UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES ACT OF
1934 For the quarterly period ended June 30, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES ACT OF
1934 For the transition period from ___________to____________
Commission File Number: 000-30477
PRIME HOLDINGS AND INVESTMENTS, INC.
-------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 88-0421215
-------- ------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
521 Fifth Avenue, Suite 1700, New York, NY
-------------------------------------------
(Address, including zip code, of principal executive offices)
(212)292-4258
------------------
(Registrant's telephone number, including area code)
---------------------------
(Former name of Registrant)
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 [ ] __
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:
Common stock, par value $0.0001: 8,351,300 shares outstanding as of
October 2, 2003.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
1
PRIME HOLDINGS AND INVESTMENTS, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Consolidated Balance Sheets - June 30, 2003 and December 31,
2002.
Unaudited Consolidated Statements of Earnings - Three Months Ended
June 30, 2003 and 2002 and Six Months Ended June 30, 2003 and 2002.
Unaudited Consolidated Statements of Cash Flow - Six Months Ended June
30, 2003 and 2002.
Notes to Unaudited Consolidated Financial Statements.
Item 2. Management's Discussion and Analysis or Plan of Operation
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
2
PRIME HOLDINGS AND INVESTMENTS, INC.
FORM 10-QSB
June 30, 2003
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
See financial statements beginning on page F-1.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
FORWARD LOOKING STATEMENTS
This Form 10-QSB contains forward-looking statements. Such statements
consist of any statement other than a recitation of historical facts and can be
identified by words such as may, expect, anticipate, estimate, hopes, believes,
continue, intends, seeks, contemplates, suggests, envisions or comparable
language. These forward-looking statements are based largely on our expectations
and are subject to a number of risks and uncertainties, including but not
limited to: those risks associated with our ability to identify and raise
additional capital to complete our acquisition of one or more other companies;
our ability to raise, and our allocation of, resources as necessary to continue
operations; our ability to generate cash flow from revenue or other sources; our
ability to use our capital stock for acquisitions, paying expenses or other
disbursements, attracting personnel or contractors and other business uses. Many
of these factors are beyond our management's control. These uncertainties could
cause our actual results to differ materially from the expectations reflected in
these forward-looking statements. In light of these risks and uncertainties, we
cannot be certain that the forward-looking information contained in this annual
report on Form 10-QSB will, in fact, occur. Potential investors should consider
carefully the previously stated factors, as well as the more detailed
information contained elsewhere in this Form 10-QSB, before making a decision to
invest in our common stock.
The following is a discussion of our financial condition and results of
operations as of the date of this Form 10-QSB. This discussion and analysis
should be read in conjunction with the accompanying audited Financial Statements
of Prime and subsidiaries, including the Notes thereto, which are included
elsewhere herein.
OVERVIEW
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES REGARDING ESTIMATES, RELATED PARTY
TRANSACTIONS AND CONTINGENCIES:
Significant accounting estimates:
The preparation of the Company's consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
3
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Inventory:
Inventory is recorded at the lower of cost and net realizable value. Cost
is established on a LIFO basis. No reserve for obsolete and slow-moving
inventories is deemed necessary.
Investments:
Investments are shown at the lower of cost or fair market value.
Revenue recognition:
TELECOMMUNICATION PRODUCTS AND SERVICES:
Revenue is recorded net of trade discounts and allowances upon shipment of
products or rendering of services and when all significant contractual
obligations have been satisfied and collection is reasonably assured.
CONSTRUCTION ACTIVITIES:
Construction contracts range up to 8 years in length and revenues are
recognized using the percentage-of-completion method. Percentage of completion
is calculated using the cost-to-cost method. Under the cost-to-cost method, the
percentage of completion is estimated by comparing total costs incurred to date
to total costs expected for the entire contract, thus recognizing a percentage
of the contract revenue each year.
Income taxes:
National corporate taxes (IRPEG) in Italy are levied on book income
adjusted for disallowable expenses at the rate of 35% in 2003 and 36% in 2002.
In addition, a regional tax on value produced (IRAP) is levied at the rate
of 4.25%. In accordance with the principles established by the Italian
accounting profession, this tax is classified with income taxes, even though
certain significant costs and expenses (e.g. personnel costs and interest
expense) are not deductible in the determination of the related IRAP tax
liability.
Reserve for employee termination indemnities:
Provision has been made, under Italian law and labor regulations, for
termination indemnities to employees upon termination of employment.
4
Translation of foreign currencies:
The functional currency of the Company is the United States dollar. The
financial statements of the Company's operations whose functional currency is
other than the United States dollar are translated from such functional currency
to United States dollars using the current rate method. Under the current rate
method, assets and liabilities are translated at the exchange rates in effect at
the balance sheet date. Revenues and expenses, including gains and losses on
foreign exchange transactions, are translated at average rates for the period.
Where the current rate method is used, the unrealized translation gains will be
accumulated in other comprehensive income under the shareholders' equity
section.
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2003 AS COMPARED TO
THE THREE MONTHS ENDED JUNE 30, 2002.
Revenues. For the three months ended June 30, 2003 total revenues were
approximately $155,000, a decrease of $1,103,000 as compared to revenues of
approximately $1,258,000 for the three months ended June 30, 2002. All of these
revenues were generated by subsidiary companies operating in Italy. During the
three months ended June 30, 2003, revenues were primarily generated by Kelti SpA
for telecommunications services and by consulting fees generated directly by
S.I.T.I.
Operating Expenses. For the three months ended June 30, 2003 operating
expenses were approximately $212,000, a decrease of $1,139,000 or 84.3%, from
approximately $1,351,000 for the same period in 2002. This decrease in operating
expenses was primarily due to a reduction in fees for outside services and a
reduction in purchases.
Other Income (Expenses). For the three months ended June 30, 2002, Prime
reported net miscellaneous other expenses of approximately $97,000 and no
interest income, as compared to net 380,000 miscellaneous income and $4,000
interest income for the three months ended June 30, 2002.
Income Taxes. For the three months ended June 30, 2002, Prime did not
recognize any income taxes as it incurred a net loss for the period, as compared
to a approximately $6,000 income taxes for the three months ended June 30, 2002.
Prime is subject to income taxes on an entity basis on income arising in or
derived from the tax jurisdiction in which each entity is domiciled.
Minority Interest. For the three months ended June 30, 2002, Prime
recognize approximately $4,000 loss from a minority interest as compared to a
approximately $17,000 gain for the three months ended June 30, 2002.
Net Income {Loss). As a consequence of the foregoing, Prime has a net loss
for the three months ended June 30, 2003 of approximately $158,000 compared with
approximately $268,000 net profit for the three months ended June 30, 2002. For
the three months ended June 30, 2003 earnings per share was approximately
($0.003) compared with an earnings of approximately $0.005 for the three months
ended June 30, 2002.
5
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2003 AS COMPARED TO THE
SIX MONTHS ENDED JUNE 30, 2002.
Revenues. For the six months ended June 30, 2003 total revenues were
approximately $229,000, a decrease of $1,447,000 as compared to revenues of
approximately $1,676,000 for the six months ended June 30, 2002. All of these
revenues were generated by subsidiary companies operating in Italy. During the
six months ended June 30, 2003, revenues were primarily generated by Kelti SpA
for telecommunications services and by consulting fees generated directly by
S.I.T.I.
Operating Expenses. For the six months ended June 30, 2003 operating
expenses were approximately $466,000, a decrease of $1,738,000 or 79.3%, from
approximately $2,193,000 for the same period in 2002. This decrease in operating
expenses was primarily due to a reduction in fees for outside services, Salaries
and Benefits and a reduction in purchases.
Other Income (Expenses). For the six months ended June 30, 2002, Prime
reported net miscellaneous other expenses of approximately $97,000 and $1,000
interest income, as compared to net $493,000 miscellaneous income and $4,000
interest income for the six months ended June 30, 2002.
Income Taxes. For the six months ended June 30, 2002, Prime recognized
approximately $1,000 for income taxes, as compared to a approximately $8,000
income taxes for the six months ended June 30, 2002. Prime is subject to income
taxes on an entity basis on income arising in or derived from the tax
jurisdiction in which each entity is domiciled.
Minority Interest. For the xix months ended June 30, 2002, Prime did not
recognize any gains or losses from a minority interest as compared to a
approximately $18,000 gain for the six months ended June 30, 2002.
Net Income {Loss). As a consequence of the foregoing, Prime has a net loss
for the six months ended June 30, 2003 of approximately $334,000 compared with
approximately $46,000 net loss for the six months ended June 30, 2002. For the
six months ended June 30, 2003 earnings per share was approximately ($0.006)
compared with ($0.001) for the six months ended June 30, 2002.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2003, Prime had net working capital of approximately
$1,071,000. Approximately $869,000 of our current assets consist of accounts
receivable primarily from customers of Kelti net of allowances for doubtful
accounts. Approximately $1,212,000 of our current assets consist of inventory.
Going forward, we expect our primary sources of working capital to be debt
and/or equity financing.
For the three months ended June 30, 2003, net cash used from operating
activities of Prime and its subsidiaries was approximately $300,000 compared
with net cash provided by operating activities of $78,000 for the three months
ended June 30, 2003.
6
We issued no new shares of stock during the three months ended June 30,
2003, we raised additional capital from proceeds of demand loans of $301,000 for
the three months ended June 30, 2003 and $600,000 during the three months ended
June 30, 2003. We have issued shares of common stock from time to time in the
past to satisfy certain obligations and expect in the future to continue to
acquire certain services, satisfy indebtedness and/or make acquisitions
utilizing authorized shares of our capital stock. If operations and cash flow
can be improved through these efforts, we believe that our liquidity problems
will be resolved and that we can continue to operate. However, no assurance can
be given that management's actions will result in profitable operations.
ITEM 3. CONTROLS AND PROCEDURES
(A) DISCLOSURE CONTROLS AND PROCEDURES. Within 90 days before filing this
report, the Company evaluated the effectiveness of the design and operation of
its disclosure controls and procedures. The Company's disclosure controls and
procedures are the controls and other procedures that it designed to ensure that
it records, processes, summarizes and reports in a timely manner the information
it must disclose in reports that it files with or submits to the Securities and
Exchange Commission. John Visendi, our Chief Executive Officer and Treasurer
(Principal Accounting Officer) supervised and participated in this evaluation.
Based on this evaluation, Mr. Visendi concluded that, as of the date of his
evaluation, the Company's disclosure controls and procedures were effective.
(B) INTERNAL CONTROLS. Since the date of the evaluation described above,
there have not been any significant changes in the Company's internal accounting
controls or in other factors that could significantly affect those controls.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Prime is not a party to any material legal proceedings and, to the best of
our knowledge, no such action by or against it has been threatened.
S.I.T.I, our wholly-owned subsidiary, is involved in an arbitration
proceeding against the minority shareholder of Kelti Srl. The dispute involves
the allocation and distribution of Kelti's profits, losses, assets and
liabilities. A trustee has been appointed to ensure that no action is taken to
prejudice either of the parties during the pendency of the arbitration.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS BY THE COMPANY UPON ITS SENIOR SECURITIES
None.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
99.1 Certification of Chief Executive Officer and Treasurer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
99.2 Certification of President and Secretary Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
b) Reports on Form 8-K
During and subsequent to the six months ended June 30, 2003, the Company
filed the following reports on Form 8-K:
Form Filing Date Event Reported
---- ---------------- -------------------
8-K April 2, 2003 A report on Form 8-K (item
5), which announced a restructuring and
symbol change to PHIV.OB from PHIL.
7
Prime Holdings and Investments, Inc.
(Successor to S.I.T.I., S.P.A. Societa Italiana Telecommunicazioni Integrate)
Unaudited Consolidated Balance Sheets
(U.S. Dollars in thousands)
June 30, December 31,
2003 2002
Assets
Current:
Cash and Cash Equivalents $ 101 $ 108
Marketable Securities 22
Accounts Receivable, net of Allowance for
Doubtful Accounts (2003-$18)(2002-$18) 869 983
Inventory 1,212 1,142
Prepaid Expenses 6 6
------------------------
2,210 2,239
Property, Plant and Equipment 619 600
Investments 645 608
Other Investments 71 100
Goodwill 49 100
Other intangible Assets 73 75
------------------------
1,457 1,483
------------------------
$3,667 $3,722
========================
Liabilities and Stockholders' Equity
Current:
Demand Loan $ 301
Accounts Payable and Accruals 811 $741
Corporate Taxes Payable 27 18
Current Portion of Long Term Debt 98
------------------------
1,139 857
Due to Directors 22
Reserve for Employee Termination Indemnities 2 2
Minority Interest 85 80
Preferred Stock 10 10
------------------------
1,226 971
Contingent Liabilities/Commitments
Stockholders' Equity
Capital Stock and Additional Paid-In Capital 5,822 5,822
Other Comprehensive Income 564 540
Deficit (3,945) (3,611)
------------------------
2,441 2,751
------------------------
$3,667 $3,722
========================
The accompanying notes are an integral part of these financial statements.
8
Prime Holdings and Investments, Inc.
(Successor to S.I.T.I., S.P.A. Societa Italiana Telecommunicazioni Integrate)
Unaudited Consolidated Statement of Stockholders' Equity
(U.S. Dollars in thousands)
Common Stock and
Common Additional
Stock Paid-In Accumulated Comprehensive
Shares Capital Deficit Inncome Total
----------------------------------------------------------
Balance, December 31, 2000 $ 740 $4,623 $ (972) $ (1) $3,650
Net Loss for the Period 937 (266) (243) 428
----------------------------------------------------------
Balance, June 30, 2001 740 5,560 (1,238) (244) 4,078
Increase in Paid-In Capital in
S.I.T.I., S.P.A. Before Reverse
Acquisition:
Reverse Acquisition Pre-Acquisition
Shares of Prime Holdings and
Investment, Inc. 3,527 34 34
Issuance of Common Shares for
Reverse Acquisition of S.I.T.I.,
S.P.A. on September 13, 2001 50,000
Allocation to Issuance of Preferred
Shares (10) (10)
Less Exchange of S.I.T.I., S.p.A
Shares (740)
----------------------------------------------------------
Balance After Reverse Acquisition 53,527 5,584 (1,238) (244) 4,102
Net Loss for the Period (100) 253 153
----------------------------------------------------------
Balance, December 31, 2001 53,527 5,584 (1,338) 9 4,255
Issuance of Common Shares for
Services Rendered 755 95 95
Increase in Paid-In Capital 143 143
Net Loss for the Period (2,273) 531 (1,742)
----------------------------------------------------------
Balance December 31, 2002 54,282 5,822 (3,611) 540 2,751
Net Loss for the period (334) 24 (310)
----------------------------------------------------------
Balance, June 30, 2003 $54,282 $5,822 $(3,945) $564 $2,441
==========================================================
The accompanying notes are an integral part of these financial statements.
9
Prime Holdings and Investments, Inc.
(Successor to S.I.T.I., S.P.A. Societa Italiana Telecommunicazioni Integrate)
Unaudited Consolidated Statements of Earnings
(U.S. Dollars in thousands) Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2003 2002 2003 2002
---- ---- ---- ----
Revenue $ 155 $ 1,258 $ 229 $ 1,676
Operating expenses:
Amortization 18 77 29 107
Bank Charges and Interest 50 129 105 146
Other Operating Expenses 95 19 241 79
Outside Services 743 1,313
Purchases 6 260 6 301
Rent 32 43 63 69
Salaries and Benefits 11 80 22 178
-------------------------------------------------------
Other Income (Expense):
Interest Income 4 1 4
Miscellaneous (97) 380 (97) 493
-------------------------------------------------------
Loss Before Minority Interest and
Income Taxes (154) 291 (333) (20)
Income Taxes 6 1 8
-------------------------------------------------------
Loss Before Minority Interest (154) 285 (334) (28)
Minority Interest (4) 17 18
-------------------------------------------------------
Net Earnings(Loss) for the Period $ (158) $ 268 $ (334) $ (46)
=======================================================
Weighted Average Common Shares
Outstanding 54,282 53,527 54,282 53,527
-------------------------------------------------------
Earnings (Loss) Per Share $(0.003) $ 0.005 $(0.006) $(0.001)
=======================================================
The accompanying notes are an integral part of these financial statements.
10
Prime Holdings and Investments, Inc.
(Successor to S.I.T.I., S.P.A. Societa Italiana Telecommunicazioni Integrate)
Unaudited Consolidated Statements of Cash Flows
Six Months Ended
--------------------
(U.S. Dollars in
thousand) June 30,
June 30, 2003 2002
-------- --------
Cash Flows From Operating Activities:
Loss From Operating Activities $(334) $ (47)
Items Not Requiring an Outlay of Funds:
Amortization 29 107
Minority Interest 5 18
--------------------
Changes in Non-Cash Working Capital:
Accounts Receivable 114 (2,691)
Inventory (70) (71)
Net Construction Work in Progress (36)
Prepaid Expenses 580
Accounts Payable and Accrued Liabilities 70 2,059
Customer Deposits (454)
Corporate Taxes Payable 9 40
Reserve for Employee Termination Indemnities (67)
--------------------
(177) (562)
--------------------
Cash Flows From Financing Activities:
Proceeds (Repayment) of Long-Term Debt (98) (22)
Increase in Minority Interest 110
Proceeds of Demand Loans 301 600
Decrease in Due to Minority Interest Shareholders (22) (109)
--------------------
181 579
--------------------
Cash Flows From Investing Activities:
Purchase Marketable Securities 22
Purchases of Capital Assets (19) (15)
Sale(Purchase)of Long-Term Investments (37) 40
Sale of Other Investments 29 119
--------------------
(5) 144
Effect of Exchange Rate Changes on Cash (6) 101
--------------------
Increase in Cash (7) 262
Cash, Beginning of Period 108 398
--------------------
Cash, End of Period $ 101 $ 660
====================
Supplemental Disclosures:
Interest Paid $105 $ 147
The accompanying notes are an integral part of these financial statements.
11
Prime Holdings and Investments, Inc.
(Successor to S.I.T.I., S.P.A. Societa Italiana Telecommunicazioni Integrate)
Notes to Unaudited Consolidated Financial Statements
Condensed Financial Statements
In the opinion of the Company, the accompanying unaudited condensed
financial statements include all adjustments (consisting only of normal
recurring accruals) which are necessary for a fair presentation of the results
for the periods presented. Certain information and footnote disclosure, normally
included in the financial statements prepared in accordance with generally
accepted accounting principles, have been condensed and omitted. The results of
operations for the six months ended June 30, 2003 are not indicative of the
results of operations for the year ended December 31, 2003. The condensed
financial statements should be read in conjunction with the Company's financial
statements included in its annual Form 10 KSB for the year ended December 31,
2002.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRIME HOLDINGS AND INVESTMENTS, INC.
By: /s/ Giovanni Iachelli
---------------------
Giovanni Iachelli
President, Secretary and Director
By: /s/ John Visendi
----------------
John Visendi
Chief Executive Officer, Treasurer and
Director (Principal Accounting Officer)
Date: October 2, 2003
12
CERTIFICATION
I, Giovanni Iachelli, President and Secretary of the Company, hereby
certify, that:
1. I have reviewed this quarterly report on Form 10-QSB of Prime Holdings and
Investments, 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 in
order 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 officer and I are responsible for
establishing and maintaining "disclosure controls and procedures" for the
registrant and have:
a. have designed such disclosure controls and procedures to ensure that
material information is made known to them, particularly during the
period in which the periodic report is being prepared;
b. have evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of the report; and
c. have presented in the report their conclusions about the effectiveness
of the disclosure controls and procedures based on the required
evaluation as of the date;
5. The registrant's other certifying officer and I have disclosed to the
registrant's auditors and to the board of directors:
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
13
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 evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
/s/ Giovanni Iachelli
---------------------
Giovanni Iachelli
President and Secretary
October 2, 2003
14
CERTIFICATION
I, John Visendi, Chief Executive Officer, Treasurer and Director (Principal
Accounting Officer) of the Company, hereby certify, that:
1. I have reviewed this quarterly report on Form 10-QSB of Prime Holdings and
Investments, 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 in
order 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 officer and I are responsible for
establishing and maintaining "disclosure controls and procedures" for the
registrant and have:
a. have designed such disclosure controls and procedures to ensure that
material information is made known to them, particularly during the
period in which the periodic report is being prepared;
b. have evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of the report; and
c. have presented in the report their conclusions about the effectiveness
of the disclosure controls and procedures based on the required
evaluation as of the date;
5. The registrant's other certifying officer and I have disclosed to the
registrant's auditors and to the board of directors:
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
15
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 evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
/s/ John Visendi
----------------
John Visendi
Chief Executive Officer and Treasurer
October 2, 2003
16