10QSB 1 v028821_10qsb.txt FORM 10-QSB U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 |X| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2005 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 0-21384 DIGITAL DESCRIPTOR SYSTEMS, INC. (Exact name of registrant as specified in its charter) Delaware 23-2770048 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification number) 2150 Highway 35, Sea Girt, New Jersey 08750 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's Telephone number, including area code: (732) 359-0260 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 |_| State the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date. Outstanding at Class of Common Stock November 3, 2005 --------------------- -------------------- $.001 par value 2,640,907,985 Shares TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT YES |_| NO |X| PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS DIGITAL DESCRIPTOR SYSTEMS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 2005 (UNAUDITED)
Assets Current Assets Cash and cash equivalents $ 280,434 Restricted cash 50,000 Accounts receivable, less allowance of $45,584 630,040 Inventory 354,614 Prepaid expenses 4,300 Debt discount and deferred financing costs 1,970,731 ------------ Total Current Assets 3,290,119 Property and equipment, net of accumulated depreciation of $34,781 480,631 Intangible assets, net of accumulated amortization of $32,523 177,843 Deposits 1,730 Goodwill 4,054,998 ------------ Total Assets $ 8,005,321 ============ Liabilities and Shareholders' Impairment Current Liabilities Accounts payable $ 326,959 Accrued expenses 310,226 Accrued interest 1,262,780 Deferred income 180,203 Convertible debentures - Current 2,112,577 ------------ Total Current Liabilities 4,192,745 Convertible debentures - Longterm 3,500,000 Note payable 3,500,000 ------------ Total Liabilities 11,192,745 ------------ Shareholders' deficit Preferred stock, $.001 par value 1,000,000 shares authorized, -0- issued and outstanding -0- Common stock, par value $.001; authorized 9,999,000,000 shares; 1,565,611,685 issued and outstanding 1,525,413 Additional paid-in capital 18,347,527 Accumulated deficit (23,060,364) ------------ Total Shareholders' Impairment (3,187,424) ------------ Total Liabilities and Shareholders' Impairment $ 8,005,321 ============
See notes to the condensed consolidated financial statements. 2 DIGITAL DESCRIPTOR SYSTEMS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS ENDED ENDED ENDED ENDED SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER 30, 2005 30, 2004 30, 2005 30, 2004 -------------- ------------- ------------- ------------- Net Sales $ 1,118,922 $ 71,068 $ 2,143,310 $ 248,259 Cost of Revenues 296,024 (2,030) 788,185 2,937 ------------- ------------- ------------- ------------- Gross Profit 822,898 73,098 1,355,125 245,322 Operating Expenses General and administrative expenses 635,911 58,355 1,411,364 305,756 Sales and marketing 22,903 10,851 101,973 48,320 Research and development 25,725 4,864 77,331 17,037 ------------- ------------- ------------- ------------- Total Operating Expenses 684,539 74,070 1,590,668 371,113 ------------- ------------- ------------- ------------- Operating Income (Loss) 138,359 (972) (235,543) (125,791) Other Expense Depreciation and amortization (18,699) -0- (43,629) -0- Interest expense and financing costs (539,556) (173,259) (1,434,519) (594,794) Miscellaneous -0- -0- -0- 3,873 ------------- ------------- ------------- ------------- Other Expense (558,255) (173,259) (1,478,148) (590,921) ------------- ------------- ------------- ------------- Loss before provision for income taxes (419,896) (174,231) (1,713,691) (716,712) Provision for income taxes 24,613 -0- 25,393 -0- ------------- ------------- ------------- ------------- Net Loss $ (444,509) $ (174,231) $ (1,739,084) $ (716,712) ============= ============= ============= ============= Net Loss per common share, basic and diluted $ (-0-) $ (-0-) $ (-0-) $ (-0-) ============= ============= ============= ============= Weighted average shares of common stock Outstanding, basic and diluted 771,728,982 169,913,737 478,591,460 153,344,879 ============= ============= ============= ============= See notes to the condensed consolidated financial statements. 3
DIGITAL DESCRIPTOR SYSYTEMS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30, 2005 2004 ------------ ------------ Cash Flows from operating activities: Net loss $(1,739,084) $ (716,712) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization 59,116 -0- Stock issued for services 30,000 -0- Amortization of deferred financing costs and debt discounts related to the beneficial conversion feature of debentures 677,331 383,884 Bad debt expense -0- (25,475) Changes in operating assets and liabilities Accounts receivable (561,511) 83,933 Inventory (19,862) -0- Prepaid expenses (4,300) 6,550 Accounts payable 189,376 (58,232) Accrued expenses 452 (46,319) Accrued interest 748,213 213,848 Deferred income (9,250) (70,494) ----------- ----------- Net cash used in operating activities (629,519) (229,017) ----------- ----------- Cash flows from investing activities: Purchase fixed assets (104,512) 72 Purchase assets from CGM Security Solutions (1,500,000) -- ----------- ----------- Net cash (used) provided by financing activities (1,604,512) 72 ----------- ----------- Cash flows from financing activities: Payment of financing costs (502,041) (3,500) Proceeds from the issuance of convertible debentures -0- 226,937 Due to officer and director (13,830) (1,990) ----------- ----------- Net cash (used) provided by financing activities (515,871) 221,447 ----------- ----------- Decrease in cash and cash equivalents $(2,749,902) $ (7,498) Cash and cash equivalents - beginning 3,080,336 51,264 ----------- ----------- Cash and cash equivalents - ending $ 330,434 $ 43,766 =========== =========== See notes to the condensed consolidated financial statements. 4
DIGITAL DESCRIPTOR SYSTEMS, INC. AND SUBSIDIARY NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Item 310 of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles 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. Operating results for the nine month period ending September 30, 2005 are not necessarily indicative of the results that may be expected for the year ended December 31, 2005. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-KSB for the year ended December 31, 2004. Principles of Consolidation. The consolidated financial statements include the accounts of CGM Applied Security Technologies, Inc. ("CGM Sub") a wholly owned subsidiary from March 1, 2005 to September 30, 2005. All intercompany balances and transactions have been eliminated in consolidation. NOTE 2. SUPPLEMENTAL CASH FLOWS DISCLOSURES There were no cash payments for interest during the third quarter of 2005 or 2004. Cash payments for income taxes were $24,613 and $-0- in the third quarter of 2005 and 2004 respectively. During the third quarter of 2005, $79,172.40 of the convertible debentures issued in September 2001, were converted into 579,730,000 shares of common stock. During the third quarter of 2005, 513,432,786 shares of common stock were issued for liquidated damages ($50,967.00) relating to the notes issued December 2001. See notes to the condensed consolidated financial statements. Digital Descriptor Systems, Inc. and Subsidiary Notes to Condensed Consolidated Financial Statements. NOTE 3. RELATED PARTY TRANSACTIONS The Company owes the former chief executive officer, who is presently a director, and Senior Vice President & CFO, $3,000 at September 30, 2005, for back payroll and sundry expenses with no repayment terms. NOTE 4. GOODWILL AND ACQUISITION OF CGM On March 1, 2005, CGM Sub acquired substantially all of the assets of CGM for $1,500,000 in cash and a $3,500,000 promissory note at 2.86% interest, subject to adjustment. CGM is a manufacturer and distributor of barrier security seals, security tapes and related packaging security systems for palletized cargo, physical security systems for tractors, trailers and containers. The results of operations for CGM is included for March 1 thru September 30 in the consolidated statement of operations. The following pro forma results for the nine months ended September 30, 2005 are presented as if the acquisition was made on January 1, 2005, for the nine months ended: CGM DDSI AND SUBSIDIARY --- ------------------- Net Sales $2,556,602 $2,761,232 Net Income (Loss) 233,195 (1,972,278) Net Loss per Share -0- -0- The transaction was accounted for as an acquisition under the purchase method of accounting in accordance with Statement of Accounting Standards No. 141, Business combinations. Under the purchase method of accounting, the total purchase price is allocated to the net tangible and intangible assets acquired by the company in connections with the transaction, based on their fair values as of the completion of the transaction. The excess cost over the net tangible and identifiable intangible assets in the amount of $4,054,998 is allocated to goodwill. The preliminary purchase allocation is subject to finalization of the intangible assets. 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is management's discussion and analysis of certain significant factors that will have affected our financial condition and results of operations. Certain statements under this section may constitute "forward-looking statements". The following discussion should be read in conjunction with our financial statements and notes thereto included in this report. CRITICAL ACCOUNTING POLICIES AND ESTIMATES CRITICAL ACCOUNTING POLICIES No material changes have occurred in the disclosure with respect to our critical accounting policies set forth in our Annual Report form 10-KSB for the fiscal year ended December 31, 2004. RESULTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2005 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2004 Revenues for the three months ended September 30, 2005, of $1,118,922 increased $1,047,854 or 1,474% from the three months ended September 30, 2004. The Company generates its revenues through software licenses, hardware, post customer support arrangements, security tape, labels and other security related items and other services. The increase in the Company's revenue is directly attributed to the acquisition of CGM, on March 1, 2005. DDSI is still experiencing a decrease in software maintenance contract dollar amount, a loss in client base, and the lack of new product offerings to their clients. Cost of revenue sold increased by $298,054 due to the increase of sales attributed to the CGM subsidiary. General and Administrative expenses for the three month period ending September 30, 2005, was $635,911 versus $58,355 for the same period prior year for an increase of $577,556. This increase was mainly attributable to the acquisition of CGM which added costs in all areas, but mainly in the area of payroll due to the added personnel acquired with the CGM subsidiary. Selling and Marketing expenses increased $12,052 for the three months period ended September 30, 2005 to $22,903 from $10,851 for the same period in 2004, which represents a 111% increase. This increase was mainly attributable to costs associated with CGM Sub where the Company is ramping up its advertising, trade shows attendance and the addition of sales reps. Research and development for the three months ended September 30, 2005, was $25,725 compared to $4,864 for the same period prior year for a increase of $20,861. The increase was due to the expansion in development expenses as the Company looks for ways to expand its revenue base by upgrading its products. The net loss for the Company increased 155% for the three months ended September, 2005, to $444,509 from $174,231 for the three months ending September 30, 2004. This was principally due to the increase in expenses in the cost of sales, general & administrative and interest expense on the Company's debt. NINE MONTHS ENDED SEPTEMBER 30, 2005 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2004 Revenues for the nine months ended September 30, 2005, of $2,143,310 increased $1,895,051 or 763% from the nine months ended September 30, 2004. The Company generates its revenues through software licenses, hardware, post customer support arrangements security tape and other security related items and other services. The increase in the Company's revenue is directly attributed to the acquisition of CGM, on March 1, 2005. DDSI is still experiencing a decrease in software maintenance contract dollar amount, a loss in client base, and the lack of new product offerings to their clients. Cost of revenue increased by $785,248 due to the higher sales in CGM Sub. General and Administrative expenses for the nine month period ending September 30, 2005, was $1,411,364 versus $305,756 for the same period prior year for an increase of $1,105,608. This increase was mainly attributable to the acquisition of CGM which added costs in all areas, areas but mainly in the area of payroll due to the added personnel acquired with the CGM subsidiary. Selling and Marketing expenses increased $53,653 for the nine months period ended September 30, 2005 to $101,973 from $48,320 for the same period in 2004, which represents a 111% increase. This increase was mainly attributable to costs associated with CGM Sub where the Company is ramping up its advertising, trade show attendance and the addition of sales reps. Research and development for the nine months ended September 30, 2005, was $77,331 compared to $17,037 for the same period prior year for a increase of $60,294. The increase was due to the expansion in development expenses as the Company looks for ways to expand its revenue base by upgrading its products. The net loss for the Company increased 142% for the nine months ended September, 2005, to $1,739.084 from $716,712 for the nine months ending September 30, 2004. This was principally due to the increase in expenses in the cost of sales, general & administrative, and interest expense on the Company's debt. 6 PLAN OF OPERATIONS ACQUISITION OF CGM On March 1, 2005, DDSI and CGM Sub acquired substantially all of the assets of CGM, for (i) $1,500,000 in cash and (ii) a 2.86% promissory note (the "Note") in the principal amount of $3,500,000, subject to adjustment (the "Acquisition"). The assets of CGM were acquired pursuant to an Asset Purchase Agreement among DDSI, CGM Sub and CGM dated as of February 25, 2005. The principal amount of the Note is subject to adjustment based upon the average of (i) the gross revenues of CGM Sub for the fiscal year ending December 31, 2007 and (ii) an independent valuation of CGM Sub based upon the consolidated audited financial statements of the Company and CGM Sub for the fiscal years ending December 31, 2006 and 2007. In addition, the Company has granted CGM a secondary security interest in substantially all of its assets and intellectual property. In connection with the Acquisition, the Company entered into a letter agreement with certain of its investors (the "Investors") which extended the maturity date of debt instruments issued on November 30, 2004 until March 1, 2008, and amended the conversion price of the debt that is held by the Investors to the lower of (i) $0.0005 or (ii) 60% of the average of the three lowest intraday trading prices for the Company's common stock during the 20 trading days before, but not including, the conversion date. In addition, the exercise price of the warrants held by the Investors was amended to $.001 per share. THE SHORT-TERM OBJECTIVE OF DDSI IS THE FOLLOWING: The Company plans to spend the majority of it's time and efforts on increasing the revenue and marketplace of its wholly owned subsidiary, CGM Applied Security Technologies, as it feels that there is a much greater potential for growth of the product line of CGM. In order to accomplish this, the Company has hired additional sales people and is increasing its marketing budget in order to expand the awareness of CGM's product line. In addition, the Company has begun a complete revamping of the company's infrastructure in order to make it better able to respond to the need of its customers and to give management the reporting it needs on a timely basis. To continue to expand the sale and acceptance of its core solutions by offering new and synergistic biometric (a measurable, physical characteristic or personal behavioral trait used to recognize the identity, or verify the claimed identity, of an individual) (i.e. FMS) security products to its installed base in the criminal justice market. DDSI's objective is to expand with these, and additional products, into much larger commercial and federal markets. Additionally, DDSI plans to execute an acquisition strategy based upon the availability of financing. We also plan to add additional product lines as a Value Added Reseller. Technologies related to DDSI's core business can bring additional cash flow with relatively small internal development capital outlay. DDSI'S LONG-TERM OBJECTIVE IS AS FOLLOWS: To enhance its sales of the product line acquired with the acquisition of CGM both domestically and internationally, though the addition of sales representative and distributors To seek additional products to sell into its basic business market - Criminal Justice - so that DDSI can generate sales adequate enough to allow for profits. New products include biometric devices such as FMS (Fingerprint Matching System) and our integrated digital image and fingerprint package, Identify on Demand. DDSI believes that it will not reach profitability until the year 2006. Over the next twelve months, management is of the opinion that sufficient working capital will be obtained from operations and external financing to meet DDSI's liabilities and commitments as they become payable. DDSI has in the past successfully relied on private placements of common stock securities, bank debt, loans from private investors and the exercise of common stock warrants in order to sustain operations. If DDSI is unable to obtain additional funding in the future, it may be forced to curtail or terminate operations. DDSI is doing the following in its effort to reach profitability: o The Company is putting a great deal of effort to increase the sales of the CGM subsidiary. The Company believes at this time that the most significant growth in revenue will come from CGM and its product lines. o Cutting costs in areas that add the least value to DDSI. o Deriving funds through investigating business alliances with other companies who may wish to license the FMS SDK (software developer's kit). 7 o Increasing revenues through the introduction of Compu-Capture(R), specifically towards kindergarten through twelfth grades, for the creation of ID cards. o Increasing revenues through the introduction of a scaled down version of our Compu-Capture(R) product. o Increasing revenues through the addition of innovative technologies as a Value Added Seller. o Acquiring and effectively adding management support to profitable companies complementary to its broadened target markets. LIQUIDITY AND CAPITAL RESOURCES We had net losses of $1,739,084 and $716,712 during the nine months ended September 30, 2005 and 2004, respectively. As of September 30, 2005, we had a cash balance in the amount of $280,434 and current liabilities of $2,080,167 which includes $3,000 due to officers and directors. The total amount of notes payable and debentures is $9,112,577. We may not have sufficient cash or other assets to meet our current liabilities. In order to meet these obligations, we may need to raise cash from the sale of securities or from borrowings. The Company's revenues have been insufficient to cover the cost of revenues and operating expenses. Therefore, the Company has been dependent on private placements of its Common Stock and issuance of convertible notes in order to sustain operations. In addition, there can be no assurances that the proceeds from private placements or other capital will continue to be available, or that revenues will increase to meet the Company's cash needs, or that a sufficient amount of the Company's Common Stock or other securities can or will be sold or that any Common Stock purchase options/warrants will be exercised to fund the operating needs of the Company. The Company has contractual obligations of $11,015,541 as of September 30, 2005. These contractual obligations, along with the dates on which such payments are due are described below:
Contractual Obligations Total One Year or Less More Than One Year ------------------------------------- ----------- ---------------- ------------------ Due to Related Parties ............... $ 3,000 $ 3,000 $ 0 Accounts Payable and Accrued Expenses 637,184 637,184 0 Accrued interest on loans ............ 1,262,780 1,262,780 0 Note payable ......................... 3,500,000 0 3,500,000 Convertible Debentures ............... 5,612,577 0 5,612,577 Total Contractual Obligations ........ $11,015,541 $ 1,902.964 $ 9,112,577
The Company is currently in default on several of the convertible debentures above but considers them to be long term since they will not be settled within one year even though they may have earlier redemption dates. Below is a discussion of our sources and uses of funds for the nine months ended September 30, 2005 and 2004. NET CASH FROM OPERATING ACTIVITIES Net cash used in operating activities for the nine months ended September 30, 2005 and 2004 was $629,519 and $229,017, respectively. The increase in cash used from operating activities in the nine months ended September 30, 2005 versus 2004 of $400,502 was principally due to the increase in net operating costs associated with CGM. NET CASH FROM INVESTING ACTIVITIES Net cash used in investing activities for the nine months ended September 30, 2005 was $1,604,512 which reflects the cash paid for the acquisition of CGM's assets. NET CASH FROM FINANCING ACTIVITIES Net cash used in financing activities was $515,871 for the nine months ended September 30, 2005. $220,845 was provided by financing activities for the nine months ended September 30, 2004. This increase in cash used of $736,716 is mainly reflected in the note payable to CGM and Erik Hoffer for the purchase of CGM. OFF BALANCE SHEET ARRANGEMENTS We do not have any off balance sheet arrangements as of September 30, 2005 or as of the date of this report. 8 ITEM 3. CONTROL AND PROCEDURES (a) Evaluation of Disclosure Controls and Procedures Our Chief Executive Officer and our Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended. (the "Exchange Act") as of the end of the period covered by this quarterly report (the "Evaluation Date"). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to our Company required to be included in our reports filed or submitted under the Exchange Act. (b) Changes in Internal Controls There were no significant changes in the Company's internal controls or in other factors that could significantly affect those controls during the quarter covered by this Report or from the end of the reporting period to the date of this Form 10-QSB. 9 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES: The Company is in default of $1,733,478 of outstanding debentures. Although the debenture holders have not pursued their rights under such debentures, there can be no assurances that such rights will not be exercised. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS 4.1 Security Agreement dated February 25, 2005 by and between CGM Applied Security Technologies, Inc. and CGM Security Solutions, Inc. (incorporated herein by reference to the Current Report on Form 8-K, dated March 3, 2005) 4.2 Intellectual Property Security Agreement dated February 25, 2005 by and between CGM Applied Security Technologies, Inc and CGM Security Solutions, Inc. (incorporated herein by reference to the Current Report on Form 8-K, dated March 3, 2005) 4.3 Letter Agreement, by and among the Company, AJW Partners, LLC, New Millennium Capital Partners II, LLC, AJW Offshore, Ltd. and AJW Qualified Partners, LLC, dated January 31, 2005 (incorporated herein by reference to the Current Report on Form 8-K, dated March 3, 2005) 4.4 2.86% Secured Convertible promissory Note in the name of CGM Security Solutions, Inc. dated February 25, 2005 (incorporated herein by reference to the Current Report on Form 8-K, dated March 3, 2005) 10.1 Asset Purchase Agreement dated February 25, 2005 by and among the Company, CGM Applied Security Technologies, Inc. and CGM Applied Security Solutions. (incorporated herein by reference to the Current Report on Form 8-K, dated March 3, 2005) 10.2 Employment Agreement, dated February 25, 2005, by and among the Company, CGM Applied Security Technologies, Inc. and CGM Security Solutions, Inc. and Eric Hoffer (incorporated herein by reference to the Current Report on Form 8-K, dated March 3, 2005) 10.3 Employment Agreement dated February 25, 2005 by and among the Company and Anthony Shupin (incorporated herein by reference to the Current Report on Form 8-K, dated April 15, 2005) 10.4 Employment Agreement dated February 25, 2005 by and among the Company and Michael J. Pellegrino (incorporated herein by reference to the Current Report on Form 8-K, dated April 15, 2005) 31.1 Certification by Chief Executive Officer pursuant to Sarbanes-Oxley Section 302 31.2 Certification by Chief Financial Officer pursuant to Sarbanes-Oxley Section 302 32.1 Certification by Chief Executive Officer pursuant to 18 U.S.C., Section 1350 32.2 Certification by Chief Financial Officer pursuant to Sarbanes-Oxley Section 1350 10 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DIGITAL DESCRIPTOR SYSTEMS, INC. -------------------------------- (Registrant) Date: November 4, 2005 By: /s/ ANTHONY SHUPIN --------------------------------------- Anthony Shupin (President, Chief Executive Officer) (Chairman) Date: November 4, 2005 By: /s/ MICHAEL J. PELLEGRINO --------------------------------------- Michael J. Pellegrino Senior Vice President & CFO (Director) 11