10QSB 1 purw10q.txt U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: September 30, 2002 ------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No.: 0-10566 ------- Pure World, Inc. ---------------- (Exact name of small business issuer as specified in its charter) Delaware 95-3419191 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 376 Main Street, Bedminster, New Jersey 07921 --------------------------------------------- (Address of principal executive offices) (908) 234-9220 -------------- (Issuer's telephone number) N/A --- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- State the number of shares outstanding of each of the issuer's classes of common stock: As of October 31, 2002, the issuer had 7,536,284 shares of its common stock, par value $.01 per share, outstanding. Transitional Small Business Disclosure Format (check one): Yes No X --- --- PART I - FINANCIAL INFORMATION ------- --------------------- Item 1. - Financial Statements ------- -------------------- PURE WORLD, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 2002 (UNAUDITED) (in $000's) ASSETS ------ Current assets: Cash and cash equivalents $ 2,105 Accounts receivable, net of allowance for uncollectible accounts and returns and allowances of $343 2,716 Inventories 7,599 Other 545 -------- Total current assets 12,965 Plant and equipment, net 8,004 Investment in unaffiliated natural products company 1,510 Notes receivable from affiliates 216 Goodwill, net of accumulated amortization of $847 1,144 Other assets 455 -------- Total assets $ 24,294 ======== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable $ 1,098 Short-term borrowings 3,550 Accrued expenses and other 1,642 -------- Total current liabilities 6,290 Long-term debt 2,278 -------- Total liabilities 8,568 -------- Stockholders' equity: Common stock, par value $.01; 30,000,000 shares authorized; 7,555,834 shares outstanding 76 Additional paid-in capital 42,848 Accumulated deficit ( 27,198) -------- Total stockholders' equity 15,726 -------- Total liabilities and stockholders' equity $ 24,294 ======== See accompanying notes to consolidated financial statements. 2 PURE WORLD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) ($000 Omitted, except per share data) Three Months Ended September 30, ---------------------- 2002 2001 -------- -------- Revenues: Sales $ 4,321 $ 4,598 Net losses on marketable securities - ( 26) Interest income 10 27 ------- ------- Total revenues 4,331 4,599 ------- ------- Expenses: Cost of goods sold: Cost of goods sold 3,554 3,684 Inventory write-down of kava 645 - ------- ------- Total cost of goods sold 4,199 3,684 Selling, general and administrative 1,110 1,339 ------- ------- Total expenses 5,309 5,023 ------- ------- Loss before income taxes ( 978) ( 424) Provision (benefit) for income taxes 1 ( 19) ------- ------- Net loss ($ 979) ($ 405) ======= ======= Basic and diluted net loss per share ($ .13) ($ .05) ======= ======= See accompanying notes to consolidated financial statements. 3 PURE WORLD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) ($000 Omitted, except per share data) Nine Months Ended September 30, --------------------- 2002 2001 -------- -------- Revenues: Sales $ 12,196 $ 14,952 Net gains on marketable securities 28 32 Interest income 38 107 -------- -------- Total revenues 12,262 15,091 -------- -------- Expenses: Cost of goods sold: Cost of goods sold 10,430 12,293 Inventory write-down of kava 645 - -------- -------- Total cost of goods sold 11,075 12,293 Selling, general and administrative 3,244 3,854 -------- -------- Total expenses 14,319 16,147 -------- -------- Loss before income taxes ( 2,057) ( 1,056) Provision (benefit) for income taxes 1 ( 7) -------- -------- Net loss ($ 2,058) ($ 1,049) ======== ======== Basic and diluted net loss per share ($ .26) ($ .13) ======== ======== See accompanying notes to consolidated financial statements. 4 PURE WORLD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) ($000 Omitted) Nine Months Ended September 30, --------------------- 2002 2001 -------- -------- Cash flows from operating activities: Net loss ($ 2,058) ($ 1,049) Adjustments: Depreciation and amortization 1,250 1,352 Net marketable securities transactions 27 3 Change in inventories 2,016 439 Change in receivables ( 672) ( 105) Change in accounts payable and other accruals 153 422 Other, net ( 16) 208 ------- ------- Net cash provided by operating activities 700 1,270 ------- ------- Cash flows from investing activities: Purchases of plant and equipment ( 174) ( 640) Loans to affiliates and others - ( 30) Repayment of loans to affiliates and others 118 54 ------- ------- Net cash used in investing activities ( 56) ( 616) ------- ------- Cash flows from financing activities: Repurchase of common stock ( 457) ( 32) Term loan borrowings 59 485 Term loan repayments ( 1,038) ( 1,097) Net revolving line of credit borrowings (repayments) 214 ( 489) ------- ------- Net cash used in financing activities ( 1,222) ( 1,133) ------- ------- Net decrease in cash and cash equivalents ( 578) ( 479) Cash and cash equivalents at beginning of period 2,683 3,116 ------- ------- Cash and cash equivalents at end of period $ 2,105 $ 2,637 ======= ======= Supplemental disclosure of cash flow information: Cash paid for: Interest $ 341 $ 455 ======= ======= Taxes $ 19 $ 1 ======= ======= See accompanying notes to consolidated financial statements. 5 PURE WORLD, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. General ------- The accompanying unaudited consolidated financial statements of Pure World, Inc. and subsidiaries (the "Company" or "Pure World") as of September 30, 2002 and for the three and nine month periods ended September 30, 2002 and 2001 reflect all material adjustments consisting of only normal recurring adjustments which, in the opinion of management, are necessary for a fair presentation of results for the interim periods. Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although the Company believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the year-end consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2001 as filed with the Securities and Exchange Commission. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the three and nine month periods ended September 30, 2002 and 2001 are not necessarily indicative of the results to be expected for the entire year or any other period. 2. Inventories ----------- Inventories are comprised of the following (in $000's): Raw materials $ 561 Work-in-progress 739 Finished goods 6,299 ------- Total inventories $ 7,599 ======= 3. Investment in Unaffiliated Natural Products Company --------------------------------------------------- In May 1996, the Company purchased 500 shares of common stock representing a 25% interest in Gaia Herbs, Inc. ("Gaia") for approximately $1 million. In June 1997, the Company purchased an additional 200 shares of common stock for 6 $500,000, increasing its equity ownership to 35% of Gaia's outstanding shares of common stock ("Pure World's Gaia Stock"). Pure World's Gaia Stock is non-voting. The Company loaned Gaia $200,000 in July 1997 payable interest only on a quarterly basis for the first three years and 36 monthly payments of principal and interest thereafter (the "Pure World Loan"). In July 2000, Gaia notified the Company that they were deferring the repayment of the principal for one year as allowed in the promissory note. The Pure World Loan bears interest at 6.48% which was the imputed rate required under the Internal Revenue Code and is classified as an other asset in the consolidated balance sheet. The parties also agreed that if any other party acquired voting shares, Pure World's Gaia Stock would become voting stock. Additionally, the parties agreed that Gaia and the principal stockholder of Gaia (the "Principal Stockholder") would have a right of first refusal to acquire any Gaia stock sold by Pure World and that Pure World would have a right of first refusal to acquire any Gaia stock sold by Gaia or the Principal Stockholder. In June 1998, Gaia requested that Pure World guarantee an unsecured bank line of $500,000 (the "Gaia Bank Loan"). Because of expansion plans for Pure World's wholly-owned subsidiary, Pure World Botanicals, Inc., Pure World declined to issue the guarantee. An individual unaffiliated with Gaia or Pure World agreed to guarantee the Gaia Bank Loan in consideration of a cash fee and the issuance to the individual of 100 shares of Gaia's common stock, representing 5 percent of Gaia's common stock outstanding (the "Guarantee"). The Guarantee is also secured by Gaia stock held by Gaia's Principal Stockholder. Pure World notified Gaia that it wished to exercise its right of first refusal in connection with the Guarantee. Pure World and Gaia reached an understanding that Pure World would decline the right of first refusal if by November 30, 1998 thirty percent of Pure World's interest was purchased for $1,500,000 (leaving five percent of the current Gaia common stock outstanding) and the Pure World Loan was repaid, including any accrued interest (the "Repurchase"). If the Repurchase is not closed by November 30, 1998 ("the Closing Date"), Pure World then would have the right to assume the Guarantee pursuant to the same terms granted the original guarantor, except for the cash fee. If the Repurchase does not close prior to the Closing Date, and either before or after the Closing Date, the Guarantee is called by the bank, Pure World would then own, or have the right to own a majority of Gaia's voting stock. The Repurchase did not close on November 30, 1998. The Company continues to monitor its investment and discusses its position with Gaia from time to time. Gaia manufactures and distributes fluid botanical extracts for the high-end consumer market. Gaia is a privately held company and does not publish financial results. The Company is accounting for this investment by the cost method. 7 4. Borrowings ---------- Borrowings consisted of the following at September 30, 2002 (in $000's): Loan payable to a bank, pursuant to a $2.75 million secured line of credit bearing annual interest at the prime rate plus 2% (6.75% at September 30, 2002) maturing in December 2002 $ 2,271 Loan payable to a bank, collateralized by certain property and equipment, bearing annual interest at 6.878% maturing in December 2003 1,393 Loan payable to a bank, collateralized by certain equipment bearing annual interest at LIBOR plus 2.5% (4.32% at September 30, 2002) maturing in October 2004 833 Lease payable for equipment for gross assets of $800,000 with imputed interest of approximately 8% maturing in June 2007 542 Lease payable for equipment for gross assets of approximately $392,800 with imputed interest of approximately 6.95% maturing in March 2006 275 Loan payable to a bank, bearing annual interest at LIBOR plus 2.5% (4.32% at September 30, 2002) maturing in May 2005 220 Leases payable for equipment 153 All other 141 ------- Total borrowings 5,828 Less: Current portion of long-term debt 3,550 ------- Long-term debt $ 2,278 ======= Interest expense was $117,000 and $341,000 for the three and nine months ended September 30, 2002, respectively and $134,000 and $455,000 for the same periods in 2001. 8 5. Common Stock ------------ In connection with the Company's common stock repurchase plans, 688,800 shares of common stock were repurchased in the nine months ended September 30, 2002. All shares repurchased were returned to the status of authorized but unissued shares. In accordance with the Company's common stock repurchase plans, 968,100 shares are still available for repurchase. 6. Net Income (Loss) Per Share --------------------------- Basic income (loss) per common share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding. Diluted income (loss) per share is computed by dividing net income (loss) by the sum of the weighted-average number of common shares outstanding plus the dilutive effect of shares issuable through the exercise of stock options. The shares used for basic income (loss) per share and diluted income per share are reconciled below (in 000's). Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 2002 2001 2002 2001 -------- -------- -------- -------- Average shares outstanding for basic income (loss) per shares 7,558 8,254 7,884 8,267 Dilutive effect of stock options - - - - ----- ----- ----- ----- Average shares outstanding for diluted income (loss) per share 7,558 8,254 7,884 8,267 ===== ===== ===== ===== 7. Goodwill and Other Intangible Assets - Adoption of Statement of Financial --------------------------------------------------------------------------- Accounting Standards No. 142 ---------------------------- The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 142, "Accounting for Goodwill and Other Intangible Assets" (SFAS No. 142), in June 2001. This statement provides guidance on how to account for existing goodwill and intangible assets from completed acquisitions. In accordance with this statement, the Company adopted SFAS No. 142 in the first quarter of 2002. The Company discontinued the amortization of goodwill and has determined that there is no impairment to goodwill at this time. 9 The following table presents the loss and loss per share on a proforma basis as though goodwill amortization had not been recorded in 2001. Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 2002 2001 2002 2001 ------ ------ ------ ------ Net loss: Reported net loss ($ 979) ($ 405) ($2,058) ($1,049) Add back goodwill amortization - 36 - 108 ------ ------ ------ ------ Adjusted net loss ($ 979) ($ 369) ($2,058) ($ 941) ====== ====== ====== ====== Basic and diluted loss per share: Reported net loss per share ($ .13) ($ .05) ($ .26) ($ .13) Goodwill amortization - - - .02 ------ ------ ------ ------ Adjusted net loss per share ($ .13) ($ .05) ($ .26) ($ .11) ====== ====== ====== ====== 8. New Accounting Standards ------------------------ In July 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 146, "Accounting for Exit or Disposal Activities" ("SFAS 146"). SFAS 146 will be effective for the Company for disposal activities initiated after December 31, 2002. The Company is in the process of evaluating the effect that adopting SFAS 146 will have on its financial statements. 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results ------ of Operations ------------- This Form 10-QSB contains forward-looking statements which may involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results and performance in future periods to be materially different from any future periods or performance suggested by these statements. Liquidity and Capital Resources ------------------------------- At September 30, 2002, the Company had cash and cash equivalents of approximately $2.1 million. Cash equivalents of $1.8 million consisted of U.S. Treasury bills with an original maturity of less than three months and yields ranging between 1.61% and 1.69%. The Company had working capital of $6.7 million at September 30, 2002. At September 30, 2002, the Company complied with all loan covenants except one which had previously been waived until December 31, 2002 when the revolving credit facility currently expires. The Company and the Lender have agreed orally to terms for the extension of the revolving credit facility until September 30, 2003. The Company expects to replace its current lender prior to the expiration date however there is no assurance in the current financial climate that it will be able to do so. Net losses, offset by depreciation and amortization and a decrease in inventories provided net cash from operations of $700,000 for the nine months ended September 30, 2002 and provided net cash from operations of $1,270,000 for the nine months ended September 30, 2001. Net cash of $56,000 and $616,000 was used in investing activities for the nine months ended September 30, 2002 and 2001, respectively due primarily to the purchase of machinery and equipment. Net cash used in financing activities was $1,222,000 for the nine months ended September 30, 2002, compared to cash used in financing activities in the nine months ended September 30, 2001 of $1,133,000. Net payments of notes payable and the repurchase of common stock were the primary reasons for the cash flows. For more information of borrowings, see Note 4 of Notes to Consolidated Financial Statements. Results of Operations --------------------- The Company operates through its wholly owned subsidiary Pure World Botanicals, Inc. For the quarter ended September 30, 2002, the Company generated revenues of $4.3 million compared to revenues of $4.6 million for the quarter ended September 30, 2001, a decrease of $277,000 or 6%. Net losses for the three months ended of September 30, 2002 were $979,000 ($.13 per share), including a 11 write-down of $645,000 ($.09 per share) in the Company's kava inventory. Net losses in the comparable quarter of 2001 were $405,000 ($.05 per share). For the nine months ended September 30, 2002, revenues were $12.2 million with a net loss of $2,058,000 ($.26 per share) and for the nine months ended September 30, 2001 revenues were $15 million with a net loss of $1,049,000 ($.13 per share). For the quarter ended September 30, 2002, the gross profit margin from operations (excluding the kava write-down) was $767,000 or 18% of revenues compared to the same quarter last year when the gross profit margin was $914,000 or approximately 20% of revenues. For the nine months ended September 30, 2002, the gross profit margin from operations (excluding the kava write-down) was $1,766,000 or 14% of revenues compared to $2,659,000 or 18% for the comparable nine months in 2001. The write-down was necessary to bring the kava inventory in line with current market conditions. During the fiscal year, European regulatory authorities banned the sale of kava because of alleged liver toxicity. The FDA has not indicated that it will follow suit, but the publicity negatively affected sales of kava. Interest income declined from $27,000 in the quarter ended September 30, 2001 to $10,000 for the quarter ended September 30, 2002. For the nine months ended September 30, 2001 and September 30, 2002, interest income declined from $107,000 to $38,000, respectively. Lower invested balances and lower yields on investments accounted for the declines. Selling, general and administrative expenses were $1,110,000 for the three months ended September 30, 2002, a decrease of $229,000 or 17% from $1,339,000 for the comparable period in 2001. Selling, general and administrative expenses were $3,244,000 for the nine months ended September 30, 2002 compared to $3,854,000 for the comparable period in 2001, a decrease of $610,000 or 16%. This decrease was due principally to lower personnel expenses, lower interest expenses and the elimination of goodwill amortization. Disclosure controls and procedures ---------------------------------- Within the 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's President and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the President and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be 12 included in the Company's periodic SEC filings. There were no significant changes in internal controls, or other factors, that could significantly affect these controls, subsequent to the date of the evaluation. 13 PART II - OTHER INFORMATION ------- ----------------- Item 4. - Submission of Matters to a Vote of Security Holders ------- --------------------------------------------------- The Company held its Annual Meeting of Stockholders on October 29, 2002. All nominees to the Company's Board of Directors were elected. The following is a vote tabulation for all nominees: For Withheld ----- -------- Paul O. Koether 6,824,362 88,464 William Mahomes, Jr. 6,839,612 73,214 Alfredo Mena 6,839,612 73,214 Item 6. - Exhibits and Reports on Form 8-K ------- -------------------------------- (a) Exhibits -------- 99.1 - 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 ------------------- None 14 SIGNATURES 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. PURE WORLD, INC. Dated: November 14, 2002 By:/s/ Sue Ann Itzel ----------------------------- Sue Ann Itzel Chief Financial Officer (Principal Accounting Officer) 15 CERTIFICATIONS I, Paul O. Koether, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Pure World, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly represent 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 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 registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, 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 officer 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 functions): 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 officer and I have indicated in this quarterly report whether 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. November 14, 2002 /s/ PAUL O. KOETHER --------------------------- Paul O. Koether Chairman 16 CERTIFICATIONS I, Sue Ann Itzel, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Pure World, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly represent 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 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 registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, 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 officer 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 functions): 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 officer and I have indicated in this quarterly report whether 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. November 14, 2002 /s/ SUE ANN ITZEL --------------------------- Sue Ann Itzel Chief Financial Officer 17 Exhibit 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to Section 906 of the Public Company Accounting Reform and Investor Protection Act of 2002 (18 U.S.C. 1350, as adopted), Paul O. Koether, the Chairman of Pure World, Inc., (the "Company"), and Sue Ann Itzel, the Vice President, Treasurer and Assistant Secretary of the Company each hereby certifies that, to the best of their knowledge: 1. The Company's Quarterly Report on Form 10-QSB for the period ended September 30, 2002, to which this Certification is attached as Exhibit 99.1 (the "Periodic Report"), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition of the Company at the end of the period covered by the Periodic Report and results of operations of the Company for the period covered by the Periodic Report. Dated: November 14, 2002 /s/ Paul O. Koether -------------------------------- Paul O. Koether Chairman /s/ Sue Ann Itzel -------------------------------- Sue Ann Itzel Chief Financial Officer