SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003
COMMISSION FILE NUMBER 1-31292
EMPIRE FINANCIAL HOLDING COMPANY
--------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 56-3627212
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(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
1385 WEST STATE ROAD 434, LONGWOOD, FL 32750
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(Address of Principal Executive Offices)(Zip Code)
407-774-1300
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(Registrant's Telephone Number, Including Area Code)
Indicate by check whether the registrant has (1) 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 [ ] No |X|
As of April 30, 2003, there were 4,787,800 shares of common stock, par value
$.01 per share, outstanding.
EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES
FORM 10-Q
FOR THE THREE MONTHS ENDED MARCH 31, 2003
INDEX
PART I
FINANCIAL INFORMATION
PAGE NO.
Item 1. Financial Statements................................................................................3
Consolidated Statement of Financial Condition, March 31, 2003 (unaudited) and
Consolidated Statement of Financial Condition, December 31, 2002..................................3
Consolidated Statements of Income, Three Months Ended March 31, 2003 (unaudited) and 2002...........4
Consolidated Statements of Cash Flows, Three Months Ended March 31, 2003 (unaudited) and 2002.......5
Selected Notes to Consolidated Financial Statements.................................................6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...............8
Item 3. Quantitative and Qualitative Disclosures About Market Risk.........................................10
PART II
OTHER INFORMATION
Item 1. Legal Proceedings..................................................................................11
Item 2. Changes in Securities and Use of Proceeds..........................................................11
Item 3. Defaults Upon Senior Securities....................................................................11
Item 4. Submission of Matters to a Vote of Security Holders................................................11
Item 5. Other Information..................................................................................11
Item 6. Exhibits and Reports on Form 8-K...................................................................11
Signatures.........................................................................................12
2
PART I. - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
MARCH 31, DECEMBER 31,
2003 2002
------------- -------------
(UNAUDITED)
(NOTE 2)
ASSETS
Cash and cash equivalents................................................... $ 4,411,452 $ 4,146,857
Receivables from customers.................................................. 7,417,704 5,772,216
Receivables from brokers and dealers and clearing organizations............. 2,363,911 1,723,621
Deposits at clearing organizations.......................................... 420,937 631,687
Income taxes receivable..................................................... 351,000 351,000
Furniture and equipment, net of accumulated depreciation of $183,816 and
$163,962 respectively.................................................... 101,753 109,879
Customer list............................................................... 284,140 331,390
Other assets................................................................ 400,664 427,983
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Total assets................................................................ $ 15,751,561 $ 13,494,633
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Accounts payable, accrued expenses and other liabilities ................ $ 2,577,659 $ 3,413,044
Payable to customers..................................................... 9,283,687 5,661,667
Payable to brokers and dealers and clearing organizations................ 342,005 472,436
Due to related parties................................................... 61,352 61,353
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Total liabilities...................................................... 12,264,703 9,608,500
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Shareholders' equity
Preferred stock, $.01 par value; 1,000,000 shares authorized; none issued
and outstanding........................................................ -- --
Common stock, $.01 par value; 100,000,000 shares authorized: 5,000,000
shares issued and outstanding.......................................... 50,000 50,000
Additional paid-in capital............................................... 8,350,095 8,350,095
Retained earnings........................................................ (3,778,040) (3,378,765)
Treasury stock, at cost, 212,200 shares at March 31, 2003................ (1,135,197) (1,135,197)
------------- -------------
Total shareholders' equity............................................. 3,486,858 3,886,133
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Total liabilities and shareholders' equity............................. $ 15,751,561 $ 13,494,633
============= =============
The accompanying notes are an integral part of these consolidated financial statements.
3
EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED
MARCH 31,
--------------------------------
2003 2002
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(UNAUDITED)
Revenues:
Clearing and order execution trading revenues, net....................... $ 828,008 $ 1,227,901
Commissions and fees..................................................... 3,190,018 4,115,531
Interest................................................................. 90,372 93,246
Other.................................................................... 17,333 13,912
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4,125,731 5,450,590
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Expenses:
Employee compensation and benefits....................................... 1,234,491 2,050,670
Commissions and clearing costs........................................... 2,083,363 1,527,486
Order flow payments...................................................... 85,643 330,960
Interest................................................................. 12,272 20,332
Communications and data processing....................................... 239,608 125,074
General and administrative............................................... 830,067 490,310
Advertising.............................................................. 39,564 4,060
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4,525,008 4,548,892
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Net income (loss)........................................................... $ (399,277) $ 901,698
============= =============
Earnings (loss) per share-basic and diluted................................. $ (0.08) $ 0.23
============= =============
Unaudited pro forma information (Note 2):
Income (loss)before taxes................................................ $ (399,277) $ 901,698
Provision for income taxes............................................... - 340,000
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Net income (loss)........................................................... $ (399,277) $ 561,698
============= =============
Pro forma earnings (loss) per share - basic and diluted..................... $ (0.08) $ 0.14
============= =============
Weighted average shares outstanding......................................... 4,787,800 4,000,000
============= =============
The accompanying notes are an integral part of these consolidated financial statements.
4
EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
MARCH 31,
---------------------------------
2003 2002
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(UNAUDITED)
Operating activities
Net income (loss)........................................................ $ (399,277) $ 901,698
Adjustments to reconcile net income to net cash (used in) provided by
operating activities:
Depreciation........................................................... 19,853 18,835
Amortization of customer list.......................................... 47,250 160,000
Changes in assets and liabilities:
Segregated cash and treasury bills................................... -- 22,588
Receivables from customers............................................. (1,645,488) 1,399,596
Receivables from brokers and dealers and clearing organizations........ (640,290) (154,103)
Deposits at clearing organizations..................................... 210,750 (110)
Other assets........................................................... 27,321 (159,033)
Accounts payable, accrued expenses and other liabilities............... (835,386) 1,393,655
Payable to customers................................................... 3,622,020 (1,124,998)
Payable to brokers and dealers and clearing organizations.............. (130,432) 39,264
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Net cash provided by (used in) operating activities.................... $ 276,321 $ 2,497,392
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Investing activities:
Purchases of property and equipment...................................... (11,726) --
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Net cash used in investing activities.................................. $ (11,726) --
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Financing activities:
Payment of short-term borrowings from bank............................... $ -- $ (684,000)
Increase in contract payable -- 51,023
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Net cash provided by (used in) financing activities -- (632,977)
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Net increase in cash and cash equivalents................................... 264,595 1,864,415
Cash and cash equivalents at beginning of year.............................. 4,146,857 1,803,323
------------- -------------
Cash and cash equivalents at end of year.................................... $ 4,411,452 $ 3,667,738
============= =============
Supplemental disclosures of cash flow information:
Cash paid during the period for interest................................. $ 12,272 $ 20,332
============= =============
Income Taxes................................................................ $ -- $ --
============= =============
The accompanying notes are an integral part of these consolidated financial statements.
5
EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND FOR THE YEAR DECEMBER 31, 2002
1. BASIS OF PRESENTATION
The accompanying interim consolidated financial statements of Empire
Financial Holding Company and its subsidiaries (collectively, the "Company") are
unaudited; however, in the opinion of management, the interim financial
statements reflect all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results for the interim
periods. All intercompany balances and transactions have been eliminated in
consolidation. Certain footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted pursuant to the
applicable rules and regulations of the Securities and Exchange Commission. The
preparation of financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amount of revenue and expense
during the reporting period. Actual results could differ from these estimates.
The results of operations for the three months ended March 31, 2003, are not
Necessarily indicative of the results to be expected for the year ended December
31, 2003. These consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes for the year ended December
31, 2002 appearing in the Company's Annual Report on Form 10-K for the year
ended December 31, 2002, as filed with the Securities and Exchange Commission.
2. PRO FORMA INFORMATION
The Company elected to be taxed as an S corporation, which provides for
taxable income of the Company to be included in the income tax returns of the
Company's shareholders and not the Company. However, the Company's election to
be treated as an S corporation terminated on April 9, 2002, the effective date
of the Company's initial public offering. The pro forma adjustments shown in the
consolidated statements of income reflect provisions for income taxes computed
based upon statutory tax rates as if the Company had been subject to federal and
state taxation during the periods presented.
3. ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES
Accounts payable, accrued expenses and other liabilities consisted of
the following:
MARCH 31, DECEMBER 31,
2003 2002
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Accounts payable ............... $ 273,955 $ 479,596
Bank overdrafts ................ 1,160,827 1,092,139
Accrued payroll ................ 360,022 534,765
Accrued payroll taxes .......... 28,873 30,677
Accrued rent ................... 150,454 150,454
Other .......................... 426,547 606,176
Deferred revenue ............... 176,981 519,237
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$2,577,659 $3,413,044
========== ==========
6
EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND FOR THE YEAR 2002
(CONTINUED)
4. NET CAPITAL AND RESERVE REQUIREMENTS
Advantage Trading Group, Inc. and Empire Financial Group, Inc., the
broker dealer subsidiaries of the Company, are subject to the Securities and
Exchange Commission Uniform Net Capital Rule 15c3-1 and the requirements of the
securities exchanges of which they are members. This rule requires that
aggregate indebtedness not exceed 15 times net capital. Rule 15c3-1 also
provides for an "alternative net capital requirement" which, if elected,
requires that net capital be equal to the greater of $250,000 or 2% of aggregate
debit items computed in applying the formula for determination of reserve
requirements. The alternative net capital requirement has been utilized by
Advantage Trading Group, Inc.
Net capital positions of the Company's broker dealer subsidiaries were
as follows at March 31, 2003.
ADVANTAGE TRADING GROUP, INC.:
Net capital as a percentage of aggregate debit items 20%
Net capital ........................................ $2,030,395
Required net capital ............................... $ 250,000
EMPIRE FINANCIAL GROUP, INC.:
Ratio of aggregate indebtedness to net capital ..... 1.91 to 1
Net capital ........................................ $ 472,824
Required net capital ............................... $ 250,000
5. NET CAPITAL AND RESERVE REQUIREMENTS
Advantage Trading Group, Inc. is also subject to Rule 15c3-3 (the
"Rule") under the Securities Exchange Act of 1934 which specifies certain
conditions under which brokers and dealers carrying customer accounts are
required to maintain cash or qualified securities in a special reserve bank
account for the exclusive benefit of customers. Amounts to be maintained, if
required, are computed in accordance with a formula defined in the Rule. At
March 31, 2003, Advantage Trading Group, Inc. was not required to maintain a
reserve requirement.
6. FINANCIAL INFORMATION BY BUSINESS SEGMENT
The Company operates in two business segments, financial brokerage
services and order execution services. Financial brokerage services (including
the sale of equities, mutual funds, fixed income products and investment
advisory services) are provided directly to retail and institutional customers
through Internet and telephone trading. Order execution services involve acting
as principal in securities transactions for approximately 75 broker dealers.
Order execution services also includes clearing securities transactions for the
Company's account and unaffiliated broker dealers.
The expenses of Empire Financial Holding Company and its identifiable
assets are set forth in the segment information below as corporate. Information
concerning operations in these segments of business was as follows:
7
EMPIRE FINANCIAL HOLDING COMPANY AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND FOR THE YEAR 2002
(CONTINUED)
MARCH 31,
----------------------------
2003 2002
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Revenue:
Clearing and order execution services ..... $ 1,004,432 $ 1,227,901
Retail brokerage services ................. 3,491,373 4,786,277
Eliminations .............................. (370,074) (563,588)
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$ 4,125,731 $ 5,450,590
============ ============
Net income:
Clearing and order execution services ..... $ (382,501) $ 97,527
Retail brokerage services ................. 17,390 964,171
Corporate ................................. (34,166) (160,000)
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$ (399,277) $ 901,698
============ ============
Identifiable assets:
Clearing and order execution services ..... $ 13,829,322 $ 12,808,515
Retail services ........................... 2,325,208 4,423,251
Corporate ................................. 7,092,576 1,996,674
Eliminations .............................. (7,495,545) (1,076,382)
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$ 15,751,561 $ 18,152,058
============ ============
All of the Company's business and long-lived assets are located in the
United States. Eliminations represent revenues and receivables from intercompany
transactions resulting from clearing activities between Empire Financial Group,
Inc. and Advantage Trading Group, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the Selected
Consolidated Financial Data and the Consolidated Financial Statements and Notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2002, as previously filed with the Securities and Exchange
Commission. This discussion contains forward-looking statements that involve
risks and uncertainties that could cause actual results to differ materially
from those anticipated in such forward-looking statements. Factors that may
cause such differences include, but are not limited to: the effect of client
trading patterns on Company revenues and earnings; computer system failures;
trading volumes in excess of our capacity; the effects of competitors' pricing,
product and service decisions and intensified competition; evolving regulation
and changing industry customs and practices adversely affecting the Company;
adverse results of litigation; changes in revenues and profit margin due to
cyclical securities markets and interest rates; a significant downturn in the
securities markets over a short period of time or a sustained decline in
securities prices and trading volumes; and the other risks and uncertainties set
forth under the heading "Risk Factors" in the Company's Annual Report on Form
10-K for the year ended December 31, 2002, as previously filed with the
Securities and Exchange Commission.
The terms "we" and "us" as used in this report refer to Empire
Financial Holding Company and its operating subsidiaries.
8
Our significant accounting policies are disclosed in the Notes to
Consolidated Financial Statements for the year ended December 31, 2002, found in
our Annual Report on Form 10-K for the year ended December 31, 2002. As of
January 1, 2002, we have adopted Statement of Financial Accounting Standards No.
142, "Goodwill and Other Intangible Assets" ("SFAS 142"), and Statement of
Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SAS 144"). SFAS No. 144 requires us to test
long-lived assets by comparing their carrying value against their undiscounted
cash flows and to recognized impairment if the carrying value is greater than
the undiscounted cash flows. No impairment charges were recognized at March 31,
2003 under SFAS 144.
RESULTS OF OPERATIONS:
THREE MONTHS ENDED MARCH 31, 2003 COMPARED TO THREE MONTHS ENDED MARCH 31, 2002.
Total revenues for the three months ended March 31, 2003 were
$4,125,731, a decrease of $1,324,859, or 24%, over the same period in 2002. This
decrease was primarily due to the reasons described below.
Order execution trading revenues for the three months ended March 31,
2003 were $828,008, a decrease of $399,893, or 33%, over the same period in 2002
due to an approximate 30% decrease in the number of order execution
transactions due to market conditions.
Commission and fee revenues for the three months ended March 31, 2003
were $3,190,018, a decrease of $925,513, or 22%, over the same period in 2002
due to an approximate 18% decrease in the number of transactions and an
increased utilization of the internet for trades. We receive less revenue per
trade for internet trades.
Interest revenues for the three months ended March 31, 2003 were
$90,372, a decrease of $2,874, or 3%, over the same period in 2002, primarily
due to a decrease in the average retail customer's margin debit account
balances. The average month end customer margin debit balance for the three
months ended March 31, 2003 was $7,052,032 compared to $7,645,030 for the three
months ended March 31, 2002, a decrease of $592,998, or 8%. This decrease was
partially offset by a slight increase in the average amount of interest charged
to customers.
Total expenses for the three months ended March 31, 2003 remained
approximately the same compared to the same period in 2002, primarily due to the
reasons described below.
Employee compensation and benefit costs for the three months ended
March 31, 2003 were $1,234,491, a decrease of $816,179, or 40%, over the same
period in 2002. This decrease was primarily due to an increasing reliance on
independent registered representatives which is reflected in reduced
commissions, bonuses and other personnel costs. This decrease is also due to the
decrease in our commission fee structure. When compared to the three month
period ended March 31, 2002, commissions decreased 55%. As of March 31, 2003, we
employed 58 people as compared to 61 people as of March 31, 2002.
Conversely to employee compensation and benefit costs, commissions and
clearing costs for the three months ended March 31, 2003 were $2,083,363, an
increase of $555,877, or 36%, over the same period in 2002. This increase was
primarily attributable to our revenues increasing due to our use of more
independent representatives during the three months ended March 31, 2003 as
compared to the same period in 2002. As a result, the amount paid as commissions
increased.
9
Order flow payment expense for the three months ended March 31, 2003
was $85,643, a decrease of $245,317, or 74% over the same period in 2002, due to
a reduction in the number of trade transactions that required order flow
payments as well as a decrease in the order flow payment amount paid per
transaction.
Communications and data processing expense for the three months ended
March 31, 2003 was $239,608 an increase of $114,534, or 92%, over the same
period in 2002, due to increased activity through the Internet, web sites
established for our subsidiary companies and upgrades in computers, other
hardware devices and computer software used in our clearing function.
General and administrative expenses for the three months ended March
31, 2003 were $830,067, an increase of $339,757, or 69%, from the same period in
2002, due to an increase in professional fees. Accounting fees increased 61% and
legal fees increased 714% for the three months ended March 31, 2003 as compared
to the same period in 2002.
Advertising expenses for the three months ended March 31, 2003 were
$39,564, an increase of $35,504, or 874%, over the same period in 2002. In 2002,
we concentrated our efforts on obtaining more independent representatives. Now
that we have a broader base of operations, we are, once again, pursuing
traditional and non-traditional methods of advertising.
LIQUIDITY AND CAPITAL RESOURCES:
Our broker dealer subsidiaries have assets which are highly liquid,
consisting generally of cash, money market funds and securities freely saleable
in the open market. Total assets at March 31, 2003 were $15,751,561, which
consisted of approximately $14,200,000 in liquid assets.
Our broker dealer subsidiaries are subject to the net capital
requirements of the Securities Exchange Commission, the National Association of
Securities Dealers, Inc. and other regulatory authorities. As of March 31, 2003,
our broker dealer subsidiaries regulatory net capital for the combined
subsidiaries was $2,503,219 with a minimum combined net capital requirement of
$500,000. Combined excess net capital was $2,003,219.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk generally represents the risk of loss that may result from
the potential change in the value of a financial instrument as a result of
fluctuations in interest rates and market prices. We have established policies,
procedures and internal processes governing our management of market risks in
the normal course of our business operations.
We seek to control the risks associated with our client activities by
requiring clients to maintain margin collateral in compliance with various
regulatory and internal guidelines. We monitor required margin levels daily and,
pursuant to such guidelines, require our clients to deposit additional
collateral, or to reduce positions, as necessary.
As a fundamental part of our brokerage business we hold short-term
interest earning assets primarily in short-term fixed-rate U.S. Treasury Bills.
We earn a net interest spread on the difference between amounts earned on margin
loans made to clients and amounts paid on balances in client accounts. Since we
establish the rate paid on client accounts, a substantial portion of our
interest rate risk is under our direct management.
Our revenues and financial instruments are denominated in U.S. dollars
and we have not, to date, invested in derivative financial instruments or
derivative commodity instruments. As of March 31, 2003, the Company's broker
dealer subsidiaries had no financial instruments in an inventory short position.
10
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the ordinary course of business, the Company is and may become a
party to legal or regulatory proceedings or arbitrations. The Company is not
currently involved in any legal or regulatory proceedings or arbitrations, the
outcome of which is expected to have a material adverse impact on our business.
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
None.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
99.1 Co-Principal Executive Officer Certification Pursuant
to 18 U.S.C. Section 1350, as adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
99.2 Co-Principal Executive Officer Certification Pursuant
to 18 U.S.C. Section 1350, as adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
99.3 Principal Financial Officer Certification Pursuant to
18 U.S.C. Section 1350, as adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K.
The following report was filed on Form 8-K during the three months
ended March 31, 2003:
The company filed a Current Report on Form 8-K, reporting items 5 and
7, dated March 28, 2003, with the Securities and Exchange Commission in
connection with the execution of a non-binding Letter of Intent, dated March 28,
2003, entered into by and among the company and its principal shareholders,
Kevin M. Gagne and Richard L. Goble, confirming their interest in effectuating a
spin-off of Advantage Trading Group, Inc., a Florida corporation and a
wholly-owned subsidiary of the Company, from the Company. No financial
statements were filed with this Current Report on Form 8-K.
11
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.
Date: May 15, 2002 EMPIRE FINANCIAL HOLDING COMPANY
/s/ Richard L. Goble
--------------------
Richard L. Goble
Co-Chief Executive Officer
(Principal Executive Officer)
/s/ Kevin M. Gagne
------------------
Kevin M. Gagne
Co-Chief Executive Officer
(Principal Executive Officer)
/s/ George R. Cupples
---------------------
George R. Cupples
Chief Financial Officer
(Principal Accounting Officer)
12
CERTIFICATION
I, Kevin M. Gagne, Co-Chief Executive Officer of Empire Financial Holding
Company, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Empire Financial
Holding Company;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
function):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: May 15, 2003 /s/ Kevin M. Gagne
--------------------------
Kevin M. Gagne
Co-Chief Executive Officer
13
CERTIFICATION
I, Richard L. Goble, Co-Chief Executive Officer of Empire Financial Holding
Company, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Empire Financial
Holding Company;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
function):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: May 15, 2003 /s/ Richard L. Goble
--------------------
Richard L. Goble
Co-Chief Executive Officer
14
CERTIFICATION
I, George R. Cupples, Chief Financial Officer of Empire Financial Holding
Company, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Empire Financial
Holding Company;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
function):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: May 15, 2003 /s/ George R. Cupples
---------------------
George R. Cupples
Chief Financial Officer
15
Exhibits Index
99.1 Co-Principal Executive Officer Certification
Pursuant to 18 U.S.C. Section 1350, as adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
99.2 Co-Principal Executive Officer Certification
Pursuant to 18 U.S.C. Section 1350, as adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
99.3 Principal Financial Officer Certification
Pursuant to 18 U.S.C. Section 1350, as adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
16