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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
( X ) Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934.
For the quarterly period ended June 30, 2002.
( ) Transition Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934
For the transition period from _______ to _______
Commission File No: 000-30045
CATUITY INC.
(Exact Name of Registrant as specified in its charter)
Delaware 38-3518829
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2711 E. Jefferson Avenue
Detroit, MI 48207
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(313) 567-4348
Indicate by check mark whether the registrant (1) has filed all reports
required 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 the number of shares outstanding of the each issuer's classes of stock
as of the latest practical date:
Common stock outstanding -- 8,070,338 shares as of July 31, 2002
INDEX
CATUITY INC.
PAGE
Part 1. Financial Information NO.
Item 1. Financial Statements (Unaudited)
Consolidated balance sheets -- June 30, 2002 and
December 31, 2001 3
Consolidated statements of operations -- Three months
ended 4 June 30, 2002 and 2001; Six months ended
June 30, 2002 and 2001 4
Consolidated statements of cash flows -- Six months
ended June 30, 2002 and 2001 5
Notes to consolidated financial statements --June
30, 2002 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosure of Market Risk 13
Part II. Other Information 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures and Certification 16
2
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CATUITY INC.
CONSOLIDATED BALANCE SHEET
JUNE 30, 2002 DECEMBER 31, 2001
------------- ------------
ASSETS (UNAUDITED)
Current Assets:
Cash and cash equivalents $ 2,577,318 $ 4,464,863
Accounts receivable, less allowance of $86,000 1,104,830 668,482
at June 30, 2002 and $114,000 at December 31, 2001
Work in process 97,369 208,823
Restricted cash 104,970 94,712
Prepaid expenses and other 126,220 218,416
------------- ------------
Total current assets 4,010,707 5.655,296
Property and equipment, net 247,736 215,197
------------- ------------
Total assets $ 4,258,443 $ 5,870,493
============= ============
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Accounts payable $ 223,669 $ 271,435
Deferred revenue 620,000 834,514
Accrued compensation 161,190 153,415
Other accrued expenses 420,486 620,500
Trust liability 85,554 78,745
------------- ------------
Total current liabilities 1,510,899 1,958,609
Accrued compensation 79,045 54,910
Stockholders' equity:
Common stock -- $.001 par value 8,071 8,064
Authorized - 100 million shares
Issued and outstanding -- 8,070,338 at June 30,
2002 and 8,063,338 at December 31, 2001
Additional paid-in capital 32,358,826 32,216,113
Shareholder loans (757,733) (757,733)
Foreign currency translation (304,693) (316,280)
Accumulated deficit (28,635,972) (27,293,190)
------------- ------------
Total stockholders' equity 2,668,499 3,856,974
------------- ------------
Total liabilities and stockholders' equity $ 4,258,443 $ 5,870,493
============= ============
See accompanying notes.
3
CATUITY INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
--------------------------- ---------------------------
2002 2001 2002 2001
----------- ----------- ----------- -----------
Revenues:
Software modification revenue $ 745,018 $ 44,306 $ 1,465,587 $109,228
Service revenue 160,569 132,400 405,326 212,703
License revenue 12,050 -- 22,850 --
----------- ----------- ----------- -----------
Total revenues 917,637 176,706 1,893,763 321,931
Operating expenses:
Product development 372,892 303,734 660,291 552,416
Customer implementation & support 393,013 211,025 688,769 469,662
Sales and marketing 477,510 526,072 985,974 1,105,223
General and administrative 493,044 1,000,557 811,167 1,501,537
----------- ----------- ----------- -----------
Operating expenses before non-cash
variable stock compensation 1,736,459 2,041,388 3,146,201 3,628,838
----------- ----------- ----------- -----------
Operating loss before non-cash variable
stock compensation (818,822) (1,864,682) (1,252,438) (3,306,907)
General and administrative -- non-cash
variable stock compensation 184,847 340,475 121,828 (495,797)
----------- ----------- ----------- -----------
Total operating expenses 1,921,306 2,381,863 3,268,029 3,133,041
----------- ----------- ----------- -----------
Operating loss (1,003,669) (2,205,157) (1,374,266) (2,811,110)
----------- ----------- ----------- -----------
Other income/(expense):
Interest income 16,356 75,110 31,484 180,282
----------- ----------- ----------- -----------
Total other income 16,356 75,110 31,484 180,282
----------- ----------- ----------- -----------
Loss before taxes (987,313) (2,130,047) (1,342,782) (2,630,828)
Provision for income taxes
-- -- -- --
----------- ----------- ----------- -----------
Net loss $ (987,313) $(2,130,047) $(1,342,782) $(2,630,828)
=========== =========== =========== ============
Net loss per share - basic and diluted $(0.12) $(0.27) $(0.17) $(0.33)
Weighted average shares
outstanding-basic & diluted 8,069,360 7,900,553 8,068,819 7,885,368
See accompanying notes.
4
CATUITY INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30
----------------------------
2002 2001
----------- -----------
Cash flows from operating activities:
Net loss $(1,342,782) $(2,630,828)
Adjustments used to reconcile net loss to net cash used
in operating activities:
Non-cash stock based compensation 121,828 (495,797)
Depreciation and amortization 95,450 52,441
Non-cash services 19,200 --
Changes in assets and liabilities:
Accounts receivable (436,348) (210,111)
Other assets 193,392 56,615
Accounts payable (47,766) (116,995)
Deferred revenue (214,514) (1,084)
Accrued expenses and other liabilities (161,295) 428,172
----------- -----------
Net cash used in operating activities (1,772,835) (2,917,587)
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment (127,989) (38,648)
----------- -----------
Net cash used in investing activities (127,989) (38,648)
----------- -----------
Cash flows from financing activities:
Issuance of common stock, net of expenses 1,692 60,243
----------- -----------
Net cash provided by financing activities 1,692 60,243
----------- -----------
Foreign exchange effect on cash 11,587 (76,344)
----------- -----------
Net decrease in cash and cash equivalents (1,887,545) (2,972,336)
Cash and cash equivalents, beginning of period 4,464,863 8,558,843
----------- -----------
Cash and cash equivalents, end of period $2,577,318 $5,586,507
=========== ===========
5
CATUITY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENT
June 30, 2001 (UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Catuity Inc.
(the "Company") 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 accruals) considered necessary for a fair presentation have
been included. Operating results for the three and six months period ended June
30, 2002 are not necessarily indicative of the results that may be expected for
the year ended December 31, 2002. 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 December 31, 2001.
Certain prior year amounts have been reclassified to conform with the current
year presentation.
The balance sheet at December 31, 2001 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by accounting principles generally accepted in the United
States for complete financial statements.
For further information, refer to the consolidated statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year ended
December 31, 2001.
6
CATUITY INC.
2. COMPREHENSIVE LOSS
Total comprehensive loss is summarized as follows:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
2002 2001 2002 2001
Net loss $(987,313) $(2,130,047) $(1,342,782) $(2,630,828)
Foreign currency
translation 15,222 80,006 11,587 (76,344)
--------- ----------- ------------ -----------
Total comprehensive
loss $(972,091) $(2,050,041) $(1,331,195) $(2,707,172)
========== ============ ============ ============
7
CATUITY INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL
Catuity develops, licenses and supports customer loyalty software that enables
retailers, transaction processors and credit card issuing banks to establish and
administer customer incentive and loyalty programs that are completely
customizable to meet their unique needs. The Catuity system functions in both
the internet (e-commerce) and in-store environments using existing magnetic
stripe cards and/or smart cards.
For the six month period ended June 30, 2002, the Company's revenue increased to
$1,894,000 from $322,000 during the same period in 2001. Operating expenses,
before non-cash, variable stock compensation expense/(credit), decreased by
approximately $483,000, or 13%, principally due to lower legal expenses in 2002
associated with the Welcome Real-Time (WRT) lawsuit that was settled in the
first quarter of 2002. As a result, the Company's operating loss for the first
half of 2002, before non-cash, variable stock compensation expense/(credit), was
approximately $1,250,000 in 2002 compared to $3,300,000 in 2001. The non-cash
variable stock compensation expense/(credit) recorded in each period fluctuates
in accordance with the Company's stock price at each period end and is not
directly related to operations that occurred in the period. The Company's total
operating loss, including non-cash variable stock compensation expense/(credit),
for the six month period ended June 30, was $1,374,000 in 2002 as compared to
$2,811,000 in 2001.
For the three month period ended June 30, the Company's revenues increased to
$918,000 in 2002 from $177,000 during the same period in 2001. Operating
expenses, before non-cash, variable stock compensation expense/(credit),
decreased by approximately $306,000, or 15%, principally due to lower legal
expenses. As a result the Company's operating loss for the second quarter of
2002, before non-cash, variable stock compensation expense/(credit), was
approximately $818,000 in 2002 compared to $1,865,000 in 2001. Total operating
loss in the second quarter, including non-cash variable stock compensation
expense/(credit), was $1,004,000 in 2002 as compared to $2,205,000 in 2001.
For further information regarding the Company's market-products and services,
refer to the Company's Annual Report on Form 10-K for the year ended December
31, 2001.
REVENUE
Revenue for the three month period ended June 30, 2002 increased $741,000 from
2001. Modification work related to the Company's contract with a customer and
with a major national retail customer in the second quarter of 2002 was the
primary reason for the increase.
8
CATUITY INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
Revenue for the six month period ended June 30, increased to $1,894,000 in 2002
from $322,000 in 2001. In 2002, approximately $1,466,000 of revenue was related
to software modification activities, $405,000 was related to service revenues
for installation, training and customer support efforts, and $23,000 was related
to license revenue. All 2002 revenue was derived from U.S. customers. During the
six month period ended June 30, 2001, approximately $109,000 of revenue was from
software modification activities and $183,000 was from service revenues for
installation and training efforts on behalf of U.S. customers, while Australian
based service revenue was $30,000. The increase relates primarily to
modification work related to two major customers in the second quarter of 2002.
PRODUCT DEVELOPMENT
Product development expenses principally consist of the costs associated with
the Company's software development team in Sydney, Australia. For the three
month period ended June 30, costs increased 23% to $373,000 in 2002 from
$304,000 in 2001. The increase relates to bonuses earned by members of the
development team that were paid for achieving early delivery on development
work. Excluding the bonus expense in the three month period ended June 30, 2002,
costs were 3% higher than in the same period in 2001.
For the six month period ended June 30, costs increased 20% to $660,000 in 2002
from $552,000 in 2001. Excluding the bonus expense in 2002, costs were 9% higher
than in the same period in 2001. The increase relates to cost of living
increases and additional staff hired in the second quarter of 2001 that were in
place for all of 2002.
CUSTOMER IMPLEMENTATION AND SUPPORT
Customer implementation and support expenses consist of the costs associated
with the Company's customer implementation and support staff and facilities
located in Arlington, Virginia. For the three month period ended June 30, costs
increased 86% to $393,000 in 2002 from $211,000 in 2001. The increase was
principally due to the hiring of additional staff needed to support increasing
customer implementation and support requirements.
For the six month period ended June 30, costs increased 47% from $470,000 in
2001 to $689,000 in 2002. The principal reasons for the six month increase are
consistent with the three month period increase.
SALES AND MARKETING
For the three month period ended June 30, sales and marketing costs decreased 9%
from $526,000 in 2001 to $478,000 in 2002. Sales and marketing costs in 2002
relate solely to U.S. based activities. The decrease was principally due to
expenses related to sales and marketing efforts undertaken in Australia in 2001
that have not been continued.
9
CATUITY INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
Sales and marketing expenses decreased 11% from $1,105,000 in the six month
period ended June 30, 2001 to $986,000 in 2002. The decrease was principally due
to a higher level of travel and Australian sales and marketing costs incurred in
2001.
GENERAL AND ADMINISTRATIVE
G&A expenses include costs related to executive, financial and administrative
personnel, outside professional services, patents and intellectual property
defense including court actions, facilities and other general corporate
overhead. Expenses for the three month period ended June 30, 2002 were $493,000
compared to $1,001,000 in the same period in 2001. The decrease of $508,000
(51%) principally reflects non-recurring legal costs recorded in the second
quarter of 2001 associated with the Company's patent infringement lawsuit that
was settled in March of this year. Excluding the difference in legal expenses,
the Company held 2002 overall G&A expenses to 2001 levels.
For the six month period ended June 30, general and administrative costs
decreased from $1,502,000 in 2001 to $811,000 in 2002, a 46% decrease. The
principal reasons for the six month decrease are consistent with the three month
period decrease. Excluding the difference in legal expenses, G&A expenses in
2002 were 2% higher than in 2001.
STOCK COMPENSATION
Stock compensation is a non-cash expense/(credit) that results from a
non-recourse loan awarded in 1996, to a director and an officer in order to
purchase common stock in the Company. Other than a small reduction in the loan
due to a partial repayment in 1999, the loans have remained unchanged since they
were initially made. The non-recourse loans are treated as variable and variable
accounting has been adopted. The non-cash expense/(credit) recorded each period
is based on the period ending price of the Company's stock in order to adjust
the cumulative expense recognized by the Company for the loans based on the fair
market price per share. For the three month period ended June 30, 2002, a
non-cash expense of $185,000 was recorded due to upward movement in the
Company's stock price since March 31, 2002. In the same period in 2001, a
non-cash expense of $340,000 was recorded.
For the six month period ended June 30, 2002 a non-cash expense of $122,000 was
recorded due to upward movement in the Company's stock price since December 31,
2001. In the same period in 2001, a credit of $(496,000) was recorded.
10
CATUITY INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
OTHER INCOME
Interest income decreased by $59,000, from $75,000 for the three month period
ended June 30, 2001 to $16,000 in 2002. The decrease in interest income is
primarily attributable to lower cash balances invested in interest bearing
accounts during the three month period ended June 30, 2002.
Interest income decreased by $149,000, from $180,000 for the six month period
ended June 30, 2001 to $31,000 in 2002. The principal reasons for the six month
decrease are consistent with the three month period decrease.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2002, the company had $2,577,000 in cash and cash equivalents, a
decrease of $1,888,000 from December 31, 2001. The Company's account receivable
balance significantly increased due to the timing of invoicing at June 30, 2002.
Approximately $1,000,000 was collected in July 2002 and increased the Company's
cash balance from the June 30, 2002 level.
Net cash used in operating activities was $1,773,000 for the six month period
ended June 30, 2002 compared with $2,918,000 for the six month period ended June
30, 2001. The approximately $1,145,000 reduction in the use of cash was
primarily due to the Company's higher revenues in the period and the
corresponding reduction in its operating loss.
In both the three month and six month periods ended June 30, 2002, the
Australian dollar strengthened against the U.S. dollar. This resulted in a
positive foreign currency effect on cash of approximately $15,000 in the second
quarter and a positive effect of approximately $18,000 for the first half of the
year.
The Company believes that its existing capital resources, combined with
collected revenues from signed contracts, are adequate to meet its cash
requirements for the next twelve months.
11
CATUITY INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. (CONTINUED)
FORWARD LOOKING INFORMATION
The Management Discussion and Analysis of Financial Condition and Results of
Operations includes "forward-looking" statements within the meaning of the
Private Securities Litigation Act of 1995. This Act provides a "safe harbor" for
forward-looking statements to encourage companies to provide prospective
information about themselves so long as they identify these statements as
forward-looking and provide meaningful cautionary statements identifying
important factors that could cause actual results to differ from the expected
results. All statements other than statements of historical fact made in this
Form 10-Q are forward looking. In some cases, they can be identified by
terminology such as "may," "will," "should," "expect," " plan," "anticipate,"
"believe," "estimate," "predict," "potential," or "continue," the negative of
such terms or other comparable terminology. These statements are only
predictions. Actual events or results may differ materially. In evaluating these
statements, you should consider various factors that may cause our actual
results to differ materially from any forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee our future results, levels of
activity, performance or achievement. Moreover, neither we nor any other person
assumes liability for the accuracy and completeness of the forward-looking
statements. Various factors may cause actual performance to differ from any of
the forward-looking statements contained in the Management Discussion and
Analysis of Financial Condition and Results of Operations. These include, but
are not limited to; currency exchange rates, inflation rates, recession, and
other external economic factors over which the Company has no control; the
timing and speed with which major customers and prospects execute their plans
for the use of loyalty and/or smart cards; the demand for, timing and market
acceptance of, new and existing smart card products; continued development of
the Company's software products; competitive product and pricing pressures;
patent and other litigation risk, the risk of key staff leaving the Company; as
well as the risk that major customers of the Company's products, including Visa,
reduce their requirements of or terminate their arrangements with the Company.
We are under no duty to update any of the forward-looking statements after the
date of this filing to conform such statements to actual results or to changes
in our expectations.
12
CATUITY INC.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
The Company is exposed to foreign currency exchange rate risk inherent in its
sales, expenses, assets and liabilities denominated in the Australian dollar. To
date, the Company has not utilized any foreign currency hedging or other
derivative instruments to reduce exchange rate risk. The Company does not expect
to employ these or other strategies to hedge the risk in the foreseeable future
As of June 30, 2002 and 2001 the Company's net current assets (defined as
current assets less current liabilities) subject to foreign currency risk are
$884,000 and $422,000. The potential decrease in net assets from a hypothetical
10% adverse change in quoted foreign currency exchange rates would be
approximately $88,400 and $42,200 at June 30, 2002 and 2001, respectively.
The Company is also exposed to interest rate risk on its investment portfolio,
which is affected by changes in the general level of interest rates in the
United States and Australia. Since the Company generally invests in very
short-term interest bearing deposits, it does not believe it is subject to any
material market risk exposure.
13
CATUITY INC.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 22, 2002, Catuity held its annual shareholder meeting at which time the
shareholders elected Messrs. D.L. MacSmith, A.S. Dawson, D.P.F. Mount, M.V.
Howe, A.L. Gilman, and R.C. Robins as Directors of the Company for the next
twelve months. At the meeting, the shareholders approved the executive services
agreement and options award thereunder of D.L. MacSmith. The shareholders also
approved compensation for non-executive directors for participation on the Audit
and Compensation Committees.
The tabulation of the voting on each of the resolutions put before the
shareholders is as follows:
VOTES VOTES BROKER
RESOLUTION FOR AGAINST ABSTAIN NON-VOTES TOTAL
1. Elect D.L. MacSmith 1,908,886 21,835 32,492 5,746,213 7,709,426
Director
2. Elect A.S. Dawson 1,908,647 19,605 34,961 5,746,213 7,709,426
Director
3. Elect D.P.F. Mount 1,656,016 3,855 303,342 5,746,213 7,709,426
Director
4. Elect M.V. Howe 1,926,166 12,205 24,842 5,746,213 7,709,426
Director
5. Elect A.L. Gilman 1,949,081 10,990 3,142 5,746,213 7,709,426
Director
6. Elect R.C. Robins 1,957,766 2,305 3,142 5,746,213 7,709,426
Director
7. Approve agreement/options 924,202 140,142 10,533 6,634,549 7,709,426
for D.L. MacSmith
8. Approve non-executive 859,574 139,086 355,164 6,355,602 7,709,426
directors' fees
14
CATUITY INC.
ITEM 5. OTHER INFORMATION
On June 27, 2002 the Company announced a 1 for 8 renounceable rights offer to
all shareholders resident in Australia and New Zealand at $5.25AUD/$2.94USD for
each new share in an effort to raise approximately $5.3AUD/$2.9USD million. The
rights offer sought funds to add further capability to the Company's existing
systems and products by extending its business into data management, aggregation
and analytics and expanding its involvement in Customer Relationship Management
(CRM) services to customers. On August 6, 2002, due to the significant
volatility of global stock markets, particularly Nasdaq, the rights offering was
withdrawn. The Company continues to believe that the data analytics business is
a natural outgrowth of its present products and services and is planning to
continue its efforts to develop its capabilities in these areas.
ITEM 6. EXHIBITS AND REPORT ON FORM 8-K
None
(b) Reports on Form 8-K
The following reports were filed on Form 8-K during the three month
period ended June 30, 2002:
Financial Statements Filing
Item Reported Filed? Date
Changes in the list of top 20 shareholders No 5-9-02
Mid-year review of forward looking
statements No 6-27-02
Rights offering in Australia and
New Zealand No 6-27-02
15
CATUITY 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.
By: /s/ Michael V. Howe 8/14/02
-----------------------------------------
Michael V. Howe
President and Chief Executive Officer
By: /s/ John H. Lowry 8/14/02
-----------------------------------------
John H. Lowry
Chief Financial Officer
CERTIFICATION
The undersigned officers hereby certify that: (a) this Form 10-Q fully complies
with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934, as amended; and (b) the information contained in this Form 10-Q fairly
represents, in all material respects, the financial condition and results of
operations of the issuer.
By: /s/ Michael V. Howe 8/14/02
-----------------------------------------
Michael V. Howe
President and Chief Executive Officer
By: /s/ John H. Lowry 8/14/02
-----------------------------------------
John H. Lowry
Chief Financial Officer
16