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 Quarterly Period Ended December 31, 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 February 28, 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
- ------ December 31, 2002 and June 30, 2002 1
Statements of Operations
Three and Six Months Ended
December 31, 2002 and 2001 3
Statements of Cash Flows
Six Months Ended
December 31, 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
December 31, June 30,
2002 2002
---- ----
(Unaudited)
Assets
- ------
Current assets:
Cash $ 134,666 $ 137,948
----------- -----------
Trade accounts receivable 2,238,631 2,004,161
Less allowance for doubtful accounts (275,000) (275,000)
----------- -----------
Net accounts receivable 1,963,631 1,729,161
----------- -----------
Accounts receivable, other 211,624 162,703
Inventories:
Raw materials 487,603 528,110
Work-in-process 358,136 418,334
Finished goods 807,890 843,860
----------- -----------
Total inventories 1,653,629 1,790,304
----------- -----------
Prepaid expenses 84,485 35,632
Current portion of notes receivable
from related parties 603 603
Deferred income tax asset 183,500 149,500
----------- -----------
Total current assets 4,232,138 4,005,851
----------- -----------
Property and equipment, at cost 4,573,734 4,290,594
Less accumulated depreciation
and amortization (2,254,897) (2,135,406)
----------- -----------
Net property and equipment 2,318,837 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 $5,125
at December 31, 2002 and $3,075
at June 30, 2002 35,875 37,925
Equipment deposits 175,000 175,000
Other assets 40,462 41,130
----------- -----------
Total other assets 271,807 274,525
----------- -----------
TOTAL ASSETS $ 6,822,782 $ 6,435,564
=========== ===========
(Continued on following page)
See accompanying notes to financial statements.
1
W-W CAPITAL CORPORATION
-----------------------
Balance Sheets, Continued
December 31, June 30,
2002 2002
---- ----
(Unaudited)
Liabilities
- -----------
Current Liabilities:
Accounts payable $ 1,431,529 $ 1,373,803
Accrued property taxes 19,174 10,400
Accrued payroll and related taxes 200,304 198,887
Accrued interest payable 75,857 80,106
Current portion of long-term notes payable 354,000 239,000
Current portion of capital lease obligations 74,000 75,000
Other current liabilities 31,998 24,908
----------- -----------
Total current liabilities 2,186,862 2,002,104
----------- -----------
Other Liabilities:
Long-term notes payable, net of current portion 3,255,400 2,966,693
Long-term capital lease obligations, net
of current portion 1,183,927 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 4,619,227 4,428,310
----------- -----------
TOTAL LIABILITIES 6,806,089 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 December 31, 2002 and June 30, 2002 55,538 55,538
Capital in excess of par value 3,305,533 3,305,533
Accumulated deficit (465,263) (476,806)
----------- -----------
2,895,808 2,884,265
Less 3,545,663 shares of treasury stock at cost (2,879,115) (2,879,115)
----------- -----------
NET STOCKHOLDERS' EQUITY 16,693 5,150
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 6,822,782 $ 6,435,564
=========== ===========
See accompanying notes to financial statements.
2
W-W CAPITAL CORPORATION
-----------------------
Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
December 31 December 31,
----------- ------------
2002 2001 2002 2001
---- ---- ---- ----
Net sales $ 3,056,436 $ 3,009,617 $ 6,198,075 $ 5,826,351
Cost of goods sold 2,408,805 2,433,337 4,974,472 4,663,836
----------- ----------- ----------- -----------
Gross profit 647,631 576,280 1,223,603 1,162,515
----------- ----------- ----------- -----------
Operating expenses:
Selling expenses 281,745 284,619 522,811 566,282
General and administrative expenses 314,007 349,519 645,172 689,284
----------- ----------- ----------- -----------
Total operating expenses 595,752 634,138 1,167,983 1,255,566
----------- ----------- ----------- -----------
Operating earnings (loss) 51,879 (57,858) 55,620 (93,051)
----------- ----------- ----------- -----------
Other income (expenses):
Interest income 93 31 76 5,785
Interest expense (105,223) (84,236) (191,996) (181,934)
Gain on sale of assets -- 4,700 100 4,700
Other income (expense), net 50,067 15,652 51,999 16,476
----------- ----------- ----------- -----------
Total other income (expense) (55,063) (63,853) (139,821) (154,973)
----------- ----------- ----------- -----------
Loss before income taxes and cumulative effect
of a change in accounting principle (3,184) (121,711) (84,201) (248,024)
Income tax benefit 2.000 48.000 34,000 99,000
----------- ----------- ----------- -----------
Loss before cumulative effect of a change in
accounting principle (1,184) (73,711) (50,201) (149,024)
Cumulative effect of a change in accounting
principle -- -- 61,744 --
----------- ----------- ----------- -----------
Net earnings (loss) $ (1,184) $ (73,711) $ 11,543 $ (149,024)
=========== =========== =========== ===========
(Continued on following page)
See accompanying notes to financial statements.
3
W-W CAPITAL CORPORATION
-----------------------
Statements of Operations, Continued
(Unaudited)
Three Months Ended Six Months Ended
December 31 December 31,
----------- ------------
2002 2001 2002 2001
---- ---- ---- ----
Earnings per common share:
Basic
Loss before cumulative effect of a
change in accounting principle $ 0.00 $ (0.04) $ (0.02) $ (0.07)
Cumulative effect of a change in
accounting principle 0.00 0.00 0.03 0.00
------------- ------------- ------------- -------------
Net earnings (loss) $ 0.00 $ (0.04) $ 0.01 $ (0.07)
============= ============= ============= =============
Weighted average number of common
shares 2,008,164 2,008,164 2,008,164 2,008,164
Diluted
Loss before cumulative effect of a
change in accounting principle $ 0.00 $ (0.04) $ (0.02) $ (0.07)
Cumulative effect of a change in
accounting principle 0.00 0.00 0.03 0.00
------------- ------------- ------------- -------------
Net earnings (loss) $ 0.00 $ (0.04) $ 0.01 $ (0.07)
============= ============= ============= =============
Weighted average number of common
shares 2,008,164 2,008,164 2,008,164 2,008,164
See accompanying notes to financial statements.
4
W-W CAPITAL CORPORATION
-----------------------
Statements of Cash Flows
(Unaudited)
Six Months Ended
December 31,
------------
2002 2001
---- ----
Cash flows from operating activities:
Net earnings (loss) $ 11,543 $(149,024)
Adjustments to reconcile net earnings (loss)
to net cash used in operating activities:
Depreciation and amortization 121,541 125,560
Gain on sale of property and equipment (100) (4,700)
Provision for doubtful accounts receivable -- 39,784
Amortization of negative goodwill -- (1,171)
Write off of negative goodwill (61,744) --
Change in assets and liabilities:
Accounts receivable (234,470) (287,983)
Inventories 136,675 146,693
Other current and non-current assets (131,106) (143,658)
Accounts payable 57,726 150,531
Accrued expenses and other current liabilities 13,032 44,473
--------- ---------
Net cash used in operating activities (86,903) (79,495)
--------- ---------
Cash flows from investing activities:
Proceeds from sale of property and equipment 100 4,700
Purchase of property and equipment (22,190) (16,393)
--------- ---------
Net cash used in investing activities $ (22,090) $ (11,693)
--------- ---------
(Continued on following page)
See accompanying notes to financial statements
5
W-W CAPITAL CORPORATION
-----------------------
Statements of Cash Flows, Continued
(Unaudited)
Six Months Ended
December 31,
------------
2002 2001
---- ----
Cash flows from financing activities:
Payments on notes payable, financial
institutions and government entities $(5,950,483) $(5,398,097)
Proceeds from notes payable 6,093,240 5,515,750
Payments on capital leases (37,046) (32,124)
Payment of loan acquisition costs -- (41,000)
----------- -----------
Net cash provided by financing
activities 105,711 44,529
----------- -----------
Net decrease in cash (3,282) (46,659)
Cash at beginning of period 137,948 216,473
----------- -----------
Cash at end of period $ 134,666 $ 169,814
=========== ===========
Supplemental Information:
Cash paid during the period for interest $ 196,245 $ 136,946
Installment loans to acquire property and
equipment $ 260,950 $ --
Installment loans 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 and six month periods ended December
31, 2002, are not necessarily indicative of the result 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 statement 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
and six month periods.
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.
7
NOTE 3 - NEGATIVE GOODWILL AND CHANGE IN ACCOUNTING PRINCIPLE (continued)
- -------------------------------------------------------------------------
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:
Three Months Ended Six Months Ended
December 31 December 31,
----------- ------------
2002 2001 2002 2001
---- ---- ---- ----
Reported net income (loss) $ (1,184) $ ( 73,711) $ 11,543 $ ( 149,024)
Subtract-back adjustment for
accounting change -- -- (61,744) --
Add-back goodwill amortization -- 586 -- 1,171
---------- ----------- ----------- ------------
Adjusted net income (loss) $ (1,184) $ (73,125) $ ( 50,201) $ (147,853)
========== =========== =========== ============
Adjusted net income (loss) per share-
basic $ 0.00 $ ( 0.04) $ ( 0.02) $ ( 0.07)
Adjusted net income (loss) per share-
diluted $ 0.00 $ (0.04) $ ( 0.02) $ ( 0.07)
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 effect the Company's
statement of operations for the three and six months ended December 31, 2002 and
2001, respectively, is as follows:
Three Months Ended Six Months Ended
December 31, December 31,
------------ ------------
Transactions with
related parties 2002 2001 2002 2001
- --------------- ---- ---- ---- ----
Rent expense $ -- $ 1,000 $ -- $ 2,500
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 $11,543 for the six months ended December
31, 2002, as compared to a net loss of $149,024 for the same period of 2001. For
the three month period ended December 31, 2002, the Company incurred a loss of
$1,184 as compared to $73,711 for the same period of 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 a slight
improvement in economic conditions throughout the United States. Additionally,
the Company had a change in estimate regarding a fire claim receivable that
resulted in an increase in income of $49,141. The loss for the three month
period ended December 31, 2002 is attributable to normal slow sales during the
winter months and holiday season.
Net sales increased to $6,198,075 for the six months ended December 31,
2002, compared to $5,826,351 for 2001. The increase of $371,724 took place in
all three locations. The Thomas, Oklahoma plant had an increase in sales of
$257,157 while the Livingston, Tennessee and Duncan, Oklahoma plants had
increases of $56,270 and $58,297 respectively. The increase in sales is
attributable to an overall recovery in the economy as well as an aggressive
attempt to limit the effects of the economic slowdown by analyzing existing
products and introducing new products and product lines which allows the Company
to gain acceptance with new customers and move into markets not normally
serviced by the Company. The Company is also involved in several projects, which
includes special sales to expo centers, fairs and livestock shows. Based on
present conditions, the Company anticipates sales to increase significantly
during the second half of fiscal 2003.
Gross margins decreased slightly for the six months ended December 31,
2002 to 19.7% as compared to 20.0% in 2001. The Company was able to keep gross
margins steady while increased steel costs have hampered manufacturing companies
throughout the country. The Company continues to seek manufacturing improvements
in cost reductions as well as price adjustments and system analysis. Management
expects continued improvements in gross margins throughout 2003.
Selling expenses as a percentage of sales decreased for the six months
ended December 31, 2002 as a percentage of sales from 9.7% in 2001 to 8.4% in
2002. Total dollars expended for selling expense decreased $43,471 during the
six month period ended December 31, 2002. Through the balance of the fiscal
year, management will continue to evaluate selling expense to find ways to keep
costs in line as a percentage of sales, as we continue to grow markets and
market share with new products.
General and administrative expense decreased for the six months ended
December 31, 2002 as a percentage of sales to 10.4% as compared to 11.8% for the
same period of 2001. Overall dollars spent on general and administrative
expenses decreased $44,112 while sales increased. The Company will continue to
evaluate ways to lower general and administrative expense through the use of
centralization, job realignment, and line-by-line expense reductions. It is
anticipated that general and administrative costs will continue to improve
during fiscal 2003.
9
Interest expense increased for the six months ended December 31, 2002
to $191,996 from $181,934 for the same period of 2001. Interest expense for the
three months ended December 31, 2002 increased to $105,223 from $84,236 for the
same three-month period of 2001. This increase is due to heavy borrowings on the
revolving lines to support the economic slow down and related slow down of
customer payments and decrease in cash flow. As profits and cash flow increase,
the Company plans to reduce debt, thereby reducing overall interest expense.
Liquidity and Capital Resources
- -------------------------------
The Company's principal sources of liquidity are borrowings under its
credit facilities and from internally generated funds. The Company consumed
funds from operations of $86,903 primarily caused by an increase in net accounts
receivable balances. The Company used cash in investing activities of $22,090
primarily for the purchase of new property and equipment. Financing activities
resulted in an increase in borrowings of $105,711 for the six months ended
December 31, 2002. As the Company moves into the second half of fiscal 2003, it
anticipates increased sales growth with a steadily decline in borrowings.
There were no significant changes in the Company's credit facilities
during the quarter ended December 31, 2002. The Company was also in compliance
with all covenants related to credit facilities at December 31, 2002. The
Company feels that it will improve in both sales and operating earnings
throughout fiscal 2003 and that continued benefits will be realized because of
the plant move to Thomas, Oklahoma. 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 December 31, 2002, the Company had
variable rate notes payable of approximately $2,857,000. 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
$28,600.
ITEM 4. Controls and Procedures
- -------------------------------------
As of December 31, 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
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: February 28, 2003 By: /s/ Steve D. Zamzow
---------------------------------
Steve D. Zamzow, President & CEO
Dated: February 28, 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: February 28, 2003 By: /s/ Steve D. Zamzow
----------------------------------
Steve D. Zamzow, President and CEO