Back to GetFilings.com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[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 Number 0-14983
NUTRITION 21, INC.
------------------
(Exact Name of Registrant as Specified in its Charter)
New York 11-2653613
- ---------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4 Manhattanville Road
Purchase, New York 10577-2197
- ---------------------------------------- ------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including Area Code: (914) 701-4500
----------------------------
Securities registered pursuant to Section 12(b) of the Act:
None
----
Securities registered pursuant to Section 12(g) of the Act:
Common Stock (Par Value $.005 Per Share)
----------------------------------------
Title of Class
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 twelve (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 ninety (90) days.
Yes X No
--------- -------
The number of shares outstanding of Registrant's Common Stock as of November 13,
2002: 32,948,655.
NUTRITION 21, INC.
INDEX
PART I FINANCIAL INFORMATION PAGE
- ------ --------------------- ----
ITEM 1 Consolidated Financial Statements (unaudited)
Consolidated Balance Sheets at September 30, 2002
and June 30, 2002 3
Consolidated Statements of Operations for the
three months ended September 30, 2002 and 2001 5
Consolidated Statement of Stockholders' Equity for
the three months ended September 30, 2002 6
Consolidated Statements of Cash Flows for the
three months ended September 30, 2002 and 2001 7
Notes to Unaudited Consolidated Financial Statements 8
ITEM 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
ITEM 3 Quantitative and Qualitative Disclosures
About Market Risk 14
ITEM 4 Controls and Procedures 14
PART II OTHER INFORMATION
- ------- -----------------
ITEM 1 Legal Proceedings 15
ITEM 6 Exhibits and Reports on Form 8-K 15
2
NUTRITION 21, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
September 30, June 30,
2002 2002
------------- --------
(unaudited) (Note 1)
ASSETS
Current assets:
Cash and cash equivalents $ 4,632 $ 3,974
Short-term investments 1,000 1,000
Accounts receivable (less allowance
for doubtful accounts of $19) 1,989 2,219
Other receivables 624 1,097
Inventories 839 1,075
Prepaid expenses and other current assets 961 788
------- -------
Total current assets 10,045 10,153
Property and equipment, net 604 654
Patents and trademarks (net of accumulated
amortization of $13,302 at September 30, 2002
and $12,721 at June 30, 2002) 16,627 17,073
Other assets 218 220
------- -------
TOTAL ASSETS $27,494 $28,100
======= =======
See accompanying notes to consolidated financial statements.
3
NUTRITION 21, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
September 30, June 30,
2002 2002
------- -------
LIABILITIES, AND STOCKHOLDERS' EQUITY (unaudited) (Note 1)
Current liabilities;
Accounts payable and accrued expenses $ 1,654 $ 2,102
Contingent payments payable 36 43
Preferred dividends payable 6 6
------- -------
Total current liabilities 1,696 2,151
TOTAL LIABILITIES 1,696 2,151
------- -------
Commitments and contingent liabilities
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value,
authorized 5,000,000 shares
Series G convertible preferred, 1,769 shares
issued: 471 shares outstanding. (aggregate
liquidation value- $477) 471 471
Common stock, $0.005 par value, authorized
65,000,000 shares; 32,948,655 and 33,048,655
shares issued and outstanding at September 30,
2002 and June 30, 2002, respectively 165 165
Additional paid-in capital 63,941 63,936
Accumulated deficit (38,619) (38,501)
Less treasury stock, at cost, 236,000 shares and
136,000 shares at September 30, 2002 and
June 30, 2002 respectively (160) (122)
------- -------
TOTAL STOCKHOLDERS' EQUITY $25,798 $25,949
------- -------
TOTAL LIABILITIES, AND STOCKHOLDERS' EQUITY $27,494 $28,100
======= =======
See accompanying notes to consolidated financial statements.
4
NUTRITION 21, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
Three Months Ended
September 30,
2002 2001
---------- ----------
Net sales $3,240 $3,795
Other revenues 75 154
---------- ----------
3,315 3,949
REVENUES
Cost of goods sold 809 1,240
---------- ----------
GROSS PROFIT 2,506 2,709
Research and development expenses 228 186
Selling, general and administrative expenses 1,769 1,682
Depreciation and amortization 631 656
---------- ----------
OPERATING (LOSS) INCOME (122) 185
Interest income 21 45
Interest expense 11 28
Other income, net -- 1,794
---------- ----------
(LOSS) INCOME BEFORE INCOME TAXES (112) 1,996
Income taxes -- 719
---------- ----------
NET (LOSS) INCOME $(112) $1,277
========== ==========
Basic (loss) earnings per share $(0.00) $0.04
========== ==========
Diluted (loss) earnings per share $(0.00) $0.04
========== ==========
Weighted average number of common shares - basic 32,863,962 32,337,731
========== ==========
Weighted average number of common shares
and equivalents - diluted 32,863,962 33,647,111
========== ==========
See accompanying notes to consolidated financial statements.
5
NUTRITION 21, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(in thousands, except share data)
(unaudited)
Additional
Preferred Stock Paid-In Accumulated Treasury
Series G Common Stock Capital Deficit Stock Total
SHARES $ SHARES $ $ $ $ $
------ ---- ---------- ---- ------- -------- ----- --------
Balance at June 30, 2002 471 $471 33,048,655 $165 $63,936 $(38,501) $(122) $25,949
Preferred stock dividends declared -- -- -- -- -- (6) -- (6)
Issuance of warrants -- -- -- -- 5 -- -- 5
Repurchase of common stock for treasury -- -- (100,000) -- -- -- (38) (38)
Net loss for the period -- -- -- -- -- (112) -- (112)
--- ---- ---------- ---- ------- -------- ----- --------
Balance at September 30, 2002 471 $471 32,948,655 $165 $63,941 $(38,619) $(160) $25,798
=== ==== ========== ==== ======= ======== ===== ========
See accompanying notes to consolidated financial statements.
6
NUTRITION 21, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
September 30,
2002 2001
------ ------
Cash flows from operating activities:
Net (loss) income $ (112) $1,277
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation and amortization 631 656
Gain on sale of assets -- (40)
Issuance of warrants 5 --
Changes in operating assets and liabilities:
Accounts receivable 230 797
Other receivables 473 (945)
Inventories 236 135
Prepaid expenses and other current assets (173) (61)
Other assets 2 (300)
Accounts payable and accrued expenses (448) (730)
------ ------
Net cash provided by operating activities 844 789
------ ------
Cash flows from investing activities:
Contingent payments for acquisition (43) --
Payments for patents and trademarks (99) (86)
Proceeds from sale of assets -- 100
------ ------
Net cash (used in) provided by investing activities (142) 14
------ ------
Cash flows from financing activities:
Debt repayments -- (375)
Preferred stock dividends paid (6) (23)
Repurchase of common stock for treasury (38) (80)
Redemption of redeemable preferred stock -- (88)
------ ------
Net cash used in financing activities (44) (566)
------ ------
Net increase in cash and cash equivalents 658 237
Cash and cash equivalents at beginning of period 3,974 5,355
------ ------
Cash and cash equivalents at end of period $4,632 $5,592
====== ======
See accompanying notes to consolidated financial statements.
7
NUTRITION 21, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands, except share data)
(unaudited)
Note 1 BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted
in the United States for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United
States for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been
included. Operating results for the three-month period ended September
30, 2002 are not necessarily indicative of the results that may be
expected for the year ending June 30, 2003.
The balance sheet at June 30, 2002 has been derived from the audited
financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended June 30, 2002.
Note 2 SIGNIFICANT ACCOUNTING PRONOUNCEMENTS
In October 2002, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." The FASB's new rules on
asset impairment supersede SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of," and is effective for the Company's fiscal year beginning
July 1, 2002. For the quarter ended September 30, 2002, there was no
material impact as a result of the adoption of this standard.
Note 3 INVENTORIES
The components of inventories at September 30, 2002 and June 30, 2002
were:
September 30, June 30,
2002 2002
---- ------
Raw materials $431 $ 444
Finished goods 408 631
---- ------
Total inventories $839 $1,075
==== ======
Note 4 EARNINGS (LOSS) PER SHARE
The following table sets forth the computation of basic and diluted
(loss) earnings per share for the periods indicated.
8
NUTRITION 21, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands, except share data)
(unaudited)
Note 4 EARNINGS (LOSS) PER SHARE , (CONTINUED)
Three months ended
September 30,
2002 2001
---------- ----------
Basic and diluted (loss) earnings per share:
(Loss) income $(112) $1,277
Less: Dividends on preferred shares (6) (23)
Premium on redemption of
preferred stock -- (29)
---------- ----------
(Loss) income available to common stockholders $(118) $1,225
========== ==========
Weighted average shares 32,863,962 32,337,731
========== ==========
Basic (loss) earnings per share $(0.00) $0.04
========== ==========
Diluted (loss) earnings per share:
(Loss) income available to common stockholders $(118) $1,225
Add: Dividends on preferred stock 6 23
---------- ----------
(Loss) income available to common stockholders $(112) $1,248
---------- ----------
Weighted average shares: 32,863,962 32,337,731
Plus incremental shares from
assumed conversions:
Preferred stock -- 1,217,129
Stock option plans -- 92,251
---------- ----------
Adjusted weighted average shares 32,863,962 33,647,111
========== ==========
Diluted (loss) earnings per share ($0.00) $0.04
========== ==========
Diluted loss per share for the three-month period ended September 30,
2002, does not reflect the incremental shares from the assumed
conversion of preferred stock (376,800 shares), as the effect of such
inclusion would be anti dilutive and thus reduce the loss per share.
Note 5 INCOME TAXES
The effective tax rate for the three-month periods ended September 30,
2002 and 2001 was 0% and 36%, respectively. The difference in tax
rates is primarily due to changes in the deferred tax valuation
allowance.
9
NUTRITION 21, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands, except share data)
(unaudited)
Note 6 SEGMENT REPORTING
A summary of business data for the Company's reportable segments is as
follows:
Information by business segment (in thousands):
Three months ended
September 30,
2002 2001
------ ------
REVENUES
Nutritional Products $3,225 $3,884
Pharmaceutical Products 90 65
------ ------
$3,315 $3,949
====== ======
OPERATING (LOSS) INCOME
Nutritional Products (170) $ 162
Pharmaceutical Products 48 23
------ ------
$ (122) $ 185
====== ======
The operations of the Company are principally in the United States.
One nutritional products segment customer accounted for approximately
18% and 28% of the segment revenues in the three-month periods ended
September 30, 2002 and September 30, 2001, respectively.
Note 7 SUPPLEMENTAL CASH FLOW INFORMATION
Three months Ended
September 30,
2002 2001
---- ------
Supplemental disclosure of cash flow information:
Cash paid for interest $ 7 $ 22
Cash paid for income taxes $ -- $ 502
Supplemental schedule of non-cash
financing activities:
Obligation for purchase of property and equipment $ -- $ 144
Obligation for N21 contingent payments $ 36 $1,701
Obligation for Lite Bites contingent payment $ -- $ 663
10
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
consolidated financial statements and related notes thereto of the
Company included elsewhere herein.
GENERAL
The Company's revenues have been primarily derived from the sale of
nutrition products to manufacturers of vitamin and mineral supplements
and sales of nutrition bars and other related dietary supplement
products marketed under the trademark "Lite Bites" (the "Lite Bites
Business") through a previously exclusive relationship with QVC. Inc
("QVC"). The Company has, in addition, received royalty and license
income from users of its patented technology.
Cost of goods sold includes both direct and indirect manufacturing
costs. Research expenses include internal expenditures as well as
expenses associated with third party providers. Selling, general and
administrative expenses include salaries and overhead, third party
fees and expenses, royalty expenses for licenses and trademarks, and
costs associated with the selling of the Company's products. The
Company capitalizes patent costs and trademarks, and amortizes them,
over periods of three to fifteen years.
RESULTS OF OPERATIONS
REVENUES
Net sales for the three months ended September 30, 2002 were $3.2
million, a decrease of $0.6 million when compared to $3.8 million for
the same period a year earlier. The decrease is due primarily to
softness in sales of nutrition bars and other related dietary
supplement products sold through QVC. Partially offsetting the
decrease was a 17% increase in the volume of chromium picolinate sold
in the three months ended September 30, 2002 when compared to the same
period a year earlier.
Other revenues of 75 thousand for the three months ended September 30,
2002, declined 79 thousand when compared to $0.2 million for the same
period a year ago. Royalty fee income due from a customer was lower in
the current quarter when compared to the same period a year earlier.
COST OF GOODS SOLD
Cost of goods sold for the three months ended September 2002 was $0.8
million, a decrease of $0.4 million when compared to $1.2 million for
the same period a year ago. The reduction in cost of goods primarily
reflects the lower sales for the quarter ended September 30, 2002.
Gross margins on product sales were 75.0% and 67.3% for the three
months ended September 30, 2002 and 2001, respectively. The
improvement in gross margin is due primarily to the mix of products
sold in the current quarter compared to the same period a year ago.
RESEARCH AND DEVELOPMENT EXPENSES
Research costs of $0.2 million for the three months ended September
30, 2002, were the same as the research costs for the same period a
year ago. Our continued emphasis on focused spending for research
related activities, was the primary reason for no change. The Company
anticipates increased research spending in connection with its new
business initiative.
SELLING GENERAL AND ADMINISTRATIVE EXPENSES (SG&A)
SG&A expenses for the three months ended September 30, 2002 were $1.8
million, an increase of $0.1 million when compared to $1.7 million for
the same period a year ago. One-time charges for personnel related
activities associated with its new business development initiatives
was the primary reason for the increase.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization for the three months ended September 30,
2002 and September 30, 2001, were $0.6 and $0.7 million, respectively.
11
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
OPERATING (LOSS) INCOME
Operating (loss) for the three months ended September 30, 2002 was
$0.1 million compared to operating income of $0.2 million for the same
period a year ago. Lower revenues and a modest increase in SG&A were
the primary reasons for the shortfall.
INTEREST INCOME, NET OF INTEREST EXPENSE, AND OTHER INCOME, NET
Interest income, net of expense of $10 thousand for the three months
ended September 30, 2002, declined $7 thousand when compared to the
net of $17 thousand for the same period a year ago. Interest rates
were lower in the three months ended September 30, 2002, when compared
to the comparable period a year ago.
Other income for the three months ended September 30, 2001, was $1.8
million due primarily to amounts earned on the settlement of patent
infringement lawsuits, and gains resulting from licensing its rights
to sell lysostaphin for research purposes to an officer of the
Company. There were no such transactions in the three months ended
September 30, 2002.
INCOME TAXES
There were no income taxes for the three month period ending September
30, 2002, compared to income taxes of $0.7 million for the same period
a year ago. The benefit is due to lower profitability in the three
months ended September 30, 2002. The effective tax rates were 0% and
36% for the three month periods ending September 30, 2002 and 2001,
respectively. At September 30, 2002, the difference between the
federal statutory rate of 34% and the actual tax rate is primarily due
to changes in the deferred tax asset valuation allowance.
BUSINESS SEGMENTS
The Company operates in two business segments, Nutritional Products
and Pharmaceutical Products.
NUTRITIONAL PRODUCTS
Nutritional product revenues for the three months ended September 30,
2002, were $3.2 million, a decrease of $0.7 million when compared to
$3.9 million for the same period a year ago. The decrease in revenues
is primarily due to lower sales of nutrition bars and related dietary
supplement products through QVC.
Nutritional products operating loss was $170 thousand for the three
months ended September 30, 2002 as compared to operating income of
$162 thousand for the same period a year ago. The decline in product
sales and the lack of significant license fees earned in the current
quarter were the primary reasons for the shortfall.
PHARMACEUTICAL PRODUCTS
Pharmaceutical product revenues were $90 thousand for the three months
ended September 30, 2002, compared to $65 thousand in the comparable
period a year ago.
Pharmaceutical products operating income was $48 thousand and $23
thousand, for the three months ended September 30, 2002 and 2001,
respectively.
12
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
Cash, cash equivalents and short-term investments at September 30,
2002 were $5.6 million compared to $5.0 million at June 30, 2002. As
of September 30, 2002, the Company had a working capital surplus of
$8.3 million compared to a $8.0 million surplus as of June 30, 2002.
The working capital increase was due primarily to, reductions in
current liabilities.
During the three months ended September 30, 2002, net cash of $142
thousand was used in investing activities compared to net cash of $14
thousand provided by investing activities for the comparable period a
year ago. Funds received from the licensing of the Company's remaining
rights to use lysostaphin for research purposes in the three months
ended September 30, 2001, did not recur in the current period.
Cash used in financing activities for the three months ended September
30, 2002 was $44 thousand compared to $0.6 million for the same period
a year ago. No proceeds were used for the redemption of preferred
stock or debt repayment, and less proceeds were used for the
repurchase of common stock.
The Company's primary sources of financing are cash generated from
continuing operations and up to a $4.0 million revolving line of
credit with Fleet National Bank. At September 30, 2002, the
availability under the revolving line of credit was $1.8 million. At
September 30, 2002, the Company had no borrowings under the revolving
line of credit.
The Company believes that cash generated from operations and cash
available under the line of credit will provide sufficient liquidity
to fund operations in the short-term
Future acquisition activities and any increases in marketing and
research and development expenses over the present levels may require
additional funds. The Company intends to seek any necessary additional
funding through arrangements with corporate collaborators, through
public or private sales of its securities, including equity
securities, or through bank financing arrangements. The Company does
not currently have any specific arrangements for additional financing
and there can be no assurance that additional funding will be
available at all or on reasonable terms.
13
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of changes in value of a financial
instrument, derivative or non-derivative, caused by fluctuations in
interest rates, foreign exchange rates and equity prices. The Company
has no financial instruments that give it exposure to foreign exchange
rates or equity prices.
ITEM 4 - CONTROLS AND PROCEDURES
Nutrition 21, Inc., under the direction of the Chief Executive Officer
and Principal Financial Officer, has reviewed and evaluated its
disclosure controls and procedures and believes as of the date of
management's evaluation, that Nutrition 21, Inc's disclosure controls
and procedures are reasonably designed to be effective for the
purposes for which they are intended. The review and evaluation was
performed within 90 days prior to the filing of this report.
There have not been any significant changes in Nutrition 21, Inc's
internal controls or any other factors that could significantly affect
these controls subsequent to the date of management's evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
14
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The company in the ordinary course of its business has brought patent
infringement actions against companies that it believes have sold
chromium picolinate in violation of the Company's patent rights. As of
this date, the Company has two actions pending and is evaluating
bringing additional actions.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
99.1 Certification of President and Chief Executive Officer
99.2 Certification of Principal Financial Officer
(B) REPORTS
The Company filed a report on Form 8-K on September 18, 2002, relating
to a Rights Agreement, and Amended and Restated By-laws, adopted
September 12, 2002. The report was filed as an Exhibit to the Company's
Form 10-K for the Fiscal Year Ended June 30, 2002.
15
NUTRITION 21, INC
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.
NUTRITION 21, INC.
------------------
Registrant
Date: November 13, 2002 By: /s/ GAIL MONTGOMERY
-------------------
Gail Montgomery
President and Chief Executive Officer
(Principal Executive Officer)
/s/ ALAN J. KIRSCHBAUM
----------------------------------------
Alan J. Kirschbaum
Sr. Vice President, Finance and Treasury
(Principal Financial Officer)
16
CERTIFICATIONS
I, Gail Montgomery, President and Chief Executive Officer of Nutrition 21, Inc.,
certify that:
1. I have reviewed this quarterly r report on Form 10-Q of Nutrition 21, 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 have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether 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: November 13, 2002 /s/ GAIL MONTGOMERY
-------------------
President and Chief Executive officer
17
I, Alan J. Kirschbaum, Senior Vice President Finance and Treasurer, and
Principal Financial Officer of Nutrition 21, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-K of Nutrition 21, 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 have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether 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: November 13, 2002 /s/ ALAN J. KIRSCHBAUM
----------------------
Senior Vice President Finance and Treasury,
and Principal Financial Officer
18
EXHIBIT INDEX
Exhibit Description
- ------ ----------------------------------------------------------------------
99.1 Certification of President and Chief Executive Officer
99.2 Certification of Principal Financial Officer