-----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, LR4su/mfERW+flx2p+IjGottuLGcHBkGJh8cl1u+WrK981fJ/0CZjjbLAnFqzkrC c9caxUu7Ifa7P8HCBK0EGQ== 0000891092-02-000979.txt : 20020814 0000891092-02-000979.hdr.sgml : 20020814 20020814152635 ACCESSION NUMBER: 0000891092-02-000979 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20020814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEL INSTRUMENT ELECTRONICS CORP CENTRAL INDEX KEY: 0000096885 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS & ACCESSORIES [3670] IRS NUMBER: 221441806 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-18978 FILM NUMBER: 02735763 BUSINESS ADDRESS: STREET 1: 728 GARDEN ST CITY: CARLSTADT STATE: NJ ZIP: 07072 BUSINESS PHONE: 2019331600 MAIL ADDRESS: STREET 1: 728 GARDEN ST CITY: CARLSTADT STATE: NJ ZIP: 07072 10-Q 1 e13752_10q.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2002 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 33-18978 TEL-INSTRUMENT ELECTRONICS CORP. (Exact name of the Registrant as specified in Charter) New Jersey 22-1441806 (State of Incorporation) (I.R.S. Employer ID Number) 728 Garden Street, Carlstadt, New Jersey 07072 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone No. including Area Code: 201-933-1600 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of the issuer's common stock, as of the latest practical date: 2,135,751 shares of Common stock, $.10 par value as of August 8, 2002. TEL-INSTRUMENT ELECTRONICS CORPORATION TABLE OF CONTENTS PAGE Item 1. Financial Statements (Unaudited): Condensed Comparative Balance Sheets June 30, 2002 and March 31, 2002 1 Condensed Comparative Statements of Operations - Three Months Ended June 30, 2002 and 2001 2 Condensed Comparative Statements of Cash Flows - Three Months Ended June 30, 2002 and 2001 3 Notes to Condensed Financial Statements 4-5 Item 2. Management's Discussion and Analysis of the Results of Operations and Financial Conditions 6-9 Part II - Other Information Item 6. Exhibits and Reports on Form 8-K 10 SIGNATURES 10 Item 1 - Financial Statements TEL-INSTRUMENT ELECTRONICS CORPORATION CONDENSED COMPARATIVE BALANCE SHEETS (Unaudited) ASSETS June 30, 2002 March 31, 2002 ------------- -------------- Current assets: Cash and cash equivalents $ 1,930,219 $ 1,198,191 Accounts receivable, net of allowance for doubtful accounts of $36,598 at June 30, 2002 and March 31, 2002 1,128,722 937,849 Inventories, net 2,183,933 2,481,680 Prepaid expenses and other current assets 44,831 47,956 Deferred income tax benefit - current 611,310 669,000 ------------ ------------ Total current assets 5,899,015 5,334,676 Property, plant and equipment, net 796,053 822,010 Other assets 73,743 76,886 ------------ ------------ Total assets 6,768,811 6,233,572 ============ ---========= LIABILITIES & STOCKHOLDERS EQUITY Current liabilities: Note payable - related party - current portion 250,000 250,000 Convertible subordinated notes - related party 7,500 7,500 Capitalized lease obligations - current portion 88,890 108,845 Deferred revenues 574,907 518,103 Accrued payroll, deferred wages, vacation pay and payroll taxes 455,161 399,437 Accounts payable and accrued expenses 1,098,016 896,710 ------------ ------------ Total current liabilities 2,474,474 2,180,595 Notes payable - related party - non-current portion 100,000 100,000 Capitalized lease obligations - excluding current portion 33,096 52,183 ------------ ------------ Total liabilities 2,607,570 2,332,778 Stockholders' equity: Common stock 213,578 213,338 Additional paid-in capital 3,944,727 3,941,967 Retained earnings (accumulated deficit) 2,936 (254,511) ------------ ------------ Total stockholders' equity 4,161,241 3,900,794 ------------ ------------ Total liabilities and stockholders' equity $ 6,768,811 $ 6,233,572 ============ ---========= See accompanying notes to condensed financial statements -1- TEL-INSTRUMENT ELECTRONICS CORPORATION CONDENSED COMPARATIVE STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended --------------------------------- June 30, 2002 June 30, 2001 ------------- ------------- Sales - government $2,405,708 $ 1,808,671 Sales - commercial 444,025 753,018 ---------- ------------ Total sales 2,849,733 2,561,689 Cost of sales 1,385,283 1,314,306 ---------- ------------ Gross margin 1,464,450 1,247,383 Operating expenses: Selling, general and administrative 573,068 398,612 Engineering, research and development 451,727 415,171 ---------- ------------ Total operating expenses 1,024,795 813,783 ---------- ------------ Income from operations 439,655 433,600 Other income (expense): Interest income 6,476 4,592 Interest expense (17,408) (18,612) ---------- ------------ Income before taxes 428,723 419,580 Provision for income taxes 171,276 170,880 ---------- ------------ Net income 257,447 248,700 ========== ============ Basic and diluted income per common share $ 0.12 $ 0.12 ========== ============ Dividends per share None None Weighted average shares outstanding Basic 2,135,151 2,125,251 Diluted 2,161,770 2,162,197 See accompanying notes to condensed financial statements -2- TEL-INSTRUMENT ELECTRONICS CORPORATION CONDENSED COMPARATIVE STATEMENTS OF CASH FLOWS (Unaudited) Three Months ended ----------------------------- June 30, 2002 June 30, 2001 ------------- ------------- Cash flows from operating activities: Net income $ 257,447 $ 248,700 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income taxes 57,690 122,213 Depreciation and amortization 62,636 45,507 Changes in assets and liabilities: Increase in accounts receivable (190,873) (32,562) Decrease (increase) in inventories 297,747 (122,373) Decrease (increase) in prepaid expenses & other current assets 3,125 (33,374) Decrease (increase) in other assets 3,143 (6,450) Increase in accrued payroll, deferred wages, vacation pay and payroll taxes 55,724 18,166 Increase (decrease) in accounts payable, deferred revenues and accrued expenses 258,110 (111,340) ----------- ---------- Net cash provided by operating activities 804,749 128,487 ----------- ---------- Cash flows from investing activities: Purchases of property, plant and equipment (36,679) (96,634) ----------- ---------- Net cash used in investing activities (36,679) (96,634) ----------- ---------- Cash flows from financing activities: Proceeds from the exercise of stock options 3,000 2,592 Repayment of capitalized lease obligations (39,042) (26,352) ----------- ---------- Net cash used in financing activities (36,042) (23,760) ----------- ---------- Net increase in cash and cash equivalents 732,028 8,093 Cash and cash equivalents at beginning of period 1,198,191 433,438 ----------- ---------- Cash and cash equivalents at end of period $ 1,930,219 $ 441,531 =========== ========== Taxes paid -- $ 89,305 Interest paid $ 16,327 $ 30,811 Assets acquired through capital leases -- $ 61,857 See accompanying notes to condensed financial statements -3- TEL-INSTRUMENT ELECTRONICS CORP. NOTES TO CONDENSED FINANCIAL STATEMENTS Note 1 Basis of Presentation In the opinion of management, the accompanying unaudited condensed financial statements contain all adjustments necessary to present fairly the financial position of Tel-Instrument Electronics Corp. as of June 30, 2002 the results of operations for the three months ended June 30, 2002 and June 30, 2001, and statements of cash flows for the three months ended June 30, 2002 and June 30, 2001. These results are not necessarily indicative of the results to be expected for the full year. The financial statements have been prepared in accordance with the requirements of Form 10-Q and consequently do not include disclosures normally made in an Annual Report on Form 10-K. The March 31, 2002 results included herein have been derived from the audited financial statements included in the Company's annual report on Form 10-K. Accordingly, the financial statements included herein should be reviewed in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2002. Note 2 Accounts Receivable, net Accounts receivable, net consists of: June 30, 2002 March 31, 2002 ------------- -------------- Commercial $ 207,534 $ 238,690 Government 957,786 735,757 Allowance for bad debts (36,598) (36,598) ----------- ------------ $ 1,128,722 $ 937,849 =========== ============ Note 3 Inventories, net Inventories, net consist of: June 30, 2002 March 31, 2002 ------------- -------------- Purchased parts $ 852,684 $ 913,917 Work-in-process 1,402,434 1,584,701 Finished Goods 34,128 68,375 Less: Reserve for obsolescence (105,313) (85,313) ----------- ------------ $ 2,183,933 $ 2,481,680 =========== ============ -4- TEL-INSTRUMENT ELECTRONICS CORP. NOTES TO CONDENSED FINANCIAL STATEMENTS (continued) Note 4 Earnings Per Share The Company's basic income per common share is based on net income for the relevant period, divided by the weighted average number of common shares outstanding during the period. Diluted income per common share is based on net income, divided by the weighted average number of common shares outstanding during the period, including common share equivalents, such as outstanding stock options. Note 5 Government and Commercial Sales Information has been presented for the Company's two reportable activities, government and commercial. The Company is organized primarily on the basis of its avionics products. The government market consists primarily of the sale of test equipment to U.S. and foreign governments and militaries either direct or through distributors. The commercial market consists of sales of test equipment to domestic and foreign airlines and to commercial distributors. The commercial market also includes sales related to repairs and calibration which have a lower gross margin. The Company primarily develops and designs test equipment for the avionics industry and, as such, the Company's products and designs may be sold in the government and commercial markets. The table below presents information about sales and gross margin. Cost of sales includes certain allocation factors for indirect costs. Three Months Ended Three Months Ended June 30, 2002 June 30, 2001 Government Commercial Government Commercial ---------- ---------- ---------- ---------- Sales $ 2,405,708 444,025 $ 1,808,671 753,018 Cost of sales 1,133,885 251,398 965,303 349,003 ------------- ------- ------------ ------- Gross margin $ 1,271,823 192,627 $ 843,368 404,015 ============= ======= ============= ======= -5- Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations A number of the statements made by the Company in this report may be regarded as "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, among others, statements concerning the Company's outlook, pricing trends and forces within the industry, the completion dates of capital projects, expected sales growth, cost reduction strategies and their results, long-term goals of the Company and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. All predictions as to future results contain a measure of uncertainty and accordingly, actual results could differ materially. Among the factors that could cause a difference are: changes in the general economy; changes in demand for the Company's products or in the cost and availability of its raw materials; the actions of its competitors; the success of our customers; technological change; changes in employee relations; government regulations; litigation, including its inherent uncertainty; difficulties in plant operations and materials; transportation, environmental matters; and other unforeseen circumstances. A number of these factors are discussed in the Company's filings with the Securities and Exchange Commission. Critical Accounting Policies In preparing our financial statements and accounting for the underlying transactions and balances, we apply our accounting policies as disclosed in Note 2 of our Notes to Financial Statements included in our Form 10-K. The Company's accounting policies that require a higher degree of judgment and complexity used in the preparation of financial statements include: Revenue recognition - revenues are recognized at the time of shipment to, or acceptance by customer provided title and risk of loss is transferred to the customer. Provisions, when appropriate, are made where the right to return exists. Revenues under service contracts are recognized when the services are performed. Property and equipment - property and equipment are stated at cost, less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the respective assets over periods ranging from three to eight years. Useful lives are estimated at the time the asset is acquired and are based upon historical experience with similar assets as well as taking into account anticipated technological or other changes. Leasehold improvements are amortized over the term of the lease or the useful life of the asset, whichever is shorter. Inventory reserves - inventory reserves are estimated for excess, slow-moving and obsolete inventory as well as inventory whose carrying value is in excess of net realizable value. These estimates are based on current assessments about future demands, market conditions and related management initiatives. If market conditions and actual demands are less favorable than those projected by management, additional inventory write-downs may be required. -6- Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued) Results of Operations (continued) Critical Accounting Policies (continued) Accounts receivable - the Company performs ongoing credit evaluations of its customers and adjusts credit limits based on customer payment and current credit worthiness, as determined by review of their current credit information. The Company continuously monitors credits and payments from its customers and maintains provision for estimated credit losses based on its historical experience and any specific customer issues that have been identified. While such credit losses have historically been within our expectation and the provision established, the Company cannot guarantee that it will continue to receive positive results. Income taxes - deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates and laws that will be in effect when such differences are expected to reverse. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefit which is not more likely than not to be realized. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in the period that such tax rate changes are enacted. Overview For the first quarter ended June 30, 2002, sales increased 11.2% to $2,849,733 and net income before taxes increased 2.2% to $428,723. Deliveries of the AN/APM-480 IFF (Identification, Friend or Foe) Transponder Set Test Set (TSTS) to the U.S. Navy continue and accounted for 64.9% of sales for the quarter ended June 30, 2002 as compared to 41.8% of sales for the quarter ended June 30, 2001. While government sales remain strong as a result of deliveries of the AN/APM-480 to the U.S. Navy, the commercial market remains weak. In August 2002 the Company received an order from the U.S. Navy for an additional 105 AN/APM-480's. The Company has now received orders for 1,182 units from the U.S. Navy and there are 118 units remaining subject to the option under the contract. Any options not exercised by the U.S. Navy by February 11, 2003 will expire. The Company has shipped 637 units through June 30, 2002 and expects shipments under this contract to continue through August of next year, unless the balance of the 118 units are exercised, in which case deliveries will continue until later in the year. This program firmly established the Company as one of the leading suppliers in the avionics test equipment industry, and improved its market position. The Company continues to invest heavily in new product development to meet the expected needs of its customers and remain as one of the leaders in the industry. The Company continues its work on the next generation of IFF test sets in anticipation of U.S. and NATO requirements for more sophisticated IFF testing. The Company anticipates that most of the AN/APM-480's will need to be upgraded, in the future, to accommodate the more sophisticated IFF testing. The Company recently introduced the T-36C, Nav/Comm ramp test set, into the commercial market, and the T-47S Multi-Function ramp tester into the military market. New products soon to be introduced include the TR-220, a commercial Multi-Function ramp test set, and the T-462, the Company's new bench test set. The T-462 capitalizes on the Company's technology and is part of the plan to expand into new markets. -7- Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued) Results of Operations (continued) Overview (continued) The Company has been active in responding to customer requests for quotation, in addition to adapting its product designs to respond to these requests. The Company continues actively to pursue opportunities in both the commercial and government markets, both domestically and internationally. Exploration of opportunities in other government and commercial markets also continues in an attempt to broaden the Company's product line. The Company continues its efforts with Semaphore Capital Advisors LLC to pursue growth through acquisitions and alliances of compatible businesses or technologies. Sales For the three months ended June 30, 2002, total sales increased $288,044 (11.2%) to $2,849,733 as compared to the three months ended June 30, 2001. Government sales increased $597,037 (33%) to $2,405,708 as compared to $1,808,671 for the first three months of the prior fiscal year. The increase in government sales is mainly attributed to the shipment of the AN/APM 480 to the U.S. Navy (64.9% of total sales). Commercial sales decreased (41%) to $444,025 as compared to $753,018 for the three months ended June 30, 2001. The decrease in commercial sales is primarily the result of the drop in airline orders, as the result of the September 11th tragedy, financial difficulties in the commercial airline industry, and completion of a major contract with a freight carrier. Gross Margin Gross margin dollars increased $217,067 (17.4%) for the three months ended June 30, 2002 as compared to the same three months in the prior fiscal year. The increase in gross margin, for the most part, is attributed to an increase in sales volume, higher prices on orders for limited units of the AN/APM-480 and, to a lesser extent, to production efficiencies obtained as a result of the higher volume. These amounts were partially offset by higher warranty costs. The gross margin percentage for the three months ended June 30, 2002 was 51.4% as compared to 48.7% for the three months ended June 30, 2001. The gross margin percentage in the next few quarters will not be as high as the first quarter as a result of lower selling prices on the AN/APM-480 for the units remaining under the U.S. Navy contract. Operating Expenses Selling, general and administrative expenses increased $174,456 (43.8%) for the three months ended June 30, 2002, as compared to the three months ended June 30, 2001. This increase is attributed to added sales and marketing activities, higher sales commission expense, recruitment fees for a Chief Operating Officer, and an increase in professional fees, including investment-banking services. The Company is actively recruiting a Chief Operating Officer and a Director of Business Development. The addition of these personnel will add to the Company's operating expenses in the near future, but management believes these additions are necessary for the Company to continue its growth and provide for the orderly succession of key personnel. -8- Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued) Results of Operations (continued) Operating Expenses Engineering, research and development expenses increased $36,556 (8.8%). The higher level of expenditures is associated with an increase in research and development activities, including the TR-220, a multi-function ramp test set, and the T-462, the Company's new bench test set, as well as continued effort on the next generation of IFF test sets. Income Taxes A provision for income taxes was recorded in the amount of $171,276 for the three months ended June 30, 2002 as compared to a tax provision of $170,880 for the three months ended June 30, 2001. These amounts represent the effective federal and state tax rate on the Company's net income before taxes. The Company has used its net operating loss carryforwards and the Company will pay federal taxes this fiscal year. Liquidity and Capital Resources At June 30, 2002 the Company had working capital of $3,424,541 as compared to $3,154,081 at March 31, 2002. For the three months ended June 30, 2002, cash provided by operations was $804,749 as compared to $128,487 for the three months ended June 30, 2001. This increase in cash from operations is primarily attributed to a decrease in inventories and an increase in accounts payable and accrued expenses. The Company has a line of credit of $1,000,000 from Fleet Bank. The line of credit bears an interest rate of 0.5% above the lender's prevailing base rate, which is payable monthly, based upon the outstanding balance. As of June 30, 2002 the Company had no outstanding balance. The line of credit is collateralized by substantially all of the assets of the Company and expires in August 2002. The credit facility requires the Company to maintain certain financial covenants. As of June 30, 2002, the Company was in compliance with all financial covenants. The Company is in the process of renewing this line. Based upon the current backlog, its existing credit line, and cash balance, the Company believes that it has sufficient working capital to fund its operating plans for at least the next twelve months. However, as the Company pursues additional opportunities, the need for additional capital may arise. The Company will evaluate its alternatives when these opportunities arise. The Company has also retained Semaphore Capital Advisors as its investment bankers to help pursue acquisitions and alliances and, if needed, to help raise capital. The Company maintains its cash balance primarily in a money market account in the event the cash is needed for acquisition. There was no significant impact on the Company's operations as a result of inflation for the three months ended June 30, 2002. These financial statements should be read in conjunction with the Company's Annual Report on Form 10-K to the Securities and Exchange Commission for the fiscal year ended June 30, 2001. -9- Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued) Part II. Other Information 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. 99.2 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. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TEL-INSTRUMENT ELECTRONICS CORP. Date: August 13, 2002 By: /s/ Harold K. Fletcher ---------------------- /s/ Harold K. Fletcher Chairman and President Date: August 13, 2002 By: /s/ Joseph P. Macaluso ---------------------- /s/ Joseph P. Macaluso Principal Accounting Officer -10- EX-99.1 3 e13752ex99_1.txt CERTIFICATION EXHIBIT 99.1 CERTIFICATION PURSUANT TO 8 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Tel-Instrument Electronics Corp. (the "Company"), on Form 10-Q for the period ending June 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Harold K. Fletcher, President and Chief Executive Officer of the Company, certify, pursuant to and solely for the purpose of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge and based on my review of the Report: 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/ Harold K. Fletcher ---------------------- /s/ Harold K. Fletcher Chairman and President August 13, 2002 EX-99.2 4 e13752ex99_2.txt CERTIFICATION EXHIBIT 99.2 CERTIFICATION PURSUANT TO 8 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Tel-Instrument Electronics Corp. (the "Company"), on Form 10-Q for the period ending June 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Joseph P. Macaluso, Principal Accounting Officer of the Company, certify, pursuant to and solely for the purpose of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge and based on my review of the Report: 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/ Joseph P. Macaluso ---------------------- /s/ Joseph P. Macaluso Principal Accounting Officer August 13, 2002 -----END PRIVACY-ENHANCED MESSAGE-----