Back to GetFilings.com
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 0-25852
-------
THE MED-DESIGN CORPORATION
--------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 23-2771475
-------- ----------
(State or other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
2810 Bunsen Avenue, Ventura, CA 93003
---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (805) 339-0375
--------------
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 123-2 of the Exchange Act).
Yes |X| No |_|
On November 6, 2002, 12,492,414 shares of the registrant's common stock, $.01
par value, were outstanding.
THE MED-DESIGN CORPORATION AND SUBSIDIARIES
INDEX TO FORM 10-Q
Page Number
PART I - FINANCIAL INFORMATION
Item 1- Financial Statements
Consolidated Balance Sheets as of September 30, 2002 (unaudited) and as of
December 31, 2001 ................................................................. 3
Consolidated Statements of Operations (unaudited) for the
three months and nine months ended September 30, 2002 and 2001..................... 4
Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three
months and nine months ended September 30, 2002 and 2001........................... 5
Consolidated Statements of Cash Flows (unaudited) for the nine months
ended September 30, 2002 and 2001.................................................. 6
Notes to Consolidated Financial Statements (unaudited)............................. 7-8
Item 2- Management's Discussion and Analysis of Financial Condition and Results
of Operation.......................................................................... 9-10
Item 3- Quantitative and Quantitative Disclosure About Market Risk............................ 10
Item 4- Controls and Procedures............................................................... 11
PART II - OTHER INFORMATION
Item 1- Legal Proceedings..................................................................... 12
Item 4- Submission of Matters to Vote of Security Holders..................................... 12
Item 6- Exhibits and Reports on Form 8-K ..................................................... 13
Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.......................... 15
Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.......................... 16
2
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
THE MED-DESIGN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30,
2002 December 31,
(Unaudited) 2001
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 2,152,260 $ 397,765
Available-for-sale securities 12,271,775 5,492,001
Prepaid expenses and other current assets 910,026 289,801
------------ ------------
Total current assets 15,334,061 6,179,567
Property, plant, and equipment, net of accumulated depreciation
of $991,591 and $1,052,903 at September 30, 2002 and
December 31, 2001, respectively 381,046 391,817
Patents, net of accumulated amortization of $640,442 and $486,608 at
September 30, 2002 and December 31, 2001, respectively 1,667,852 1,688,576
-- --
------------ ------------
Total assets $ 17,382,959 $ 8,259,960
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of capital lease obligations $ 4,455 $ 12,720
Accounts payable 169,696 198,141
Accrued payroll and vacation 83,855 139,046
Other accrued expenses 62,750 22,408
------------ ------------
Total current liabilities 320,756 372,315
Capital lease obligations, less current maturities 2,178 4,086
------------ ------------
Total liabilities 322,934 376,401
------------ ------------
Commitments and Contingencies
Stockholders' equity
Preferred stock, $.01 par value, 5,000,000 shares authorized;
No shares outstanding at September 30, 2002 and December 31, 2001 -- --
Common stock, $.01 par value, 30,000,000 shares authorized;
12,492,414 and 10,963,386 shares issued and outstanding as of
September 30, 2002 and December 31, 2001, respectively 124,924 109,634
Additional paid-in capital 52,588,950 36,869,326
Accumulated deficit (34,977,635) (29,152,181)
Accumulated other comprehensive income (loss) (676,214) 56,780
------------ ------------
Total stockholders' equity 17,060,025 7,883,559
------------ ------------
Total liabilities and stockholders' equity $ 17,382,959 $ 8,259,960
============ ============
The accompanying notes are an integral part of these financial statements.
3
THE MED-DESIGN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------------- -------------------------------------
2002 2001 2002 2001
----------------- ----------------- ---------------- -----------------
Revenue $9,089 $2,040,000 $22,803 $2,090,000
----------------- ----------------- ---------------- -----------------
Operating expense:
General and administrative $1,607,015 $1,546,639 $4,897,496 $4,218,265
Research and development 347,560 325,214 1,110,591 911,414
----------------- ----------------- ---------------- -----------------
Total operating expenses 1,954,575 1,871,853 6,008,087 5,129,679
Income (loss) from operations (1,945,486) 168,147 (5,985,284) (3,039,679)
Interest expense (233) (9,809) (901) (10,272)
Investment income 71,974 67,997 160,731 197,074
----------------- ----------------- ---------------- -----------------
Net income (loss) ($1,873,745) $226,335 ($5,825,454) ($2,852,877)
================= ================= ================ =================
Basic and diluted loss per common share:
Net income (loss) applicable to common shares ($0.15) $0.02 ($0.49) ($0.27)
Weighted average common shares 12,448,990 10,890,419 11,978,725 10,675,565
Weighted average common shares - diluted 12,448,990 11,611,764 11,978,725 10,675,565
Options and warrants to purchase 2,382,831 shares of common stock as of
September 30, 2002 and 1,684,117 shares of common stock as of September 30, 2001
were not included in computing diluted earnings per share as the effect was
antidilutive.
The accompanying notes are an integral part of these
consolidated financial statements.
4
THE MED-DESIGN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------- -------------------------------------
2002 2001 2002 2001
------------------ ---------------- ---------------- -----------------
Net income (loss) ($1,873,745) $226,335 ($5,825,454) ($2,852,877)
Other comprehensive loss:
Unrealized holding losses on
securities (138,623) (23,702) (732,994) (25,919)
------------------ ---------------- ---------------- -----------------
Comprehensive income (loss) ($2,012,368) $202,633 ($6,558,448) ($2,878,796)
================== ================ ================ =================
The accompanying notes are an integral part of these
consolidated financial statements.
5
THE MED-DESIGN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
2002 2001
----------- ------------
Cash flows from operating activities:
Net loss ($5,825,454) ($2,852,877)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 420,710 233,549
Stock-based compensation 1,302,350 1,374,046
Changes in operating assets and liabilities:
Prepaid expenses and other current assets (620,225) (27,832)
Licensing Fee Receivable -- (2,000,000)
Accounts payable (28,445) (86,883)
Accrued expenses (14,849) (152,319)
----------- -----------
Net cash used in operating activities (4,765,913) (3,457,102)
----------- -----------
Cash flows from investing activities:
Purchases of property and equipment (256,105) (18,749)
Additions to patents (133,110) (190,928)
Investment in available-for-sale securities (12,325,703) --
Sale of available-for-sale securities 4,812,935 599,368
----------- -----------
Net cash provided by (used in) investing activities (7,901,983) 389,691
----------- -----------
Cash flows from financing activities:
Capital lease payments (10,173) (1,016)
Warrants and stock options exercised 240,124 2,106,998
Proceeds from private placement-net of issuance
costs paid 14,192,440 --
----------- -----------
Net cash provided by financing activities 14,422,391 2,096,631
----------- -----------
Increase (decrease) in cash 1,754,495 (961,429)
Cash and cash equivalents, beginning of period 397,765 1,728,103
----------- -----------
Cash and cash equivalents, end of period $2,152,260 $ 766,674
----------- -----------
Noncash investing activities:
Change in unrealized gain (loss) on available-for-sale
Securities ($ 732,994) ($ 25,919)
The accompanying notes are an integral part of these financial statements.
6
THE MED-DESIGN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements include
The Med-Design Corporation (hereinafter, including its subsidiaries as the
context indicates, the "Company" or "Med-Design") and its wholly-owned
subsidiaries, MDC Investment Holdings, Inc. and MDC Research Ltd. All
significant intercompany transactions and accounts are eliminated. The
accompanying consolidated financial statements have been prepared on a basis
consistent with that used as of and for the year ended December 31, 2001 and, in
the opinion of management, reflect all adjustments (principally consisting of
normal recurring accruals) considered necessary to present fairly the financial
position of the Company as of September 30, 2002, the results of the Company's
operations for the three and nine month periods ended September 30, 2002 and
cash flows for the nine month period ended September 30, 2002. The results of
operations for the three and nine month periods ended September 30, 2002 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2002. The financial statements included herein have been prepared
in accordance with accounting principles generally accepted in the United States
for interim financial information and the applicable requirements of Regulation
S-X promulgated by the Securities and Exchange Commission. 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. The consolidated balance sheet at December 31, 2001 was derived from
audited financial statements, but does not include all disclosures required by
accounting principles generally accepted in the United States. These
consolidated financial statements should be read in conjunction with the
Company's audited financial statements, which were included as part of the
Company's Annual Report on Form 10-K for the year ended December 31, 2001.
2. Stock Based Compensation
In August 2000 the Company entered into several equity arrangements
with officers of the Company involving grants of stock options and warrants to
purchase common stock. The Company recorded compensation expense in the amount
of $1,247,922 in connection with these transactions in the first nine months of
2002 to reflect vesting of the grants.
3. Stockholders' Equity
On March 25, 2002, the Company completed a private equity placement of
the Company's common stock. The Company sold 1,326,260 shares of its common
stock for $15,000,000. The net proceeds to the Company after the issuance cost
were approximately $14,200,000.
In connection with the offering, on March 22, 2002, the Company
provided to the placement agent, for nominal consideration, a five-year warrant
to purchase 40,000 shares of the Company common stock at an exercise price of
$14.1375 per share for an aggregate value of $319,604. The warrant vested upon
issuance.
On March 15, 2002, the Company issued two warrants to purchase 18,000
shares of common stock each at an exercise price of $12.50 per share to two
consultants. The warrants vest over three years and expire on December 27, 2007.
Compensation expense of $54,428 was recorded during the first nine months of
2002, based on the fair value of the warrant calculated using a Black-Scholes
valuation model in accordance with FAS 123.
4. Unrealized Holding Losses on Securities
On September 7, 2001, the Company entered into an Addendum to the
development and licensing agreement with Medamicus. Under the terms of the
Addendum, Med-Design received an initial payment of $2,000,000, $1,000,000 of
which was paid in 68,027 shares of Medamicus common stock and $1,000,000 which
was paid in cash on October 15, 2001. The Company still holds the majority of
the common stock received from Medamicus and shares subsequently purchased by
Med-Design which common stock has declined significantly in market value.
Medamicus stock accounts for approximately $809,805 in unrealized losses at
September 30, 2002.
7
5. Commitments and Contingencies
In August 2000, the Company's stockholders approved the issuance of a
warrant to purchase 50,000 shares of common stock at an exercise price of $6.26
per share and the issuance of 125,000 shares of common stock to John F. Kelley,
a former director of the Company in connection with the performance of past
consulting services. The compensation arrangement was approved, subject to the
conclusion of negotiations with Mr. Kelley regarding the amount of compensation
to be provided by the Company for such past consulting services. To date, the
Company has been unable to reach an agreement with Mr. Kelley and is unable to
predict whether it will reach such an agreement.
6. Related Party Transactions
On April 15, 2002, pursuant to a Note and Pledge Agreement, the Company
loaned $250,000 to Michael W. Simpson, which will be collateralized by 66,000
shares of the Company's common stock to be issued to Mr. Simpson on August 6,
2003. The Note was made to enable Mr. Simpson to pay his 2001 federal income
taxes. The Note is repayable on the earlier of (i) April 15, 2004, (ii) the date
on which Mr. Simpson ceases to be an employee, consultant or director of the
Company, (iii) the date on which the Company provides notice to Mr. Simpson that
the closing price of the common stock has been $30.00 or higher for 20
consecutive trading days as reported on the Nasdaq National Market or (iv) the
date on which Mr. Simpson sells or transfers the pledged securities. The Note
accrues interest at 16% per year until the issuance of the pledged securities to
Mr. Simpson, at which time the Note will accrue interest at the prime lending
rate plus 1%.
As of September 30, 2002, other current assets includes receivables
from the Company's officers in the amount of approximately $315,000 of which
$250,000 is from the transaction described above.
8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation
FORWARD-LOOKING STATEMENTS
The report contains forward-looking statements within the meaning of
the "safe harbor" provisions of The Private Securities Litigation Reform Act of
1995 that address, among other things, the generation of royalty revenues from
our licensees; sufficiency of available resources to fund operations; and the
anticipated launch dates of several of our licensed products. We generally
identify forward looking statements in this report using words like "believe,"
"anticipate," "will," "expect," "may," "could," "intend" or similar statements.
There are important factors that could cause actual results to differ materially
from those expressed or implied by such forward-looking statements including
lack of demand or low demand for our products or for safety products generally;
a determination of our licensees to focus their marketing efforts on products
other than those licensed from us; delays in introduction of products licensed
by us due to manufacturing difficulties or other factors; our inability to
license or enter into joint venture or similar arrangements regarding our other
products and other factors discussed in this report generally and in our Annual
Report on Form 10-K for the year ended December 31, 2001. Readers are cautioned
not to place undue reliance on these forward-looking statements, which reflect
management's analysis only as of the date of this report. We undertake no
obligation to publicly revise these forward-looking statements to reflect events
or circumstances that arise after the date of this report.
Results of Operations
Results of Operations for the Three-Months Period Ended
September 30, 2002 and 2001
Revenue for the three months ended September 30, 2002 was $9,089 as
compared to $2,040,000 for the corresponding period in 2001. The majority of the
revenue for the three months ended September 30, 2002 reflected a royalty
payment from Medamicus under our September 25, 2001 agreement with Medamicus.
Revenue for the three months ended September 30, 2001 reflected the license fee
in connection with the initial payment made by Medamicus under the Addendum to
the Development and Licensing Agreement.
General and administrative expenses for the three months ended
September 30, 2002 were $1,607,015, an increase of $60,376 as compared to
$1,546,639 in the corresponding period in 2001. The increase is due primarily to
an increase in corporate expenses which include additional personnel, travel
related to the marketing of the Company's portfolio products, consulting and
legal.
Research and development expenses for the three months ended September
30, 2002 were $347,560, an increase of $22,346 as compared to $325,214 for the
corresponding period in 2001. The increase in research and development expenses
was due primarily to additional costs of an evaluation study and regulatory
application costs related to the Safety Dental Pre-filled Cartridge Injector.
Results of Operations for the Nine-Month Periods Ended
September 30, 2002 and 2001
Revenue for the nine months ended September 30, 2002 was $22,803 as
compared to $2,090,000 in the corresponding period in 2001. The majority of
revenue reported in the nine months ended September 30, 2002 was from royalty
payments from Medamicus under our September 25, 2001 agreement with Medamicus.
Revenue for the nine months ended September 30, 2001 reflected a development fee
and license payment from Medamicus.
General and administrative expenses for the nine months ended September
30, 2002 were $4,897,496, an increase of $679,231 as compared to $4,218,265 in
the corresponding period in 2001. The increase is due primarily to an increase
in corporate expenses which include travel, consulting and relocation related to
hiring a new executive of $356,000 and legal expenses of $177,000.
Research and development expenses for the nine months ended September
30, 2002 were $1,110,591, an increase of $199,177 as compared to $911,414 for
the corresponding period in 2001. The increase in research and development
expenses was due primarily to costs associated with an evaluation study and
regulatory application costs related to the Safety Dental Pre-filled Cartridge
Injector.
9
Liquidity and Capital Resources
At September 30, 2002, cash, cash equivalents and available-for-sale
securities totaled $14,424,035, as compared to $5,889,766 at December 31, 2001,
an increase of $8,534,269 or approximately 145%. The increase was due to the
completion of a private equity placement of 1,326,260 shares of our common stock
on March 25, 2002 resulting in net proceeds of approximately $14,200,000.
Our consolidated statements of comprehensive income (loss) reflects
$732,994 in unrealized holding losses on securities for the nine months ended
September 30, 2002. A majority of these unrealized losses resulted from a
significant decline in the market price of Medamicus shares that we hold. See
Item 3 of Part I of this Form 10-Q for additional information.
Reference is made to Item 1 of Part II of this Form 10-Q for
information regarding our arbitration proceedings with BD. The results of these
arbitration proceedings may have a material effect on our license revenues in
future periods.
We have a revolving line of credit totaling $3,000,000. This facility
can be used to fund working capital needs and finance capital equipment
purchases. However, advances for capital equipment financing may not exceed
$600,000. Borrowings are collateralized by substantially all of our assets. Any
borrowings to meet working capital needs bear interest at LIBOR plus 2.25%,
while borrowings to finance capital equipment purchases bear interest at the
prime rate plus 2.5%. The facility expires on May 31, 2003. There is no
assurance that we will be successful in negotiating a continuation of the
availability of the line of credit on reasonable terms. There were no amounts
outstanding under the line of credit at September 30, 2002.
We believe that we have sufficient funds to support our planned
operations for at least the next twelve months. The availability of resources
over a longer period of time will be dependent on our ability to enter into
licensing agreements and to receive royalty payments from our current and future
licensees and our ability to enter into, and profitably operate under, joint
venture or similar arrangements. If licensing revenues are insufficient to
support operations or we are unsuccessful in negotiating additional agreements,
we may be required to reduce the scope of, or cease, our operations.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
There were no amounts outstanding under our revolving line of credit at
September 30, 2002. If we were to borrow under our credit facility, borrowings
to meet working capital needs would bear interest at LIBOR plus 2.25% and
borrowings to finance capital equipment purchases would bear interest at the
prime rate plus 2.5%. As a result, any such borrowings would be subject to the
fluctuations in the market which affect LIBOR or the prime rate, respectively.
We invest excess cash in marketable securities in accordance with our
investment guidelines as approved by the Board of Directors. These investments
are in highly liquid, low risk securities where our risk of loss is at a
minimum. Additionally, we have acquired shares of a publicly traded company for
which we are at risk of loss based on downward fluctuations in the quoted market
fair value of those shares. If the quoted fair value of this company's shares
were to fall by 10% and 20%, we would incur an unrealized loss of $162,690 and
$325,381 respectively. Such losses are ultimately recognized as expense in the
period in which the stock is sold.
10
Item 4. Controls and Procedures
Med-Design management, including the Chief Executive Officer and Chief
Financial Officer, have conducted an evaluation of the effectiveness of
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based
on that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the disclosure controls and procedures are effective in ensuring
that all material information required to be filed in this quarterly report has
been made known to them in a timely fashion. There have been no significant
changes in internal controls, or in factors that could significantly affect
internal controls, subsequent to the date the Chief Executive Officer and Chief
Financial Officer completed their evaluation.
11
Part II - OTHER FINANCIAL INFORMATION
Item 1. Legal Proceeding
The Company gave notification on July 19, 2002, and instituted on
September 13, 2002, arbitration proceedings involving The Med-Design Corporation
and Becton Dickinson and Company to determine which of the different royalty
rates provided for in the Licensing Agreement dated May 11, 2000 between
Med-Design and Becton Dickinson is payable to Med-Design for BD's IntegraTM
Syringe with Retracting Precision GlideTM Needle. The higher royalty rate is
approximately four times greater than the lower royalty rate. As previously
discussed, we estimate that the arbitration proceedings will take approximately
12 months.
Item 4. Submission of Matters to Vote of Securities Holders
The Company held its Annual Meeting of the Stockholders (the "Meeting")
on July 26, 2002. The following were the matters voted upon at the Meeting.
1. Election of Directors. The following Directors were elected at the
Meeting: Ralph Balzano, D. Walter Cohen and Paul Castignani. The
number of votes cast and withheld for each are as follows:
Director For Withheld
-------- --- --------
Ralph Balzano 9,719,274 245,299
D. Walter Cohen 9,907,070 57,503
Paul Castignani 9,721,274 243,217
2. Proposal to amend the Company's 2001 Equity Compensation Plan:
For Against Abstain
--- ------- -------
6,769,240 3,950,363 45,770
3. Ratification of the appointment of PricewaterhouseCoopers, LLP as
the independent auditors of the Company for the year ending December
31, 2002:
For Against Abstain
--- ------- -------
10,735,225 23,053 7,065
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
We filed a Form 8-K dated, as amended dated September 23, 2002 in which
we, among other things, set forth the relevant provisions of the License
Agreement with BD as they relate to the arbitration with BD and stated our
estimate that the arbitration proceedings to resolve the dispute will take
approximately 12 months.
12
We filed a Form 8-K dated September 10, 2002 addressing our position
with respect to the progress made under the co-promotion agreement between
Med-Design and Abbott One-2-One Global Pharmaceutical Services.
We filed a Form 8-K dated August 15, 2002 in which we, among other
things, stated our estimate that the arbitration proceedings with BD would take
between 9 and 12 months.
We filed a Form 8-K dated July 26, 2002 that included information
incorporated in the presentation and script used in connection with The
Med-Design Corporation's Annual Meeting of Stockholders held on July 26, 2002.
13
Signatures
In accordance with 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.
The Med-Design Corporation
Date: November 6, 2002 /s/ James M. Donegan
------------------------------------
James M. Donegan
Chief Executive Officer
/s/ Lawrence D. Ellis
------------------------------------
Lawrence D. Ellis
Chief Financial Officer
14
THE MED-DESIGN CORPORATION
CERTIFICATIONS PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
- -------------
I, Lawrence D. Ellis, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The Med-Design
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal 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: November 7, 2002 /s/ Lawrence D. Ellis
________________________ __________________________________________
Lawrence D. Ellis, Chief Financial Officer
15
THE MED-DESIGN CORPORATION
CERTIFICATIONS PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, James M. Donegan, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The Med-Design
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal 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: November 7, 2002 /s/ James M. Donegan
________________________ __________________________________________
James M. Donegan, Chief Executive Officer
16
EXHIBIT INDEX
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
99.2 Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
17