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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003

FOR THE TRANSITION PERIOD FROM                               TO                              

Commission File Number 000-30833

Bruker Daltonics Inc.
(Exact name of registrant as specified in its charter)

40 Manning Road
Billerica, MA 01821
(Address of principal executive offices)

(978) 663-3660
(Registrant's telephone number, including area code)

        Indicate by checkmark 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 ý    No o

        Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý

        As of May 9, 2003 there were 54,550,731 shares of the Registrant's common stock outstanding and 457,200 issued but not outstanding shares of common stock held by the Registrant in treasury.

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PART I    FINANCIAL INFORMATION

ITEM 1:    Financial Statements (Unaudited)

Bruker Daltonics Inc.

Consolidated Condensed Balance Sheets

(in thousands, except per share amounts)

See accompanying notes.

3

Bruker Daltonics Inc.

Consolidated Condensed Statements of Operations

(in thousands, except per share data)

(Unaudited)

See accompanying notes.

4

Bruker Daltonics Inc.

Consolidated Condensed Statements of Cash Flows

(in thousands)

(Unaudited)

See accompanying notes.

5

Bruker Daltonics Inc.

Notes to Consolidated Condensed Financial Statements

1.    Description of Business

        Bruker Daltonics Inc. and its wholly-owned subsidiaries (the "Company") design, manufacture and market proprietary life science systems based on mass spectrometry core technology platforms. The Company also sells a broad range of field analytical systems for substance detection and pathogen identification. The Company maintains major technical centers in Europe, North America and Japan. Bruker Daltonics allocates substantial capital and resources to research and development and is party to various collaborations and strategic alliances. The Company's diverse customer base includes pharmaceutical companies, biotechnology companies, proteomics companies, academic institutions and government agencies.

        The financial statements represent the consolidated accounts of Bruker Daltonics Inc. and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The consolidated condensed financial statements as of March 31, 2003 and for the three months ended March 31, 2003 and 2002 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with 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 months ended March 31, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003.

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

        The balance sheet at December 31, 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 December 31, 2002.

2.    Inventories

        The components of inventories were as follows (in thousands):

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3.    Warranty Costs

        The Company generally provides a one year parts and labor warranty with the purchase of equipment. The anticipated cost for this one year warranty is accrued upon recognition of the sale and is included as a current liability on the accompanying balance sheets. To the extent the Company experiences increased warranty claim activity or increased costs associated with servicing those claims, its warranty accrual will increase resulting in a decreased gross profit.

        Changes in our accrued warranty liability during the period were as follows:

4.    Restructuring Charge

        The Company recorded a restructuring charge during the three months ended June 30, 2002 of approximately $1.5 million related to a workforce reduction of approximately 50 employees. The charge consisted primarily of employee severance, professional fees and outplacement services. During the third and fourth quarters of 2002, the Company recorded a credit of approximately $1.0 million against this reserve to reflect a revised estimate for the actual employee severance costs. This credit is reflected in the December 31, 2002 statement of operations under the heading of Special charges (credits). As of December 31, 2002 a total of $300,000 had been paid and an accrual of $200,000 remained in accrued expenses for the 27 employees affected by the workforce reduction. During the first quarter of 2003, the Company paid an additional $140,000 for the workforce reduction leaving an approximately $60,000 balance in accrued expenses as of March 31, 2003.

        The Company could incur additional restructuring charges during 2003 due to the potential merger with Bruker AXS Inc. See footnote 10 for further explanation. The merger is expected to close during the summer of 2003. Future restructuring costs, however, cannot be reasonably estimated at this time.

5.    Stock Compensation Arrangements

        The Company accounts for its stock compensation arrangements under the intrinsic value method in accordance with Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees," and FASB Interpretation No. 44, "Accounting for Certain Transactions involving Stock Compensation." The Company has adopted the disclosure-only provisions of FASB Statement No. 123, "Accounting for Stock-Based Compensation." Any compensation cost on fixed awards with pro rata vesting is recognized on a straight-line basis over the award's vesting period.

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        If the Company had elected to recognize compensation expense for the granting of options under stock option plans based on the fair values at the grant dates consistent with the methodology prescribed by Statement No. 123, net (loss) income and net (loss) income per share for the periods ended March 31, 2003 and 2002 would have been reported as the following pro forma amounts:

6.    Earnings Per Share

        Basic earnings per share is calculated by dividing net earnings by the weighted-average number of common shares outstanding during the period. The diluted earnings per share computation includes the effect of shares which would be issuable upon the exercise of outstanding stock options, reduced by the number of shares which are assumed to be purchased by the Company from the resulting proceeds at the average market price during the period.

        The following table sets forth the computation of basic and diluted average shares outstanding for the periods indicated.

7.    Comprehensive Income (Loss)

        Total comprehensive income (loss), consisting of net (loss) income and the change in the accumulated foreign currency translation adjustment, was $0.3 million for the three months ended March 31, 2003, and $(0.3) million for the three months ended March 31, 2002.

8.    Contingencies

        The Company incurred a special charge during the fourth quarter of 2002 in connection with a contract its German and Swiss subsidiaries have with the U.K. Ministry of Defense ("MOD"). The charge consisted of an additional reserve in the amount of $700,000, which represents the projected further increase in cost for rework and retesting on the contract due to various technical problems associated with meeting the contract requirements. The Company previously incurred a charge on this same contract in the fourth quarter of 2000, as the Company was required to make considerable design

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changes to our product at that time, and this increased the cost of contract performance. This earlier reserve from the fourth quarter of 2000 is still on the Company's books at $800,000.

        As the Company previously reported during the third quarter of 2001, the Company also has a reserve of $1.7 million for the possible imposition of liquidated damages pursuant to this contract. The Company strongly disputes the applicability of liquidated damages and believes that the Company is owed additional development funding by the U.K. MOD. The Company's German and Swiss subsidiaries are making strong efforts to deliver product which is deemed acceptable by the U.K. MOD, and further tests are currently occurring under the auspices of the MOD. Management will continue to monitor the situation closely.

        The Company's Swiss and German subsidiaries have now delivered product which meets the specifications of the contract. Subsequent to the end of the first quarter of 2003, the Company reached an agreement with the Ministry of Defense regarding the possible imposition of liquidated damages pursuant to the contract. The Ministry of Defense has agreed not to pursue any further claims for liquidated damages, other than those previously paid, pursuant to the contract and the Company has agreed not to pursue its claims for the recovery of additional research and development expenses incurred in connection with the contract.

        Other lawsuits, claims and proceedings of a nature considered normal to its businesses may be pending from time to time against the Company. The Company believes the outcome of these proceedings, if any, will not have a material impact on the Company's financial position or results of operations.

9.    New Accounting Pronouncements

        In June 2002, the FASB issued Statement No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," which is effective for exit or disposal activities that are initiated after December 31, 2002. Statement No. 146 nullifies Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." Statement No. 146 requires that a liability for costs associated with an exit or disposal activity be recognized and measured at fair value when the liability is incurred rather than at the date of an entity's commitment to an exit or disposal plan. The Company adopted the provisions of Statement No. 146 effective January 1, 2003. Statement No. 146 will not impact the accounting for any restructuring plan approved and announced as of December 31, 2002; however, the pronouncement will impact the accounting for any future exit or disposal activities.

        In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." Interpretation No. 45 requires a liability to be recognized at the time a company issues a guarantee for the fair value of the obligations assumed under certain guarantee agreements. Additional disclosures about guarantee agreements are also required in the interim and annual financial statements. The disclosure provisions of Interpretation No. 45 are effective for the Company as of December 31, 2002. The provisions for initial recognition and measurement of guarantee agreements are effective on a prospective basis for guarantees that are issued or modified after December 31, 2002. The Company does not expect the recognition provisions of Interpretation No. 45 to materially impact its consolidated financial statements.

        In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51." FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have

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the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. The Company is currently evaluating the effect that the adoption of FIN 46 will have on the results of operations and financial condition.

10.    Significant Changes and Subsequent Events

        On April 4, 2003, the Company and Bruker AXS Inc. entered into a definitive merger agreement intended to form a leading tools supplier for life science and materials research, with an emphasis on advancing proteomics. The agreement was signed following the unanimous approval of the Board of Directors of each company as well as the unanimous recommendations of independent Special Committees of both companies' boards.

        In the merger, which must be approved by the stockholders of both Bruker AXS and the Company, each outstanding share of common stock of Bruker AXS will be converted into the right to receive, at the election of the holder, either 0.63 of a share of Bruker Daltonics common stock or consideration designed to be of substantially equivalent value, payable 75% in Bruker Daltonics common stock and 25% in cash. Outstanding shares of Bruker Daltonics common stock will not be changed in the merger.

        The merger is expected to close during the summer of 2003. Additional information regarding the proposed merger can be found in the Company's registration statement on Form S-4, initially filed with the SEC on May 1, 2003.

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ITEM 2:    Management's Discussion and Analysis of Financial Condition and Results of Operations

        The following discussion of our financial condition and results of operations should be read in conjunction with our interim consolidated condensed financial statements and the notes to those statements included in Part 1, Item 1 of this Quarterly Report on Form 10-Q and in conjunction with the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2002.

        Statements in this Management's Discussion and Analysis of Financial Condition and Results of Operations which express that we "believe", "anticipate", "expect" or "plan to," as well as other statements which are not historical fact, are forward-looking statements within the meaning of the Private Securities Litigation Act of 1995. Actual events or results may differ materially as a result of the risks and uncertainties described herein and elsewhere, including but not limited to, those factors discussed in "Factors Affecting Our Business, Operating Results and Financial Condition" set forth in our Annual Report on Form 10-K for the year ended December 31, 2002.

Results of Operations

Quarter Ended March 31, 2003 Compared to Quarter Ended March 31, 2002

        Product Revenue.    Total product revenue for the three months ended March 31, 2003 increased $8.4 million, or 32.7%, to $34.1 million compared to $25.7 million for the same period in 2002. Life science systems revenue, substance detection systems revenue and aftermarket revenue as a percentage of product revenue was 76%, 6% and 18%, respectively, in the first quarter of 2003 as compared to 76%, 8% and 16%, respectively, for the same period in 2002. The overall organic growth is attributable to the continued growth of all our life science product lines, particularly within our TOF product lines. The remainder of the increase is related to foreign currency impact of approximately 13.9%.

        Other Revenue.    Other revenue for the three months ended March 31, 2003 decreased $64,000, or 58.7%, to $45,000 compared to $109,000 for the same period in 2002. The change is due to the timing of receipts from various projects for early-stage research and development, which are currently funded by grants from the German government.

        Cost of Product Revenue.    Cost of product revenue for the three months ended March 31, 2003 increased $4.8 million, or 39.4%, to $16.8 million compared to $12.1 million for the same period in 2002. The cost of product revenue as a percentage of product revenue was 49.4% in the first quarter of 2003 as compared to 47.0% for the same period in 2002. The increase in overall cost of product revenue is attributable to foreign currency impact and a change in the product mix of sales to third party customers and distributors. Since most of our product lines are manufactured in Germany, the strengthening of the Euro against the U.S. dollar caused a 1.5% increase, approximately, in our overall cost of product for the first quarter of 2003 as compared to the first quarter of 2002.

        Selling, General and Administrative.    Selling, general and administrative expenses for the three months ended March 31, 2003 increased $1.7 million, or 21.5%, to $9.5 million compared to $7.9 million for the same period in 2002. Selling, general and administrative expenses as a percentage of product revenues were 28.0% in the first quarter 2003 and 30.6% for the same period in 2002. The decrease as a percentage of revenue is related to the small percentage increases of general and administrative expenses as compared to the accelerated growth of product revenue.

        Research and Development.    Research and development expenses for the three months ended March 31, 2003 increased $1.8 million, or 40.0%, to $6.3 million compared to $4.5 million for the same period in 2002. As a percentage of product revenues, research and development expenses were 18.5% in 2003 compared to 17.5% for the same period in 2002. The increase relates to the timing of certain development projects that have now or will become a part of our existing product line throughout 2003 and into 2004 and an unfavorable foreign currency impact of approximately 1%.

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        Merger Related Costs.    Merger related costs of approximately $1.9 million relate to the merger costs incurred during the first quarter 2003 associated with the potential merger of Bruker Daltonics and Bruker AXS. See footnote 10 of our financial statements for further explanation of the potential transaction.

        Interest and Other (Loss) Income, Net.    Interest and other (loss) income, net for the three months ended March 31, 2003 was ($86,000), compared to $220,000 for the same period in 2002. The difference relates to the lower interest income earned on our short-term investments, an increase in interest expense on our short-term financing to support our working capital and foreign currency transaction gains and losses.

        Provision for Income Taxes.    Provision for income taxes was $0.5 million in the first quarter of 2003 as compared to $0.6 million for the same period in 2002. The effective tax rate in the first quarter of 2003 was 301% as compared to an effective rate of 40% for the same period in 2002. The effective tax rate is higher in 2003 because the Company is unable to recognize a deferred tax benefit on the merger related costs for the first quarter 2003. Excluding these costs, the effective tax rate would be 38%. The effective tax rates reflect a blended tax rate from the various countries in which we operate.

Liquidity and Capital Resources

        Presently, we anticipate that our existing capital resources will meet our operating and investing needs through the end of 2003. Historically, we have financed our growth through a combination of cash provided from operations, short-term investments, debt financing and issuance of common stock. During the three months ended March 31, 2003, net cash used in operating activities was $4.0 million, which was consistent with net cash used in operating activities during the three months ended March 31, 2002.

        We used $1.1 million of cash during the three months ended March 31, 2003 for capital expenditures, which were principally related to some additional improvements for our existing facility in Germany and overall general capital purchases. We expect to continue to make capital investments which will focus on enhancing the efficiency of our operations and supporting our growth.

        In December 2002, we entered into a demand revolving line of credit with Citizens Bank in the United States in the amount of $2.5 million. This line, which is secured by portions of our inventory, receivables and equipment in the United States, is used to support working capital and has no expiration date. We also maintain revolving lines of credit of approximately $14.2 million with German banks and $4.1 million with Japanese banks. As of March 31, 2003, there was approximately $11.8 million and $3.9 million outstanding on our German and Japanese lines of credit, respectively. Both of the German and Japanese lines of credits are unsecured.

        We have one short-term note payable and two long-term notes payable with outstanding balances aggregating $13.4 million as of March 31, 2003. One note ($5.4 million), with an interest rate of 5.10%, is payable in full in June 2003. The other two notes ($8.4 million in the aggregate) have an interest rate of 4.65% and are payable in full in 2008. Interest is due monthly, and all obligations are collateralized by the land and buildings of our German subsidiary Bruker Daltonik GmbH.

        In 2002, we repurchased 457,200 shares of our common stock, at an average price per share of $5.10, in accordance with the terms of our stock repurchase plan. Our stock repurchase plan, announced August 26, 2002, authorizes us to repurchase up to one million shares of our common stock. During the three months ended March 31, 2003, we did not repurchase any shares.

        Our future capital uses and requirements depend on numerous factors, including our success in selling our existing products, our progress in research and development, our ability to introduce and sell new products, our sales and marketing expenses, our need to expand production capacity, costs associated with possible acquisitions, expenses associated with unforeseen litigation, regulatory changes, competition and technological developments in the market.

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Inflation

        We do not believe inflation has had a material impact on our business or operating results during the periods presented.

Impact of Foreign Currencies

        We sell our products in many countries, and a substantial portion of our sales and a portion of our costs and expenses are denominated in foreign currencies, especially in Euro. Historically, our realized foreign exchange gains and losses have not been material. Accordingly, we have not hedged our foreign currency position in the past. However, as we expand our sales internationally, we plan to evaluate our currency risks, and we may enter into foreign exchange contracts from time to time to mitigate foreign currency exposure.

ITEM 3:    Quantitative and Qualitative Disclosures About Market Risk

        Part of the information called for by this item is provided under the caption "Liquidity and Capital Resources" and "Impact of Foreign Currencies" under Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations.

        The Company does not use derivative financial instruments for trading or speculative purposes. However, the Company regularly invests excess cash in overnight repurchase agreements and interest-bearing investment-grade securities that we hold for the duration of the term of the respective instrument and are subject to changes in short-term interest rates. The Company believes that the market risk arising from holding these financial instruments is minimal.

        The Company's exposure to market risks associated with changes in interest rates relates primarily to the increase or decrease in the amount of interest income earned on its investment portfolio since the Company's long-term debt has a fixed rate. The Company ensures the safety and preservation of invested funds by limiting default risks, market risk and reinvestment risk. The Company mitigates default risk by investing in investment grade securities. A hypothetical 100 basis point adverse move in interest rates along the entire interest rate yield curve would not materially affect the fair value of the Company's interest sensitive financial instruments at March 31, 2003. Declines in interest rates over time will, however, reduce the Company's interest income.

ITEM 4:    Controls and Procedures

        Within the ninety day period prior to the date of this report, the Company conducted an evaluation under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer (its principal executive officer and principal financial officer, respectively) regarding the effectiveness of the design and operation of the Company's disclosure controls and procedures as defined in Rule 13a-14 of the Securities Exchange Act of 1934. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to them by others within entities.

        There were no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to the date the Company carried out its evaluation.

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PART II    OTHER INFORMATION

ITEM 1:    Legal Proceedings

General

        The Company may, from time to time, be involved in legal proceedings in the ordinary course of business. The Company is not currently involved in any pending legal proceedings that, either individually or taken as a whole, could materially harm our business, prospects, results of operations or financial condition. No such arbitrations or lawsuits have been threatened.

ITEM 2:    Changes in Securities and Use of Proceeds

        On August 3, 2000, the Securities and Exchange Commission declared effective our registration statement on Form S-1 (No. 333-34820) pursuant to which we offered and sold 9,200,000 shares of our common stock, generating net proceeds of approximately $110 million. We have used a portion of the net proceeds of the offering to fund our continuing research and development activities and for working capital and other general corporate purposes. Additionally, we have used approximately $7.0 million of the net proceeds to pay off a portion of our outstanding bank debt.

ITEM 3:    Defaults Upon Senior Securities

        None.

ITEM 4:    Submission of Matters to a Vote of Security Holders

        None.

ITEM 5:    Other Information

        None.

ITEM 6:    Exhibits and Reports on Form 8-K

(a)

Exhibits.

(b)

Current Reports on Form 8-K.

We filed no reports on Form 8-K during the quarter ended March 31, 2003.

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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.

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CERTIFICATION

        I, Frank H. Laukien, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Bruker Daltonics Inc.;

2.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.

The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)

designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)

evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c)

presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a)

all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.

The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

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CERTIFICATION

        I, John J. Hulburt, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Bruker Daltonics Inc.;

2.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.

The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)

designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)

evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c)

presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a)

all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.

The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

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Exhibit Index