UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended: December 31, 2002
[ ] Transition report under Section 13 or 15(d) of the
Securities Exchange Act.
NVE Corporation
---------------
(Exact name of registrant as specified in its charter)
Minnesota
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(State or other jurisdiction of incorporation)
000-12196 41-1424202
-------------------------------- ------------------------
Commission File Number I.R.S. Employer
Identification number
11409 Valley View Road, Eden Prairie, Minnesota 55344
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(Address of principal executive offices) (Zip code)
Issuer's telephone number, including area code: (952) 829-9217
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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 each of the
issuer's classes of common stock, as of the latest practical
date:
Common Stock, $.01 Par Value - 4,172,328 shares outstanding as of
January 24, 2003.
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements.
NVE CORPORATION
BALANCE SHEET
DECEMBER 31, 2002
Current assets:
Cash $ 365,489
Investment securities 5,655,474
Accounts receivable, net 1,350,930
Inventories 846,293
Prepaid expenses and other assets 178,846
-----------
Total current assets 8,397,032
Fixed assets:
Machinery and equipment 2,682,384
Furniture and fixtures 35,499
Leasehold improvements 365,187
Construction in progress 11,826
-----------
3,094,896
Less accumulated depreciation 1,835,701
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Total fixed assets 1,259,195
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Total assets $9,656,227
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 386,696
Accrued payroll and other 492,581
Deferred revenue 1,082,028
Current portion of capital lease obligations 151,039
-----------
Total current liabilities 2,112,344
Capital lease obligations, less current portion 262,952
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Total liabilities 2,375,296
Shareholders' equity:
Common stock 41,634
Additional paid-in capital 12,114,278
Accumulated other comprehensive income 92,671
Accumulated deficit (4,967,652)
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Total shareholders' equity 7,280,931
-----------
Total liabilities and shareholders' equity $9,656,227
===========
SEE ACCOMPANYING NOTES.
NVE CORPORATION
STATEMENTS OF OPERATIONS
Three Months Ended
December 31 December 30
2002 2001
--------------------------
Revenue
Contract research and development $1,673,502 $1,246,875
Product sales 565,633 402,168
License revenue 97,917 125,699
--------------------------
Total revenue 2,337,052 1,774,742
Cost of sales 1,424,507 1,332,045
--------------------------
Gross profit 912,545 442,697
Expenses
Research and development 327,472 475,266
Selling, general & administrative 420,862 405,368
--------------------------
Total expenses 748,334 880,634
--------------------------
Income (loss) from operations 164,211 (437,937)
Interest income 58,454 4,099
Interest expense (9,210) (21,346)
Other income (expense) 20,706 20,188
--------------------------
Net income (loss) 234,161 (434,996)
==========================
Net income (loss) per share-basic .06 (.13)
==========================
Net income (loss) per share-diluted .05 (.13)
==========================
Weighted average shares outstanding:
Basic 4,159,718 3,420,996
Diluted 4,466,199 3,420,996
SEE ACCOMPANYING NOTES.
NVE CORPORATION
STATEMENTS OF OPERATIONS
Nine Months Ended
December 31 December 30
2002 2001
--------------------------
Revenue
Research and development $4,843,268 $3,319,218
Product sales 1,707,633 1,098,133
License Revenue 293,751 488,197
--------------------------
Total Revenue 6,844,652 4,905,548
Cost of sales 4,273,553 3,815,892
--------------------------
Gross profit 2,571,099 1,089,656
Expenses
Research and development 944,330 1,132,549
Selling, general & administrative 1,324,302 1,248,887
--------------------------
Total expenses 2,268,632 2,381,436
--------------------------
Income (loss) from operations 302,467 (1,291,780)
Interest income 154,134 18,683
Interest expense (32,108) (33,937)
Other income (expense) 62,193 100,715
--------------------------
Net income (loss) 486,686 (1,206,319)
==========================
Net income (loss) per share-basic .12 (.35)
==========================
Net income (loss) per share-diluted .11 (.35)
==========================
Weighted average shares outstanding:
Basic 4,118,523 3,399,101
Diluted 4,425,004 3,399,101
SEE ACCOMPANYING NOTES.
NVE CORPORATION
STATEMENTS OF CASH FLOWS
Nine Months Ended
December 31 December 30
2002 2001
--------------------------
OPERATING ACTIVITIES
Net income (loss) $ 486,686 $(1,206,319)
Adjustments to reconcile net loss to net cash
provided used in operating activities:
Depreciation and amortization 370,398 233,452
Changes in operating assets and liabilities:
Accounts receivable (89,757) 188,753
Inventories (334,078) 107,195
Prepaid expenses and other (119,641) 39,992
Accounts payable and accrued expenses 63,795 (208,253)
Deferred revenue (483,279) 481,140
--------------------------
Net cash used in operating activities (105,876) (364,040)
INVESTING ACTIVITIES
Purchases of fixed assets (383,377) (855,310)
Purchases of investment securities (5,583,414) -
--------------------------
Net cash used in investing activities (5,966,791) (855,310)
FINANCING ACTIVITIES
Net proceeds from sale of common stock 6,224,766 89,599
(Repayment of) proceeds from notes payable and
capital lease obligations (323,868) 508,511
--------------------------
Net cash provided by financing activities 5,900,898 598,110
--------------------------
Decrease in cash (171,769) (621,240)
Cash at beginning of period 537,258 1,492,080
--------------------------
Cash at end of period $ 365,489 $ 870,840
==========================
SEE ACCOMPANYING NOTES.
NVE CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
1. INTERIM FINANCIAL INFORMATION
The accompanying unaudited financial statements of NVE Corporation (the
"Company") are consistent with accounting principles generally accepted in the
United States and reporting with SEC regulations. In the opinion of
management, these financial statements reflect all adjustments, consisting
only of normal and recurring adjustments, necessary for a fair presentation of
the financial statements. Although we believe that the disclosures are adequate
to make the information presented not misleading, it is suggested that these
condensed financial statements be read in conjunction with the audited
financial statements and the notes included in our latest annual financial
statements included in our report on Form 10-KSB. The results of operations
for the three and nine month periods ended December 31, 2002 are not
necessarily indicative of the results that may be expected for the full year
ending March 31, 2003.
2. NATURE OF BUSINESS
We develop and sell "spintronics" devices, which rely on electron spin
rather than electron charge to acquire, store, and transmit information.
3. REVENUE RECOGNITION
Revenue from product sales to direct customers is recognized upon shipment.
Revenue from licensing and technology development programs, which is
nonrefundable and for which no significant future obligations exist, is
recognized when the license is signed. Revenue from licensing and technology
development programs, which is refundable, recoupable against future royalties,
or for which future obligations exist, is recognized when we have completed our
obligations under the terms of the agreements. Revenue from royalties is
recognized upon the shipment of product from our technology license partners to
direct customers. Certain research and development activities are conducted for
third parties and such revenue is recognized as the services are performed.
4. EARNINGS PER SHARE
We calculate our income (loss) per share pursuant to Statement of Financial
Accounting Standards No. 128 ("SFAS 128"), Earnings Per Share. Basic earnings
per share is computed based upon the weighted average number of common shares
issued and outstanding during each year. Diluted net income per share amounts
assume conversion, exercise or issuance of all potential common stock
instruments (stock options, warrants and convertible preferred stock).
Potentially dilutive securities including warrants and stock options are
excluded from diluted earnings per share during net loss periods because these
securities would be anti-dilutive.
5. INVESTMENTS
We classify and account for debt and equity securities in accordance with SFAS
No. 115, Accounting for Certain Investments in Debt and Equity Securities. The
Company's entire portfolio is classified as available for sale; thus,
securities are recorded at fair market value and any associated unrealized gain
or loss, net of tax, is included as a separate component of shareholders'
equity, "Accumulated other comprehensive income."
6. COMPREHENSIVE INCOME
The components of comprehensive income (loss) are as follows:
Three months ended
December 31 December 30
2002 2001
----------- ------------
Net income (loss) $234,161 $(434,996)
Change in unrealized gains 1,557 -
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Comprehensive income (loss) $235,718 $(434,996)
=========== ============
Nine months ended
December 31 December 30
2002 2001
----------- ------------
Net income (loss) $486,686 $(1,206,319)
Change in unrealized gains 92,671 -
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Comprehensive income (loss) $579,357 $(1,206,319)
=========== ============
7. INVENTORIES
Inventories consist of the following:
Raw materials $ 347,901
Work-in-process 523,025
Finished goods 175,367
-----------
1,046,293
Less obsolescence reserve (200,000)
-----------
$ 846,293
===========
8. STOCK SPLIT
We executed a one-for-five reverse split of our Common Stock to stockholders of
record at the close of business on November 21, 2002. All share and per share
amounts have been restated for both 2002 and 2001 in the accompanying financial
statements.
9. NEW ACCOUNTING PRONOUNCEMENTS
On December 31, 2002, the FASB issued Statement 148 to provide alternative
methods of transition to the fair value method of accounting for stock-based
employee compensation. In addition, Statement No. 148 amends the disclosure
provisions of Statement 123 to require disclosure in the summary of
significant accounting policies of the effects of an entity's accounting
policy with respect to stock-based employee compensation on reported net
income and earnings per share in annual and interim financial statements.
Statement 148 does not amend Statement No. 123 to require companies to account
for their employee stock-based awards using the fair value method. However,
the disclosure provisions are required for all companies with stock-based
employee compensation, regardless of whether they utilize the fair value
method of accounting described in Statement No. 123 or the intrinsic value
method described in APB Opinion No. 25, Accounting for Stock Issued to
Employees.
Statement No. 148 is effective for fiscal years ending after December 15,
2002, with earlier application permitted for entities with fiscal years
ending prior to December 15, 2002, provided that financial statements for the
2002 fiscal year were not issued prior to the issuance of Statement No. 148
(December 31, 2002). The disclosure requirements for interim financial
statements containing condensed financial statements are effective for interim
periods beginning after December 15, 2002.
10. TECHNOLOGY EXCHANGE AGREEMENT
On April 19, 2002 the Company closed a technology exchange agreement
accompanied by an investment by Cypress Semiconductor Corporation ("Cypress").
Cypress purchased 686,600 shares of NVE Common Stock for $6.228 million.
Cypress also received a warrant for the purchase of up to an additional
400,000 shares of Common Stock for $15.00 per share for a term of three years.
Item 2. Management's Discussion and Analysis or Plan of Operation.
General
We develop and sell "spintronics" devices, which are integrated circuit
type devices that rely on electron spin rather than electron charge to acquire,
store, and transmit information in electronic systems. We derive revenue from
three sources:
1) contract spintronics research and development (principally government
contracts);
2) commercial sales of spintronic sensor and coupler products; and
3) licenses for our magnetic random-access memory (MRAM)
intellectual property.
Critical accounting policies
It is important to understand our significant accounting policies in order
to understand our consolidated financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United
States. These accounting principles require us to make estimates and
assumptions that affect amounts reported in our consolidated financial
statements and the accompanying notes. Actual results are likely to differ
from those estimates, but we do not believe such differences will materially
affect our financial position or results of operations for the periods
presented in this report.
Revenue recognition
Revenue from product sales to direct customers is recognized upon
shipment. Revenue from licensing and technology development programs, which is
nonrefundable and for which no significant future obligations exist, is
recognized when the license is signed. Revenue from licensing and technology
development programs, which is refundable, recoupable against future royalties,
or for which future obligations exist, is recognized when we complete our
obligations under the terms of the agreements. Revenue from royalties is
recognized upon the shipment of product from our technology license partners
to direct customers. Certain research and development activities are conducted
for third parties and such revenue is recognized as the services are
performed. Payments received from licensing and technology development
programs relating to future obligations as well as prepayments for future
discounts on product sales are recorded as deferred revenue.
Bad Debt
We maintain an allowance for doubtful accounts for estimated losses
resulting from the inability of our customers to make required payments.
If the financial condition of our customers were to deteriorate, resulting
in an impairment of their ability to make payments, additional allowances may
be required.
Inventory
We reduce the stated value of our inventory for excess quantities or
obsolescence in an amount equal to the difference between the cost of inventory
and the estimated market value based upon assumptions about future demand and
market conditions. If actual future demand or market conditions are less
favorable than those projected by management, additional reductions in stated
value may be required.
Income Taxes
In determining the carrying value of our net deferred tax assets, we must
assess the likelihood of sufficient future taxable income in certain tax
jurisdictions, based on estimates and assumptions to realize the benefit of
these assets. Our management evaluates the realizability of the deferred
assets quarterly and assesses the need for valuation allowances or reduction
of existing allowances quarterly.
Three months ended December 31, 2002 compared to three months ended
December 30, 2001
The table shown below summarizes the percentage of revenue for the
various items for the periods indicated:
Three months ended
December 31 December 30
2002 2001
----------- -----------
Revenue:
Research and development 71.6 % 70.2 %
Product sales 24.2 22.7
License fees 4.2 7.1
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Total revenue 100.0 100.0
Cost of sales 61.0 75.1
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Gross profit 39.0 24.9
Total expenses 29.0 49.5
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Net income (loss) 10.0 % (24.6)%
======= =======
Revenue for the three months ended December 31, 2002 was $2,337,052, an
increase of 32% from revenue of $1,774,742 for the three months ended December
30, 2001. The revenue increase was due to increases in commercial product sales
and research and development revenue. Commercial product sales increased 41% to
$565,633 from $402,168. Research and development revenue increased 34% to
$1,673,502 from $1,246,875 due to increased government contract revenue and
increased revenue recognized under our agreement with Agilent Technologies,
Inc. Increases in commercial product sales and research and development revenue
were partially offset by a decrease in license revenue from $125,699 to
$97,917. The decrease in license revenue was due to completion of revenue
recognition for one of our MRAM license agreements.
Gross profit increased to 39% for the three months ended December 31, 2002
as compared to 25% for the three months ended December 30, 2001. Gross profit
on commercial product sales and contract research and development increased
50% and 32%, respectively, for the three months ended December 31, 2002 as
compared to (3%) and 26% for the three months ended December 30, 2001. This
increase was due to higher yields on commercial products as well as increased
margins on contract research and development.
Research and development expenses decreased 31% to $327,472 for the three
months ended December 31, 2002 as compared to $475,266 in the three months
ended December 30, 2001. The decrease was due to completion of the development
of some of our commercial products.
Selling, general and administrative expenses for the three months ended
December 31, 2002 increased by 4% to $420,862 compared to $405,368 for the
Three months ended December 30, 2001. The increase was primarily due to an
increase in product marketing.
Net income totaled $234,161 for the three months ended December 31,
2002 compared to a net loss of $434,996 for the three months ended December
30, 2001. The increase in net income was due to a change from operational
losses to profits, lower interest expense from the retirement of high-cost
debt, and higher interest income from our investments.
Nine months ended December 31, 2002 compared to nine months ended
December 30, 2001
The table shown below summarizes the percentage of revenue for the
various items for the periods indicated:
Nine Months Ended
December 30 December 31
2002 2001
----------- -----------
Revenue:
Research and development 70.8 % 67.7 %
Product sales 24.9 22.4
License fees 4.3 9.9
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Total revenue 100.0 100.0
Cost of sales 62.4 77.8
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Gross profit 37.6 22.2
Total expenses 30.5 46.8
------- -------
Net income (loss) 7.1 % (24.6)%
======= =======
Revenue for the nine months ended December 31, 2002 was $6,844,652, an
increase of 40% from revenue of $4,905,548 for the nine months ended December
30, 2001. The revenue increase was due to increases in commercial product
sales and research and development revenue. Commercial product sales
increased 56% to $1,707,633 from $1,098,133. Research and development revenue
increased 46% to $4,843,268 from $3,319,218 due to increased government
contract revenue and increased revenue recognized under our agreement with
Agilent Technologies, Inc. Increases in commercial product sales and research
and development revenue were partially offset by a decrease in license revenue
from $488,197 to $293,751. The decrease in license revenue was due to
completion of revenue recognition for one of our MRAM license agreements.
Research and development expenses decreased by 17% to $944,330 for the
nine months ended December 31, 2002 as compared to $1,132,549 in the nine
months ended December 30, 2001. The decrease was due to completion of the
development of some of our commercial products.
Gross profit margins increased to 38% for the nine months ended December
31, 2002 as compared to 22% for the nine months ended December 30, 2001. Gross
profit on commercial product sales increased to 50% and gross profit on
contract research and development increased to 29% for the nine months ended
December 31, 2002 as compared to 14% and 13% for the nine months ended
December 30, 2001. This increase was due to higher yields on commercial
products as well as increased margins on contract research and development.
Selling, general and administrative expenses for the nine months ended
December 31, 2002 increased by 6% to $1,324,302 compared to $1,248,887 for the
nine months ended December 30, 2001. The increase was primarily due to higher
expenses associated with a ramp-up in commercial selling activities.
Net income totaled $486,686 for the nine months ended December 31, 2002
compared to a net loss of $1,206,319 for the nine months ended December 30,
2001. The increase in net income was due to a change from operational losses
to profits, and higher interest income on our increased investments.
Liquidity and capital resources
At December 31, 2002, we had $5,655,474 in available-for-sale securities,
consisting of marketable fixed-income investments. We had cash on December 31,
2002 of $365,489 and working capital of $6,284,688. We believe our working
capital is adequate for our current needs.
Recent Developments
On November 11, 2002, we announced plans for a one-for-five reverse split
of our Common Stock, and also announced that our board of directors had
authorized the repurchase of up to 50,000 post-split shares of our Common
Stock. Through December 31, 2002 we had not repurchased any shares under the
repurchase program.
We executed a one-for-five reverse split of our Common Stock to
shareholders of record at the close of business on November 21, 2002. In
conjunction with the reverse split, we changed our Common Stock CUSIP number
to 629-445-20-6 from 629-445-10-7, and the trading symbol to NVCR from NVEC.
On January 22, 2003, our Common Stock began trading on the Nasdaq SmallCap
Market under the symbol NVEC, which was the symbol prior to the November 21,
2002 reverse split. The CUSIP number was unchanged from the post-split number.
Outlook
Thus far our commercial product revenues have continued to grow rapidly,
although we believe adverse economic conditions may be limiting our growth in
our core industrial control market.
We continue to take steps related to our business strategy, which includes
the following key elements:
o Grow our commercial product business by expanding distribution and
product promotion
o Develop new products based on modules and designs we have developed
o Support product research and development with government contract
research and development
o Deploy our MRAM intellectual property through manufacturing partnerships
In line with this strategy, we have invested in training and supporting
our new representatives and distributors to maximize their productivity, and we
delivered our first couplers to be distributed by Agilent Technologies, Inc. We
expanded our "Hate Optos" advertising campaign, and produced a new sensor
product-line catalog.
We announced several new sensor products and continued to invest in
development of faster and more cost-effective coupler products. Contract
research and development programs continue, including advanced sensors and
couplers.
We continue our MRAM research, and supported our manufacturing partners,
especially Cypress Semiconductor Corp.
We expect commercial product revenues to continue to grow, and we
anticipate profitability to continue in the quarter ending March 31, 2003. In
the fiscal year beginning April 2003, approximately $250,000 per quarter of
contract research and development from Agilent milestone achievements and
recognition of MRAM license revenues of approximately $98,000 per quarter will
cease. We may be able to replace those revenue and profit sources with
expanded commercial product sales, but there can be no assurance we will
continue to be profitable.
Item 3. Controls and Procedures.
Within 90 days prior to the date of filing of this report, we carried out
an evaluation, under the supervision and with the participation of our
management, including the Chief Executive Officer and the Chief Financial
Officer, of the design and operation of our disclosure controls and
procedures. Based on this evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures are
effective for gathering, analyzing and disclosing the information we are
required to disclose in the reports we file under the Securities Exchange Act
of 1934, within the time periods specified in the SEC's rules and forms. There
have been no significant changes in our internal controls or in other factors
that could significantly affect internal controls subsequent to the date of
this evaluation.
PART II--OTHER INFORMATION
Item 5. Other Information
On January 22, 2003, our Common Stock began trading on the Nasdaq SmallCap
Market. Prior to being listed on the Nasdaq SmallCap Market, our Common Stock
was traded on the Over-the-Counter Bulletin Board.
On October 25, 2002, our Board approved amended Articles of Incorporation
to adjust authorized shares in conjunction with a reverse split of our common
stock. The amended Articles of Incorporation are filed herein.
We executed an amendment dated October 18, 2002 to our Agreement with
Agilent Technologies, Inc. The amendment recognizes the completion of key
milestones in the qualification of our technology, and adjusts certain tine
periods accordingly. The amendment is filed herein.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits.
Exhibit 3: Amended and Restated Articles of Incorporation of the
Company as amended by the Board of Directors effective November 21,
2002.
Exhibit 10.1: Amendment dated October 18, 2002 to OEM Purchase
Agreement with Agilent Technologies, Inc.
Exhibit 10.2: OEM Purchase Agreement with Agilent Technologies, Inc.,
incorporated by reference to our report on Form 10QSB filed
October 26, 2001 (confidential treatment has been requested with
respect to portions of this exhibit, and such confidential portions
have been deleted and separately filed with the Securities and
Exchange Commission pursuant to Rule24b-2 or Rule 406).
b. Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on behalf of the undersigneds thereunto duly authorized.
NVE CORPORATION
Date: January 28, 2003
By /s/ Daniel A. Baker
-------------------------------------
Daniel A. Baker
President and Chief Executive Officer
By /s/ Richard George
-------------------------------------
Richard George
Chief Financial Officer
CERTIFICATIONS PURSUANT TO SECTION 302
I, Daniel A. Baker, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of NVE Corporation.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent 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 officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: January 28, 2003
/s/ Daniel A. Baker
-------------------------------------
Daniel A. Baker
President and Chief Executive Officer
I, Richard George, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of NVE Corporation.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent 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 officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: January 28, 2003
/s/ Richard George
-----------------------
Richard George
Chief Financial Officer