SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
AMENDED FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT
OF 1934
OR
[_] TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO _______________
For the quarterly period ended: June 30, 2002
Commission File Number: 0-29459
PACEL CORP.
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(Exact name of registrant as specified in its charter)
VIRGINIA 54-1712558
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
8870 RIXLEW LANE, SUITE 201
MANASSAS, VIRGINIA 20109-3795
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(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code: (703) 257-4759
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 day:
Yes [X] No [ ]
Transitional Small Business Disclosure Format (check one)
Yes [ ] No [X]
State the number of Shares outstanding of each of the issuer's classes of common
equity, as of the latest date:
As of June 30, 2002, there were 122,227,409 shares of the Registrant's common
stock outstanding.
Part I
PACEL CORP. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION (unaudited)
Item 1. Index to Consolidated Condensed Financial Statements F-1
Condensed Consolidated Balance Sheets F-2
Consolidated Condensed Statements of Income of Operations F-3
Consolidated Statements of Cash Flows F-4
Notes to Consolidated Condensed Financial Statements F-5
PACEL CORP. AND SUBSIDIARIES
Balance Sheet
(Unaudited)
ASSETS
June 30, December 31,
2002 2001
Unaudited Audited
------------------- -----------------
Current assets:
Cash and cash equivalents $ 5,113 $ 65,761
Accounts receivable, net of allowance for doubtful accounts of
$1,311 and $1,311 respectively 91,672 324,134
Inventory 24,883 61,306
Other receivables 108,479 36,684
4 ------------------- -----------------
Total current assets 230,147 487,885
Property and equipment, net of accumulated depreciation
of $81,423 and $73,946 respectively 73,626 81,123
Non-current assets:
Note receivable 71,000 71,000
Goodwill - 407,049
Security deposits 25,359 10,122
------------------- -----------------
Total non-current assets 96,359 488,171
Total assets $ 400,132 $ 1,057,179
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 1,770,270 $ 1,423,979
Accrued expense 244,303 175,511
Loans payable officers-Stockholders 780,824 143,853
Notes payable 863,750 1,182,343
Notes payable bank 50,000 50,000
Net liabilities of discontinued operations - 236,731
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Total current liabilities 3,709,147 3,212,417
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Long Term liabilities:
Convertible debentures 808,629 700,636
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Total long term liabilities 808,629 700,636
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Total liabilities 4,517,776 3,913,053
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Minority interest Commitments:
The accompanying notes are an integral part of the financial statements
F-2
PACEL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2001
AND THE THREE MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2001
Six months Six months Three months Three months
Ended Ended Ended Ended
June 30, 2002 June 30, 2001 June 30, 2002 June 30, 2001
----------------------------------------------------------------------------------------------------------------------------
Sales $ 316,957 $ 243,694 $ 138,369 $ 61,955
Direct Cost of Goods Sold 312,812 240,815 127,502 61,002
Gross Profit 4,145 2,879 10,867 953
-------------- -------------- -------------- --------------
Operating costs and expenses:
Research and development 232,826 219,285 129,455 137,297
Depreciation & Amortization 7,477 7,810 3,727 4,175
Interest expense 70,308 23,018 35,013 12,052
Sales and Marketing 206,244 48,288 147,365 7,927
Financing Expenses 35,500 81,100 32,000 81,100
General and Administrative 1,670,190 629,594 557,446 364,308
-------------- -------------- -------------- --------------
Total operating costs and expenses 2,222,545 1,009,095 905,006 606,859
-------------- -------------- -------------- --------------
Loss from continuing operations (2,218,400) (1,006,216) (894,139) (605,906)
Loss from operations of discontinued EBStor business (220,268) (250,358) (116,284) (107,210)
Gain from disposal of EBStor business 177,817 177,817
Loss before cumulative effect of accounting change (2,260,851) (1,256,574) (832,606) (713,116)
Cumulative effect of accounting change (407,049) 0 0 0
Net (loss) $(2,667,900) $(1,256,574) $ (832,606) $ (713,116)
============== ============== ============== ==============
Net (loss) per common share
Basic (0.10) (2.83) (0.02) (2.03)
Diluted (0.10) (2.83) (0.02) (2.03)
============== ============== ============== ==============
Weighted Average shares outstanding
Basic 27,740,062 444,492 52,219,456 351,953
Diluted 27,740,062 444,492 52,219,456 351,953
============== ============== ============== ==============
The accompanying notes are an integral part of the financial statements
F-3
PACEL CORP. AND SUBSIDIARIES
Statements of Cash Flows
(Unaudited)
2002 2001
-------------- ----------------
Cash flows from operating activities:
Net (loss) $ (2,667,900) $ (1,256,574)
Adjustments to reconcile net (loss) to net cash (used in)
provided by operating activities:
Cumulative effect of accounting change 407,049 -
Depreciation 7,477 7,810
Provision for Bad Debts 0 (721)
Other non cash items 1,153,652 368,483
Gain on sale of EB-Store (177,817)
Increase (Decrease) in Cash from changes in:
Accounts receivable 232,462 (107,146)
Other receivables (71,795) 5,965
Inventory 36,423 762
Other assets 0 (1,798)
Security deposits (15,237) 0
Prepaid expenses 0 (1,798)
Accounts payable 287,357 253,386
Accrued expense 68,792 (1,506)
Loans Payable Officers-Stockholders 636,971 80,228
Net cash (used in) operating activities (102,566) (652,909)
-------------- ----------------
Cash flows from investing activities:
Purchase of property and equipment (3,882)
Notes Receivable 0 0
Net cash used in investing activities - (3,882)
-------------- ----------------
Cash flows from financing activities:
Repayment of loans payable (125,362) -
Notes payable convertible debenture 25,000 518,301
Proceeds from sale of common stock 150,000 101,490
Net cash provided by financing activities 49,638 619,791
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Effect of exchange rates on cash (7,720) 912
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Net increase (Decrease) in cash and cash equivalents
(60,648) (36,088)
Cash and cash equivalents at beginning of year 65,761 36,356
-------------- ----------------
Cash and cash equivalents at end of period $ 5,113 $ 268
============== ================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid for interest 5,467 2,380
============== ================
The accompanying notes are an integral part of the financial statements
F-4
PACEL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
JUNE 30, 2002
1. Basis of Presentation
The unaudited financial statements included in the Form 10-QSB have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation SB. The financial information furnished herein reflects all
adjustments, which in the opinion of management are necessary for a fair
presentation of the Company's financial position, the results of operations and
cash flows for the periods presented.
Certain information and footnote disclosures normally contained in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted, pursuant to such rules and regulations.
These interim statements should be read in conjunction with the audited December
31, 2001 consolidated financial statements and related notes included in the
Company's year ended certified financial statements. The results of operations
for the periods ended June 30 are not necessarily indicative of the operating
results for the year. The Company presumes that users of the interim financial
information herein have read or have access to the audited financial statements
for the preceding fiscal year and that the adequacy of additional disclosure
needed for a fair presentation may be determined in that context. The results of
operations for any interim period are not necessarily indicative of the results
for the full year.
2. Accounting for Business Combinations
In July 2001, the FASB issued Statements of Financial Accounting Standards
("Statement") No. 141, "Business Combinations" and No. 142, "Goodwill and Other
Intangible Assets" ("FAS 142"). These standards change the accounting for
business combinations by, among other things, prohibiting the prospective use of
pooling-of-interests accounting and requiring companies to stop amortizing
goodwill and certain intangible assets with an indefinite useful life. Instead,
goodwill and intangible assets deemed to have an indefinite useful life will be
subject to an annual review for impairment. The new standards generally were
effective for Pacel in the first quarter of 2002 and for purchase business
combinations consummated after June 30, 2001. Upon adoption of FAS 142 in the
F-5
first quarter of 2002, Pacel recorded a one-time, noncash charge of $407,049 to
reduce the carrying value of its goodwill. Such charge is nonoperational in
nature and is reflected as a cumulative effect of an accounting change in the
accompanying consolidated statement of operations.
3. Discontinued Operations
On May 31, 2002, the Company completed an agreement to sell E-BStor an 80% owned
subsidiary to F. Kay Calkins a director. The Company recorded a gain on the sale
of $177,817. Ms. Calkins assumed all of the assets and liabilities on the books
as of May 31, 2002. There is an inter-company receivable of $1,568,815 we have
taken a 100% reserve against the receivable due to our inability to determine
when they will have cash flow to start repayment of this loan. The Consolidated
Financial Statements have been restated, where applicable, to reflect the
E-BStor discontinued operations. .
4. Subsequent events
a. In April 2002, David Calkins president, director and F. Kay Calkins director
of Pacel were granted a noncash option to purchase 100,000,000 shares of the
company's common stock in exchange for the a loan made to the company in 1999
amounting to $124,000 and securing and loaning to the Company, a personal line
of credit of up to $3,000,000 using the stock as collateral. Our ability to draw
on this line is based on the volume of the Common Stock multiplied by the VWAP
(volume weighted average price) for the thirty days preceding funding which must
be a minimum of $75,000. The maximum amount of collateral at any closing may not
exceed 4.9% of the issued and outstanding shares of the Company. Loan to value
is 35%. The interest rate is prime+2% payable quarterly in cash plus financing
expense of 9% of the draws. The Company will pay these expenses directly. The
terms and conditions set fourth in the agreement we may not be able to meet.
b. On April 5, 2002 the Company affected a one-for-one hundred reverse split
restating the number of common shares as of March 31, 2002 from 648,462,600 to
6,484,626 and December 31, 2001 from 247,064,400 to 2,470,644. All references to
average number of shares outstanding and prices per share have been restated
retroactively to reflect the split.
F-6
FORWARD-LOOKING STATEMENTS
When used in this document and in our filings with the Securities and Exchange
Commission, in our press releases or other public or shareholder communications,
and in oral statements made with the approval of an authorized executive
officer, the words or phrases "will likely result," "are expected to," "will
continue," "is anticipated," "estimate," "project" or similar expressions are
intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are subject
to certain risks and uncertainties, which could cause our actual results to
differ materially from our historical results and those we presently anticipate
or project. You should not place undue reliance on any forward-looking
statements, which speak only as of the date made. Various factors could affect
our financial performance and could cause our actual results for future periods
to differ materially from any opinions or statements we express with respect to
future periods in any current statement. These factors include, but are not
limited to, the following: increases in our operating expenses outpacing our
revenues; our inability to expand our sales and distribution channels; the
failure of strategic relationships to implement and promote our software
products; the failure of third parties to develop software components necessary
for the integration of applications using our software; and the use of our
intellectual property by others.
We do not undertake--and we specifically decline any obligation--to publicly
release the result of any revisions which may be made to any forward-looking
statements to reflect events or circumstances after the date of such statements
or to reflect the occurrence of anticipated or unanticipated events.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL BUSINESS
Management's discussion and analysis of results of operations and financial
condition, include a discussion of liquidity and capital resources. The
following discussion (presented in hundreds, except per share amounts) should be
read in conjunction with the consolidated financial statements and notes
thereto.
Overview
PACEL's mission is to provide consumers and businesses with a full suite of
products and services that provide secure connectivity to and from the Internet,
including e-commerce transactions and personnel and company data security. To
that end PACEL. and its subsidiaries have been developing products and methods
that meet that need for both families and companies. The ChildWatch software
suite of programs puts the controls for family computer usage, including
internet filtering, access controls and community support for finding missing
and abducted children in the hands of the parents and is readily available at
Zany Brany and Electronic Boutique stores nationally. "Data Protector" our
latest technology advancement (patent pending) software product will provide
complete file and data security. This new software is designed to guard both the
Inner Door (full protection on your PC from existing and new viruses), i.e., the
Love Bug, and someone trying to penetrate your PC and by-pass your password, and
the Outer Door (full Intruder protection from Internet data collection devices
and programs or hackers). Our current goal is to utilize and extend these
technologies in the production of derivative products to provide secure Internet
connectivity and enhanced desktop security for customers in the home and
business marketplaces.
RESULTS OF OPERATIONS
Six Months Ended June 30, 2002 Compared to Six Months Ended June 30, 2001
Revenues increased 30% to $316,957 in 2002 compared to $243,694 in 2001. The
increase in revenues is directly attributed to sales generated from Advantage
Systems hardware sales. The sales from FCL fell sharply in the six months ended
June 30, 2002 compared to 2001. RFP's from Nato were not approved in the fourth
quarter of 2001 therefore delaying sales for 2002. We have not received any new
RFP's from Nato. The Company is focusing it's efforts on expanding it's hardware
sales in the United States as well as through existing NATO contracts. The
Company continues to believe that the Child Watch software, Data Protector has
sales potential if we can obtain adequate financing for the marketing.
Cost of Goods Sold increased 23% to $312,812 in 2002 compared to $240,815 in
2001. The increase is directly attributed to the increase in sales. The sale of
hardware generates a small gross profit than our other services.
Research and Development expenses consist principally of salaries for software
developers, outside consulting, related facilities costs, and expenses
associated with computer equipment used in software development. Research and
development expenses increase .6% to $232,826 in 2002 compared to $219,285 in
2001. The increase is attributed to normal increases in salaries and benefits.
Our lack of funding has forced us to cut further research and development on
Data Protector as well as the development of new products and enhancements. The
Company believes that research and development activities are crucial to
maintaining a competitive edge in markets characterized by rapid rates of
technological advancements. Without adequate financing we may not be able to
stay on the cutting edge of technology.
Sales and marketing expenses include salaries and benefits, sales commissions,
travel expenses, and related facilities costs for our sales, marketing, customer
support, and distribution consultants. Sales and marketing expenses also include
the costs of programs aimed at increasing revenue, such as advertising, trade
9
shows, public relations, and other market development programs. Sales and
marketing expenses increased 427% to $206,244 in 2002 compared to $48,288 in
2001. The increase is attributed to focusing more efforts on developing markets
for our products and the increase in salaries, and commission expenses related
to the sales in Advantage as well as the hiring of additional sales personal.
General and administrative expenses consist principally of salaries and
benefits, travel expenses, and related facilities costs for finance and
administration, human resources, legal, information services, and executive
personnel of PACEL. General and administrative expenses also include outside
legal and accounting fees, and expenses associated with computer equipment and
software used in the administration of the business. General and administrative
expenses increased 265% to $1,670,190 in 2002 compared to $629,594 in 2001. The
increase in administrative expenses is directly related to the expenses related
to the acquisition of Advantage Systems. In addition we issued $1,168,606 worth
of stock for services instead of cash. The cost of the services would have been
signficiantly lower if we had paid cash for the services in lieu of stock.
Interest expense and financing cost Increased 305% to $70,308 in 2002 Compared
to $23,018 in 2001. The increase in interest expense is due the convertible
notes not being converted into common stock because of the low price of our
common stock. In addition we continue to borrow short term money instead of
obtaining financing from equity.
Net (Loss) from continuing operations
Pacel's net loss before the cumulative effect of an accounting change increased
to $2,218,400 in 2002, compared to $1,006,216 in 2001. Pacel's net loss before
the cumulative effect of an accounting change increased due to additional
overhead expenses, rent, utilities, administrative staff, related to the
acquisition of Advantage in September 2001. In addition we had increased our
sales force. Interest expense also increased. On several occasions we issued
stock in lieu of cash for various services with deep discounted rates compared
to the cash value of the services.
Three Months Ended June 30, 2002 Compared to Three Months Ended June 30, 2001
Revenues increased 223% to $138,369 in 2002 compared to $61,955 in 2001. The
increase in revenues is directly attributed to the increase in sales from
Advantage Systems.
Cost of Goods Sold increased 209% to $127,502 in 2002 compared to $61,002 in
2001. The increase is directly attributed to the increase in sales.
Research and Development expenses consist principally of salaries for software
developers, outside consulting, related facilities costs, and expenses
associated with computer equipment used in software development. Research and
development expenses decrease 5.4% to $129,955 in 2002 compared to $137,297 in
2001. The decrease is attributed to the decrease in staff.
Sales and marketing expenses increased 1859% to $147,365 in 2002 compared to
$7,927 in 2001. The increase is attributed to the additional salaries,
commission expenses related to the sales in Advantage.
General and administrative expenses increased 53% to $557,446 to in 2002
compared to $364,308, in 2001. The increase in administrative expenses is
directly related to the administrative salaries and overhead expenses associated
with the acquisition of Advantage Systems. In addition we issued $342,606 worth
of stock for services instead of cash. The cost of the services would have been
reduced if we had paid for the services in cash in lieu of stock.
10
Interest expense and financing cost Increased 290% to $35,013 in 2002 Compared
to $12,052 in 2001. The increase in interest expense is due the convertible
notes not being converted into common stock because of the low price of our
common stock and additional borrowing of short term money.
Six Months Ended June 30, 2002 Compared to Six Months Ended June 30, 2001
Net cash used from operating activities for the six months ended June 30, 2002
and 2001 was $102,566 and $652,909 respectively. The use of cash in operating
activities for the six months ended June 30, 2002 resulted primarily from the
short fall in sales off set by the reduction in of accounts receivable and the
increase in accounts payable.
Net cash used in investing activities for the six months ended June 30, 2002 and
2001 was $-0- and $3,882 respectively. This decrease was due to lack of funds
available for investing activities.
Net cash provided by financing activities for the six months ended June 30, 2002
and 2001 was $49,638 and $619,791, respectively. The decrease in financing
activities was attributable to repayment of notes payable of $125,362 and our
inability to file an Sb-2.
At June 30, 2002, we had $5,113 in cash and cash equivalents compared to $1,867
at June 30, 2001. We will continue to have significant capital requirements due
to limited sales projections as well as expected increases in expenditures for
sales and marketing. In July 2002 we laid off all non essential administrative
staff to reduce our cash requirements until significant sales are projected and
we can secure adequate financing.
In April 2002, David Calkins president, director and F. Kay Calkins director of
Pacel were granted a noncash option to purchase 100,000,000 shares of the
company's common stock in exchange for the a loan made to the company in 1999
amounting to $124,000 and securing and loaning to the Company, a personal line
of credit of up to $3,000,000 using the stock as collateral. Our ability to draw
on this line is based on the volume of the Common Stock multiplied by the VWAP
(volume weighted average price) for the thirty days preceding funding must be a
minimum of $75,000. The maximum amount of collateral at any closing may not
exceed 4.9% of the issued and outstanding shares of the Company. Loan to value
is 35%. The interest rate is prime+2 payable in cash quarterly and financing
expense of 9% of the draws. The Company will pay these expenses directly. The
terms and conditions set fourth in the agreement we may not be able to meet. To
date we have drawn approximately $740,000. Due to the low price of the stock
additional proceeds from this line of credit maybe limited. We intend to repay
this loan over the next six months.
In August 2002, we entered in an agreement to borrow $720,000 over the next six
months at an interest rate of 15% to meet our projected cash needs for the next
six months. In September 2002 our previous agreement was revised to $1,000,000.
Our cash requirements for funding our operations have greatly exceeded cash
flows from operations. We continually satisfy our capital needs through equity
financing which has become difficult due to the current investment environment.
Our liabilities consist of over extended accounts payable, payroll taxes, loans
from officers and officer's compensation.
We continually look for strategic relationships that will enhance our products
and services. Due to the present economic conditions in technology and our lack
of available cash flow it is becoming harder to develop these relationships. If
we do not develop these relationships and find additional sources of financing
it will hinder our ability to continue as a going concern.
We expect to continue our investing activities, including expenditures for
computer systems for research and development, sales and marketing, product
support, and administrative staff, as funds become available.
11
On August 1, 2002 , we formed a wholly owned subsidiary, Entremetrix. The
company has started a human resource support company, out of our California
offices. The company has been granted various contracts. We believe that
development of this business will provide us with a direct marketing channel for
our IT consulting, System Security, hardware and Web based technologies.
In May 2002, we signed a letter of intent for the acquisition of a human
resource support company, for $2,500,000. We believe that this acquisition will
expand the Entremetrix business. In September 2002 we signed a revised letter of
intent for the acquisition of the human resource support company for $2,000,000.
We have an agreement with Compass Capital for funding to acquire this company.
In May 31, 2002, we sold our 80% ownership in EB-Store to F Kay Calkins. F. Kay
Calkins assumed all of the assets and all of the liabilities of record on May
31, 2002. There is an inter-company receivable of $1,568,815. We have taken a
100% percent reserve against the receivable due to our inability to determine
when EB-Store will be able to start repayment if at all. The Company recorded a
gain on the sale of $177,817. or $0.0064 per share-diluted and reflected this
business as a discontinued operation in June 2002.
Part II
Item 1. Legal Proceedings.
The Company knows of no legal proceedings to which it is a party or to which any
of its property is the subject which are pending, threatened or contemplated or
any unsatisfied judgments against the Company. However, the Company has
responded to subpoenas addressed to the Company from the Securities and Exchange
Commission and the United States Attorney's Office requesting documents
involving transactions between the Company and Suburban Capital Corporation,
North Coast Investments, Inc., Frank Custable and certain other individuals. The
Company has been advised that it has not been identified as a target of the
investigation by the U.S. Attorney's Office.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults in Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information
During the quarter, the following directors resigned due to personal reasons:
Keith P. Hicks and Corey M. LaCross. Neither furnished the Registrant with a
letter requesting that any matter be disclosed.
12
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Pacel, Corporation
(Registrant)
Date: September 20, 2002
/s/ David F. Calkins
-----------------------------------
David F. Calkins, CEO & Chairman
13
CERTIFICATIONS
I, David E. Calkins, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Pacel Corp.;
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; and
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.
Date: September 20, 2002
/s/ David F. Calkins
---------------------------
David E. Calkins
Chief Executive Officer (or equivalent thereof)
I, Steven Cheek, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Pacel Corp.;
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; and
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.
Date: September 20, 2002
/s/ Steven Cheek
-------------------
Steven Cheek
Chief Financial Officer (or equivalent thereof)