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 quarterly period ended September 30, 2002
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number: 0-1665
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DCAP GROUP, INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 36-2476480
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(State or other jurisdiction of (I.R.S Employer Identification No.)
incorporation or organization)
1158 Broadway, Hewlett, NY 11557
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(Address of principal executive offices) (Zip Code)
(516) 374-7600
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(Regstrant't telephone number, including area code
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(Former name, former address and former fiscal year,
if changed sinxe last report)
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. ( X ) Yes ( ) No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. ( )Yes ( ) No
APPLICABLE ONLY TO CORPORATE ISSUESERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: 12,353,402 shares as of
October 31, 2002
INDEX
DCAP GROUP, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheet - September 30, 2002 (Unaudited)
Condensed Consolidated Statements of Operations - Nine months
ended September 30, 2002 and 2001 (Unaudited)
Condensed Consolidated Statements of Operations - Three months
ended September 30, 2002 and 2001 (Unaudited)
Condensed Consolidated Statements of Cash Flows - Nine months
ended September 30, 2002 and 2001 (Unaudited)
Notes to Condensed Consolidated Financial Statements - Nine
months ended September 30, 2002 and 2001 (Unaudited)
Item 2. Management's Discussion and Analysis or Plan of Operation
Item 3. Controls and Procedures
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
2
Forward Looking Statements
This Quarterly Report contains forward-looking statements as that term is
defined in the federal securities laws. The events described in forward-looking
statements contained in this Quarterly Report may not occur. Generally these
statements relate to business plans or strategies, projected or anticipated
benefits or other consequences of our plans or strategies, projected or
anticipated benefits from acquisitions made or to be made by us, or projections
involving anticipated revenues, earnings or other aspects of our operating
results. The words "may," "will," "expect," "believe," "anticipate," "project,"
"plan," "intend," "estimate," and "continue," and their opposites and similar
expressions are intended to identify forward-looking statements. We caution you
that these statements are not guarantees of future performance or events and are
subject to a number of uncertainties, risks and other influences, many of which
are beyond our control, that may influence the accuracy of the statements and
the projections upon which the statements are based. Factors which may affect
our results include, but are not limited to, the risks and uncertainties
associated with undertaking different lines of business, the lack of experience
in operating certain new business lines, the decline in the number of insurance
companies offering insurance products in our markets, the volatility of
insurance premium pricing, government regulation, competition from larger,
better financed and more established companies, the possibility of tort reform
and a resultant decrease in the demand for insurance, the uncertainty of
litigation with regard to our hotel lease, the dependence on our executive
management, our ability to continue to obtain the necessary financing to operate
our premium finance business, and our ability to raise additional capital which
may be required in the near term. Any one or more of these uncertainties, risks
and other influences could materially affect our results of operations and
whether forward-looking statements made by us ultimately prove to be accurate.
Our actual results, performance and achievements could differ materially from
those expressed or implied in these forward-looking statements. We undertake no
obligation to publically update or revise any forward-looking statements,
whether from new information, future events or otherwise.
Explanatory Note
Throughout this Quarterly Report, the words "DCAP Group," "we," "our," and
"us" refer to DCAP Group, Inc. and the operations of DCAP Group, Inc. as a
whole. References to "DCAP Insurance" in this Quarterly Report mean our
wholly-owned subsidiary, Dealers Choice Automotive Planning Inc., and affiliated
companies. References to "Barry Scott Companies" in this Quarterly Report mean
our wholly-owned subsidiary, Barry Scott Companies, Inc. (which we acquired on
August 30, 2002), and its subsidiaries.
3
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
DCAP GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
September 30, 2002
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 560,757
Accounts receivable, net of allowance for doubtful
accounts of $40,000 592,574
Notes receivable from former officer 34,428
Prepaid expenses and
other current assets 155,323
------------
Total current assets 1,343,082
------------
PROPERTY AND EQUIPMENT, net 297,135
------------
OTHER ASSETS:
Goodwill 619,382
Other intangibles, net 290,978
Deposits and other assets 66,700
------------
Total other assets 977,060
------------
$ 2,617,277
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 756,737
Current portion of long-term debt 22,047
Current portion of capital lease obligations 114,421
Deferred revenue 79,169
Debentures payable 154,200
------------
Total current liabilities 1,126,574
------------
LONG-TERM DEBT 729,124
------------
CAPITAL LEASE OBLIGATIONS 131,390
------------
DEFERRED REVENUE 24,829
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STOCKHOLDERS' EQUITY:
Common Stock, $.01 par value; authorized
40,000,000 shares; issued 16,068,018 shares 160,680
Preferred Stock, $.01 par value; authorized 1,000,000
shares; 0 shares issued and outstanding -
Capital in excess of par 10,242,409
Deficit (8,869,074)
------------
1,534,015
Treasury Stock, at cost, 3,714,616 shares (928,655)
------------
605,360
$ 2,617,277
See notes to condensed consolidated financial statements.
4
DCAP GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Nine months ended
September 30,
2002 2001
---------- ----------
Revenues:
Commissions and fees $1,276,675 $1,683,438
Rooms 618,271 714,227
Premium finance revenue 855,668 125,325
Other 10,489 20,015
---------- ----------
Total revenues 2,761,103 2,543,005
---------- ----------
Operating Expenses:
Selling, general and administrative 2,229,298 3,117,367
Depreciation and amortization 107,416 222,878
Property operation and maintenance 29,258 48,548
---------- ----------
Total operating expenses 2,365,972 3,388,793
---------- ----------
Operating Income (Loss) 395,131 (845,788)
Other (Expense) Income:
Interest income 3,373 14,743
Interest expense (44,193) (44,747)
Gain on sale of store - 56,043
---------- ----------
(40,820) 26,039
---------- ----------
Income (loss) before income taxes
and minority interest 354,311 (819,749)
Provision for income taxes 9,332 20,621
---------- ----------
Income (loss) before minority interest 344,979 (840,370)
Minority interest 1,936 7,254
---------- ----------
Net income (loss) $ 343,043 $ (847,624)
========== ==========
Net income (loss) per common share:
Basic $ 0.03 $ (0.06)
========== ==========
Diluted $ 0.03 $ (0.06)
========== ==========
Weighted average number of shares outstanding:
Basic 11,474,281 15,068,018
========== ==========
Diluted 11,656,367 15,068,018
========== ==========
See notes to condensed consolidated financial statements.
5
DCAP GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended
September 30,
2002 2001
---------- -----------
Revenues:
Commissions and fees $ 577,440 $ 339,877
Rooms 200,586 215,619
Premium finance revenue 428,572 85,123
Other 3,585 2,518
---------- ----------
Total revenues 1,210,183 643,137
---------- ----------
Operating Expenses:
Selling, general and administrative 882,861 512,755
Depreciation and amortization 39,958 50,972
Property operation and maintenance 9,360 17,946
---------- ----------
Total operating expenses 932,179 581,673
---------- ----------
Operating Income 278,004 61,464
Other (Expense) Income:
Interest income 1,122 5,341
Interest expense (15,293) (14,105)
---------- ----------
(14,171) (8,764)
---------- -----------
Income before income taxes
and minority interest 263,833 52,700
Provision for income taxes 8,089 317
---------- ----------
Income before minority interest 255,744 52,383
Minority interest - 12,402
---------- ----------
Net income $ 255,744 $ 39,981
========== ==========
Net income per common share:
Basic $ 0.02 $ -
========== ==========
Diluted $ 0.02 $ -
========== ==========
Weighted average number of shares outstanding:
Basic 11,712,098 15,068,018
========== ==========
Diluted 12,105,812 15,068,018
========== ==========
See notes to condensed consolidated financial statements.
6
DCAP GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine months ended
September 30,
2002 2001
-------- -----------
Cash flows from operating activities:
Net income (loss) $343,043 $ (847,624)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 107,416 222,878
Forgiveness of note receivable - 141,454
Provision for bad debts 8,819 151,009
Minority interest in net income 1,936 7,254
Gain on sale of store - (56,043)
Decrease (increase) in assets:
Accounts receivable (67,351) 38,868
Prepaid expenses and other current assets 7,696 (14,771)
Deposits and other (5,434) 6,918
Decrease in liabilities:
Accounts payable and accrued expenses (80,989) (601,577)
Deferred revenue (23,131) (197,120)
-------- --------
Net cash provided by (used in)
operating activities 292,005 (1,148,754)
-------- ----------
Cash flows from investing activities:
Decrease in notes and
other receivables, net 4,667 156,237
Acquisition of property and equipment (10,023) (25,577)
Acquisition of Barry Scott Companies (325,000) -
Acquisition of minority interest (40,000) -
Proceeds from sale of property and
equipment 36,610 -
Deposits on sale of stores - 739,115
Proceeds from sale of DCAP stores - 104,976
-------- ----------
Net cash (used in) provided by
investing activities (333,746) 974,751
-------- ----------
Cash flows from financing activities:
Principal payment of long-term debt and
capital lease obligations (84,943) (213,422)
Proceeds from private placement 500,000 -
Decrease in due to officer (33,333) -
-------- ----------
Net cash provided by (used in)
financing activities 381,724 (213,422)
-------- ----------
Net increase (decrease) in cash and
cash equivalents 339,983 (387,425)
Cash and cash equivalents,
beginning of period 220,774 759,309
-------- ----------
Cash and cash equivalents,
end of period $560,757 $371,884
======== ==========
Supplemental schedule of noncash investing
and financing activities:
Acquisition of business $525,000 $ -
======== ==========
See notes to condensed consolidated financial statements.
7
DCAP GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (UNAUDITED)
1. The Condensed Consolidated Balance Sheet as of September 30, 2002, the
Condensed Consolidated Statements of Operations for the three and nine
months ended September 30, 2002 and 2001 and the Condensed Consolidated
Statements of Cash Flows for the nine months ended September 30, 2002 and
2001 have been prepared by us without audit. In our opinion, the
accompanying unaudited condensed consolidated financial statements contain
all adjustments necessary to present fairly in all material respects our
financial position as of September 30, 2002, results of operations for the
three and nine months ended September 30, 2002 and 2001 and cash flows for
the nine months ended September 30, 2002 and 2001. This report should be
read in conjunction with our Annual Report on Form 10-KSB for the year
ended December 31, 2001.
2. Summary of Significant Accounting Policies:
------------------------------------------
a. Principles of consolidation
The accompanying consolidated financial statements include the
accounts of all subsidiaries and joint ventures in which we have a
majority voting interest or voting control. All significant
intercompany accounts and transactions have been eliminated.
b. Revenue recognition
We recognize commission revenue from insurance policies at the
beginning of the contract period, on income tax preparation when
services are completed, and on automobile club dues equally over the
contract period. Franchise fee revenue is recognized when
substantially all of our contractual requirements under the franchise
agreement are completed. Refunds of commissions on the cancellation of
insurance policies are reflected at the time of cancellation.
Premium financing fee revenue is earned based upon the origination of
premium finance contracts sold by agreement to third parties. The
contract fee gives consideration to an estimate as to the
collectability of the loan amount. Periodically, actual results are
compared to estimates previously recorded, and adjusted accordingly.
Revenues from room sales are recorded at the time services are
performed.
c. Website Development Costs
Technology and content costs are generally expensed as incurred,
except for certain costs relating to the development of internal-use
software, including those relating to operating our website, that are
capitalized and depreciated over two years. No costs were incurred
during the nine months ended September 30, 2002.
8
d. Reclassifications
Certain reclassifications have been made to the consolidated financial
statements for the three and nine months ended September 30, 2001 to
conform with the classifications used for the three and nine months
ended September 30, 2002.
3. Acquisition of Barry Scott Companies. On August 30, 2002, we acquired all
the outstanding capital stock of Barry Scott Companies at a price of
$850,000. Barry Scott Companies consists of a holding company and three
insurance agencies with 20 store locations throughout New York State. The
insurance agencies derive substantially all of their income from
commissions and fees associated with the sale of automobile insurance. The
acquisition allows for the expansion of our geographical footprint within
New York State and allows for us to capitalize on operational and
administrative efficiencies.
The goodwill amount recorded at August 30, 2002 is comprised of the
following: (i) the excess of the purchase price over the tangible net
assets and identified intangibles acquired; and (ii) the estimated direct
transaction costs associated with the acquisition.
Our condensed consolidated statements of operations include the revenues
and expenses of Barry Scott Companies from August 30, 2002.
The following pro forma results were developed assuming the acquisition of
Barry Scott Companies had occurred on January 1, 2001:
Three months ended Nine months ended
September 30, September 30,
----------------------- ----------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
Revenues $1,766,630 $1,512,921 $5,062,479 $4,844,964
Net Income (loss) 221,405 133,833 416,546 (1,169,524)
Net Income (loss)
per share 0.02 0.01 0.03 (0.07)
The above unaudited pro forma condensed financial information is presented
for illustrative purposes only and is not necessarily indicative of the
condensed consolidated results of operations that actually would have been
realized had we and Barry Scott Companies been a combined company during
the specified periods.
4. The results of operations and cash flows for the three and nine months
ended September 30, 2002 are not necessarily indicative of the results to
be expected for the full year.
5. Segment and Related Information. We have three reportable business
segments: Insurance, Premium Finance and Hotel. The Insurance segment sells
retail auto, motorcycle, boat, life, business, and homeowner's insurance
and franchises. In addition, this segment offers tax preparation services
and automobile club services for roadside emergencies. The Premium
9
Finance segment offers property and casualty policyholders loans to finance
the policy premiums. The Hotel segment operates the International Airport
Hotel in San Juan, Puerto Rico. The Hotel caters generally to commercial
and tourist travelers in transit.
Summarized financial information concerning our reportable segments is shown in
the following tables:
Nine Months Ended Premium
September 30, 2002 Insurance Finance Hotel Other(1) Total
------------------------ --------- -------- -------- --------- ----------
Revenues from external
customers $1,276,675 $855,668 $628,760 $ - $2,761,103
Interest income 1,534 - 1,551 288 3,373
Interest expense 44,193 - - - 44,193
Depreciation and
amortization 95,803 - 11,613 - 107,416
Segment (loss) profit (29,814) 669,741 49,438 (346,322) 343,043
Segment assets 2,000,784 250,464 245,962 120,067 2,617,277
Nine Months Ended Premium
September 30, 2001 Insurance Finance Hotel Other(1) Total
----------------------- ---------- -------- -------- -------- ----------
Revenues from external
customers $1,683,438 $125,325 $728,483 $ 5,759 $2,543,005
Interest income 2,501 - 2,183 10,059 14,743
Interest expense 44,747 - - - 44,747
Depreciation and
amortization 212,554 - 10,324 - 222,878
Segment (loss) profit (760,566) 116,341 95,757 (299,156) (847,624)
Segment assets 2,087,831 38,542 280,929 200,337 2,607,639
------------
(1) Column represents corporate-related items
6. Private Placement. Effective August 30, 2002, we issued an aggregate of
1,000,000 shares of common stock for $500,000, or $.50 per share, in a
private transaction.
10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
Results of Operations
Our net income for the nine months ended September 30, 2002 was $343,043 as
compared to a net loss of $847,624 for the nine months ended September 30, 2001.
During the nine months ended September 30, 2002, revenues from our
insurance-related operations were $1,276,675 as compared to $1,683,438 during
the nine months ended September 30, 2001. The decline in revenues was generally
due to the sale (and conversion to franchise status) of eight DCAP offices
effective as of March 28, 2001, offset by revenues for the month of September
2002 from Barry Scott Companies, which was acquired on August 30, 2002.
Premium finance revenues increased $730,343 during the nine months ended
September 30, 2002 as compared to the nine months ended September 30, 2001. This
increase was the result of (i) our renegotiation in September 2001 of our
agreement regarding the sale of premium finance receivables that has given rise
to increased revenues per transaction, (ii) an increase in the number of
franchises utilizing our premium finance services, and (iii) an expansion of our
premium finance marketing efforts to non-DCAP insurance agencies.
Hotel revenues decreased $99,723 between the nine months ended September
30, 2001 and 2002 primarily due to the decline in air traffic following the
terrorist attack of September 11, 2001.
Our selling general and administrative expenses for the nine months ended
September 30, 2002 were $888,069 less than for the comparable period in 2001.
This decrease were primarily due to the sale of stores discussed above offset by
expenses for the month of September 2002 resulting from the operation of Barry
Scott Companies. Further, our depreciation and amortization expenses decreased
$115,462 between the nine months ended September 30, 2001 and 2002 primarily due
to the sale of the stores, a write-off of goodwill as a result of the store
sales, and a write off of fixed assets during the fourth quarter of 2001.
Our insurance-related operations during the nine months ended September 30,
2002, on a stand-alone basis, generated a net loss of $29,814 as compared to a
net loss of $760,566 for the nine months ended September 30, 2001 (after giving
effect to a gain of $56,043 on the sale of our ownership interest in a DCAP
store). Our premium finance operations during the nine months ended September
30, 2002, on a stand-alone basis, generated a net profit of $669,741 as compared
to a net profit of $116,341 during the comparable period in 2001. The operations
of the hotel during the nine months ended September 30, 2002, on a stand-alone
basis, generated net income of $49,438 as compared to a net income of $95,757
for the nine months ended September 30, 2001. Losses from corporate-related
items not allocable to reportable segments were $346,322 during the nine months
ended September 30, 2002 as compared to $299,156 for the nine months ended
September 30, 2001.
11
Liquidity and Capital Resources
As of September 30, 2002, we had $560,757 in cash and cash equivalents and
working capital of $216,508. As of December 31, 2001, we had $220,774 in cash
and cash equivalents and a working capital deficiency of $598,263.
Cash and cash equivalents increased between December 31, 2001 and September
30, 2002 primarily due to (i) net cash of $292,005 provided by operating
activities for the nine months ended September 30, 2002 based on our net income
of $343,043 and depreciation and amortization expenses of $107,416 for the
period, offset by an increase in current assets of $65,089 and a decrease in
current liabilities of $104,120 for the period; and (ii) net cash of $381,724
provided by financing activities for the nine months ended September 30, 2002
based on proceeds from a private placement of $500,000, offset primarily by
principal payments of long-term debt and capital lease obligations of $84,943
for the period; offset by (iii) net cash of $333,746 used in investing
activities for the nine months ended September 30, 2002 based primarily on our
payment of $325,000 at the closing of our acquisition of Barry Scott Companies.
Liquidity at September 30, 2002 was sufficient, in the opinion of
management, to meet our cash requirements for the 12 month period ending
September 30, 2003.
We have no current commitments for capital expenditures.
Item 3. CONTROLS AND PROCEDURES
Within 90 days prior to the filing date of this report, our Chief Executive
Officer and Chief Financial Officer conducted an evaluation of the effectiveness
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 in alerting him in a timely manner to
material information required to be included in our SEC reports. In addition,
our Chief Executive Officer and Chief Financial Officer reviewed our internal
controls, and there have been no significant changes in our internal controls or
in other factors that could significantly affect those controls subsequent to
the date of our last evaluation.
12
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Effective August 30, 2002, we issued an aggregate of 1,000,000 shares of
common stock for $500,000, or $.50 per share, in a private transaction to Jack
Seibald and Stephanie Seibald, jointly (500,000 shares), and SDS Partners I,
Ltd. (500,000 shares).
The above offering of shares was exempt from the registration requirements
of the Securities Act of 1933 pursuant to Section 4(2) thereof as a transaction
not involving any public offering. We reached this determination based on the
following: (i) the investors represented that they were "accredited investors"
and acquired the shares for their own account; (ii) the certificates
representing the shares of common stock bear restrictive legends permitting
transfer only upon the registration of the shares or pursuant to an exemption
from such registration requirements; and (iii) we did not offer or sell the
shares by any form of general solicitation or general advertising.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
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
3(a) Certificate of Incorporation, as amended
3(b) By-laws, as amended
99 Certificate of Chief Executive Officer and Chief Financial
Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13
(b) Reports on Form 8-K
Two Current Reports on Form 8-K were filed by us during the
quarter ended September 30, 2002 as follows:
(i) Date of Report: August 30, 2002
Items reported: 2 and 7
(ii) Date of Report: September 3, 2002
Items reported: 5 and 7
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DCAP GROUP, INC.
Dated: November 12, 2002 By:/s/ Barry Goldstein
-----------------------------------
Barry Goldstein
President, Chairman of the Board,
Chief Executive Officer, Chief
Financial Officer and Treasurer
(Principal Executive, Financial
and Accounting Officer)
Certification
I, Barry Goldstein, Chief Executive Officer and Chief Financial Officer of
DCAP Group, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-QSB of DCAP Group, 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. 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: November 12, 2002
/s/ Barry Goldstein
----------------------------
Barry Goldstein
Chief Executive Officer and
Chief Financial Officer