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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 0-28674
CADUS PHARMACEUTICAL CORPORATION
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(Exact Name of Registrant as Specified on its Charter)
Delaware 13-3660391
-------------------------------- -------------------
(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
767 Fifth Avenue, New York, New York 10153
- ---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (212) 702-4315
--------------
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
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The number of shares of registrant's common stock, $0.01 par value, outstanding
as of October 31, 2002 was 13,144,040.
CADUS PHARMACEUTICAL CORPORATION
INDEX
Page No.
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SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS 4
PART I - CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets - September 30, 2002 (unaudited)
and December 31, 2001 (audited) 5
Condensed Consolidated Statements of Income - Three
Months Ended September 30, 2002 and 2001 (unaudited) 6
Condensed Consolidated Statements of Income - Nine Months
Ended September 30, 2002 and 2001 (unaudited) 7
Condensed Consolidated Statements of Cash Flows - Nine Months
Ended September 30, 2002 and 2001 (unaudited) 8
Notes to Condensed Consolidated Financial Statements (unaudited) 9 - 11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12 - 14
Item 3. Quantitative and Qualitative Disclosures About Market Risk
14
Item 4. Controls and Procedures 14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities and Use of Proceeds 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
2
Page No.
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CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY
ACT OF 2002 17 - 18
EXHIBIT INDEX 19
3
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements in this Quarterly Report on Form 10-Q constitute
"forward-looking statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. Such forward-looking statements involve known
and unknown risks, uncertainties, and other factors which may cause the actual
results, performance, or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, technological uncertainties
regarding the Company's technologies, risks and uncertainties relating to the
Company's ability to realize value from its assets, the Company's ability to
license its technologies to third parties, the Company's future acquisition and
in-licensing of technologies, the Company's capital needs and uncertainty of
future funding, the Company's history of operating losses, the Company's
dependence on proprietary technology and the unpredictability of patent
protection, intense competition in the pharmaceutical and biotechnology
industries, rapid technological development that may result in the Company's
technologies becoming obsolete, as well as other risks and uncertainties
discussed in the Company's prospectus dated July 17, 1996.
4
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CADUS PHARMACEUTICAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
SEPTEMBER 30, DECEMBER 31,
2002 2001
------------ ------------
(Unaudited) (Audited)
Current assets
Cash and cash equivalents $ 23,894,757 $ 24,469,357
License fee receivable -- 500,000
Prepaid and other current assets 150,598 75,000
Investment in marketable securities 679,827 --
------------ ------------
Total current assets 24,725,182 25,044,357
Investment in other ventures 164,322 165,614
Other assets, net 929,942 990,622
------------ ------------
Total assets $ 25,819,446 $ 26,200,593
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accrued expenses and other current liabilities $ 156,428 $ 95,032
Arbitration settlement -- 750,000
Deferred gain on marketable securities 158,135 --
------------ ------------
Total current liabilities 314,563 845,032
------------ ------------
Stockholders' equity
Common stock 132,857 132,857
Additional paid-in capital 59,844,355 59,844,355
Accumulated deficit (33,870,757) (34,321,576)
Other comprehensive income (301,497) --
Treasury stock (300,075) (300,075)
------------ ------------
Total stockholders' equity 25,504,883 25,355,561
------------ ------------
Total liabilities and stockholders' equity $ 25,819,446 $ 26,200,593
============ ============
See accompanying notes to condensed consolidated financial statements
5
CADUS PHARMACEUTICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
September 30,
2002 2001
------------ ------------
(Unaudited) (Unaudited)
License and maintenance fees $ -- $ --
------------ ------------
Total revenues -- --
------------ ------------
Costs and expenses:
General and administrative expenses 191,536 163,639
Loss (gain) from equity in other ventures 2,699 (1,826)
------------ ------------
Total costs and expenses 194,235 161,813
------------ ------------
Operating loss (194,235) (161,813)
------------ ------------
Other income:
Interest income 81,816 185,346
Realized gain on marketable securities 823,189 --
------------ ------------
Total other income 905,005 185,346
------------ ------------
Income before income taxes 710,770 23,533
Income taxes -- --
------------ ------------
Net income $ 710,770 $ 23,533
============ ============
Basic and diluted income per weighted average share of common
stock outstanding $ 0.05 $ 0.00
============ ============
Weighted average shares of common stock outstanding - basic and
diluted 13,144,040 13,144,040
============ ============
See accompanying notes to condensed consolidated financial statements
6
CADUS PHARMACEUTICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Nine Months Ended
September 30,
2002 2001
------------ ------------
(Unaudited) (Unaudited)
License and maintenance fees $ 100,000 $ 100,000
------------ ------------
Total revenues 100,000 100,000
------------ ------------
Costs and expenses:
General and administrative expenses 733,081 812,547
Loss (gain) from equity in other ventures 1,292 (3,805)
------------ ------------
Total costs and expenses 734,373 808,742
------------ ------------
Operating loss (634,373) (708,742)
------------ ------------
Other income:
Interest income 262,003 714,840
Net reimbursement of SIBIA litigation costs -- 125,616
Realized gain on marketable securities 823,189 --
------------ ------------
Total other income 1,085,192 840,456
------------ ------------
Income before income taxes 450,819 131,714
Income taxes -- --
------------ ------------
Net income $ 450,819 $ 131,714
============ ============
Basic and diluted income per weighted average share of common
stock outstanding $ 0.03 $ 0.01
============ ============
Weighted average shares of common stock outstanding - basic and
diluted 13,144,040 13,144,040
============ ============
See accompanying notes to condensed consolidated financial statements
7
CADUS PHARMACEUTICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
2002 2001
------------ ------------
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income $ 450,819 $ 131,714
Adjustments to reconcile net income
to net cash (used in) provided by operating activities:
Amortization of patent costs 60,680 60,679
Realized gain on marketable securities (823,189) --
Loss (gain) from equity in other ventures 1,292 (3,805)
Changes in assets and liabilities:
Decrease in license fee receivable 500,000 --
Increase in prepaid and other current assets (75,598) (34,472)
(Decrease) increase in accrued expenses and other
current liabilities (688,604) 115,652
------------ ------------
Net cash (used in) provided by operating activities (574,600) 269,768
------------ ------------
Net (decrease) increase in cash and cash equivalents (574,600) 269,768
Cash and cash equivalents - beginning of period 24,469,357 24,383,352
------------ ------------
Cash and cash equivalents - end of period $ 23,894,757 $ 24,653,120
============ ============
See accompanying notes to condensed consolidated financial statements
8
CADUS PHARMACEUTICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note - 1 ORGANIZATION AND BASIS OF PREPARATION
The information presented as of September 30, 2002 and for the
three and nine month periods then ended, is unaudited, but
includes all adjustments (consisting only of normal recurring
accruals) that the Company's management believes to be
necessary for the fair presentation of results for the periods
presented. 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 omitted pursuant to the
requirements of the Securities and Exchange Commission,
although the Company believes that the disclosures included in
these financial statements are adequate to make the
information not misleading. The December 31, 2001 balance
sheet was derived from audited financial statements. These
financial statements should be read in conjunction with the
Company's annual report on Form 10-K for the year ended
December 31, 2001.
The consolidated financial statements include the accounts of
the Company and its wholly owned subsidiary Cadus
Technologies, Inc., organized in December 2001. All
inter-company balances and transactions have been eliminated
in consolidation.
The results of operations for the nine month period ended
September 30, 2002 are not necessarily indicative of the
results to be expected for the year ending December 31, 2002.
Note - 2 NET INCOME PER COMMON SHARE
For the three and nine month periods ended September 30, 2002
and 2001 basic net income per share is computed by dividing
the net income by the weighted average number of common shares
outstanding. Diluted net income per share is the same as basic
net income per share since the inclusion of 609,309 shares of
potential common stock equivalents (stock options and
warrants) in the computation at September 30, 2002 would be
anti-dilutive.
Note - 3 LICENSING AGREEMENTS
In December 2001, the Company licensed its yeast-based drug
discovery technologies on a non-exclusive basis to a major
pharmaceutical company. Under the licensing agreement, the
Company received an up-front non-refundable fee of $500,000
that was recorded as revenue in the December 31, 2001
consolidated statement of income as the Company has no further
involvement with the development of the product. The Company
received payment in January 2002. The Company will receive an
additional licensing fee of $1,000,000 if the licensee
achieves a research milestone. The licensee is entitled to use
the technologies for five years from the date of the agreement
if it makes such $1,000,000 payment. If the $1,000,000 payment
is not made by February 2003, the Company has the
9
CADUS PHARMACEUTICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
right to terminate the agreement. Following the initial five
year term, the licensee may renew the license annually upon
payment of an annual licensing fee of $250,000.
In February 2000, Cadus licensed to OSI Pharmaceuticals, Inc.
("OSI"), on a non-exclusive basis, its yeast-based drug
discovery technologies, including various reagents and its
library of over 30,000 yeast strains, and its bioinformatics
software. OSI paid to Cadus a license fee of $100,000 and an
access fee of $600,000. OSI is also obligated to pay an annual
maintenance fee of $100,000 until the earlier of 2010 or the
termination of the license and a supplemental license fee of
$250,000 which was paid in December 2000, after the lifting of
the injunction obtained by SIBIA Neurosciences, Inc.
("SIBIA"), and recorded as license fee revenue. OSI may
terminate the license at any time on 30 days prior written
notice. During each of the nine month periods ended September
30, 2002 and 2001, Cadus recognized $100,000 of license
revenue related to this agreement.
Note - 4 ARBITRATION AWARD
In March 2002, the arbitrator in the arbitration proceeding
commenced against Cadus by Philip N. Sussman, the former
Senior Vice President, Finance and Corporate Development, and
Chief Financial Officer of Cadus, ruled in favor of Mr.
Sussman and awarded him approximately $750,000 in severance
pay, interest and attorneys and other costs and fees. A charge
of $750,000 was recorded in the consolidated statement of
income for the year ended December 31, 2001. The payment to
Mr. Sussman was made during the quarter ended June 30, 2002.
Note - 5 INVESTMENT IN MARKETABLE SECURITIES
The Company had an equity interest in Axiom Biotechnologies,
Inc. ("Axiom"). Due to Axiom's operating losses, the Company's
investment was written down to $0 at December 31, 2001. On
August 30, 2002 Axiom entered into a merger agreement with a
wholly owned subsidiary of Sequenom, Inc. ("Sequenom") whose
shares of common stock are publicly traded on the Nasdaq
National Market. Pursuant to the merger, the Company received
441,446 common shares of Sequenom with a fair market value of
$2.43 per share, in exchange for its shares in Axiom.
Pursuant to the merger, 102,685 of the Company's 441,446
common shares of Sequenom are held in escrow (the "Escrow
Shares") for a one-year period. The Escrow Shares are held to
secure rights to indemnification, compensation and
reimbursement of Sequenom and other indemnities as defined in
the merger agreement.
Upon closing of the transaction, the Company recorded a
realized gain of $823,189 related to the 338,761 common shares
received in the condensed consolidated statement of income
10
CADUS PHARMACEUTICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the three months ended September 30, 2002. The remaining
value of the Escrow Shares received was recorded as a deferred
gain on marketable securities in the accompanying condensed
consolidated balance sheet.
Pursuant to the provisions of Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Debt and
Equity Securities" management deems its investment in Sequenom
to be available for sale and reports its investment at fair
value with net unrealized gains or losses reported within
shareholders' equity. The Company's unrealized loss of
$301,497 on shares received is reflected in other
comprehensive income as of September 30, 2002. The Company's
unrealized loss of $91,390 for escrow shares is reflected as
an offset to the deferred gain on marketable securities as of
September 30, 2002.
Note - 6 ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 142, "Goodwill
and Other Intangible Assets" ("SFAS 142"), addresses the method
of identifying and measuring goodwill and other intangible
assets, eliminates further amortization of goodwill and
intangible assets that have indefinite useful lives, and
requires periodic evaluations of impairment of goodwill
balances and intangible assets. SFAS 142 also requires that
intangible assets with definite useful lives be amortized over
their respective estimated useful lives to their estimated
residual values and reviewed for impairment in accordance with
SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Live Assets to be Disposed Of." SFAS 142 is
effective for fiscal years beginning after December 15, 2001.
There was no impact on the Company financial statements from
the adoption of this statement on January 1, 2002.
Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"), addresses financial accounting and
reporting for the impairment or disposal of long-lived assets.
SFAS 144 supercedes SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of" and is effective for financial statements issued
for fiscal years beginning after December 15, 2001. There was
no impact on the Company financial statements from the adoption
of this statement on January 1, 2002.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company was incorporated in 1992 and until July 30, 1999, devoted
substantially all of its resources to the development and application of novel
yeast-based and other drug discovery technologies. On July 30, 1999, the Company
sold its drug discovery assets and ceased its internal drug discovery operations
and research efforts for collaborative partners.
The Company has incurred operating losses in each year since its inception. At
September 30, 2002, the Company had an accumulated deficit of approximately
$34.0 million. The Company's losses have resulted principally from costs
incurred in connection with its research and development activities and from
general and administrative costs associated with the Company's operations. These
costs have exceeded the Company's revenues and interest income. As a result of
the sale of its drug discovery assets and the cessation of its internal drug
discovery operations and research efforts for collaborative partners, the
Company ceased to have research funding revenues and substantially reduced its
operating expenses. The Company expects to generate revenues in the future only
if it is able to license its technologies.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2001
REVENUES
There were no revenues for the three months ended September 30, 2002 and 2001.
COSTS AND EXPENSES
General and administrative expenses were $191,536 for the three months ended
September 30, 2002 compared to $163,639 for the same period in 2001. The
increase is primarily attributable to an increase in patent costs and
professional fees.
For the three months ended September 30, 2002, the Company recognized a loss of
$2,699 in Laurel Partners Limited Partnership ("Laurel"), compared to income for
the same period in 2001 of $1,826.
OTHER INCOME
Interest income for the three months ended September 30, 2002 was $81,816
compared to interest income of $185,346 for the same period in 2001. This
decrease is attributable primarily to lower interest rates earned on invested
funds.
On August 30, 2002, the Company's equity interest in Axiom Biotechnologies, Inc.
("Axiom") was converted into 441,446 shares of Sequenom, Inc. ("Sequenom")
pursuant to the merger of Axiom and Sequenom. Upon closing of the transaction,
the Company recorded a realized gain of $823,189 related to the 338,761 common
shares received in the condensed consolidated statement of income for the three
months ended September 30, 2002. The remaining value of the 102,685 shares held
in escrow was recorded as a deferred gain on marketable securities in the
accompanying condensed consolidated balance sheet.
12
NET INCOME
Net income for the three months ended September 30, 2002 was $710,770 compared
to the net income of $23,533 for the same period in 2001. This increase in net
income can be attributed primarily to the realized gain on marketable securities
offset by a decrease in interest income.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2001
REVENUES
Revenues for the nine months ended September 30, 2002 and for the nine months
ended September 30, 2001 were $100,000 which is the annual maintenance fee from
OSI.
COSTS AND EXPENSES
General and administrative expenses were $733,081 for the nine months ended
September 30, 2002 compared to $812,547 for the same period in 2001. The
decrease is attributable primarily to a decrease in insurance, professional fees
and shareholder relations offset by increases in patent costs and directors
fees.
For the nine months ended September 30, 2002, the Company recognized a loss of
$1,292 in its investment in Laurel compared to income for the same period in
2001 of $3,805.
OTHER INCOME
Interest income for the nine months ended September 30, 2002 was $262,003
compared to interest income of $714,840 for the same period in 2001. This
decrease is attributable primarily to lower interest rates earned on invested
funds.
On August 30, 2002, the Company's equity interest in Axiom was converted into
441,446 shares of Sequenom pursuant to the merger of Axiom and Sequenom. Upon
closing of the transaction, the Company recorded a realized gain of $823,189
related to the 338,761 common shares received in the condensed consolidated
statement of income for the nine months ended September 30, 2002. The remaining
value of the 102,685 shares held in escrow was recorded as a deferred gain on
marketable securities in the accompanying condensed consolidated balance sheet.
Pursuant to a court order, the Company received in February 2001 a $155,402
reimbursement of SIBIA litigation costs offset by legal costs incurred of
$29,786.
NET INCOME
Net income for the nine months ended September 30, 2002 was $450,819 compared to
net income of $131,714 for the same period in 2001. This increase can be
attributed primarily to a realized gain on marketable securities offset by the
decrease in interest income and the receipt, only in 2001, of the net
reimbursement of SIBIA litigation costs.
13
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2002 the Company held cash and cash equivalents of $23.9
million. The Company's working capital at September 30, 2002 was $24.4 million.
The Company believes that its existing capital resources, together with interest
income, will be sufficient to support its operations through the end of 2003.
This forecast of the period of time through which the Company's financial
resources will be adequate to support its operations is a forward-looking
statement that may not prove accurate and, as such, actual results may vary. The
Company's capital requirements may vary as a result of a number of factors,
including the transactions, if any, arising from the Company's efforts to
acquire technologies or products or to acquire or invest in companies and the
expenses of pursuing such transactions.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's earnings and cash flows are subject to fluctuations due to changes
in interest rates primarily from its investment of available cash balances in
money market funds with portfolios of investment grade corporate and U.S.
government securities. The Company does not believe it is materially exposed to
changes in interest rates. Under its current policies the Company does not use
interest rate derivative instruments to manage exposure to interest rate
changes.
Item 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Based on the evaluation of the Company's disclosure controls and procedures
conducted within 90 days of the date of filing this report on Form 10-Q, the
Company's President and Chief Executive Officer, who also performs functions
similar to those of a principal financial officer, concluded that the Company's
disclosure controls and procedures (as defined in Rules 13a-14(c) and
15(d)-14(c) promulgated under the Securities Exchange Act of 1934) are
effective.
CHANGES IN INTERNAL CONTROLS
There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation, nor were any corrective actions required with regard to
significant deficiencies and material weaknesses.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Nothing to report.
Item 2. Changes in Securities and Use of Proceeds
Nothing to report.
Item 3. Defaults Upon Senior Securities
Nothing to report
14
Item 4. Submission of Matters to a Vote of Security Holders
Nothing to report
Item 5. Other Information
Nothing to report
Item 6. Exhibits and Reports on Form 8-K.
(a) The Exhibit listed in the Exhibit Index is included in this report.
(b) Reports on Form 8-K.
None
15
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.
CADUS PHARMACEUTICAL CORPORATION
(REGISTRANT)
Date: November 14, 2002 By: /s/ Russell D. Glass
------------------------------------
Russell D. Glass
President and Chief Executive Officer
(Authorized Officer and Principal Financial
Officer)
16
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Russell D. Glass, President and Chief Executive Officer of Cadus
Pharmaceutical Corporation, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Cadus Pharmaceutical
Corporation.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report.
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedure 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 the 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
17
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls.
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: November 14, 2002
/s/ Russell D. Glass
----------------------------------------------
Russell D. Glass
President and Chief Executive Officer (Chief
Executive Officer and Chief Financial Officer)
18
EXHIBIT INDEX
The following exhibit is filed as part of this Quarterly Report on Form 10-Q:
Exhibit No. Description
- ----------- -----------
99.1 Certification Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002
19