UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 2003
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission file number 333-61714
ASSURE ENERGY, INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 13-4125563
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2750-140 4th Avenue S.W., Calgary, Alberta, Canada T2P 3N3
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(Address of principal executive offices) (Zip Code)
(403) 266-2787
------------------------------------------------
(Issuer's telephone number, including area code)
N/A
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(Former Name, Former Address and Former Fiscal Year, if Changed since Last Report)
Check whether the issuer (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, and (2) has been subject to such filing requirements for
the past 90 days. Yes |X| No | |
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
16,433,000 shares as at May 16, 2003
Transitional Small Business Disclosure Format (check one). Yes ; No X
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ASSURE ENERGY, INC.
MARCH 31, 2003 QUARTERLY REPORT ON FORM 10-QSB
TABLE OF CONTENTS
Page Number
Special Note Regarding Forward Looking Statements ............ 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements ......................................... 4
Item 2. Plan of Operation............................................ 11
Item 3 Controls and Procedures...................................... 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings ........................................... 12
Item 2. Changes in Securities and Use of Proceeds.................... 13
Item 5. Other Information............................................ 13
Item 6. Exhibits and Reports on Form 8-K............................. 14
2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
To the extent that the information presented in this Quarterly Report
on Form 10-QSB for the quarter ended March 31, 2003, discusses financial
projections, information or expectations about our products or markets, or
otherwise makes statements about future events, such statements are
forward-looking. We are making these forward-looking statements in reliance on
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Although we believe that the expectations reflected in these
forward-looking statements are based on reasonable assumptions, there are a
number of risks and uncertainties that could cause actual results to differ
materially from such forward-looking statements. These risks and uncertainties
are described, among other places in this Quarterly Report, in "Plan of
Operation".
In addition, we disclaim any obligations to update any forward-looking
statements to reflect events or circumstances after the date of this Quarterly
Report. When considering such forward-looking statements, you should keep in
mind the risks referenced above and the other cautionary statements in this
Quarterly Report.
3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet as at March 31, 2003 (unaudited).............................................. 5
Consolidated Statements of Operations for the three month periods ended March 31, 2003 and
2002 (unaudited)....................................................................................... 6
Consolidated Statements of Cash Flows for the three month periods ended March 31, 2003 and
2002 (unaudited)....................................................................................... 7
Notes to Consolidated Financial Statements (unaudited)................................................... 8
4
ASSURE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 2003
(Unaudited)
ASSETS
Current Assets:
Cash $ 7,532,304
Accounts receivable and other current assets 1,519,554
------------
Total current assets 9,051,858
Restricted cash 59,001
Property and equipment, net of accumulated depreciation
and depletion of $1,438,983 4,773,703
------------
$ 13,884,562
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 422,041
Income tax payable 88,365
------------
Total current liabilities 510,406
Long term debt 5,209,524
Obligation for site restoration 61,456
Deferred income tax payable 44,919
------------
5,826,305
------------
Commitments and contingencies
Stockholders' Equity:
Preferred stock: 4,977,250 shares authorized
Series A; stated value $100, 5% cumulative dividend; 17,500 shares
authorized, issued and outstanding 1,750,000
Series B; stated value $100, 5% cumulative dividend, 5,250 shares
authorized, issued and outstanding 525,000
Common stock; $.001 par value, 100,000,000 shares authorized,
16,433,000 shares issued and outstanding 16,433
Additional paid in capital 6,507,193
Accumulated other comprehensive income 501,357
Accumulated deficit (1,241,726)
------------
Total stockholders' equity 8,058,257
------------
$ 13,884,562
============
See Notes to Consolidated Financial Statements.
5
ASSURE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31,
(Unaudited)
2003 2002
------------ ------------
Revenue:
Oil and gas production $ 1,074,142 $ --
------------ ------------
Total royalties expense:
Crown royalties 134,353 --
Freehold royalties 42,706 --
Gross overriding royalties 20,009 --
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Total royalties expense 197,068 --
------------ ------------
Net oil and gas revenue 877,074 --
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Expenses:
General and administrative 247,787 105,498
Operating expense 150,946 --
Interest and bank charges 182,626 --
Depletion and site restoration 579,701 --
------------ ------------
Total expenses 1,161,060 105,498
------------ ------------
Loss before provision for income taxes (283,986) (105,498)
------------ ------------
Provision for income taxes:
Current 85,887 --
Deferred 10,701 --
------------ ------------
Total provision for income taxes 96,588 --
------------ ------------
Loss from operations (380,574) (105,498)
Other comprehensive income, net of taxes
Foreign translation gain 428,658 --
------------ ------------
Comprehensive income (loss) $ 48,084 $ (105,498)
============ ============
Basic loss per common share $ (.03) $ *
============ ============
Basic weighted average common shares outstanding 15,757,233 31,326,000
============ ============
* Amount is less than $.01
See Notes to Consolidated Financial Statements.
6
ASSURE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31,
(Unaudited)
2003 2002
------------ -------------
Cash flows from operating activities:
Net loss $ (380,574) $ (105,498)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and depletion 476,295 --
Allowance for site restoration 18,543 --
Interest expense on warrants 181,260 --
Deferred income taxes 16,763 --
Change in operating assets and liabilities:
Accounts receivable and other current assets (311,584) --
Accounts payable and accrued expenses (606,059) 19,376
Income tax payable 88,365 --
----------- -----------
Net cash used in by operating activities (516,991) (86,122)
----------- -----------
Cash flows from investing activities:
Purchases of property and equipment (568,412) --
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Cash flows from financing activities:
Proceeds from long term debt 4,500,000 100,000
Proceeds from sale of units 2,400,750 --
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Net cash provided by financing activities 6,900,750 100,000
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Effect of exchange rate changes on cash 500,203 --
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Increase (decrease) in cash 6,315,550 13,878
Cash, beginning of period 1,216,754 17,289
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Cash, end of period $ 7,532,304 $ 31,167
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 759 $ --
=========== ===========
See Notes to Consolidated Financial Statements.
7
ASSURE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003
(Unaudited)
Note 1 - Nature of Business
Assure Energy, Inc. (the "Company") was incorporated in the state of
Delaware on August 11, 1999. The Company, through its wholly owned
Canadian subsidiaries Assure Oil & Gas Corp. and Westerra 2000, Inc.,
is engaged in the exploration, development and production of oil and
natural gas properties in the Canadian providences of Alberta and
Saskatchewan.
Note 2 - Basis of Presentation
The accompanying unaudited consolidated financial statements and
related footnotes have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission for Form 10-QSB.
Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United
States of America for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. It is
suggested that these financial statements be read in conjunction with
the financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2002. The results of operations for the three-months ended
March 31, 2003 are not necessarily indicative of the operating results
that may be expected for the fiscal year ending December 31, 2003.
The accompanying financial statements include the accounts of the
Company and its wholly owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
Note 3 - Pro forma information
The following table represents unaudited consolidated pro forma
information as if Energy, Oil and Westerra had been combined as of
January 1, 2002. The pro forma data is presented for illustrative
purposes only and is not necessarily indicative of the combined results
of operations of future periods or the results that actually would have
resulted had Energy, Oil, and Westerra been a combined company during
the specified periods.
Three months Ended
March 31, 2002
REVENUE
Oil and gas production $ 317,706
Total Revenue $ 317,706
===========
NET LOSS $ (178,706)
===========
BASIC LOSS PER COMMON SHARE $ (.01)
BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 31,326,000
8
ASSURE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003
(Unaudited)
Note 4 - Summary of Significant Accounting Policies
Stock based compensation
Effective January 1, 2003, the Company adopted the fair value of
accounting for stock based compensation following the provisions of
Statement of Financial Accounting Standards No. 148 "Accounting for
Stock-Based Compensation - Transition and Disclosure" an amendment of
SFAS No. 123.
Three Months
Ended
March 31, 2003
--------------
Net loss (as reported) $
(380,574)
Deduct: Total stock based compensation expense determine
under the fair value based method for all awards granted,
modified or settled during the period, net of related taxes --
-----------
Pro forma net loss $ (380,574)
===========
Basic, as reported $ (.03)
===========
Basic, pro forma $ (.03)
===========
Use of estimates
The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the
financial statements and revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Recent accounting pronouncements
Management does not believe that any recently issued, but not yet
effective accounting pronouncements, if currently adopted, would have a
material effect on the accompanying consolidated financial statements.
Note 5 - Long Term Debt
On March 15, 2003 the Company entered into a six year Subordinated
Promissory Note Payable (the "Subordinated Note") with a foreign entity
with a principle balance of $4,500,000. This Subordinate Note accrues
interest at Citibank's prime rate (4.25% per annum at December 31,
2002) plus 3.5% per annum. No payments will be due until March 14,
2004, at which time all accrued and outstanding interest is due and
payable. Thereafter, quarterly payments of principle and interest are
due each June 15, September 15, December 15 and March 15. This note is
subordinated to all present and future bank debt of the Company and its
subsidiaries. The Company further agreed to issue 450,000 common stock
purchase warrants to purchase an equal number of the Company's common
stock with an exercise price of $3.10 per share. The common stock
purchase warrants may be exercised, at any time, during the five years
commencing July 1, 2003. The common stock purchase warrants have a fair
value at the grant date of $181,260, which has been recorded as
interest expense in the accompanying consolidated statement of
operations.
9
ASSURE ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003
(Unaudited)
Note 6 - Stockholders' Equity
During February 2003 the Company entered into Subscription Agreements
to sell 1,067,000 units for an aggregate of $2,400,750. Each unit
consists of one share of the Company's common stock and one half common
stock purchase warrant. Each full warrant entitles the holder to
purchase one share of the Company's common stock at $2.50 per warrant
share for a period of five years commencing from the date of issuance,
February 26, 2003. The warrants have a fair value of at $482,500 at
March 31, 2003.
Note 7 - Subsequent event
On April 7, 2003 the Company entered into an agreement with an
unrelated third party to provide internet public relations services. As
compensation for its services the Company will pay $50,000, of which
$25,000 was paid upon the signing of the Consulting Agreement. In
addition, the Company issued 100,000 warrants, exercisable at any time,
to purchase an equal amount of the Company's common stock at $3.00 per
share, expiring on April 7, 2008.
10
ITEM 2. PLAN OF OPERATION
The following discussion of our plan of operation for the next twelve
months should be read together with, and is qualified in its entirety by the
more detailed information, including the financial statements, appearing
elsewhere in this document.
We were incorporated on August 11, 1999 in the state of Delaware with
the objective to license toy designs to toy manufacturers and to act as a toy
inventor's agent in licensing toy designs developed by others. We expected to
market such toy designs by both direct meetings with toy manufacturers'
representatives and through a web site that could give manufacturers the
opportunity to review pictures and descriptions of new inventions at a single
source to decide whether a face-to-face meeting would be useful. Given the
effect of an overcrowded .com business environment, no operations in this area
were ever commenced. Accordingly we looked at other ventures of merit for
corporate participation as a means of enhancing shareholder value. This strategy
resulted in our April 23, 2002 Acquisition Agreement with Assure Oil & Gas Corp.
("Assure O&G").
Assure O&G is actively engaged in the exploration, development,
acquisition and production of petroleum and natural gas (P&NG) properties
primarily located in Western Canada. In October 2000 Assure O&G commenced its
oil and gas operations as part of an initiative to create cash flow by
participating in a Farmout Agreement to drill a prospective Elkton zone natural
gas well. To date, Assure O&G has acquired varying interests, through farmout
participations, asset purchases, crown land sales and corporate acquisitions, of
both producing and prospective P&NG properties in the Western Sedimentary Basin
of Western Canada.
On May 30, 2002 Assure O&G entered into a Share Purchase Agreement with
the 3 shareholders of Westerra 2000 Inc. ("Westerra"), wherein Assure O&G
acquired Westerra, an Alberta, Canada corporation engaged in the exploration,
development and production of oil and gas properties primarily located in
Saskatchewan, Canada.
We plan to continue to explore, develop and acquire P&NG properties
over the next twelve months to increase cash flow, and to build P&NG reserves.
We anticipate engaging in an exploration program that could include infill
drilling of current proved and producing properties, seismic interpretation of
prospective properties and exploratory drilling. Acquisitions could include
lands, licenses and leases, producing well bores and corporate acquisitions. We
also may from time to time acquire, or enter into strategic alliances with,
complementary businesses to achieve these objectives.
We anticipate that our presently available capital resources together
with expected oil and gas cash flow from our existing oil and gas production
will be sufficient to fund our current oil and gas operations during the next
twelve months. We intend to fund our acquisition strategy and new exploration
programs during the next twelve months from oil and gas cash flow, working
capital, sales of our securities and other available sources of financing. Our
employee levels are expected to increase during the next twelve months in direct
proportion to the anticipated expansion of our oil and gas exploration program
and available cash resources. We do not presently anticipate any purchases or
sales of plant or significant equipment other than the
11
purchase of pump jacks which are used to enhance oil production and equipment
utilized to transport gas to processing facilities. Alternatively, we may rent,
lease or subcontract for the use of such equipment. We do no expect to engage in
any material research and development activities during the next twelve months.
The exploration of and drilling for oil and gas reserves is risky, uncertain and
capital intensive. No assurance can be given that we will increase our oil and
gas operations to the extent we anticipate or that if increased, our new
acquisitions and exploration programs will prove to be successful.
ITEM 3. CONTROLS AND PROCEDURES
Our principal executive and financial officer evaluated the
effectiveness of our disclosure controls and procedures as of a date within 90
days prior to the filing of this report. Based on this evaluation, our principal
executive and financial officer concluded that our controls and procedures are
effective in providing reasonable assurance that the information required to be
disclosed in this report is accurate and complete and has been recorded,
processed, summarized and reported within the time period required for the
filing of this report. Subsequent to the date of this evaluation, there have not
been any significant changes in our internal controls or, to our knowledge, in
other factors that could significantly affect our internal controls.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On February 19, 2003 Gary Freitag, Garth R. Keyte and Evan Stephens
filed a Statement of Claim against Assure Oil & Gas Corp. in the Court of
Queen's Bench of Alberta, Canada Judicial District of Calgary seeking judgment
in the sum of CDN$350,0000 (approximately US $221,000) together with interest
thereon at the rate of 6% per annum from January 15, 2003. The action relates to
CDN$350,000 that was placed in trust as part of the May 30,2002 Share Purchase
Agreement between Assure Oil & Gas Corp. and the three shareholders of Westerra
2000 Inc. Plaintiffs claim the money should have been released to them on or
about January 15, 2003, the date of resolution of certain title deficiencies
that existed at the time the Share Purchase Agreement was executed. On April 9,
2003 we filed a Statement of Defense and Counterclaim based upon our assertion
that certain of the Westerra 2000 Inc. wells that had been purchased in
consideration of a report that indicated they were proven and producing wells
were and are in fact non-producing and that the shareholders had agreed to a
holdback of the CDN$350,000 pending the wells being brought on to production. We
further asserted that since the wells are not on production the holdback has
been forfeited and is not payable. Our Counterclaim seeks CDN$36,915 as
reimbursement for costs incurred by us in attempting to bring the non-producing
wells to a producing state; CDN$200,000 representing estimated future costs to
attempt to bring these wells into production; judgment for the abandonment costs
we will incur if these wells cannot be brought into production; interest and
litigation costs. While we believe our position has merit, we can offer no
assurance as to the outcome of this matter.
No other legal proceedings are pending to which we or any of our
property is subject, nor to our knowledge are any such proceedings threatened.
12
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Effective April 7, 2003 we issued 100,000 5 year warrants, each
exercisable for the purchase of 1 share of our restricted common at a price of
$3 per share, in consideration of consulting services. Piggyback registration
rights apply with respect to the shares underlying the warrants. These piggyback
registration rights do not apply to registration statements relating solely to
employee benefit plans, business combinations or changes in domicile. The
issuance was made in reliance on the exemption from registration provided by
Section 4(2) of the Securities Act of 1933, as amended.
On March 15, 2003 we issued a six-year, $4,500,000 promissory note (the
"Note") together with 450,000 5 year warrants (the "Warrants") to 1 person. Each
Warrant entitles the holder to purchase one share of our common stock at a price
of $3.10 per share during the five year period commencing July 1, 2003. The
issuance of the Note and Warrants was made in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act of 1933, as amended.
On February 26, 2003 we completed a $2,400,750 equity financing in
which we sold 1,067,000 units to 2 persons at a purchase price of $2.25 per
unit. Each unit consists of 1 share of our common stock and one-half warrant.
Each full warrant entitles the holder to purchase one share of our common stock
at a price of $2.50 per share for a period of five years commencing February 26,
2003. The stock comprising part of the units was issued in May 2003. The
issuance of the securities was made in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act of 1933, as amended.
ITEM 5. OTHER INFORMATION
On March 6, 2003 we entered into a share purchase agreement (the "Share
Purchase Agreement") with 5 shareholders (the "Shareholders") of Quarry Oil &
Gas Ltd., ("Quarry") an Alberta, Canada corporation respecting our proposed
purchase of 6,750,000 Quarry shares from the shareholders for an aggregate
purchase price of CDN $8,962,650 (approximately US $5,800,000) or CDN $1.3278
per share. These shares represent 47.28% of Quarry's outstanding common shares.
The closing of the Share Purchase Agreement, as amended, is subject to the
approval of the TSX Venture Exchange, Quarry's bank and certain other
conditions. Quarry is a junior oil and gas exploration and development company
based on Calgary, Alberta whose common shares are listed on the TSX Venture
Exchange under the symbol "QUC". Quarry's average daily production is currently
approximately 1200 barrels of oil equivalent per day. Quarry has a stable oil
production base in Alberta and has recently added significant gas production
from its discoveries in northeast British Columbia where it has access to a
large base of undeveloped lands. It has developed an extensive portfolio of
natural gas prospects to facilitate future growth.
The Share Purchase Agreement contains a covenant by us to engage in one
of the following post closing activities:
o present to Quarry an experienced, previously successful management
team for Quarry, subject to the reasonable consent of the
Shareholders;
13
o make, within 60 days of closing, an offer to acquire the remaining
Quarry shares at a price of not less than CDN $1.3278 per share; or
o subscribe, within 90 days of closing, to a material private placement
of Quarry at a subscription price per share of CDN $1.3278.
As of May 12, 2003 the transaction has not closed since the TSX Venture
Exchange has yet to grant required approval. No assurance can be given when, if
ever, such approval will be granted and the transaction will be completed.
Effective September 23, 2002 we entered into a Consulting Agreement
with Primoris Group, Inc., ("Primoris") an Ontario corporation pursuant to which
Primoris provided us with corporate media and investor relation services. The
agreement had a 61 week term which was scheduled to expire on November 30, 2003
unless mutually extended. Under the agreement, we agreed to pay Primoris $5,500
per month. Further, effective October 1, 2002, we issued to Primoris an option
to purchase 200,000 shares of our restricted common stock for a period of 2
years from issuance at a price of $2.75 per share. The agreement was mutually
terminated effective April 28, 2003, at which time Primoris returned to us all
sums previously advanced to it by us for services not yet delivered, and the
options were cancelled.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
99.1 Certificate of Chief Executive and Financial Officer
(b) Reports on Form 8-K.
None.
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.
ASSURE ENERGY, INC.
Dated: May 19, 2003 By: /s/ Harvey Lalach
------------------------------------------
Harvey Lalach
President and Chief Executive Officer
14
CERTIFICATIONS
I, Harvey Lalach, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Assure Energy,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly 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 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 me 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 my conclusions about the
effectiveness of the disclosure controls and procedures based on my
evaluation as of the Evaluation Date;
5. I have disclosed, based on my 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. 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 my most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: May 19, 2003 /s/ Harvey Lalach
-------------------------------------------------------
Name: Harvey Lalach
Title: Principal Executive and Financial Officer
15