASSETS $19,465,664 $19,820,956
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,077,532 $ 1,171,575
Accrued compensation and vacation 485,556 630,321
Other accrued expenses 225,453 354,292
Accrued product warranties 269,066 266,933
Accrued income taxes 489,569 364,117
Dividends payable 353,773 328,211
----------- -----------
Total current liabilities 2,900,949 3,115,449
Deferred income taxes 320,285 325,685
----------- -----------
Total liabilities 3,221,234 3,441,134
----------- -----------
Stockholders' equity:
Common stock - $.10 par value 541,492 547,019
Capital in excess of par value 13,897 45,567
Retained earnings 15,687,372 15,785,601
Accumulated other comprehensive income 1,669 1,635
----------- -----------
Total stockholders' equity 16,244,430 16,379,822
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $19,465,664 $19,820,956
=========== ===========
See accompanying notes to consolidated financial statements.
-1-
MOCON, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
-----------------------
2003 2002
---------- ----------
Sales
Products $4,591,863 $4,387,612
Consulting services 437,287 441,066
---------- ----------
Total sales 5,029,150 4,828,678
---------- ----------
Cost of sales
Products 2,055,423 1,962,039
Consulting services 215,645 270,970
---------- ----------
Total cost of sales 2,271,068 2,233,009
---------- ----------
Gross profit 2,758,082 2,595,669
---------- ----------
Selling, general and administrative expenses 1,510,989 1,470,307
Research and development expenses 346,318 299,156
---------- ----------
Total operating expenses 1,857,307 1,769,463
---------- ----------
Operating income 900,775 826,206
Investment income 31,902 59,630
---------- ----------
Income before income taxes 932,677 885,836
Income taxes 326,000 288,000
---------- ----------
Net income $ 606,677 $ 597,836
========== ==========
Net income per common share:
Basic $ 0.11 $ 0.11
========== ==========
Diluted $ 0.11 $ 0.11
========== ==========
Weighted average shares outstanding:
Basic 5,456,766 5,478,851
========== ==========
Diluted 5,531,344 5,633,997
========== ==========
See accompanying notes to consolidated financial statements.
-2-
MOCON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months
Ended March 31,
--------------------------
2003 2002
----------- -----------
Cash flows from operating activities:
Net income $ 606,677 $ 597,836
Adjustments to reconcile net income to net cash provided by
operating activities:
Loss on intangible assets 18,520 --
Depreciation and amortization 245,816 207,608
Deferred income taxes (5,400) --
Changes in operating assets and liabilities:
Accounts receivable 933,874 333,744
Other receivables (1,253) (10,748)
Inventories (7,668) (269,505)
Prepaid expenses 34,803 28,728
Accounts payable (94,043) (246,390)
Accrued compensation and vacation (144,765) (354,615)
Other accrued expenses (128,839) (102,412)
Accrued product warranties 2,133 (10,924)
Accrued income taxes 125,452 222,559
----------- -----------
Net cash provided by operating activities 1,585,307 395,881
----------- -----------
Cash flows from investing activities:
Purchases of marketable securities (2,987,960) (19,179)
Proceeds from sales of marketable securities 881,330 572,303
Purchases of property and equipment (21,954) (129,149)
Purchases and development of software (18,440) (132,793)
Purchases of patents, trademarks and technology rights -- (13,464)
Other (1,505) (1,769)
----------- -----------
Net cash (used in) provided by investing activities (2,148,529) 275,949
----------- -----------
Cash flows from financing activities:
Proceeds from the exercise of stock options 29,539 27,236
Purchases and retirement of common stock (419,400) --
Dividends paid (328,360) (328,650)
Other 1,680 --
----------- -----------
Net cash used in financing activities (716,541) (301,414)
----------- -----------
Net (decrease) increase in cash and
temporary cash investments (1,279,763) 370,416
Cash and temporary cash investments:
Beginning of period 3,082,610 1,030,596
----------- -----------
End of period $ 1,802,847 $ 1,401,012
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for income taxes $ 205,948 $ 65,441
Supplemental schedule of noncash investing and financing activities:
Unrealized holding gain on available-for-sale securities $ 1,669 $ 5,358
Dividends accrued 353,773 328,524
See accompanying notes to consolidated financial statements.
-3-
MOCON, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Consolidated Financial Statements
The consolidated balance sheet as of March 31, 2003, the consolidated statements
of income for the three-month periods ended March 31, 2003 and 2002, and the
consolidated statements of cash flows for the three-month periods ended March
31, 2003 and 2002 have been prepared by us, without audit. However, all
adjustments (consisting solely of normal recurring adjustments) which are, in
the opinion of management, necessary to present fairly the financial position,
results of operations and cash flows at March 31, 2003, and for all periods
presented, have been made. The results of operations for the period ended March
31, 2003 are not necessarily indicative of operating results for the full year.
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 consolidated financial statements be read in conjunction with the
financial statements and notes included in our December 31, 2002 annual report
to shareholders.
Stock-Based Compensation
We use the intrinsic-value method for employee stock-based compensation pursuant
to Accounting Principles Board Opinion No. 25 (Opinion 25), ACCOUNTING FOR STOCK
ISSUED TO EMPLOYEES. Under the guidelines of Opinion 25, compensation cost for
stock-based employee compensation plans is recognized based on the difference,
if any, between the quoted market price of the stock on the date of grant and
the amount an employee must pay to acquire the stock.
We have adopted the disclosure-only provisions for employee stock-based
compensation and the fair-value method for nonemployee stock-based compensation
of Statement of Financial Accounting Standard (SFAS) No. 123, ACCOUNTING FOR
STOCK-BASED COMPENSATION. No stock options were granted during the three-month
periods ended March 31, 2003 and 2002.
Had we recorded compensation cost based on the estimated fair value on the date
of grant, as defined by SFAS No. 123, our net income and net income per common
share would have been reduced to the pro forma amounts indicated below:
-4-
Three Months Ended
March 31,
--------------------------
2003 2002
----------- -----------
Net income - as reported $ 606,677 $ 597,836
Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards, net
of related tax effects (39,756) (37,194)
----------- -----------
Net income - pro forma $ 566,921 $ 560,642
=========== ===========
Net income per common share - as reported:
Basic $ 0.11 $ 0.11
Diluted $ 0.11 $ 0.11
Net income per common share - pro forma:
Basic $ 0.10 $ 0.10
Diluted $ 0.10 $ 0.10
Note 2 - Inventories
Inventories consist of the following:
March 31, December 31,
2003 2002
---------- ----------
Finished Products $ 357,826 $ 449,870
Work in Process 1,506,289 1,323,996
Raw Materials 1,898,342 1,980,923
---------- ----------
$3,762,457 $3,754,789
========== ==========
Note 3 - Net Income Per Common Share
Basic net income per common share is computed by dividing net income by the
weighted average number of shares of common stock outstanding during the period.
Diluted net income per common share is computed using the treasury stock method
to compute the weighted average common stock outstanding assuming the conversion
of potential dilutive common shares.
The following table presents a reconciliation of the denominators used in the
computation of net income per common share - basic and net income per common
share - diluted for the three- month periods ended March 31, 2003, and 2002:
-5-
Three Months Ended
March 31,
---------------------
2003 2002
--------- ---------
Weighted shares of common stock
outstanding - basic 5,456,766 5,478,851
Weighted shares of common stock
issuable upon exercise of outstanding
stock options 74,578 155,146
--------- ---------
Weighted shares of common stock
outstanding - diluted 5,531,344 5,633,997
========= =========
Note 4 - Goodwill and Intangible Assets
As of March 31, 2003, we have unamortized goodwill in the amount of $1,346,795.
Other intangible assets (all of which are being amortized) are as follows:
As of March 31, 2003
------------------------------------
Carrying Accumulated
Amount Amortization Net
---------- ---------- ----------
Patents $ 513,994 $ 158,033 $ 355,961
Trademarks and tradenames 86,934 55,108 31,826
Technology rights 784,008 329,480 454,528
Other intangibles 270,150 94,313 175,837
---------- ---------- ----------
$1,655,086 $ 636,934 $1,018,152
========== ========== ==========
Total amortization expense for the three months ended March 31, 2003 and 2002
was $45,602 and $44,301, respectively. Estimated amortization expense for each
of the five succeeding fiscal years based on the intangible assets as of March
31, 2003 is as follows:
Estimated Expense
-------------------
2003 179,725
2004 179,369
2005 179,275
2006 165,916
2007 158,256
Note 5 - Marketable Securities
Available-for-sale securities are recorded at fair value. Unrealized holding
gains and losses on available-for-sale securities are excluded from income and
are reported as a separate component of stockholders' equity until realized. At
March 31, 2003, and March 31, 2002, this resulted in a net unrealized gain of
$1,669 and $5,358, respectively, within stockholders' equity.
-6-
Note 6 - Comprehensive Income
Three Months Ended
March 31,
2003 2002
--------- ---------
Net income $ 606,677 $ 597,836
Net unrealized gain (loss) on marketable
securities 34 (3,743)
--------- ---------
Comprehensive income $ 606,711 $ 594,093
========= =========
Note 7 - Warranty Guarantees
We provide a warranty for most of our products. Warranties are for periods
ranging from ninety days to one year, and cover parts and labor for
non-maintenance repairs, at our location. Operator abuse, improper use,
alteration, damage resulting from accident, or failure to follow manufacturer's
directions, are excluded from warranty coverage.
Warranty expense is accrued at the time of sales based on historical claims
experience. Special warranty reserves are also accrued for special rework
campaigns for known major product modifications. We also offer service contracts
for select products when the factory warranty period expires.
Warranty provisions and claims for the three-month periods ended March 31, 2003
and 2002 were as follows:
Three Months Ended
March 31,
2003 2002
-------- --------
Beginning balance $266,933 $251,318
Warranty provisions 60,472 58,048
Warranty claims 58,339 68,971
-------- --------
Ending balance $269,066 $240,395
======== ========
-7-
MOCON, INC.
Item 2. Management's Discussion and Analysis of Results of Operations and
------------------------------------------------------------------
Financial Condition
-------------------
This Form 10-Q includes certain statements that are deemed to be
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. All statements, other than statements of historical facts, included
in this Form 10-Q that address activities, events, or developments that we
expect, believe, or anticipate will or may occur in the future, are
forward-looking statements. The forward-looking statements in this filing are
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Investors are cautioned that any such statements are not
guarantees of future performance and that actual results or developments may
differ materially from those projected in the forward-looking statements because
these statements are subject to a number of risks and uncertainties including
the risk factors described in our annual report on Form 10-K for the year ended
December 31, 2002, including, but not limited to, the factors included in the
section entitled "Certain Important Factors." Persons reading this Form 10-Q
should carefully review the discussion of all of the risk factors described in
such Form 10-K and in our other filings made from time to time with the
Securities and Exchange Commission.
Summary
Sales increased 4 percent for the quarter ended March 31, 2003, compared to the
same period in 2002, and net income increased 1 percent. Both basic and diluted
earnings per share were 11 cents for both periods. International sales were 47
percent of sales in the three months ended March 31, 2003. We use a network of
independent representatives to market and service our products in foreign
countries, and expect that international sales will continue to account for a
significant portion of our revenues for the foreseeable future. We have four
operating locations, all of which are located in the United States.
Results of Operations
Sales for the quarter ended March 31, 2003, were $5,029,150, up 4 percent from
first quarter 2002 sales of $4,828,678. The increase in 2003 sales was primarily
the result of increases in the foreign sales volume of our permeation products
and domestic sales volume of our weighing products, offset somewhat by decreases
in the sales volume of our gas analyzer, sample preparation and gas
chromatography analyzer products. The impact of price increases was not
significant.
Total domestic sales for the quarter ended March 31, 2003, decreased 17 percent
from the first quarter of 2002 to $2,645,077, and total foreign sales increased
44 percent to $2,384,073. Domestic sales were 53 percent of total first quarter
2003 sales, compared to $3,172,697, or 66 percent, of first quarter 2002 sales.
Foreign sales were 47 percent of total first quarter 2003 sales, compared to
$1,655,981, or 34 percent, of first quarter 2002 sales. This increase was due
primarily to an increase in sales to customers in Japan.
We derive our revenue from product sales and consulting services, consisting of
standard laboratory testing services and consulting and analytical services
performed for various customers. In the first quarter of 2003, product sales
were $4,591,863 and consulting services were $437,287, or 91 and 9 percent,
respectively, of our total first quarter 2003 sales. This
-8-
compares to product sales of $4,387,612 and consulting services of $441,066 in
the first quarter of 2002, also 91 and 9 percent of total sales, respectively.
The cost of sales for product sales was 45 percent for the first quarters of
both 2003 and 2002. The cost of sales for consulting services sales was 49
percent and 61 percent for the first quarters of 2003 and 2002 respectively. The
decrease in the cost of consulting services sales between 2002 and 2003, both in
total dollars and as a percent of sales, was primarily the result of tighter
cost controls including lower headcount in 2003, particularly in the consulting
and analytical services area.
Selling, general and administrative expenses were 30 percent of total sales for
both the three-month periods ended March 31, 2003 and 2002. The $40,682 total
dollar increase for the three months ended March 31, 2003 is due primarily to an
increase in general and administrative expenses, including increases in
insurance costs and professional expenses, in 2003 versus 2002.
Research and development (R&D) expenses increased $47,162 in the first quarter
of 2003 compared to the first quarter of 2002. As a percent of sales, R&D
expenditures were 7 percent of sales for the quarter ended March 31, 2003, and 6
percent of sales for the quarter ended March 31, 2002. The increase is primarily
due to R&D expenses associated with the development of new permeation products.
Continued R&D expenditures are necessary as we develop new products to expand in
our niche markets and into new markets. For the foreseeable future, we expect to
spend on an annual basis approximately 6 to 8 percent of sales on R&D.
Investment income decreased $27,728 in the first quarter of 2003 as compared to
the first quarter of 2002. The decrease is the result of lower average
investment yields, offset somewhat by higher average investment balances in 2003
versus 2002.
Our provision for income taxes was 35 percent of income before income taxes for
the three- month period ending March 31, 2003 compared to 32.5 percent for the
same period in 2002. The increase in the rate is due in part to lower benefits
from export tax incentives and lower tax-exempt interest income. We review the
tax rate quarterly and may make adjustments to reflect changing estimates. Based
on current operating conditions and income tax laws, we expect the effective tax
rate for all of 2003 to be in the range of 34 to 36 percent.
Net income was $606,677 for the first quarter of 2003, compared to $597,836 for
the first quarter of 2002. Diluted net income per share was $.11 for both the
first quarters of 2003 and 2002.
Liquidity and Capital Resources
We continue to maintain a strong financial position. Cash flow provided by
operating activities totaled $1,585,307 in the first three months of 2003. Total
cash, temporary cash investments and marketable securities increased $826,901
during the same period, primarily as a result of the net income for the period,
a decrease in accounts receivable, and an increase in accrued income taxes,
offset somewhat by a decrease in accounts payable and accrued compensation,
repurchases of shares of our common stock totaling $419,400, and dividend
payments totaling $328,360. The $933,874 year-to-date decrease in accounts
receivable is primarily due to improved collection of receivables, and to lower
shipments in the first quarter of 2003 compared to the fourth quarter of 2002.
Inventory levels remained consistent between December 31, 2002 and March 31,
2003. The $214,500 year-to-
-9-
date decrease in current liabilities is primarily due to the decrease in accrued
compensation resulting from the payment of incentive bonuses in the first
quarter of 2003.
We have no long-term debt or material commitments for capital expenditures as of
March 31, 2003. Our plant and equipment would not require any major expenditures
to accommodate a significant increase in operating demands. We anticipate that a
combination of our existing cash, temporary cash investments and marketable
securities, plus an expected continuation of cash flow from operations, will
continue to be adequate to fund operations, capital expenditures and dividend
payments for the foreseeable future.
Critical Accounting Policies
Our estimates related to certain significant assets and liabilities are an
integral part of these consolidated financial statements. These estimates are
considered critical to the consolidated financial statements because they
require subjective and complex judgements. We consider our critical accounting
policies to be the policies applicable to allowance for doubtful accounts,
inventory reserves, and the recoverability of long-lived assets. These policies
are discussed in the section of the Management's Discussion and Analysis of
Financial Condition and Results of Operations entitled Critical Accounting
Policies contained in our Annual Report on Form 10-K for the year ended December
31, 2002. No material change occurred in these policies in the periods covered
by this report.
New Accounting Pronouncements
In June 2002, the FASB issued SFAS No. 146, ACCOUNTING FOR COSTS ASSOCIATED WITH
EXIT OR DISPOSAL ACTIVITIES, which supersedes Emerging Issues Task Force (EITF)
Issue No. 94-3, LIABILITY RECOGNITION FOR CERTAIN EMPLOYEE TERMINATION BENEFITS
AND OTHER COSTS TO EXIT AN ACTIVITY. SFAS No. 146 requires that a liability for
a cost associated with an exit activity or disposal activity be recognized and
measured initially at fair value only when the liability is incurred. EITF Issue
No. 94-3 requires recognition of a liability at the date an entity commits to an
exit plan. All provisions of SFAS No. 146 were effective for exit or disposal
activities that were initiated after December 31, 2002. We adopted SFAS No. 146
during the first quarter of fiscal 2003 with no material impact on our
consolidated financial statements.
-10-
MOCON, INC.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
Market Risk Management
Substantially all of our marketable securities are at fixed interest rates.
However, virtually all of our marketable securities mature within two years,
therefore, we believe that the market risk arising from the holding of these
financial instruments is minimal.
We currently sell our products and services in United States dollars;
accordingly, the exposure to foreign currency exchange risk is minimal.
There have been no significant changes since December 31, 2002.
Item 4. Controls and Procedures
-----------------------
a. Evaluation of Disclosure Controls and Procedures. The Company's Chief
Executive Officer and President, and Vice President, Treasurer and Chief
Financial Officer, have evaluated the effectiveness of the Company's
disclosure controls and procedures (as such term is defined in Rules
13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as
amended (the Exchange Act)) as of a date within 90 days prior to the filing
date of this quarterly report (the Evaluation Date). Based on such
evaluation, such officers have concluded that, as of the Evaluation Date,
the Company's disclosure controls and procedures are effective in alerting
them, on a timely basis, to material information relating to the Company
(including its consolidated subsidiaries) required to be included in the
Company's periodic filings under the Exchange Act.
b. Changes in Internal Controls. Since the Evaluation Date, there have not
been any significant changes in the Company's internal controls or in other
factors that could significantly affect such controls.
-11-
MOCON, INC.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a. Exhibits
99.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
b. Reports on Form 8-K
On February 19, 2003, we furnished a report on Form 8-K under Item 9,
Regulation FD Disclosure, to announce that we issued a press release on
February 19, 2003 announcing preliminary results for the fourth quarter
and full year period ended December 31, 2002, and filed under Item 7,
Financial Statements and Exhibits, a copy of the press release dated
February 19, 2003.
-12-
SIGNATURES
Pursuant to the requirements of the SECURITIES EXCHANGE ACT of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MOCON, INC.
Registrant
Date: May 15, 2003 /s/ Robert L. Demorest
-----------------------
Robert L. Demorest,
Chairman, President and Chief
Executive Officer
Date: May 15, 2003 /s/ Dane D. Anderson
---------------------
Dane D. Anderson,
Vice President, Treasurer and Chief
Financial Officer
-13-
I, Robert L. Demorest, certify that:
1. I have reviewed this quarterly report on Form 10-Q of MOCON, 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 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
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 15, 2003
/s/ Robert L. Demorest
- ------------------------
Robert L. Demorest,
Chief Executive Officer and President
-14-
I, Dane D. Anderson, certify that:
1. I have reviewed this quarterly report on Form 10-Q of MOCON, 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 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
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 15, 2003
/s/ Dane D. Anderson
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Dane D. Anderson,
Vice President, Treasurer and Chief Financial Officer
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