-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E7kFy3hCWwjXup2Ytq0xwBRYMhsSSH19ra+OhIPJ8BDZqsPEMvmxPxkF6ekE0XdH 8Da+jJqtnlqL3/by8zoKzA== 0001019056-02-000775.txt : 20021112 0001019056-02-000775.hdr.sgml : 20021111 20021112081132 ACCESSION NUMBER: 0001019056-02-000775 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ONLINE GAMING SYSTEMS LTD \ CENTRAL INDEX KEY: 0001003739 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 133858917 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-27256 FILM NUMBER: 02815090 BUSINESS ADDRESS: STREET 1: 200 E PALMETTO PARK RD, STE 200 CITY: BOCA RATON STATE: FL ZIP: 33432 BUSINESS PHONE: 5613936685 MAIL ADDRESS: STREET 1: 3225 MCLEDO DRIVE STREET 2: 1ST FLOOR CITY: LAS VEGAS STATE: NV ZIP: 89121 FORMER COMPANY: FORMER CONFORMED NAME: CEEE GROUP CORP DATE OF NAME CHANGE: 19951120 FORMER COMPANY: FORMER CONFORMED NAME: ATLANTIC INTERNATIONAL ENTERTAINMENT LTD DATE OF NAME CHANGE: 19961203 FORMER COMPANY: FORMER CONFORMED NAME: ONLINE GAMING SYSTEMS INC DATE OF NAME CHANGE: 19991115 10QSB 1 online3q02.txt FORM 10QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter 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 Number: 0-27256 ------- ONLINE GAMING SYSTEMS, LTD. ----------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) DELAWARE 65-0512785 - ------------------------------- --------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification number) incorporation or organization) 3225 McLeod Drive 1st Floor, Las Vegas, Nevada 89121 ---------------------------------------------------- (Address of principal executive offices) Registrant's telephone no., including area code: (702) 836 -3042 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. Class Outstanding as of November 7, 2002 - ----------------------------- ---------------------------------- Common Stock, $.001 par value 96,365,953 TABLE OF CONTENTS Heading Part I. FINANCIAL INFORMATION Page - ------- ----------------------------- ---- Item 1 Financial Statements............................................ 2 Consolidated Balance Sheet-September 30, 2002 ((Unaudited).................................................... 3 Consolidated Statement of Operations-Nine Months Ended September 30, 2002 (Unaudited).................................. 4 Consolidated Statement of Operations-Three Months Ended September 30,2002 (Unaudited)................................... 5 Consolidated Statement of Cash Flows-Nine Months Ended September 30, 2002 (Unaudited).................................. 6 Notes to Consolidated Financial Statements (Unaudited).......... 7 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operation............................................ 10 Part II. OTHER INFORMATION -------------------------- Item 1 Legal Proceedings............................................... 13 Item 2 Change in Securities............................................ 13 Item 3 Defaults Upon Senior Securities................................. 13 Item 4 Submission of Matters to a Vote of Securities Holders........... 13 Item 5 Other Information............................................... 13 Item 6 Exhibits and Reports on Form 8-K................................ 13 Signatures...................................................... 14 Certifications.................................................. 15 PART 1 Item 1. Financial Statements The following unaudited financial Statements for the nine-month periods ended September 30, 2002 and 2001 have been prepared by Online Gaming Systems, Ltd. (the "Company") and Subsidiary. ONLINE GAMING SYSTEMS, LTD. AND SUBSIDIARY Financial Statements September 30, 2002 Page 2 of 17 ONLINE GAMING SYSTEMS, LTD. AND SUBSIDIARY CONSOLIDATED BALANCE SHEET
September 30, December 31, ------------ ------------ 2002 2001 ---- ---- (Unaudited) ------------ ------------ Assets: Current Assets: Cash $ 55,515 $ 123,097 Other Current Assets 17,018 22,918 ------------ ------------ Total Current Assets 72,533 146,015 Property and Equipment-Net of accumulated depreciation 80,472 214,393 Intangible Assets-Net of accumulated amortization 326,665 319,333 ------------ ------------ Total Assets $ 479,670 $ 679,741 ------------ ------------ Liabilities and Stockholders' Equity: Current Liabilities: Accounts Payable and Accrued Expenses $ 262,910 $ 379,125 Notes Payable-Officers -- 34,680 Accrued Interest-Related Party 1,165,629 804,098 Note Payable 70,000 22,500 Capital Lease Obligations 5,868 34,874 ------------ ------------ Total Current Liabilities 1,504,407 1,275,277 Convertible Notes Payable-Related Party 4,804,907 3,734,907 ------------ ------------ Total Liabilities 6,309,314 5,010,184 Commitments and Contingencies -- -- Stockholders' (Deficit): Convertible Preferred Stock-Par Value $.001 Per Share; Authorized 10,000,000 Shares, None Issued and Outstanding -- -- Common Stock-Par value $.001 Per Share; Authorized 100,000,000 Shares, Issued and outstanding- 96,365,953 Shares at September 30, 2002 96,365 94,546 Additional Paid-in Capital 18,695,434 18,615,665 Treasury Stock, 811,767 Common Shares-At Cost (1,730,485) (1,730,485) Accumulated (Deficit) (22,890,958) (21,310,169) ------------ ------------ Total Stockholders' (Deficit) (5,829,644) (4,330,443) ------------ ------------ Total Liabilities and Stockholders' (Deficit) $ 479,670 $ 679,741 ------------ ------------
The Accompanying Notes are an Integral Part of these Consolidated Financial Statements Page 3 of 17 ONLINE GAMING SYSTEMS, LTD. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Nine Months Ended September 30, 2002 2001 ---- ---- Revenue Related Party $ 250,000 $ -- Other 436,706 693,937 ------------ ------------ Total Revenue 686,706 693,937 Cost of Sales -- 17,142 ------------ ------------ Gross Profit 686,706 676,795 ------------ ------------ Operating Expenses: General and Administrative 1,631,727 2,930,995 Depreciation and Amortization 242,238 185,719 ------------ ------------ Total Operating Expenses 1,873,965 3,116,714 ------------ ------------ [Loss] from Operations (1,187,259) (2,439,919) ------------ ------------ Other [Expenses] Income: Interest Expense-Related Party (392,005) (445,097) Interest Expense (3,323) (16,245) Settlement of debt -- (200,000) Other Income [Expense] 1,797 (183,732) ------------ ------------ Other [Expenses] - Net (393,531) (845,074) ------------ ------------ [Loss] from Operations Before Income Tax [Benefit] Expense (1,580,790) (3,284,993) Income Tax [Benefit] Expense -- -- ------------ ------------ [Loss] from Operations (1,580,790) (3,284,993) ------------ ------------ Net [Loss] (1,580,790) (3,284,993) Preferred Stock Dividend in Arrears -- -- ------------ ------------ Net [Loss] Available to Common Stockholders $ (1,580,790) $ (3,284,993) ------------ ------------ Basic and Diluted Net [Loss] Per Share of Common Stock $ (.01) $ (.15) Weighted Average Shares of Common Stock Outstanding-Basic and Diluted 95,336,529 22,440,889 The Accompanying Notes are an Integral Part of these Consolidated Financial Statements. Page 4 of 17 ONLINE GAMING SYSTEMS, LTD. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended September 30, 2002 2001 ---- ---- Revenue Related Party $ -- $ -- Other 146,473 196,798 ------------ ------------ Total Revenue 146,473 196,798 Cost of Sales -- -- ------------ ------------ Gross Profit 146,473 196,798 ------------ ------------ Operating Expenses: General and Administrative 438,769 1,048,271 Depreciation and Amortization 68,143 59,984 ------------ ------------ Total Operating Expenses 506,912 1,108,255 ------------ ------------ [Loss] from Operations (360,439) (911,457) ------------ ------------ Other [Expenses] Income: Interest Expense-Related Party (137,397) (173,500) Interest Expense (680) (860) Other Income [Expense] -- (183,734) ------------ ------------ Other [Expenses] - Net (138,077) (357,734) ------------ ------------ [Loss] from Operations Before Income Tax [Benefit] Expense (498,516) (1,269,191) Income Tax [Benefit] Expense -- -- ------------ ------------ [Loss] from Operations (498,516) (1,269,191) ------------ ------------ Net [Loss] (498,516) (1,269,191) Preferred Stock Dividend in Arrears -- -- ------------ ------------ Net [Loss] Available to Common Stockholders $ (498,516) $ ( 1,269,191) ------------ ------------ Basic and Diluted Net [Loss] Per Share of Common Stock $ (0.01) $ (.04) Weighted Average Shares of Common Stock Outstanding-Basic and Diluted 95,546,846 33,985,792 The Accompanying Notes are an Integral Part of these Consolidated Financial Statements. Page 5 of 17 ONLINE GAMING SYSTEMS, LTD. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30, 2002 2001 ---- ---- Operating Activities: [Loss] from Operations $(1,580,790) $(3,284,993) Adjustments to Reconcile Net [Loss] Income to Net Cash [Used for] Operating Activities: Depreciation and Amortization 242,238 185,719 Issuance of Common Stock for services rendered 34,000 Issuance of Common Stock for cancellation of indebtedness 200,000 Issuance of Common Stock for services rendered (38,769) Changes in Assets and Liabilities: [Increase] Decrease in: Other Assets (4,747) (17,622) Increase [Decrease] in: Accounts Payable and Accrued Expenses (116,218) (707,817) Accrued Interest - Related Party 361,531 445,097 ----------- ----------- Net Cash - Operating Activities: (1,063,986) (3,218,385) ----------- ----------- Investing Activities: Purchase of Patents and Licenses -- (125,000) Purchase of Property, Equipment, and Capitalized Software (105,000) (80,548) ----------- ----------- Net Cash - Investing Activities (105,000) (205,548) ----------- ----------- Financing Activities: Proceeds from Issuance of Common Stock 12,910 17,500 Proceeds from Sale of Treasury Stock -- 14,062 Increase (Decrease) in Loan Payable to Officer -- 91,254 Proceeds from Note Payable 50,000 132,500 Proceeds from Convertible Note Payable - Related Party 1,320,000 3,538,642 Repayment of Convertible Note Payable - Related Party (250,000) -- Repayments of Note Payable (2,500) (282,500) Repayments of Lease Payable (29,006) (85,888) ----------- ----------- Net Cash - Financing Activities 1,101,404 3,425,570 ----------- ----------- [Decrease] Increase in Cash and Cash Equivalents (67,582) 1,637 Cash and Cash Equivalents - Beginning of Period 123,097 32,929 ----------- ----------- Cash and Cash Equivalents - End of Period $ 55,515 $ 34,566 =========== =========== Supplemental Disclosures of Cash Flow Information: Cash paid during the years for: Interest $ 33,796 $ 37,805 Taxes -- -- Supplemental Disclosure of Non-cash Financing Activities:
The Company issued 561,766 shares of common stock of the Company at $.06 per share to a former CEO& President of the company in exchange for cancellation of an amount owed. During the nine month period ended September 30, 2001 the Company issued 225,000 shares of common stock to a former consultant in exchange for cancellation of indebtedness. Accordingly non-cash expense of $200,000 was recognized. The Accompanying Notes are an Integral Part of these Consolidated Financial Statements. Page 6 of 17 ONLINE GAMIING SYSTEMS, LTD. AND SUBSIDIARY Notes to Consolidated Financial Statements (Unaudited) September 30, 2002 Note 1 - Basis of Preparation -------------------- The accompanying unaudited consolidated financial statements of Online Gaming Systems, Ltd and Subsidiary (the " Company") have been prepared in accordance with Regulation S-B promulgated by the Securities and Exchange Commission and do not include all of the information and footnotes required by generally accepted accounting principles in the United States for complete financial statements. In the opinion of management, these interim financial statements include all adjustments necessary in order to make the financial statements not misleading. The results of operations for such interim period are not necessary indicative of results of operations for a full year. The unaudited financial statements should be read in conjunction with the audited financial statements and notes thereto of the Company and management's discussion and analysis of financial condition and results of operations included in the Annual Report on Form 10-KSB for the year ended December 31, 2001. Note 2 - Significant Accounting Policies ------------------------------- The accounting policies followed by the Company are set forth in Note 2 to the Company's financial statements in the December 31, 2001 Form 10-KSB. Note 3 - Per Share Data -------------- Per share basic data are based on the weighted average number of common shares outstanding during the respective periods. The diluted net income per share is based upon the common stock outstanding during the period and the effect of all dilutive potential common shares outstanding. The computation of diluted earnings per share does not assume conversion, exercise or contingent issuance of securities that would have an anti-dilutive effect on earnings per share. Note 4 - Major Customers --------------- Income fees derived from customers are concentrated amongst numerous customers, with the following contributing more than 10 percent of the Company's revenues during the nine-month period ending September 30, 2002: Customer A-related party 36% Customer B 36% Page 7 of 17 Note 5 - Convertible Notes Payable - Related Party ----------------------------------------- At September 30, 2002, the Company had a $4,804,907 convertible note payable balance due Hosken Consolidated Investments ["HCI"]. As of September 30, 2002, subsidiaries of HCI owned approximately 86% of the outstanding shares of the Company's common stock. HCI is a South African investment holding company involved in various technology industries. Terms of the revised loan agreement provide for an extension of the maturity to repay all principal outstanding and related accrued interest by December 31, 2003. The notes payable are secured by substantially all assets of the Company. In November 2001, HCI converted $3,600,000 of convertible debt into 60,000,000 shares of the Company's common stock. As of September 30, 2002 the Company has $1,165,629 in interest related to the convertible debt borrowing. During the nine-month periods ended September 30, 2002 and 2001 the Company repaid HCI approximately $30,473 and $16,046 in accrued interest respectively. During the first quarter of 2002, HCI advanced the Company $750,000 in convertible notes and funds. During the second quarter of 2002, HCI advanced the Company $400,000 in convertible notes and funds During the second quarter of 2002 the Company provided management services in connection with developing an Internet casino and securing requisite licensing to International Gaming & Entertainment Ltd.("IGEC") for a fee of $250,000. Ahead Investments ("AI") is the majority shareholder of IGEC. AI is a wholly owned subsidiary of HCI and majority stockholder of the Company. Per the agreement IGEC exercised its right to pay for the license fee and management services by offsetting $250,000 of convertible debt due AI. During the third quarter of 2002, HCI advanced the Company $170,000 in convertible notes and funds See Note 7 for additional business agreements. Note 6 - Capital Stock ------------- During the first quarter 2002, the Chief Financial Officer of the Company purchased 166,667 shares of the Company's common stock, at $.06 per share. During the first quarter 2002, the former Chief Executive Officer of the Company was issued 561,766 shares of the Company's common stock, in settlement of a loan amount due to the former Chief Executive Officer of $34,683. Page 8 of 17 In January 2002, the Company received a purchase money mortgage note from a consultant calling for the purchase of 30,000 shares per month for 12 months at a price of $.05 per share, the closing price on the date when the agreement was negotiated. On January 2, 2002, the Company issued the initial 30,000 shares of its common stock in exchange for $1,500. On February 7, 2002, the Company issued another 90,000 shares of its common stock in exchange for $4,500. On August 8, 2002 the Company issued another 30,000 shares of its common stock. In the second quarter of 2002, 241,251 shares of the Company's common stock were issued to a previous customer in satisfaction of an investment made in the Company. During the third quarter 2002, the Chief Financial Officer of the Company purchased 133,333 shares of the Company's common stock, at $.06 per share. In the third quarter 2002, 541,667 shares of the Company's common stock with a fair market value of $0.06 per share were issued as consideration for rent in arrears. Additionally the Company issued 25,000 shares of common stock with a fair market value of $0.06 per share to a consultant for services rendered. Note 7 - Business Agreements ------------------- UnoDosTres.com -------------- During the third quarter of 2001, the Company executed a Marketing and Operations Agreement with UnoDosTres.com ("UDT) whereby it was granted exclusive rights to market up to three Internet Casinos on the UDT site and UDT agreed to provide up to $155 million of bartered advertising to promote the Internet casinos. The Agreement called for the first of the Internet casinos to be open not later than September 19, 2002. Due to delays in completion of certification for the Internet casino that the company will be managing for International Gaming & Entertainment Corporation, an affiliate, the casino was not open as of September 19, 2002. On September 25, 2002 UDT informed the Company that the agreement would be terminated, and has proposed certain changes to the various of the business points of the original Agreement. The Company is currently negotiating a new agreement with UDT. Page 9 of 17 Note 8- New Authoritative Accounting Pronouncements ------------------------------------------- On August 15, 2001, the FASB issued SFAS No.143, "Accounting for Asset Retirement Obligations ["SFAS No.143"]. SFAS No.143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. SFAS No.143 will be effective for financial statements issued for fiscal years beginning after June 15, 2002. An entity shall recognize the cumulative effect of adoption of SFAS No.143 as a change in accounting principle. The Company is not currently affected by this Statement's requirements. On April 30, 2002, the Financial Accounting Standards Board (FASB) issued Statement No.145, Rescission of FASB Statements No.4, 44 and 64,Amendment of FASB Statement No. 13 and Technical Corrections. The Statement updates, clarifies and simplifies existing accounting pronouncements. Statement 145 rescinds Statement 4, which required all gains and losses from extinguishments of debt to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. As result, the criteria in Opinion 30 will now be used to classify those gains and losses. Statement 64 and amended Statement 4, is no longer necessary because Statement 4 has been rescinded. Statement 44 was issued to establish accounting requirements for the effects of transition to the provisions of the Motor Carrier Act of 1980. Because the transition has been completed, Statement 44 is no longer necessary. Statement 145 amends Statement 13 to require that certain lease modifications that have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. This amendment is consistent with the FASB's goal of requiring similar accounting treatment for transactions that have similar economic effects. This Statement also makes technical corrections to exiting pronouncements. While those corrections are not substantive in nature, in some instances, they may change accounting practice. The Company is not currently affected by this Statement's requirements. Item 2. Management's Discussion and Analysis of Financial Condition and Results ----------------------------------------------------------------------- of Operations ------------- Result of Operations -------------------- Nine Months Ended September 30, 2002 and 2001 --------------------------------------------- Net Revenues. The Company's revenues decreased approximately 1% in 2002 over the same period in 2001. Revenues from operations for the nine-month ended September 30, 2002 were $686,706 as compared with $693,937 for the same period in 2001. The decreases in fee-paying customers emanating from a general industry slowdown apparent since the third quarter of 2001 and a offset of consulting fees to a related Page 10 of 17 party for $250,000. We allocated our limited resources to increased product development, as opposed to marketing and sales, to better position the company to benefit from changes occurring in the industry. Operating Expenses. Operating expenses decreased by 40% or $1,242,749 for the nine-month period ended September 30, 2002 over the same period in 2001. The decrease was largely due to downsizing of employees, resulting in reduced payroll costs and reducing certain operating expenses. We focused our business on Internet gaming software, and significantly reduced our involvement in the hardware portion of our business. Accordingly, we experienced relatively significant severance and related charges during the past nine months. Three Months Ended September 30, 2002 and 2001 ---------------------------------------------- Net Revenues. The Company's revenues decreased approximately 26% in 2002 over the same period in 2001. Revenues from operations for the three-month ended September 30, 2002 were $146,473 as compared with $196,798 for the same period in 2001. The decrease in revenue was primarily due to a decrease in fee-paying customers emanating from a general industry slowdown apparent since the third quarter of 2001. Additionally, significant revenue during 2001 was derived from hardware and related services, of which those projects have been completed, and the company is no longer as involved in this line of business. Operating Expenses. Operating expenses decreased by 54% or $601,343 for the three-month period ended September 30, 2002 over the same period in 2001. The decrease was largely due to downsizing of employees, resulting in reduced payroll costs and reducing certain operating expenses. Liquidity and Capital Resources ------------------------------- Cash and cash equivalents totaled $55,515 at September 30, 2002. Net cash used from operations was $1,063,986 primarily due to a Net Loss for the nine months ended September 30, 2002 of $1,580,790, a reduction in Accounts Payable and accrued expenses of $116,218, an increase in accrued interest to a related party of $361,531 and non-cash depreciation and amortization of $242,238. Net cash used in investing activities for the nine months ended September 30, 2002, was $105,000 for payments made for the further development of the Company's software. Net cash provided from financing activities for the nine months ended September 30, 2002, was $851,404. HCI, the Company's largest stockholder advanced $1,320,000 of which $250,000 was offset for payment of consulting fees. Our ability to meet our future obligations in relation to the orderly payment of our recurring obligations on a current basis is totally dependent on our ability to attain a profitable level of operations, and receive required working capital advances from our shareholders. Failure to obtain sufficient funding from HCI could adversely affect the operating ability of the Company. Page 11 of 17 Forward -Looking Statements --------------------------- The matters discussed in Management's Discussion and Analysis and throughout this report that are forward-looking statements are based on current management expectations that involve risk and uncertainties. Potential risks and uncertainties include, without limitation; the impact of economic conditions generally and in the industry for Internet gaming products and services; dependence on key customers; continued competitive and pricing pressures in the industry; open-sourcing of products; rapid product improvement and technological change; capital and financing availability; and other risks set forth herein. Controls and Procedures ----------------------- (a) Explanation of disclosure controls and procedures. The Company's chief executive officer and its chief financial officer after evaluating the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15-d-14(c) as of a date within 90 days of the filing date of the quarterly report (the "Evaluation Date") have concluded that as of the Evaluation Date, the Company's disclosure controls and procedures were adequate and effective to ensure that material information relating to the Company and its consolidated subsidiary would be made known to them by others within those entities, particularly during the period in which this quarterly report was being prepared. (b) Changes in internal controls. There were no significant changes in the Company's internal controls or in other factors that could significantly affect the Company's disclosure controls and procedures subsequent to the Evaluation Date, nor any significant deficiencies or material weaknesses in such disclosure controls and procedures requiring corrective actions. As a result, no corrective actions were taken. Page 12 of 17 ONLINE GAMING SYSTEMS, LTD. AND SUBSIDIARY PART II Item 1. Legal Proceedings During the second quarter of 2002, RCS Financial Services, Ltd filed suit against the Company for repayment of a loan, alleging a remaining balance of $47,500. The Company is currently investigating the matter, and has retained counsel to defend the claim. During the third quarter of 2002, counsel for Chipstead Consultants Limited, an Australian company threatened litigation against the company, alleging a software purchase transaction in January of 2000 whereby the company failed to deliver the software in exchange for deposits totaling $112,500. The Company has responded to Chipstead's counsel, asserting that it provided software and support to Chipstead that included the alleged amount. The Company has not retained counsel at this point. There were no other new legal proceedings filed or threatened involving the Company during the nine-month period ended September 30, 2002. Item 2. Changes in Securities 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) None (b) Reports on Form 8-K Form 8-K: Changes to executive management, - March 29, 2002 Page 13 of 17 In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Online Gaming Systems, Ltd. Date: November 8, 2002 By: /s/ J.A. COPELYN ------------------------------------- (Signature) J.A. Copelyn Chairman of the Board / Chief Executive Officer By: /s/ LAWRENCE P. TOMBARI ------------------------------------- (Signature) Lawrence P. Tombari President/Chief Financial Officer Page 14 of 17 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, J.A. Copelyn, Chief Executive Officer of Online Gaming Systems, Ltd. (the "Company") do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (a) the Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2002, which this certification accompanies (the "Periodic Report") fully complies with the requirements of Section 13(a) fo the Securities Exchange Act of 1934; and (b) that information contained in the Periodic Report fairly presents, in all material respect, the financial condition and results of operations of the Company. Date: November 8, 2002 By: /s/ J.A. COPELYN ------------------------------------- J.A. Copelyn Chief Executive Officer Online Gaming Systems, Ltd. I, Lawrence P. Tombari, Chief Financial Officer of Online Gaming Systems, Ltd. (the "Company") do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (a) the Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2002, which this certification accompanies (the "Periodic Report") fully complies with the requirements of Section 13(a) fo the Securities Exchange Act of 1934; and (b) that information contained in the Periodic Report fairly presents, in all material respect, the financial condition and results of operations of the Company. Date: November 8, 2002 By: /s/ LAWRENCE P. TOMBARI ------------------------------------- Lawrence P. Tombari Chief Financial Officer Online Gaming Systems, Ltd. Page 15 of 17 EX-99.1 3 ex99_1.txt EXHIBIT 99.1 CHIEF EXECUTIVE OFFICER CERTIFICATION I, J.A. Copelyn, Chief Executive Officer of Online Gaming Systems, Ltd. (the "Company") do hereby certify that: (1) I have reviewed this quarterly report on Form 10-Q of the Company for the quarter ended September 30, 2002; (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 in order 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 financials 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 Company, as of, and for, the period presented in this quarterly report; (4) The Company's other certifying officer 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 Company and we have: (a) designed such disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report was being prepared; (b) evaluated the effectiveness of the Company's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarter 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 Company's other certifying officer and I have disclosed, based on our most recent evaluation, to the Company's auditors and the Company's board of directors: (a) all significant deficiencies in the design or operation of internal controls which could have adversely affect the Company's ability to record, process, summarize and report financial data and have identified for the Company'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 Company's internal controls; and (6) The Company's other certifying officer 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. Dated: November 8, 2002 By: /s/ J.A. COPELYN ------------------------------------- J.A. Copelyn Chief Executive Officer Online Gaming Systems, Ltd. Page 16 of 17 EX-99.2 4 ex99_2.txt EXHIBIT 99.2 CHIEF FINANCIAL OFFICER CERTIFICATION I, Lawrence P. Tombari, Chief Financial Officer of Online Gaming Systems, Ltd. (the "Company") do hereby certify that: (1) I have reviewed this quarterly report on Form 10-Q of the Company for the quarter ended September 30, 2002; (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 in order 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 financials 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 Company, as of, and for, the period presented in this quarterly report; (4) The Company's other certifying officer 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 Company and we have: (a) designed such disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report was being prepared; (b) evaluated the effectiveness of the Company's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarter 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 Company's other certifying officer and I have disclosed, based on our most recent evaluation, to the Company's auditors and the Company's board of directors: (a) all significant deficiencies in the design or operation of internal controls which could have adversely affect the Company's ability to record, process, summarize and report financial data and have identified for the Company'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 Company's internal controls; and (6) The Company's other certifying officer 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. Dated: November 8, 2002 By: /s/ LAWRENCE P. TOMBARI ------------------------------------- Lawrence P. Tombari Chief Financial Officer Online Gaming Systems, Ltd. Page 17 of 17 -----END PRIVACY-ENHANCED MESSAGE-----