10QSB 1 form10qsb093001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: September 30, 2001 --------------------- [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from to Commission file number 33-20111 Eat at Joe's Ltd. (Exact name of small business issuer as specified in its charter) Delaware 75-2636283 ------------------------------------------------------------------------------- (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) 670 White Plains Road, Suite 120, Scarsdale, New York, 10583 ------------------------------------------------------------ (Address of principal executive offices) (914) 725-2700 Issuer's telephone number APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practical date: September 30, 2001 45,048,299 ------------------------------ Transitional Small Business Disclosure Format (check one). Yes ; No X ---- ---- PART I - FINANCIAL INFORMATION Item 1. Financial Statements INDEPENDENT ACCOUNTANT'S REPORT Eat at Joe's, Ltd. We have reviewed the accompanying balance sheets of Eat at Joe's, Ltd. as of September 30, 2001 and December 31, 2000, and the related statements of operations for the three and nine months ended September 30, 2001 and 2000, and cash flows for the nine months ended September 30, 2001 and 2000. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statement taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with generally accepted accounting principles. Respectfully submitted /S/ ROBISON, HILL & CO. Certified Public Accountants Salt Lake City, Utah November 8, 2001 EAT AT JOE'S LTD., AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
September 30, December 31, 2001 2000 --------------- -------------- ASSETS Current Assets: Cash and cash equivalents $ 39,650 $ 14,670 Receivables - 3,411 Inventory 19,216 19,832 Prepaid expense 29,097 13,217 --------------- -------------- Total Current Assets 87,963 51,130 --------------- -------------- Property and equipment: Equipment 117,826 163,024 Furniture & Fixtures 3,964 5,454 Leasehold improvements 568,143 629,100 --------------- -------------- 689,933 797,578 Less accumulated depreciation (252,071) (196,945) --------------- -------------- 437,862 600,633 --------------- -------------- Other Assets: Investments 100,000 100,000 Intangible and other assets net of amortization of $55,980 and $44,367, respectively 98,857 110,470 --------------- -------------- Total Assets $ 724,682 $ 862,233 =============== ==============
EAT AT JOE'S LTD., AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Continued)
September 30, December 31, 2001 2000 --------------- -------------- LIABILITIES Current Liabilities: Accounts payable and accrued liabilities $ 498,192 $ 462,430 Short-term notes payable 530,180 518,302 Shareholders loans 1,500,553 1,373,022 --------------- -------------- Total Current Liabilities 2,528,925 2,353,754 --------------- -------------- Convertible Debentures, Net of Issue Costs 1,430,578 1,338,448 --------------- -------------- Total Liabilities 3,959,503 3,692,202 --------------- -------------- STOCKHOLDERS EQUITY Preferred stock - $0.0001 par value. 10,000,000 shares authorized; -0- shares issued and outstanding at September 30, 2001 and December 31, 2000 - - Common Stock - $0.0001 par value. 50,000,000 shares authorized, 45,048,299 and 44,894,967 issued and outstanding at September 30, 2001 and December 31, 2000 4,505 4,490 Additional paid-in capital 9,927,476 9,919,824 Cumulative Translation Adjustment 19,496 120,405 Retained deficit (13,186,298) (12,874,688) --------------- -------------- Total Stockholders' Equity (3,234,821) (2,829,969) --------------- -------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 724,682 $ 862,233 =============== ==============
See accompanying notes and accountants' report. EAT AT JOE'S LTD., AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended For the nine months ended September 30, September 30, ------------------------------- ------------------------------- 2001 2000 2001 2000 -------------- --------------- --------------- -------------- Revenues $ 372,099 $ 543,864 $ 1,215,240 $ 1,540,041 Cost of Revenues 180,714 242,232 503,816 606,453 -------------- --------------- --------------- -------------- Gross Margin 191,385 301,632 711,424 933,588 Expenses Labor and Related Expenses 106,111 161,102 292,549 552,737 Rent 34,957 62,273 155,211 160,615 Other General and Administrative 101,182 216,352 401,931 598,378 -------------- --------------- --------------- -------------- Income (Loss) Before Depreciation and Amortization (50,865) (138,095) (138,267) (378,142) Depreciation and Amortization 29,847 27,484 91,468 229,286 -------------- --------------- --------------- -------------- Net Loss from Continuing Operations (80,712) (165,579) (229,735) (607,428) -------------- --------------- --------------- -------------- Other Income (Expense), Net (38,647) (1,744,827) (81,725) (1,810,043) -------------- --------------- --------------- -------------- Net Loss Before Income Taxes (119,359) (1,910,406) (311,460) (2,417,471) Income Tax Expense (Benefit) 50 475 150 1,425 -------------- --------------- --------------- -------------- Net Loss To Common Stockholders $ (119,409) $ (1,910,881)$ (311,610) $ (2,418,896) ============== =============== =============== ============== Basic and Diluted Loss Per Common Share $ 0.00 $ (0.04)$ (0.01) $ (0.06) ============== =============== =============== ============== Weighted Average Number of Common Shares 45,048,299 44,026,562 45,002,130 42,852,783 ============== =============== =============== ==============
See accompanying notes and accountants' report. EAT AT JOE'S LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, ------------------------------- 2001 2000 --------------- -------------- Cash Flows From Operating Activities Net loss for the period $ (311,610) $ (2,418,896) Adjustments to reconcile net loss to net cash Provided by operating activities Depreciation and Amortization 91,468 229,286 Write Down of Assets 87,352 1,704,809 Currency Translation Adjustment (100,909) - Stock issued for services and expenses 7,667 238,567 Decrease (Increase) in Receivables 3,411 8,407 Decrease (Increase) in inventory 615 15,188 Decrease (Increase) in prepaid expense (15,879) 64,514 Increase in accounts payable and accrued liabilities 176,681 (157,922) --------------- -------------- Net Cash Provided by (Used in) Operating Activities (61,204) (316,047) --------------- -------------- Cash Flows From Investing Activities Purchase of property and equipment (4,435) (177,934) --------------- -------------- Net Cash Provided by Investing Activities (4,435) (177,934) --------------- -------------- Cash Flows From Financing Activities Advances from majority stockholders 90,240 350,650 Repayment of long-term notes payable (22,581) - Proceeds from short-term notes payable 22,960 161,876 --------------- -------------- Net Cash Provided by Financing Activities 90,619 512,526 --------------- -------------- Increase (Decrease) in Cash 24,980 18,545 Cash at beginning of period 14,670 - --------------- -------------- Cash at End of Period $ 39,650 $ 18,545 =============== ============== Supplemental Disclosure of Interest and Income Taxes Paid Interest paid during the period $ - $ - =============== ============== Income taxes paid during the period $ 2,720 $ 700 =============== ============== Supplemental Disclosure of Non-cash Investing and Financing Activities: Debt Converted To Equity - 125,000
See accompanying notes and accountants' report. EAT AT JOE'S LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of accounting policies for Eat At Joe's, Ltd. and subsidiaries is presented to assist in understanding the Company's financial statements. The accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements. The unaudited financial statements as of September 30, 2001 and for the three and nine months then ended reflect, in the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to fairly state the financial position and results of operations for the three and nine months. Operating results for interim periods are not necessarily indicative of the results which can be expected for full years. Organization and Basis of Presentation Eat At Joe's Ltd. (Company) was incorporated on January 6, 1988, under the laws of the State of Delaware, as a wholly-owned subsidiary of Debbie Reynolds Hotel and Casino, Inc. (DRHC) (formerly Halter Venture Corporation or Halter Racing Stables, Inc.) a publicly-owned corporation. DRHC caused the Company to register 1,777,000 shares of its initial 12,450,000 issued and outstanding shares of common stock with the Securities and Exchange Commission on Form S-18. DRHC then distributed the registered shares to DRHC stockholders. During the period September 30, 1988 to December 31, 1992, the Company remained in the development stage while attempting to enter the mining industry. The Company acquired certain unpatented mining claims and related equipment necessary to mine, extract, process and otherwise explore for kaolin clay, silica, feldspar, precious metals, antimony and other commercial minerals from its majority stockholder and other unrelated third-parties. The Company was unsuccessful in these start-up efforts and all activity was ceased during 1992 as a result of foreclosure on various loans in default and/or the abandonment of all assets. From 1992 until 1996 the Company had no operations, assets or liabilities. During the year ended December 31, 2000, the Company changed the domicile of each of the following subsidiaries to Nevada; E.A.J. Hold, Inc., E.A.J. Shoppes, Inc., E.A.J. Innerharbor, Inc., E.A.J. Neshaminy, Inc., E.A.J. PM, Inc., E.A.J. Echelon, Inc., E.A.J. Market East, Inc., E.A.J. MO, Inc., E.A.J. Syracuse, Inc., E.A.J. Walnut Street, Inc., and E.A.J. Owings, Inc. EAT AT JOE'S LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (Continued) NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Principles of Consolidation The consolidated financial statements include the accounts of Eat At Joe's, LTD. And its wholly-owned subsidiaries, E.A.J. Hold, Inc., a Nevada corporation ("Hold"), E.A.J. PHL Airport, Inc., a Pennsylvania corporation, E.A.J. Shoppes, Inc., a Nevada corporation, Eat At Joe's, LTD, a New Jersey corporation, E.A.J. Innerharbor, Inc., a Nevada corporation, E.A.J. Neshaminy, Inc., a Nevada corporation, E.A.J. PM, Inc., a Nevada corporation, E.A.J. Echelon, Inc., a Nevada corporation, E.A.J. Market East, Inc., a Nevada corporation, E.A.J. MO, Inc., a Nevada corporation, E.A.J. Syracuse, Inc., a Nevada corporation, E.A.J. Walnut Street, Inc., a Nevada corporation, E.A.J. Owings, Inc., a Nevada corporation, and 1398926 Ontario, Inc. and 1337855 Ontario, Inc., British Columbia corporations. All significant intercompany accounts and transactions have been eliminated. Nature of Business The Company is developing, owns and operates theme restaurants styled in an "American Diner" atmosphere. Inventories Inventories consist of food, paper items and related materials and are stated at the lower of cost (first-in, first-out method) or market. Income Taxes The Company accounts for income taxes under the provisions of SFAS No. 109, "Accounting for Income Taxes." SFAS No.109 requires recognition of deferred income tax assets and liabilities for the expected future income tax consequences, based on enacted tax laws, of temporary differences between the financial reporting and tax bases of assets and liabilities. EAT AT JOE'S LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (Continued) NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Depreciation Office furniture, equipment and leasehold improvements, are stated at cost. Depreciation and amortization are computed using the straight-line method over the estimated economic useful lives of the related assets as follows: Furniture & Fixtures 5-10 years Equipment 5- 7 years Leasehold improvements 8-15 years Maintenance and repairs are charged to operations; betterments are capitalized. The cost of property sold or otherwise disposed of and the accumulated depreciation thereon are eliminated from the property and related accumulated depreciation accounts, and any resulting gain or loss is credited or charged to income. Amortization Intangible assets are amortized over useful life of 10 years. The Company has adopted the Financial Accounting Standards Board SFAS No., 121, "Accounting for the Impairment of Long-lived Assets." SFAS No. 121 addresses the accounting for (i) impairment of long-lived assets, certain identified intangibles and goodwill related to assets to be held and used, and (ii) long-live lived assets and certain identifiable intangibles to be disposed of. SFAS No. 121 requires that long-lived assets and certain identifiable intangibles be held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected future cash flows from the used of the asset and its eventual disposition (undiscounted and without interest charges) is less than the carrying amount of the asset, an impairment loss is recognized. Pervasiveness of Estimates The preparation of financial statements in conformity with generally accepted accounting principles required management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure 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. EAT AT JOE'S LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (Continued) NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Earnings (Loss) Per Share Diluted net income per common share was calculated based on an increased number of shares that would be outstanding assuming that the warrants are converted to common shares. The effect of outstanding common stock equivalents are anti-dilutive for 2001 and 2000 and are thus not considered. The reconciliations of the numerators and denominators of the basic earnings per share computations are as follows: Per Share Income Shares Amount -------------- -------------- --------------- (Numerator) (Denominator) For the three months ended September 30, 2001 ----------------------------------------------- Basic EPS Net Loss to common shareholders $ (119,409) 45,048,299 $ - ============== ============== =============== For the three months ended September 30, 2000 ----------------------------------------------- Basic EPS Net Loss to common shareholders $ (1,910,881) 44,026,562 $ (0.04) ============== ============== =============== For the nine months ended September 30, 2001 ----------------------------------------------- Basic EPS Net Loss to common shareholders $ (311,610) 45,002,130 $ (0.01) ============== ============== =============== For the nine months ended September 30, 2000 ----------------------------------------------- Basic EPS Net Loss to common shareholders $ (2,418,896) 42,852,783 $ (0.06) ============== ============== =============== EAT AT JOE'S LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (Continued) NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. Concentration of Credit Risk The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company maintains the majority of its cash balances with one financial institution, in the form of demand deposits. Reclassifications Certain reclassifications have been made in the 2000 financial statements to conform with the 2001 presentation. NOTE 2 - SHORT-TERM NOTES PAYABLE Short-Term Notes Payable consist of loans from unrelated entities as of September 30, 2001 and December 31, 2000. The notes are payable one year from the date of issuance together with interest at 6.50% A.P.R. NOTE 3 - INCOME TAXES As of December 31, 2000, the Company had a net operating loss ("NOL") carry forward for income tax reporting purposes of approximately $11,510,000 available to offset future taxable income. This net operating loss carry forward expires at various dates between December 31, 2003 and 2021. A loss generated in a particular year will expire for federal tax purposes if not utilized within 20 years. Additionally, the Internal Revenue Code contains provisions which could reduce or limit the availability and utilization of these NOLs if certain ownership changes have taken place or will take place. In accordance with SFAS No. 109, a valuation allowance is provided when it is more likely than not that all or some portion of the deferred tax asset will not be realized. Due to the uncertainty with respect to the ultimate realization of the NOLs, the Company established a valuation allowance for the entire net deferred income tax asset of $3,787,000 as of December 31, 2000. Also consistent with SFAS No. 109, an allocation of the income (provision) benefit has been made to the loss from continuing operations. EAT AT JOE'S LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 (Continued) NOTE 4 - PURCHASE OF SUBSIDIARIES The Company has entered into a non-binding letter of intent to acquire a 16 unit regional restaurant chain. Either party to the letter may terminate the letter of intent without penalty. The parties have agreed to proceed toward negotiation of a mutually agreeable purchase agreement. No assurances can be given that the purchase of the restaurant chain will be completed. On July 1, 2000, the Company opened a new restaurant in Toronto, Ontario. The restaurant is called "Mediterraneo" and offers primarily Italian Cuisine. NOTE 5 - RENT AND LEASE EXPENSE The Company occupies various retail restaurant space under operating leases beginning October 1997 and expiring at various dates through 2012. The minimum future lease payments under these leases for the next five years are: Year Ended December 31, Real Property Equipment --------------------------- -------------- --------------- 2001 $ 269,808 $ - 2002 269,808 - 2003 269,808 - 2004 269,808 - 2005 269,808 - -------------- --------------- Total minimum future lease payments $ 1,349,040 $ - ============== =============== The leases generally provides that insurance, maintenance and tax expenses are obligations of the Company. It is expected that in the normal course of business, leases that expire will be renewed or replaced by leases on other properties. NOTE 6 - RELATED PARTY TRANSACTIONS During the nine months ended September 30, 2001 and the years 2000 and 1999, an officer, Joseph Fiore, CEO of the Company, and/or companies controlled by the officer paid expenses and made advances to the Company. As of September 30, 2001, $1,500,553 in advances was due to Mr. Fiore. NOTE 7 - RESTAURANT CLOSURES During 2000, E.A.J. MO, Inc., E.A.J. Shoppes, Inc., E.A.J. Walnut Street, Inc., and the third 137855 Ontario restaurants were closed and substantially all assets and leasehold improvements abandoned. This abandonment of assets has been reported in the financial statements as a loss on sale of assets at $1,808,168 for the year ended December 31, 2000. EAT AT JOE'S LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 (Continued) NOTE 8 - CONVERTIBLE PREFERRED STOCK, DEBENTURES, WARRANTS & OPTIONS The following table sets forth the options and warrants outstanding as of September 30, 2001 and December 31, 2000.
September 30, December 31, 2001 2000 --------------- -------------- Options & warrants outstanding, beginning of year 1,247,750 1,247,750 Granted - - Expired - - Exercised - - --------------- -------------- Options & warrants outstanding, end of year 1,247,750 1,247,750 =============== ============== Exercise price for options & warrants outstanding, end of period $0.50 to $1.79 $0.50 to $1.79 =============== ==============
Item 2. Management's Discussion and Analysis or Plan of Operation. General - This discussion should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's annual report on Form 10-KSB for the year ended December 31, 2000. Results of Operations - From March 1, 1990 to December 12, 1995 the Company was an inactive corporation. From December 12, 1995 to November 1997 the Company was a development stage company and had not begun principal operations. During November and December, 1997 two restaurants were opened and began operations. Two restaurants were opened, during May 1998, and three restaurants were opened during third quarter 1998 (1 per month) and one restaurant was opened and began operations during October 1998. During March 1999 the Company purchased and began operating three restaurants in Ontario Canada. During second and third quarter of 1999, four U.S. restaurants and two Canadian restaurants were closed and substantially all assets and leasehold improvements abandoned. During 2000, the Company opened two new restaurants in Ontario, Canada. Also during 2000, the Company closed three U.S. restaurants and one Canadian restaurant and substantially all assets and leasehold improvements were abandoned. After its review of over one year of operating revenues from the U.S. units, management decided to cease operations and cut any negative cash drain from these units. Also, in contemplating acquisitions, there would be an overlap of use clauses in every center where these units were located. When management carefully reviewed the Canada locations, although high-profile, the economic costs of occupancy made continuing operations unfeasible without expending additional capital of which management felt would be utilized more prudently within existing already cash-flow positive units. Management believes these closings will strengthen cash flows position after the initial close down costs. During the nine months ended September 30, 2001 the company operated three restaurants. During the nine months ended September 30, 2000 the Company operated five restaurants. Total Revenues - For the three months ended September 30, 2001 and 2000, the Company had total sales of approximately $372,000 and $544,000 respectively. For the nine months ended September 30, 2001 and 2000, the Company had total sales of approximately $1,215,000 and $1,540,000 respectively. Costs and Expenses - For the three months ended September 30, 2001 and 2000, the Company had a net loss from operations of approximately $81,000 and $166,000 respectively. For the nine months ended September 30, 2001 and 2000, the Company had a net loss from operations of approximately $230,000 and $607,000 respectively. Other Income (Expense), Net - For the three months ended September 30, 2001 and 2000 the Company reported net other expenses in the amount of approximately $39,000 and $1,745,000. For the nine months ended September 30 2001 and 2000 the Company reported net other expenses in the amount of approximately $82,000 and $1,810,000. These expenses primarily represent accrued interest on short term notes, writedowns of property, plant and equipment, and foreign currency gains and losses. LIQUIDITY AND CAPITAL RESOURCES For the nine months ended September 30, 2001 and 2000, the Company used approximately $61,000 and $316,000 in cash flow from operating activities. During the nine months ended September 30, 2001 and 2000 the Company borrowed approximately $91,000 and $513,000, respectively from shareholder advances and short-term notes. The Company expects future development and expansion will be financed through cash flow from operations and other forms of financing such as the sale of additional equity and debt securities, capital leases and other credit facilities. There are no assurances that such financing will be available on terms acceptable or favorable to the Company. Government Regulations - The Company is subject to all pertinent Federal, State, and Local laws governing its business. Each Eat at Joe's is subject to licensing and regulation by a number of authorities in its State or municipality. These may include health, safety, and fire regulations. The Company's operations are also subject to Federal and State minimum wage laws governing such matters as working conditions, overtime and tip credits. PART II - OTHER INFORMATION Item 1. Legal Proceedings None. Item 2. Changes in Securities None. 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 The Company did not file a report on Form 8-K during the 3rd quarter 2001. 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. EAT AT JOE'S LTD. (Registrant) DATE: November 12, 2001 By: /s/ Joseph Fiore ------------------------- ------------------------------------- Joseph Fiore C.E.O., Chairman, Secretary, Director DATE: November 12, 2001 By: /s/ Gary Usling ------------------------- ------------------------------------- Gary Usling C.F.O., Director