-----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, B7txuN7OrXRaRT9KE6Wft/lg0WUSuSjeS0hypnpubr5W2CzBDZfsFOY5bZxrV7og RY9DFaETejdJRuqjMLS9EQ== 0001019056-04-000735.txt : 20040517 0001019056-04-000735.hdr.sgml : 20040517 20040517084548 ACCESSION NUMBER: 0001019056-04-000735 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040331 FILED AS OF DATE: 20040517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OCG TECHNOLOGY INC CENTRAL INDEX KEY: 0000073779 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-COMPUTER & PERIPHERAL EQUIPMENT & SOFTWARE [5045] IRS NUMBER: 132643655 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-05186 FILM NUMBER: 04809872 BUSINESS ADDRESS: STREET 1: 56 HARRISON ST STREET 2: SUITE 501 CITY: NEW ROCHELLE STATE: NY ZIP: 10801 BUSINESS PHONE: 914-576-8457 MAIL ADDRESS: STREET 1: 56 HARRISON ST STREET 2: SUITE 501 CITY: NEW ROCHELLE STATE: NY ZIP: 10801 FORMER COMPANY: FORMER CONFORMED NAME: OCG TECHNOLOGIES INC DATE OF NAME CHANGE: 19851217 FORMER COMPANY: FORMER CONFORMED NAME: DATA DISPLAY SYSTEMS INC DATE OF NAME CHANGE: 19730422 10QSB 1 ocg_q.txt FORM 10QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2004 -------------- [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from __________ to___________ Commission file number 0-5186 -------- OCG TECHNOLOGY, INC. ----------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) DELAWARE 13-2643655 ------------------------------- ------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 56 Harrison Street, New Rochelle, New York 10801 ------------------------------------------------ (Address of principal executive offices) (914) 576- 8457 --------------------------- (Issuer's telephone number) --------------------------------------------------------------------------- (Former name, 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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No Indicate by check mark whether the registrant is an accelerated filer(as defined in Exchange Act Rule 12b-2) Yes [ ] No [X] State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: CLASS SHARES OUTSTANDING AT MAY 5, 2004 ----------------------------- --------------------------------- Common Stock ($.01 par value) 44,740,281 Shares OCG TECHNOLOGY, INC. AND SUBSIDIARIES INDEX PART 1. FINANCIAL INFORMATION PAGE NUMBER - ----------------------------- ----------- Item 1. Financial Statements Consolidated Condensed Balance Sheets as of March 31, 2004 and June 30, 2003 1 Consolidated Condensed Statements of Operations for the Three and Nine Months Ended March 31, 2004 and 2003 2 Consolidated Condensed Statements of Cash Flow for the Nine Months Ended March 31, 2004 and 2003 3 Notes to Consolidated Condensed Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6 Item 3. Controls and Procedures 13 PART II - OTHER INFORMATION - --------------------------- Item 2. Changes In Securities 13 Item 6. Exhibits and Reports on Form 8-K 14 Signatures 15 All items that are not applicable or to which the answer is negative have been omitted from this report. 2
OCG TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS March 31, 2004 June 30, 2003 ASSETS (UNAUDITED) (AUDITED) ------------ ------------ Current Assets: Cash $ 10,101 $ 10,832 Accounts receivable 11,226 -- Inventory 16,165 12,260 Note receivable -- 334,500 Interest receivable 6,420 33,982 Marketable securities 73,477 -- Other current assets 74,938 5,043 ------------ ------------ Total current assets 192,327 396,617 Property and equipment, net of accumulated depreciation of ($642,310) and ($631,959) 17,428 17,491 Capitalized software costs, net of accumulated amortization ($579,349) and ($526,719) 357,622 285,725 Other assets 4,972 4,972 ------------ ------------ Total assets $ 572,349 $ 704,805 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses 50,469 70,656 Note payable - bank 3,100 3,891 Note payable, shareholder - current maturity 8,700 -- ------------ ------------ Total current liabilities 62,269 74,547 Other liabilities: Notes Payable, shareholder - long term 150,000 158,700 ------------ ------------ Total liabilities 212,269 233,247 ------------ ------------ Shareholders' equity: Series C Preferred stock $.10 par value (200,000 authorized, 200,000 and 163,330 issued & outstanding, respectively) 20,000 16,333 Series E Preferred stock $.10 par value (100,000 authorized; 33,333 issued & outstanding) 3,333 3,333 Common stock $.01 par value (50,000,000 authorized; 44,740,281 and 41,273,613 issued, respectively) 447,403 412,736 Additional paid-in capital 26,201,092 25,999,426 Accumulated deficit (25,946,425) (25,767,770) Stock subscriptions receivable (130,000) (130,000) Unrealized loss on marketable securities (172,823) -- ------------ ------------ 422,580 534,058 Less: treasury stock, at cost (12,500 shares) (62,500) (62,500) ------------ ------------ Total shareholders' equity 360,080 471,558 ------------ ------------ Total liabilities and shareholders' equity $ 572,349 $ 704,805 ============ ============
See accompanying notes to consolidated condensed financial statements 1
OCG TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended March 31, Nine Months Ended March 31, ---------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Revenues $ 75,266 $ 76,973 $ 214,853 $ 173,896 Less: Cost of sales 38,242 43,767 99,559 92,521 ------------ ------------ ------------ ------------ Gross margin 37,024 33,206 115,294 81,375 ------------ ------------ ------------ ------------ Expenses: Marketing, general and administrative 46,370 57,101 113,835 150,457 Depreciation and amortization 23,010 42,838 62,981 122,762 Product development costs 46,901 39,490 136,251 127,603 ------------ ------------ ------------ ------------ Total expenses 116,281 139,429 313,067 400,822 ------------ ------------ ------------ ------------ Net loss from operations (79,257) (106,223) (197,773) (319,447) Gain from sale of securities -- -- 6,761 -- Interest - net 3,549 12,569 12,357 25,095 ------------ ------------ ------------ ------------ Net loss $ (75,708) $ (93,654) $ (178,655) $ (294,352) ============ ============ ============ ============ Weighted average number of shares outstanding during the period 42,363,618 40,289,989 42,363,618 40,289,989 ============ ============ ============ ============ Loss per Common Share - basic and diluted $ (-)* $ (-)* $ (-)* $ (-)* ============ ============ ============ ============
*Amounts less than ($.005) See accompanying notes to consolidated condensed financial statements 2
OCG TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended December 31, ---------------------------- 2004 2003 ------------ ------------ Cash flows from operating activities: Net loss ($ 178,655) ($ 294,352) ------------ ------------ Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 62,981 122,762 Issuance of stock and warrants for services 86,000 18,000 Gain on sale of securities (6,761) -- Changes in assets and liabilities Receivables (21,464) (26,827) Other current assets (69,896) 38,688 Inventory (3,905) 2,207 Accounts payable and accrued expenses (20,186) (6,135) ------------ ------------ Total adjustments 26,769 144,281 ------------ ------------ Net cash used in operating activities (151,886) (150,071) ------------ ------------ Cash flows from investing activities: Proceeds from sale of marketable securities 132,761 -- Decrease in note receivable -- (9,500)* Capitalized software development costs (124,527) (135,119) Increase in property and equipment (10,288) (18,412) ------------ ------------ Net cash provided by investing activities (2,054) (163,031) ------------ ------------ Cash flows from financing activities: Increase (decrease) in note payable, bank (791) 14,343 Increase in notes payable -- 137,271 Proceeds from sale of common stock 44,000 145,000* Proceeds from sale of Series C Preferred Stock 110,000 -- ------------ ------------ Net cash provided by financing 153,209 296,614 ------------ ------------ Net increase (decrease) in cash (731) (16,488) Cash, beginning of period 10,832 37,191 ------------ ------------ Cash, end of period $ 10,101 $ 20,703 ============ ============ Non-cash investing and financing activities: exchange of notes receivable and related accrued interest for marketable securities $ 372,300
*Reclassified for comparative purposes See accompanying notes to consolidated condensed financial statements 3 OCG TECHNOLOGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 1 - ORGANIZATION OCG Technology, Inc. ("OCG") together with its subsidiaries is engaged in the development, marketing, and distribution of software and diagnostic products for the healthcare industry. The Company entered into an Internet service agreement with a medical center for the use of its medical Web sites. Through use of these Web sites, OCG expects to receive 70% of all advertising revenues through a revenue sharing agreement with Hackensack University Medical Center. 2 - BASIS OF PRESENTATION In the opinion of management, the unaudited consolidated condensed financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with 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 regarding interim financial statements. Preparing financial statements requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue and expenses. Actual results and outcomes may differ significantly from management's estimates and assumptions. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-QSB should be read in conjunction with the audited financial statements and notes included in the Form 10-KSB for the year ended June 30, 2003. 3 - GOING CONCERN The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed below, the Company has suffered recurring losses from operations and negative cash flows that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are described below. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company has experienced recurring losses from operations and has relied on the sale of equity interests in the Company to fund its operations. If necessary, the Company intends to provide additional working capital through the sale of equity interests in the Company. Although, in the past the Company has been able to provide working capital through the sale of equity interests in the Company, there can be no assurances that the Company will succeed in its efforts, which creates a doubt about its ability to continue as a going concern. During the prior fiscal year, the Company's marketing efforts had been concentrated on its Web products. However, during the fiscal year ended June 30, 2002, the PrimeCareTM System was selected to be part of a major international health care information management program anticipated to be installed in a number of countries as their health care information system. The first of these country contracts was recently announced. A five year, three-phase contract was awarded to create a health care information infrastructure for a nation of 11 million people. During phase one of the contract, the current health care infrastructure of the country will be assessed to determine the final specifications for the new system. After approval of the final specifications by the country's Ministry of Health the second phase will commence. The second phase consists of the installation and operation of a comprehensive health care information system throughout the country. Upon commencement of phase two, 4 PrimeCare(TM) Version 9 will be an integral part of the country's comprehensive health care information system. PrimeCare(TM) Version 9 will provide health care personnel and patients a simple, effective means of entering medical data for processing and analysis. Successful completion of these contracts will produce significant revenues for the Company and will materially increase the awareness of PrimeCare(TM) Version 9 in the health care industry. The Company does not anticipate any revenues from this contract until the fourth quarter of the current fiscal year. However, there is no certainty of the country participating, nor any certainty of revenues. 4 - PER SHARE DATA Basic income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding during the periods. Diluted income per share reflects the potential dilution if Series C Convertible Preferred Stock and stock warrants are converted into common stock. Since the effect of outstanding stock warrants and Series C Convertible Preferred Stock are antidilutive they have been excluded from the Company's computation of loss per common share for the periods ending March 31, 2004 and 2003. Therefore, basic and diluted earning per share are the same. 5 - SHAREHOLDER'S EQUITY During the three months ended March 31, 2004, an aggregate of 2,000,000 shares of the Company's Common Stock, par value $0.01 per share (the "Shares"),were issued in payment for a one-year contract for services to be performed. The contract is being expensed over a one-year period. The Shares were not registered and bear a restrictive legend. The closing market price on the day the sale was authorized was $0.04. During the three months ended December 31, 2003, an aggregate of 1,466,667 shares of the Company's Common Stock, par value $0.01 per share (the "Shares"), were sold for $44,000 or $0.03 per share. The Shares sold were not registered and bear a restrictive legend. The closing market price on the day the sale was authorized was $0.03. During the three months ended September 30, 2003, for services rendered in accordance with the terms of a consulting agreement, warrants were issued to purchase a total of 15,000 shares of the Company's common stock at the exercise price of $0.15 per share with exercise dates of said warrants expiring between September 1, 2005 and December 1, 2005. The Company reflected a total expense of $6,000 for the three month period ending September 30, 2003. During the three months ended September 30, 2003, an aggregate of 36,670 shares of the Company's Series C Preferred Stock, par value $0.10 per share, were sold for $110,000 or $3.00 per share. 6 - MARKETABLE SECURITIES The Company had advanced funds totaling $334,500, plus accrued interest at 7% per annum, pursuant to a grid note, dated February 4, 2002 (the "Note"). In consideration for these advances, the Company received warrants to purchase common stock of the borrower, exercisable over a period of three years from the date of issuance, at a price of $0.25 per share. The Company received a security interest in accounts receivable of the borrower anticipated to be generated under certain sales contracts which provide for borrower to install and maintain the health care system for certain countries. The Company is also a subcontractor of the borrower. The borrower has recently announced that it has received the first of these contracts. On October 10, 2003, the Company agreed to accept 3,709,230 restricted (unregistered) shares of the borrower's common stock, par value $0.0001 per share, (the "Stock") in full payment of the Note and accrued interest. These equity securities, are classified as available-for-sale securities and are carried at quoted market value. Unrealized gains and losses are reported as a separate component of shareholders' equity, net of applicable income taxes. Realized gains and losses and declines in value deemed to be other than temporary on available-for-sale securities are included in other income. During the three months ended March 31, 2004, the Company sold 1,260,000 shares of the Stock for a net sales price of $132,761 and realized a gain of $6,761 on the sale. The Company valued the remaining Stock to reflect its market value as of March 31, 2004. The price per share of Stock on that date was $0.03. 7 - NOTES PAYABLE A note of $8,700 is payable to a shareholder. A note payable to a shareholder in the amount of $100,000 is unsecured, bears interest in the form of warrants to purchase 100,000 shares, on or before February 4, 2004, of the Company's common stock at the purchase price of $0.10 per share. The warrants expired and were not exercised. The date for payment of the note has been extended until February 4, 2005. 5 A note payable to a shareholder of $50,000 is unsecured, bears interest at 4% per annum and is convertible into 5,000 shares of Series C Preferred Stock at the rate of $10 per share. The date for payment of the note has been extended until June 15, 2005. The Company has a revolving line of credit with RBC Centura Bank which provides for a maximum principal borrowing of $20,000. Interest is payable monthly on the average daily loan balance at the variable interest rate equal to the Wall Street Journal Prime Rate plus 3% as determined on the 25th day of the month preceding the month in which the interest is charged. The credit line provides for a minimum monthly repayment equal to at least 3% of the then outstanding loan balance. 8 - COMPREHENSIVE LOSS The components of comprehensive loss were as follows: Nine Months Ended March 31, --------------------------- 2004 2003 ------------ ------------ Net loss $ (178,655) $ (294,352) Unrealized loss on investments (172,823) $ (0) ------------ ------------ $ (,351,478) $ (294,352) ============ ============ 9 - NEW ACCOUNTING PRONOUNCEMENTS In January 2003, the Financial Accounting Standards Board issued FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"). FIN 46 is applicable immediately for variable interest entities created after January 31, 2003. For variable interest entities created before February 1, 2003, the provisions of FIN 46 were originally applicable no later than July 1, 2003. The Company has not created any variable interest entities after January 31, 2003. In December 2003 the FASB deliberated certain proposed modifications and revised FIN 46 ("FIN 46 (R)"). The revised provisions are applicable to SB filers no later than the first reporting period ending after December 15, 2004. The adoption of FIN 46 and FIN 46 (R) is not anticipated to have a material impact on the Company's financial reporting and disclosures. In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity". SFAS No. 150 changes the accounting for certain financial instruments that, under previous guidance, could be classified as equity or "mezzanine" equity, by now requiring those instruments to be classified as liabilities (or assets in some circumstances) in the Consolidated Balance Sheet. Further, SFAS No. 150 requires disclosure regarding the terms of those instruments and settlement alternatives. The guidance in SFAS No. 150 generally is effective for all financial instruments entered into or modified after May 31, 2003, and is otherwise effective at the beginning of the first interim period beginning after June 15, 2003. The Company has evaluated SFAS No. 150 and determined that it does not have an impact on the Company's financial reporting and disclosures. 6 OCG TECHNOLOGY, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS A SUMMARY OF INCREASES (DECREASES) IN THE ITEMS INCLUDED IN THE CONSOLIDATED STATEMENTS OF LOSS IS SHOWN BELOW: GENERAL - ------- The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and Notes thereto appearing elsewhere herein. The following discussion contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Company intends that such forward-looking statements be subject to the safe harbors created thereby. These forward-looking statements include predictions, estimates and other statements that involve a number of risks and uncertainties. While this outlook represents the Company's current judgment on the future direction of the business, such risks and uncertainties could cause actual results to differ materially from any future performance suggested herein. We have experienced recurring losses from operations and have relied on the sale of equity interests in the Company to fund its operations. If necessary, we intend to provide additional working capital through the sale of equity interests in the Company. Although, in the past, we have been able to provide working capital through the sale of equity interests in the Company, there can be no assurances that we will succeed in its efforts, which creates a doubt about its ability to continue as a going concern. CRITICAL ACCOUNTING POLICIES AND ESTIMATES - ------------------------------------------ Our discussion and analysis of our financial condition and results of operations following are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles of the United States of America. The preparation of these financial statements requires us to make estimates and judgements that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We believe that the estimates, assumptions and judgements involved in the accounting policies described below have the greatest potential impact on our financial statements, so we consider these to be our critical accounting policies. Because of the uncertainty inherent in these matters, actual results could differ from the estimates we use in applying the critical accounting policies. Within the context of these critical accounting policies, we are not currently aware of any reasonably likely events or circumstances which would result in materially different amounts being reported. CAPITALIZED SOFTWARE COSTS - -------------------------- Capitalized software costs are amortized over the estimated useful life. Changes in circumstances, such as technological advances or shortfalls in marketing estimates, can result in differences between the actual and estimated useful life. Periodically, and when conditions dictate, we reevaluate the recoverability of the carrying value and useful life of this long-lived asset and make the necessary adjustments to reflect the asset at its proper estimated value and amortize it over the remaining estimated useful life. The Company had a writeoff of $187,819 of capitalized software costs during the year ended June 30, 2003 in compliance with the Company's policy relating to reevaluating the value and useful life of this long-lived asset. REVENUE RECOGNITION - ------------------- The Company has four sources of income: (1) sale of inventoried merchandise on our Web sites; (2) commissions received from vendors who link to our Web sites; (3) advertising fees; and (4) software license fees. SALE OF INVENTORIED MERCHANDISE. - -------------------------------- This revenue stream is reported on a "gross" basis in compliance with EITF 99-19, because the Company purchases the merchandise from the source it selects; is at risk for the purchaser's credit; and the Company ships the merchandise. The Company reports the gross sales price as revenue and expense the cost of the merchandise and the shipping costs as "cost of sales". The Company is almost always paid by credit card at the time of purchase and occasionally by check. Sales are booked when the merchandise is shipped. The merchandise is not shipped until the credit is approved. COMMISSIONS RECEIVED FROM VENDORS - --------------------------------- The Company acts as a commissioned broker by displaying a vendors products on the Company's Web sites. When a consumer indicates a desire to purchase an item, the order is collected through the Web site and processed by the third party seller. The Company receives a commission on such sale after it is consummated. When the Company is paid, it reports the "commissions" on a "net" basis in 7 compliance with EITF 99-19. The Company reports commissions this way because: (a) it does not have any direct costs; (b) it does not purchase the product sold; and (c) it does not have any credit risk on the sale, and it does not handle or ship the product when sold. The Company notifies the seller of an interested buyer and it receives a commission check from the seller upon the consummation of a sale.. At that time the Company reports the revenue on a "net" basis. ADVERTISING FEES - ---------------- The Company receives fees for placing advertisements on its Web sites. At the end of the month the Company sends an invoice to the advertiser and enters it on its books as income from advertising fees. SOFTWARE LICENSE FEES - --------------------- The Company accounts for software license fees in accordance with SOP 97-2. Revenues are recognized when all of the following criteria are met: (a) persuasive evidence of an arrangement exists; (b) delivery has occurred; (c) the vendors fee is fixed or determinable; and (d) collectiblity is probable. All licenses are evidenced by a written contract. License fees are either annual fees, generally payable quarterly in advance, or are based on uses, which are purchased before use. The license fee includes updates to the software, but only during the term of the license. The software contains considerable medical information and the Company keeps this medical content reasonably current. The Company does not sell the software or any updates separately and therefore, has not established VSOE. The Company will recognize income ratably over the license term. RESULTS OF OPERATIONS - --------------------- Total revenues decreased $1,707 and increased $40,957 for the three and nine months ended March 31, 2004, as compared to the same periods for 2003. The increase in revenues came as the result of an increase in the sale of merchandise due an increase of visitors to our Web sites and the Company securing advertising contracts. Cost of sales decreased $5,525 and increased $7,038 for the three and nine months ended March 31, 2004 as compared to the same periods for 2003. The Company's revenues for the nine months ended March 31, 2004, consisted of: $162,963 from the sale of merchandise (an increase of $8,007 for the same period in 2003); $31,980 from advertising fees (an increase of $28,980 for the same period in 2003); and $19,910 from commissions (an increase of $3,970 over the same period in 2003). Marketing, general and administrative expenses decreased $10,731 and $36,622 for the three and nine months ended March 31, 2004, as compared to the same period for 2003, primarily from the decrease of approximately: $25,000 in sales and marketing expenses. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- At March 31, 2004, the Company had a current ratio of 2.31 to 1 compared to .95 to 1 as of March 31, 2003. The increase in current ratio is due primarily to the decrease in notes payable. The net loss from operations for the nine months ended March 31, 2004, was $178,655 compared to $294,352 for the prior year. The reduction in the net loss from operations was due to an increase of approximately $34,000 in net revenues and a decrease of approximately $43,000 in marketing, general and administrative expenses and approximately $60,000 in depreciation and amortization for the nine months ended March 31, 2004, as compared to the same period of 2003. The Company has experienced recurring losses from operations and has been unable to provide sufficient working capital from operations and has relied significantly on the sale of equity interests in the Company, and the exercise of warrants and loans from shareholders to fund its operations. Cash on hand, inventory, receivables and marketable securities were $135,969 at March 31, 2004. During the nine months ended March 31, 2004, the Company raised $44,000 through the sale of common stock. In addition, as of March 31, 2004, the Company has $105,000 of notes receivable related to the purchase of the Company's common stock through the exercise of warrants. In October, 2003, the Company received 3,709,230 restricted (unregistered) shares of the borrower's common stock, par value $0.0001 per share, (the "Shares") in full payment of the Note and accrued interest. During the three months ended December 31, 2003, the Company sold 1,260,000 Shares for the net sales price of $132,761, a net gain over cost of $6,761. Although, in the past, the Company's principal means of overcoming its cash shortfalls from operations was from the sale of the Company's stock, loans and the exercise of warrants, there can be no assurances that the Company will succeed in its efforts in the future. COMPETITION: - ------------ The Company has not identified any competitive patient management system which embodies all the features of the PrimeCareTM System, in particular the complaint specific, interactive Questionnaires completed by the patient and the report generated by the patient's responses. The Company believes that it has the only in-office patient management system and Web sites that enable physicians to 8 obtain the patient's detailed History of Present Illness by having the patient answer problem-specific HPI Questionnaires on a PC in the office or via the Internet. However, other companies market systems which may have some of the features of the PrimeCareTM System and some companies market medical office products which perform different functions than those performed by the PrimeCareTM System. To date, market penetration by both the Company and its competitors has been limited. PRODUCTS OVERVIEW. - ------------------ PRIMECARE(TM) PATIENT MANAGEMENT SYSTEM, VERSION 9 -------------------------------------------------- PrimeCare(TM) Patient Management System, Version 9 ("PrimeCareTM Version 9") is a complete, ground-up redesign and re-write of the Company's initial EMR, the PrimeCareTM Patient Management System ("PCPMS"). The overall system architecture has been changed; the supporting data base structures have been enhanced; the client interface has been redesigned to more accurately reflect the operational needs of the end-users, and user installation has been greatly simplified. PrimeCareTM Version 9 is a user friendly, patient management system that is patient, physician and staff, interactive. PrimeCareTM Version 9: (i) creates an electronic medical record documenting the patient physician encounter; (ii) is compatible with practice management and billing systems, EMR and CPR systems; (iii) is Health Insurance Portability Accountability Act ("HIPAA") compliant; (iv) is designed for use in ambulatory clinics, group and individual practices; (v) uses an authoritative and comprehensive knowledge database of approximately 280 symptom and problem oriented patient Questionnaires for diagnostic and follow-up office visits; (vi) collectively contains over 100,000 complaint and disease state questions, over 2,000 diagnoses, over 675 physician reference articles, over 300 patient education articles; (vii) allows the staff to schedule the appropriate Questionnaire and enter the vital signs; (viii) interacts directly with the patient by having the patient select the answers that apply to their problem from the Questionnaire; (ix) does not require the patient to have computer or typing skills; (x) enables the physician to obtain their patients' detailed History of Present Illness ("HPI") by having the patient answer the Questionnaires without requiring physician or staff time; (xi) allows the physician to interact directly with PrimeCareTM Version 9 to select and document the normal and abnormal physical findings, assessments, tests, prescriptions and treatment plan for the patient; (xii) provides automatic (real time) calculation of HCFA's Evaluation and Management ("E&M") code, with a full audit trail, used for determining the reimbursement level by Medicare and other third party payers for the office visit; (xiii) virtually eliminates dictation and transcription costs; (xiv) reduces risk of malpractice liability due to errors of omission and "failure to consider"; (xv) permits patients to answer Questionnaires at their own speed (xvi) creates significant clinical and patient databases for outcomes research. When the patient arrives at the doctor's office, a designated staff member selects the appropriate Questionnaire based upon the patient's chief complaint and/or symptom and enters the patient's vital signs. The patient is then seated at a computer and answers complaint-specific questions by using either the keyboard number keys or mouse to indicate answers that apply to him or her. No typing or computer skills are required. When the patient has completed the Questionnaire, PrimeCareTM Version 9 creates a Preliminary Report (the "Report") for the physician to review before examining the patient. The Report contains the patient's current problems, medications and allergies, and the patient's detailed HPI that includes all of positive and significant negative subjective responses, vital signs and an alphabetical list of the diagnostic possibilities with the patient's responses repeated that support, or give rise, to each diagnostic possibility. By freeing up the time physicians would normally have to spend asking patient history questions and recording responses, PrimeCareTM Version 9 permits physicians to see more patients and to spend more quality time with each patient. PrimeCareTM Version 9 is also easy for physicians to understand and use. The same simple key stroke or mouse click process allows the physician or appropriate staff member to select and document the: physical findings (normal and abnormal), assessment, tests, treatment plan, prescribed medications, and patient education materials to be distributed and to schedule follow-up visits. The physician or appropriate staff member can also type a comment that expands upon: an answer selected by the patient in the Questionnaire, a physical finding, an assessment, a treatment plan, a prescription, or about any subject that may be appropriate. At the conclusion of the encounter a final summary report of the visit that includes, the patient's HPI, physical findings, assessment, tests, prescriptions, treatment plan, patient educational materials and the scheduled follow-up visit, are stored electronically in the patient's file, and can be printed for the patient. PrimeCareTM Version 9: standardizes the patient record; assures consistency in patient care; creates a patient database for clinical and outcomes research; supports utilization review and quality assurance audits; improves the quality of care; increases efficiency and productivity of the physician's practice; automatically generates a problem list; incorporates patient care algorithms and clinical practice guidelines; permits, with appropriate security controls, both local and remote, on-line electronic retrieval of patient records and hard copy print outs; enables rapid access to important patient data for clinical care; contains and provides patient education materials about disease, disease management, tests and medications; and provides physician reference materials. 9 PrimeCareTM Version 9's overall system architecture has been redesigned away from a local network based two-tier client-server application, used in the prior version of the PCPMS, to incorporate a robust three-tier client-provider-relational database management system ("RDBMS") application, designed for geographically separated tiers. The client (end-user) tier of PrimeCareTM Version 9 is designed to connect with the middle or provider (server) tier via internet communications. The provider and data base tiers are designed to support multiple, distinct clients simultaneously. The client application has been designed to allow easy internalization and localization. Supporting data bases have been redesigned to remove unnecessary redundancies, including a major redesign of the patient/physician encounter questionnaire. Also, provisions have been added for support of an unlimited number of alternative languages. Currently, language support is offered in, or being developed for, English, Spanish, French, and Simplified Chinese. PrimeCare(TM) Version 9 continues to be a Windows(TM) application. Although the client tier will run on Windows 95 or any later Windows desktop operating system, it performs best when hosted on Windows 2000, Windows NT, or Windows XP. The server (provider tier) and data base tiers of PrimeCare(TM) Patient Management System, Version 9 should be hosted on redundant Windows 2000 or Windows XP servers with appropriate backup, and standby support. The three-tier architecture of PrimeCareTM Version 9 provides many advantages, including easy client installation; reduced on-site support requirements; enhanced data security; and maximum flexibility. PrimeCareTM Version 9's reduced installation and maintenance costs and its flexibility enables it to be adapted to a wide variety of health care organizational uses, including national and local health care systems, military organizations, correctional facilities, HMOs, hospitals with outpatient services, clinics, group practices and solo practitioners. As a three-tier application, PrimeCareTM Version 9, requires only that the client tier application be installed at the end-user location. This system architecture greatly simplifies both user installation and system maintenance. Although the client (end-user) tier uses the internet to communicate with the provider and data base tiers, it is not a browser-based application, thereby eliminating the many compatibility and security issues involved in supporting multiple browser configurations. The PrimeCareTM Version 9 client is a specially written front-end application, designed to be downloaded by the client via a web connection, and then installed at the client's location using normal Windows installation procedures. The system is designed to support multiple reimbursement models, including free demo, no-charge use, sponsored use, flat fee, periodic (monthly / annual) fee, activity based fees, and option-based fees. PRIMECARETM PATIENT MANAGEMENT SYSTEM ("PCPMS") ----------------------------------------------- The PCPMS was the Company's initial EMR offering. The Company has discontinued marketing the PCPMS CODE COMPLIERTM: ---------------- The Company has also developed Code ComplierTM an application software program that was designed to be used in conjunction with The Company's PrimeCareTM and PrimeCareOnTheWeb.comTM. As each item of information is entered into and collected by PrimeCareTM during the patient encounter, the CodeComplierTM organizes the data in the proper classification and using the 1997 HCFA guidelines, automatically calculates HCFA's Evaluation and Management code level, with full audit trail, used for determining the reimbursement level by Medicare and other third party payors for the History, Physical Findings and Decision Making sections the office visit. It totally eliminates the time and effort which would otherwise be required by the physician or office personnel to complete this task. CodeComplierTM takes the guess work out of E&M and third party payer compliance. CodeComplier is an integral part of PrimeCareTM Version 9. PRIMECAREONTHEWEB.COM (the "PCW Site"): --------------------------------------- The PCW Site is a unique physician and patient interactive Site that: (i) uses PrimeCare's unique Questionnaires for diagnostic and follow-up office visits, physician reference articles, patient education material, CodeComplierTM for real time calculation of E&M code and the scheduler portion of PrimeCareTM; (ii) enables physicians to obtain their patient's detailed HPI by having the patient answer Questionnaires via the Internet without requiring physician time; (iii) saves the physician and staff the time required to obtain the HPI, thus allowing them to give more attention to each patient and/or see more patients; (iv) produces an extremely comprehensive HPI that includes all of the "yes" answers, pertinent negatives and a list of the diagnostic possibilities with the answers repeated that support each diagnostic consideration; (v) is HIPAA compliant; (vi) protects all Internet communication and the confidentiality rights of every user through a unique user ID and password per Questionnaire to be answered and secure digital certificates from VeriSignTM, (vii) encrypts all data for storage; (viii) enables creating a significant data base for outcomes research; and (ix) automatically provides registered physicians individual Web sites on YourOwnDoctorTM.com. 10 YOUROWNDOCTOR.COM (the "YOD Site"): ----------------------------------- The YOD Site is a web community created, owned, operated and maintained by the Company that: (i) provides free individual Web sites for physicians, physician groups, and other health care providers that register for PrimeCareOnTheWebTM; (ii) enables physicians to promote their services through displaying credentials, including photos of each physician and staff in the office, listing specialities, office hours, directions, maps, phone numbers, e-mail addresses, and accepted insurance plans; (iii) provides useful links to other medical sites; (iv) provides a direct link from physician site to PCW that enables patient to access appropriate Questionnaire and complete; (v) provides direct link to YourOwnHealth.comTM for use by patients. YOUROWNHEALTH.COM (the "YOH Site"): ----------------------------------- The YOH Site is a unique, free online health and wellness site designed to empower health care consumers to be better prepared for their next visit to the doctor. The YOH Site offers: (1) the "Medical Interview" that: (i) enables visitors to securely and anonymously select and complete from approximately 110 of the 280 Questionnaires contained in PrimeCareTM Version 9 and PCPMS; (ii) generates and makes available to the visitor a detailed HPI report based upon their responses; (iii) permits the visitor to answer the Questionnaires in either English or Spanish; (iv) encrypts all medical data and uses digital certificates from VeriSignTM for Internet communication; (v) provides banner links to the YOD Site and www.DeniseAustin.com. (2) "YourOwnHealthTM Notebook": (i) is a secure depository for storage of personal and family medical data for Registered Members; (ii) can be accessed only through the use of registered IDs and Passwords; (iii) encrypts all medical data and uses digital certificates from VeriSignTM for Internet communication; (iv) provides a convenient way to keep track of personal health issues such as allergies, immunizations, medications and others that can be kept and edited on designated lists; (v) allows the Member to save their completed HPI Questionnaire reports and to add personal notes and reminders to the record. (3) "YourOwnHealthTM Reference" provides extensive health care consumer education material relating to diseases, disease management, medical procedures and prescription and common over the counter medications, including drug interaction. THE MARKET: - ----------- The Company's domestic and international markets for: (a) the PrimeCare System, the PCW Site, YourOwnHealth Site and the YOD Site are ambulatory/outpatient medical facilities, such as, primary care physicians, medical clinics, group practices, health maintenance organizations, and in general, health care providers other than those providing care to patients confined to hospital beds; and (b) the YOH Site is for the use of the general public. REVENUE SOURCES AND MARKETING STRATEGY: - --------------------------------------- LICENSING FEES: During prior fiscal years, the Company's marketing efforts had been concentrated on its Web products. However, during the fiscal year ended June 30, 2002, the PrimeCareTM System was selected to be part of a major international health care information management program anticipated to be installed in a number of countries as their health care system. The first of these country contracts was recently concluded. A five year, three-phase contract was awarded to create a health care information infrastructure for a nation of 11 million people. During phase one of the contract, the current health care infrastructure of the country will be assessed to determine the final specifications for the new system. After approval of the final specifications by the country's Ministry of Health the second phase will commence. The second phase consists of the installation and operation of a comprehensive health care information system throughout the country. Upon commencement of phase two, PrimeCare(TM) Version 9 will be an integral part of the country's comprehensive health care information system. PrimeCare(TM) Version 9 will provide health care personnel and patients a simple, effective means of entering medical data into this health care information management system for processing and analysis. Successful completion of these contracts should produce significant revenues for the Company and should materially increase the awareness of PrimeCare(TM) Version 9 in the health care industry. The actual value of this contract cannot be determined at this time. The Company does not anticipate any revenues from this contract until at least the fourth quarter of the current fiscal year. The Company believes that the increased awareness of PrimeCare(TM) Version 9 arising from the above contract will enhance the Company's ability to obtain additional contracts and annual licensing fees from large fixed population groups, which includes, but is not limited to, other countries, labor unions, medical insurance companies, HMOs, military forces and correctional facilities. ADVERTISING FEES: - ----------------- The Company currently receives revenues from advertising. Advertising revenues are dependant upon the number of visitors that use the Company's Web sites. The 11 Company believes that the use of PrimeCare(TM) Version 9 by licensees will increase awareness and use of the Company's Web sites and thus result in increased advertising fees. The Company has entered into an agreement with Hackensack University Medical Center ("HUMC") during July, 2000. The agreement provides for the use of the Company's Web sites by HUMC's medical services organization ("MSO"), North Jersey Medical Management Services, L.L.C. This MSO has over 1,000 physicians. HUMC, and its Physicians Hospital Organization, have created www.HUMCMD.net , the only complete Physician/Patient Internet Service Provider ("ISP") providing top quality Internet connectivity to members of its physician network, plus access to key internal HUMC applications. The HUMCMD site has both a "Physician Portal" and "Patient Portal". The site currently contains the Company's PCW Site and YOH Site. The Company's advertising revenues are dependent upon HUMC's marketing efforts to its Staff Physicians and patients. OUTCOMES RESEARCH. - ------------------ Potentially, the Company could receive fees for conducting outcomes research for pharmaceutical companies and teaching hospitals. The Company anonymizes, encrypts and stores both the completed diagnostic and follow-up Questionnaires. This ever-growing medical database can be analyzed in various ways to determine the effectiveness of treatment plans, medications, etc. However, at the present time the Company does not receive revenues from this source. FITNESS WEB SITES: - ------------------ The Company's marketing of the DeniseAustin website has been revised. The Company no longer operates DeniseAustin.com, however, the Company has entered into two agreements with the new manager of the Web site. Under one agreement, the Company operates the "shopping cart" on the site and the second agreement retains the Company as the exclusive seller of Denise Austin videos and DVDs. The new manager has agreed to commence an aggressive marketing campaign to promote the site. The Company's percentage of revenues has been reduced. However, the Company believes the increased visitors to the site, as a result of the marketing campaign being instituted by the new site manager, will result in greater net income for the Company. The fitness and wellness Web site known as www.DeniseAustin.com features Denise Austin, a nationally known fitness expert who has had a daily fitness show on television for over 15 years, the Company's shopping cart sells a variety of Denise Austin products on the Web site. Visitors and fans are able to shop online for their favorite Denise Austin signature exercise videos, books, equipment, gear, and private label apparel and nutraceuticals (when available), as well as sign up for her monthly news letter, enjoy fitness tips, exercises, motivation messages, and some of her favorite healthy recipes. MARKETING: The Company operates the comprehensive shopping area on the DA Web site which offers a broad range of noncompeting products within the fitness industry. The Company will share income from two sources - advertising revenues and e-commerce. The Company derives revenues from this operation. Item 3. Controls and Procedures An evaluation was carried out under the supervision and with the participation of the Company's management, including the President/Chief Financial Officer ("CFO"), of the effectiveness of the Company's disclosure controls and procedures. Based on that evaluation, the President/CFO has concluded that as of the end of the period covered by this report, the Company's disclosures, controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and timely reported as provided in the Securities and Exchange Commission rules and forms. The Company periodically reviews the design and effectiveness of our internal controls over financial reporting, including compliance with various laws and regulations that apply to the Company's operations. The Company makes modifications to improve the design and effectiveness of its internal control structure, and may take other corrective action, if the Company's reviews identify deficiencies or weaknesses in its controls. No changes occurred during the quarter ended March 31, 2004 in the Company's internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. PART II - OTHER INFORMATION Item 2. Changes In Securities During the three months ended September 30, 2003, the Company issued 36,670 shares of its Series C Preferred Stock to a shareholder, for an aggregate purchase price of $110,000, in an unregistered private placement. 12 During the nine months ended March 31, 2004, an aggregate of 1,466,667 shares of the Company's Common Stock, par value $0.01 per share (the "Shares"), were sold for $44,000 or $0.03 per share. The Shares sold were not registered and bear a restrictive legend. The closing market price on the day the sale was authorized was $0.03. During the three months ended March 31, 2004, an aggregate of 2,000,000 shares of the Company's Common Stock, par value $0.01 per share (the "Shares"), were issued in payment of services to be rendered in the ensuing year. The Shares were not registered and bear a restrictive legend. The closing market price on the day the sale was authorized was $0.04. In consummating the above described private placements, the Company relied upon the exemptions from registration provided by Sections 4(2) of the Securities Act of 1933, as amended (the "Securities Act"), and Rule 506 promulgated thereunder based upon: representations from the investor that he, she or it, (a) met one of the categories of accredited investor set forth in Rule 501, (b) was acquiring the securities for his, her or its own account and not with a view towards further distribution and (c) had such sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks connected with the applicable investment, and the fact that (a) no general solicitation of the securities was made by the Company, (b) the securities issued were "restricted securities" as that term is defined under Rule 144 promulgated under the Securities Act, (c) the Company placed appropriate restrictive legends on the certificates representing the securities regarding the restricted nature of these securities and (d) prior to the completion of each transaction, each investor was informed in writing of the restricted nature of the securities, provided with all information regarding the Company as required under Rule 502 of Regulation D and was given the opportunity to ask questions of and receive additional information from the Company regarding its financial condition and operations. Item 6. Exhibits and Reports on Form 8-K (a) 31.1 Certification pursuant to Rule 13a-14 AND 15d-14 of the Securities Exchange act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley act of 2002 32.1 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 A Form 8-K was filed on October 20, 2003 and a Form 8-K was filed on November 12, 2003, both relating to the change in the Company's independent auditors. 13 SIGNATURES Pursuant to the requirements of Sections 13 or 15(d) the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized. OCG TECHNOLOGY, INC. BY /s/ EDWARD C. LEVINE -------------------------------------- EDWARD C. LEVINE, PRESIDENT (CHIEF FINANCIAL OFFICER) DATED: May 14, 2004 14 EX-31.1 2 ex31_1.txt EXHIBIT 31.1 Exhibit 31.1 CERTIFICATION PURSUANT TO RULE 13a-14a or Rule 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-0XLEY ACT OF 2002 I, Edward C. Levine, President/Chief Financial Officer of the Registrant, OCG Technology, Inc. hereby certify that: 1) I have reviewed this quarterly Form 10-QSB for the period ending March 31, 2004 of OCG Technology, 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 report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report; 4) I am solely responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a - 15(f) and 15d- 15(f)) for the Registrant and I have: a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under my supervision, 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 was prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting procedures; c) evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this quarterly report based on such evaluation; and d) disclosed in this quarterly report any change in the Registrant's internal control over financial reporting that occurred during the period ending March 31, 2004 that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and 15 5) I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. Date: MAY 14, 2004 ------------ By: /s/ EDWARD C. LEVINE ------------------------------------- Edward C. Levine, President/Chief Financial Officer 16 EX-32.1 3 ex32_1.txt EXHIBIT 32.1 Exhibit 32.1 CERTIFICATION PURSUANT TO RULE 13a -14(b) or RULE 15d-14(b) AND SECTION 1350 OF TITLE 18, OF THE UNITED STATES CODE (18 U.S.C. 1350) AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of OCG Technology, Inc., (the "Company") on Form 10QSB for the period ending March 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Edward C. Levine, President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. By: /s/ EDWARD C. LEVINE ------------------------------------ Edward C. Levine, President/Chief Financial Officer May 14, 2004 17 -----END PRIVACY-ENHANCED MESSAGE-----