FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended September 30, 2002
OR
( ) 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. 0-17757
W-W CAPITAL CORPORATION
(exact name of Registrant as specified in its charter)
Nevada 93-0967457
------ ----------
(State or other jurisdiction of (IRS Employer Identi-
incorporation or organization) fication Number)
3500 JFK Parkway Suite 202 Ft. Collins, CO 80525
(Address of principal executive offices, including zip code)
(970) 207-1100
(Registrant's telephone number, including area code)
Not Applicable
(Former name, address and former fiscal year, if changed since last report)
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 the filing
requirements for the past 90 days. Yes X No _
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether Registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15 (d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.
Yes No NOT APPLICABLE X
---- ---- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Title of Each Class Number of Shares Outstanding
------------------- at January 31, 2003
Common stock ----------------------------
$0.01 Par Value 2,008,164
W-W CAPITAL CORPORATION
Index
-----
PART I FINANCIAL INFORMATION PAGE NO.
- ------ --------------------- --------
Item 1 Balance Sheets
- ------ September 30, 2002 and June 30, 2002 1
Statements of Operations
Three Months Ended
September 30, 2002 and 2001 3
Statements of Cash Flows
Three Months Ended
September 30, 2002 and 2001 5
Notes to Financial Statements 7
Item 2 Management's Discussion and Analysis
- ------ of Financial Condition and Results
of Operations 9
Item 3 Quantitative and Qualitative Disclosures
- ------ About Market Risks 11
Item 4 Controls and Procedures 11
- ------
PART II OTHER INFORMATION
- -------
Item 1 LEGAL PROCEEDINGS 12
- ------
Item 2 CHANGES IN SECURITIES 12
- ------
Item 3 DEFAULTS UPON SENIOR SECURITIES 12
- ------
Item 4 SUBMISSION OF MATTERS TO VOTE OF
- ------ SECURITY HOLDERS 12
Item 5 OTHER INFORMATION 12
- ------
Item 6 EXHIBITS AND REPORT ON FORM 8-K 12
- ------
SIGNATURES 13
Part I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
W-W CAPITAL CORPORATION
-----------------------
Balance Sheets
September 30, June 30,
2002 2002
---- ----
(Unaudited)
Assets
- ------
Current assets:
Cash $ 100,458 $ 137,948
----------- -----------
Trade accounts receivable 1,908,397 2,004,161
Less allowance for doubtful accounts (275,000) (275,000)
----------- -----------
Net accounts receivable 1,633,397 1,729,161
----------- -----------
Accounts receivable, other 163,266 162,703
Inventories:
Raw materials 596,912 528,110
Work-in-process 413,061 418,334
Finished goods 833,409 843,860
----------- -----------
Total inventories 1,843,382 1,790,304
----------- -----------
Prepaid expenses 72,760 35,632
Current portion of notes receivable
from related parties 603 603
Deferred income tax asset 181,500 149,500
----------- -----------
Total current assets 3,995,366 4,005,851
----------- -----------
Property and equipment, at cost: 4,536,904 4,290,594
Less accumulated depreciation
and amortization (2,194,730) (2,135,406)
----------- -----------
Net property and equipment 2,342,174 2,155,188
----------- -----------
Other Assets:
Long-term notes receivable from
related parties, net of current portion 20,470 20,470
Loan acquisition costs--net of
accumulated amortization of $4,100
at September 30, 2002 and $3,075
at June 30, 2002 36,900 37,925
Equipment deposits 175,000 175,000
Other assets 40,728 41,130
----------- -----------
Total other assets 273,098 274,525
----------- -----------
TOTAL ASSETS $ 6,610,638 $ 6,435,564
=========== ===========
(Continued on following page)
See accompanying notes to financial statements.
1
W-W CAPITAL CORPORATION
-----------------------
Balance Sheets, Continued
September 30, June 30,
2002 2002
---- ----
(Unaudited)
Liabilities
- -----------
Current Liabilities:
Accounts payable $ 1,560,941 $ 1,373,803
Accrued property taxes 15,600 10,400
Accrued payroll and related taxes 204,999 198,887
Accrued interest payable 68,843 80,106
Current portion of long-term notes payable 282,000 239,000
Current portion of capital lease obligations 80,000 75,000
Other current liabilities 14,160 24,908
----------- -----------
Total current liabilities 2,226,543 2,002,104
----------- -----------
Other Liabilities:
Long-term notes payable, net of current portion 2,987,528 2,966,693
Long-term capital lease obligations, net
of current portion 1,198,790 1,219,973
Deferred income tax liability 179,900 179,900
Negative goodwill, net of accumulated
amortization of $5,466 at June 30, 2002 -- 61,744
----------- -----------
Total other liabilities 4,366,218 4,428,310
----------- -----------
TOTAL LIABILITIES 6,592,761 6,430,414
----------- -----------
Stockholders' Equity
- --------------------
Preferred stock: $10.00 par value, 400,000 shares
authorized -- --
Common stock, $0.01 par value, 15,000,000
shares authorized; 5,553,827 shares issued
at September 30, 2002 and June 30, 2002 55,538 55,538
Capital in excess of par value 3,305,533 3,305,533
Accumulated deficit (464,079) (476,806)
----------- -----------
2,896,992 2,884,265
Less 3,545,663 shares of treasury stock at cost (2,879,115) (2,879,115)
----------- -----------
NET STOCKHOLDERS' EQUITY 17,877 5,150
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 6,610,638 $ 6,435,564
=========== ===========
See accompanying notes to financial statements.
2
W-W CAPITAL CORPORATION
-----------------------
Statements of Operations
(Unaudited)
Three Months Ended
September 30,
-------------
2002 2001
---- ----
Net sales $ 3,141,639 $ 2,816,733
Cost of goods sold 2,565,668 2,230,499
----------- -----------
Gross profit 575,971 586,234
----------- -----------
Operating expenses:
Selling expenses 241,065 281,663
General and administrative expenses 331,165 339,765
----------- -----------
Total operating expenses 572,230 621,428
----------- -----------
Operating earnings (loss) 3,741 (35,194)
----------- -----------
Other income (expenses):
Interest income -- 5,754
Interest expense (86,790) (97,698)
Gain on sale of assets 100 --
Other income (expense), net 1,932 825
----------- -----------
Total other income (expense) (84,758) (91,119)
----------- -----------
Loss before income taxes and cumulative effect
of a change in accounting principle (81,017) (126,313)
Income tax benefit 32,000 51,000
----------- -----------
Loss before cumulative effect of a change in
accounting principle (49,017) (75,313)
Cumulative effect of a change in accounting
principle 61,744 --
----------- -----------
Net earnings (loss) $ 12,727 $ (75,313)
=========== ===========
See accompanying notes to financial statements.
3
W-W CAPITAL CORPORATION
-----------------------
Statements of Operations, Continued
(Unaudited)
Three Months Ended
September 30
------------
2002 2001
---- ----
Earnings (loss) per common share:
Basic
Loss before cumulative effect of a change
in accounting principle $ (.02) $ (.04)
Cumulative effect of a change in
accounting principle .03 --
------------- -------------
Net earnings (loss) $ .01 $ (.04)
============= =============
Weighted average number of common
shares 2,008,164 2,008,164
Diluted
Loss before cumulative effect of a change
in accounting principle $ (.02) $ (.04)
Cumulative effect of a change in
accounting principle .03 --
------------- -------------
Net earnings (loss) $ .01 $ (.04)
============= =============
Weighted average number of common
shares 2,008,164 2,008,164
See accompanying notes to financial statements.
4
W-W CAPITAL CORPORATION
-----------------------
Statements of Cash Flows
(Unaudited)
Three Months Ended
September 30,
-------------
2002 2001
---- ----
Cash flows from operating activities:
Net earnings (loss) $ 12,727 $ (75,313)
Adjustments to reconcile net earnings (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 60,349 63,755
Gain on sale of property and equipment (100) --
Amortization of negative goodwill -- (585)
Write off of negative goodwill (61,744) --
Change in assets and liabilities:
Accounts receivable 95,764 (445,828)
Inventories (53,078) (52,586)
Other current and non-current assets (69,289) (91,941)
Accounts payable 187,138 320,007
Accrued expenses and other current liabilities (10,699) (27,129)
--------- ---------
Net cash provided by (used in)
operating activities 161,068 (309,620)
--------- ---------
Cash flows from investing activities:
Purchase of property and equipment (16,791) (1,014)
Proceeds from sale of property and equipment 100 --
--------- ---------
Net cash used in investing activities $ (16,691) $ (1,014)
--------- ---------
(Continued on following page)
5
W-W CAPITAL CORPORATION
-----------------------
Statements of Cash Flows, Continued
(Unaudited)
Three Months Ended
September 30,
-------------
2002 2001
---- ----
Cash flows from financing activities:
Payments on notes payable, financial
institutions and government entities $(3,233,341) $(2,148,934)
Proceeds from notes payable 3,067,657 2,456,050
Payment on capital leases (16,183) (15,987)
Payment on loan acquisition costs -- (41,000)
----------- -----------
Net cash provided by (used in)
financing activities (181,867) 250,129
----------- -----------
Net decrease in cash (37,490) (60,505)
Cash at beginning of period 137,948 216,473
----------- -----------
Cash at end of period $ 100,458 $ 155,968
=========== ===========
Supplemental Information:
Cash paid during the period for interest $ 98,035 $ 74,054
Installment loans to acquire property
and equipment $ 229,519 $ --
Installment loan to acquire residential rental
property $ -- $ 28,543
See accompanying notes to financial statements.
6
W-W CAPITAL CORPORATION
-----------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited financial statements include the accounts of
W-W Capital Corporation (the Company) and its wholly owned subsidiary W-W
Manufacturing Co., Inc. All significant intercompany accounts and transactions
have been eliminated.
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. They do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations and changes in cash
flows in conformity with generally accepted accounting principles for full-year
financial statements. However, except as disclosed herein, there has been no
material change in the information disclosed in the notes to W-W Capital
Corporation's financial statements included in its Annual Report on Form 10-K
for the year ended June 30, 2002. In the opinion of management, all adjustments
(consisting of normal recurring accrual basis adjustments) considered necessary
for a fair presentation have been reflected in the accompanying financial
statements. Operating results for the three month period ended September 30,
2002, are not necessarily indicative of the results that may be expected for the
year ended June 30, 2003.
NOTE 2 - NET BASIC EARNINGS PER SHARE
- -------------------------------------
The net basic earnings (loss) per share amount included in the
accompanying statements of operations have been computed using the
weighted-average number of shares of common stock outstanding and the dilutive
effect, if any, of common stock equivalents existing during the applicable three
month period.
NOTE 3 - NEGATIVE GOODWILL AND CHANGE IN ACCOUNTING PRINCIPLE
- -------------------------------------------------------------
In June 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 141, "Business Combinations." SFAS
No. 141 requires that unamortized negative goodwill arising from a business
combination, for which the acquisition date was before July 1, 2001, shall be
written off and recognized as a change in accounting principle. SFAS No. 141 was
effective for the Company on July 1, 2002.
As of July 1, 2002, the Company had $61,744 of unamortized negative
goodwill relating to the fiscal year 2000 purchase of the Adrian J. Paul Company
by its subsidiary, WW Manufacturing Company. The write off resulted in an
increase in income and was reflected as a cumulative effect of a change in
accounting principle in the quarter ended September 30, 2002.
A reconciliation of reported net income (loss) adjusted to reflect the
adoption of SFAS No. 141 as if it had been effective July 1, 2001 is as follows:
7
NOTE 3 - NEGATIVE GOODWILL AND CHANGE IN ACCOUNTING PRINCIPLE (continued)
- -------------------------------------------------------------------------
Three Months Ended
September 30,
-------------
2002 2001
---- ----
Reported net income (loss) $ 12,727 $(75,313)
Subtract-back adjustment for accounting change (61,744) --
Add-back goodwill amortization -- 585
-------- --------
Adjusted net income (loss) (49,017) (74,728)
======== ========
Adjusted net income (loss) per share - Basic (.02) (.04)
Adjusted net income (loss) per share - Diluted (.02) (.04)
NOTE 4 - RELATED PARTY TRANSACTION
- ----------------------------------
The Company has a number of related party transactions. See the
footnotes to W-W Capital Corporation financial statements for the year ended
June 30, 2002, included in its Annual Report on Form 10-K for the nature and
type of related party transactions.
A summary of the related party transactions that affect the Company's
statements of operations for the three months ended September 30, 2002 and 2001
respectively, is as follows:
Three Months Ended
September 30,
-------------
Transactions with
Related parties 2002 2001
- --------------- ---- ----
Rent expense $ -- $ 1,500
NOTE 5 - LONG-TERM DEBT AND SUBSEQUENT EVENT
- --------------------------------------------
During July 2002, the Company exercised an option to purchase the
production facility used in Duncan, Oklahoma, which it had been leasing. To
finance the purchase, the Company borrowed $50,000 from the Duncan Area Economic
Development Foundation. The note bears interest at 5% and is payable in monthly
installments of $944, including principal and interest, through July 2007.
Additionally, the Company borrowed $160,584 from a financial institution. The
note bears interest at 6% and is payable in monthly installments of $1,790,
including principal and interest, through July 2012. Both of these notes are
collateralized by the production facility.
During October 2002, the Company refinanced a certain term loan that
resulted in additional borrowings of $184,447. The new term loan bears interest
at 4% over the Bank's base rate and is payable in monthly principal installments
of $6,250 plus interest through October 2004, at which time the remaining
principal balance is due. The note is collateralized by equipment, inventory,
intangibles and receivables.
8
ITEM 2. - Management's Discussion and Analysis of Financial Condition and
Results of Operations.
- --------------------------------------------------------------------------------
The business of the Company is carried on within one segment group by
three operating units. The livestock handling equipment segment is composed of
W-W Manufacturing (W-W Manufacturing), Eagle Enterprises (Eagle), and W-W Paul
Scales (Paul).
Analysis of Results of Operations
- ---------------------------------
The Company had net income of $12,727 for the three month period ended
September 30, 2002, as compared to a net loss of $75,313 in 2001. The increase
in earnings reflects the Company's recovery from transition costs associated
with the manufacturing plant shut down in Dodge City, Kansas as well as an
improvement in economic conditions felt throughout the United States during 2001
and the first six months of fiscal 2002.
Net sales increased to $3,141,639 for the three months ended September 30,
2002, compared to $2,816,733 for 2001. The total increase in sales of $324,906
was felt throughout the Company. While the W-W Manufacturing plant in Thomas,
Oklahoma had a slight increase in sales of $36,765, the Eagle and Paul plants
had increased sales of $178,506 and $109,635, respectively. The increase in
sales is attributable to an overall recovery in the economy as well as an
aggressive attempt to limit the effect of the economic slowdown by analyzing
existing product improvements and introducing new products and product lines
which allowed the Company to gain acceptance with new customers and move into
markets not normally serviced by the Company. The Company continues to be
involved in several projects, which include special sales to expo centers, fairs
and livestock shows.
Gross margins decreased from 20.8% for the three month period ended
September 30, 2001 to 18.3% for the same period of 2002. The decreased margins
are a result of higher material costs due to increased steel prices that have
hampered manufacturing companies throughout the country. The Company continues
to seek improvements through manufacturing system analysis as well as retail
price adjustments.
Selling expenses as a percentage of sales decreased from 10.0% for the
three month period ended September 30, 2001 to 7.7% for the same period of 2002.
The dollars expended on selling expense decreased from $281,663 for the three
months ended September 30, 2001 to $241,065 for the same period of 2002, a
decrease of $40,598. The Company will continue its aggressive pursuit of new
markets and expanding its distributor/dealer base while at the same time
evaluating ways of keeping costs in line as a percentage of sales.
General and administration expenses as a percentage of sales decreased
from 12.1% for the quarter ended September 30, 2001 to 10.5% for the
corresponding quarter in 2002. The total dollars expended on general and
administration costs remained relatively consistent, decreasing $8,600. The
Company will continue to find ways to lower general and administrative expense
through the use of centralization, job realignment, and line-by-line expense
evaluation and reduction. It is anticipated that general and administrative
costs will continue to improve during fiscal 2003.
Interest expense decreased from $97,698 for the three months ended
September 30, 2001 to $86,790 for the same period of 2002. This decrease is due
to the reduction in interest rates for borrowings under the revolving credit
facilities. As profits and cash flow improve, the Company plans to reduce debt,
thereby reducing overall interest expense.
9
Liquidity and Capital Resources
- -------------------------------
The Company's principal sources of liquidity are internally generated
funds and borrowings under its credit facilities. The Company generated funds
from operations of $161,068 during the quarter ended September 30, 2002. The
Company used cash from investing of $16,791 for the purchase and updating of new
equipment. Financing activities used net cash of $181,867, primarily to repay
amounts outstanding under our credit facilities. As the Company moves further
into fiscal 2003 it anticipates increased sales growth with a continued
reduction in borrowings.
During July 2002, the Company exercised an option to purchase the
production facility used in Duncan, Oklahoma, which it had been leasing. To
finance the purchase, the Company borrowed $50,000 at 5% interest from the
Duncan Area Economic Development Foundation. Additionally, the Company borrowed
$160,584 at 6% interest from a financial institution. Both of these notes are
collateralized by the production facility.
During October 2002, the Company refinanced an existing term loan that
resulted in additional borrowings of $184,447 at 4% interest over the Bank's
base rate. The note is collateralized by equipment, inventory, intangibles and
receivables.
The Company feels that it will improve in both sales and operating
earnings throughout fiscal 2003. The Company also believes that continued
benefits will be realized because of the plant move to Thomas, Oklahoma through
fiscal 2003 and thereafter. With increased working capital and lines of credit,
the Company feels it has an adequate supply of liquidity to meet its needs.
Forward-Looking Statements
- --------------------------
In addition to historical information, this Quarterly Report contains
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, and are thus prospective. The forward-looking
statements contained herein are subject to certain risks and uncertainties that
could cause actual results to differ materially from those reflected in the
forward-looking statements. Factors that might cause such a difference include,
but are not limited to, competitive pressures, changing economic conditions,
factors discussed in this Management's Discussion and Analysis of Financial
Condition and Results of Operations, and other factors, some of which will be
outside the control of management. Readers are cautioned not to place undue
reliance on these forward-looking statements, which reflect management's
analysis only as of the date hereof. The Company undertakes no obligation to
publicly revise these forward-looking statements to reflect events or
circumstances that arise after the date hereof. Readers should refer to and
carefully review the information described in future documents the Company files
with the Securities and Exchange Commission.
10
ITEM 3. - Quantitative and Qualitative Disclosures About Market Risks
- ---------------------------------------------------------------------
The Company is exposed to market risk from changes in interest rates.
Market risk is the potential loss arising from adverse changes in market rates
and prices such as interest rates. For fixed rate debt, interest rate changes
affect the fair value of financial instruments but do not impact earnings or
cash flows. Conversely for floating rate debt, interest rate changes generally
do not affect the fair market value but do impact future earnings and cash flow,
assuming other factors are held constant. At September 30, 2002, the Company had
variable rate notes payable of approximately $2,511,000. Holding other variables
constant, the pre-tax earnings and cash flow impact for the next year resulting
from a one percentage point increase in interest rates would be approximately
$25,000.
ITEM 4. - Controls and Procedures
- ---------------------------------
As of September 30, 2002, the Company carried out an evaluation, under
the supervision and with the participation of the Company's management,
including the Chief Executive Officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures. Based upon that
evaluation, the Chief Executive Officer concluded that the Company's disclosure
controls and procedures are effective in timely alerting him to material
information relating to the Company (including its consolidated subsidiary)
required to be included in the Company's periodic Securities Exchange Commission
(SEC) filings. Disclosure controls and procedures are defined as controls and
procedures that are designed to ensure that information required to be disclosed
by the Company in reports filed with the SEC is recorded, processed, summarized
and reported within the time periods specified in the SEC's rules and forms.
Subsequent to the date of the evaluation, there have been no
significant changes in the Company's internal controls or in other factors that
could significantly affect internal controls, nor were any corrective actions
required with regard to significant deficiencies and material weaknesses.
11
PART II
OTHER INFORMATION
-----------------
ITEM 1. LEGAL PROCEEDINGS
-----------------
Not Applicable
ITEM 2. CHANGES IN SECURITIES
---------------------
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
-------------------------------
Not Applicable
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
--------------------------------------------------
Not Applicable
ITEM 5. OTHER INFORMATION
-----------------
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
Exhibit
Number Document
------ --------
99.0 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(attached hereto).
12
SIGNATURES
----------
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
W W CAPITAL CORPORATION
(Registrant)
Dated: January 31, 2003 By: /s/ Steve D. Zamzow
-------------------------------
Steve D. Zamzow, President & CEO
Dated: January 31, 2003 By: /s/ Mike Dick
-------------------------------
Mike Dick, Controller
13
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Steve D. Zamzow, President and Chief Executive Officer of W W Capital
Corporation, certify that:
1. I have reviewed this quarterly report on Form 10-Q of W W Capital
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. I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and I 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 my conclusions about the
effectiveness of the disclosure controls and procedures based on
my evaluation as of the Evaluation Date;
5. I have disclosed, based on my 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 auditor 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. 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.
Dated: January 31, 2003 By: /s/ Steve D. Zamzow
--------------------------------
Steve D. Zamzow, President and CEO