SECURITIESAND 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

               **Forthe quarterly period ended July 31, 2003**

                                  
  OR

 
 (  )      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
                For the transition period from _____________ to _________
 

 

 Commission File Number: 000-28915
 

 
**Sonoran Energy, Inc.**

(Exact name of registrant as specified in its charter)
 

** Washington, United States**

(State or other jurisdiction                                                of incorporation or organization)
  

**13-4093341**

(I.R.S. Employer ID Number)
 
 **11300 W. Olympic Blvd., Suite 800, Los Angeles, California 90064**

(Address of principal executive offices)   (Zip code)
 

**(866) 599-7676**

    * (Registrant's telephone number, including area code)*
 
**N/A**
*(Former Name, Former Address and Former Fiscal Year if Changed Since LastReport)*

      
 

Indicate by check mark whether the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities ExchangeAct of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.
 

                         YES       X                                        NO               

                                     
Indicate the number of shares outstanding of each of the registrant'sclasses of common stock, as of the latest practicable date.
 

Class Shares outstanding at July 31, 2003

---------------------------------------------------------------

9,412,110 Shares Common Stock, no par value 

0 SharesPreferred stock, no par value
 
Page 1

 
CONTENTS

PART I.  FINANCIAL INFORMATION

Item 1.   Financial Statements

 

Item 2.   Management's Discussion and Analysis of Financial Condition

               and Results of Operations
 

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
Page 2

 

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

SONORAN ENERGY, INC.

(FORMERLY SHOWSTAR ONLINE.COM, INC..)
 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Periods Ended July  31, 2003 and 2002

TABLE OF CONTENTS
                                                                                                     

                                                                                                                                                                  **PAGE**
Condensed Consolidated Balance SheetsF-1  Condensed Consolidated Statements of    OperationsF-2  Condensed Consolidated Statement of Changes    in Shareholders' DeficitF-3  Condensed Consolidated Statements of Cash    FlowsF-4  Notes to Unaudited Condensed Consolidated Financial    StatementsF-5    
                                                               
Page 3

SONORAN ENERGY, INC.

(FORMERLY SHOWSTAR ONLINE.COM, INC..)
Condensed Consolidated Balance Sheet

(Unaudited)

July31, 2003

 

**ASSETS**         Current assets:              Cash$          36,635             Accounts receivable28,060             Loan receivable2,525             Accrued interest receivable327             Prepaid expenses60,000                       Total current assets127,547          Restricted cash - Idle well bond (Note B)75,453        Oil and gas properties - full cost method (Note D):              Proved776,878             Unproved514,908                       Total oil and gas properties1,291,786             Accumulated depletion(11,706)                       Net oil and gas properties1,280,080          Assets available for sale (Note C)309,743 $  1,792,823  
**LIABILITIES AND SHAREHOLDERS' DEFICIT**         Current liabilities:              Accounts payable$       536,417             Accrued expenses250,704             Loans payable845,000             Notes payable75,000             Accrued interest payable302,828             Indebtedness to related parties11,888                       Total current liabilities2,021,837          Long-term debt:              Notes payable1,000,000                       Total liabilities3,021,837          Shareholders' deficit:              Preferred stock, no par value; 25,000,000 shares authorized,                   no shares issued and outstanding-             Common stock, no par value; 75,000,000 shares authorized,                   9,412,110 shares issued and outstanding    14,719,379             Additional paid-in capital380,000             Outstanding common stock warrants - 150,0007,200             Cumulative translation adjustments13,980             Accumulated deficit(16,349,573)                       Total shareholders' deficit(1,229,014)   $  1,792,823  
Page F-1

SONORAN ENERGY, INC.

(FORMERLY SHOWSTAR ONLINE.COM, INC..)
Condensed Consolidated Statements of Operations

(Unaudited)

 
 **For the Three Months Ended July 31,** 
**2003** 
**2002**    Revenue           Oil and gas sales$        105,592 $                     -        Other1,500-                  Total revenue107,092 -    Operating    expenses           Oil and gas production costs72,174 -        Depletion7,478 -        Stock-based compensation:                Debt issue costs2,500 -             Consulting27,100 29,000        General and administrative80,055 101,695        Liability settlement gains(526) -                  Total costs and expenses(188,781) (130,695)    Interest    income151 -Interest    expense(72,950) (24,923)                       Loss from continuing operations before income taxes(154,488) (155,618)    Income tax    provision- -                       Net loss$    (154,488) $  (155,618)    Net loss    per common share:           Basic and diluted$             (0.02) $        (0.05)Weighted    average common shares outstanding:           Basic and diluted9,081,332 3,028,666    
 

Page F-2

SONORAN ENERGY, INC.

(FORMERLY SHOWSTAR ONLINE.COM, INC..)
Condensed Consolidated Statement of Changes in Shareholders' Deficit

(Unaudited)

 
 **Common Stock** **Additional Paid-In Capital**   **Deficit Accumulated During Development Stage** 
**Cumulative    Translation Adjustment**

**Other    Comprehensive Loss** **Total** **Shares** **Amount**  
**Outstanding**

**Common**

**Stock**

**Options/**

**Warrants**                 Balance at April 30, 20038,854,444 $14,589,663 $380,000 7,200 $(16,195,085) $22,687 $(1,195,535)       -      Common    stock sales100,000 20,000 - - - - 20,000Common    stock issued in exchange for      -           consulting services    94,000     27,100 - -- - -     27,100
Common stock    issued in exchange for                     debt issue costs    10,000     2,500 - - - -     2,500
Common stock    cancelled    (18,800)     (13,000) - - - -     (13,000)
Common stock    issued in exchange for

        debt payments    372,466     93,116 - - - -     93,116
Comprehensive    loss:

        Net loss, three months ended July 31, 2003- - - -     (154,488) -     (154,488)Cumulative translation adjustment- - - - - (300) (300)Comprehensive loss- - - - - - (163,195)              Balance as at July 31, 20039,412,110 $14,719,379 $380,000 $7,200 $(16,349,573) $13,980  (1,229,014)              
 

PageF-3

SONORAN ENERGY, INC.

(FORMERLY SHOWSTAR ONLINE.COM, INC..)
CondensedConsolidated Statements of Cash Flows

(Unaudited)

 
 
**For the Three Months Ended**

**July 31,** **2003** **2002**    Net cash provided by (Used In) Operating    Activities$                    (323) $              (78,326)    Cash flows from investing activities:        Purchases of oil and    gas properties(6,954)     (95,553)             Net cash used in investing activities(6,954) (95,553)    Cash flows from financing activities:        Proceeds from    advances- 173,188     Proceeds from the    sale of common stock20,000 -             Net cash provided by financing activities20,000 173,188    Cumulative translation adjustment(8,707) -                      Net change in cash4,016 (691)    Cash, beginning of period32,619 -    Cash, end of period$              36,635 $                 (691)    Supplemental disclosure of cash flow    information:        Cash paid for income    taxes$                      - $                        -     Cash paid for    interest$                 823 $                        -    Non-cash investing and financing activities:   
        Common stock issued for payment of debt, advances and other

             liabilities$         93,116 $         458,203     Common stock issued    for acquisition of oil and gas properties$                      - $         350,000     Common stock issued    for services$         29,600 $              28,125    
 

PageF-4

SONORAN ENERGY,INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2003
 

NOTE A:   General Information

 

The accompanying unaudited condensed consolidatedfinancial statements of Sonoran Energy, Inc. as of and for the three monthsended July 31, 2003 and July 31, 2002 have been prepared in accordance with therules and regulations of the Securities and Exchange Commission and do notinclude all of the information and footnotes required by generally acceptedaccounting principles for complete financial statements.

 

In the opinion of management,all adjustments considered necessary for a fair presentation of the results ofthe interim period have been included.  Operating results for any interim periodare not necessarily indicative of the results that may be expected for theentire fiscal year. These statements should be read in conjunction with theconsolidated financial statements and notes thereto for the year ended April 30,2003 included in the Company's report in Form 10 KSB as filed with theSecurities and Exchange Commission.

 

                 Change in Business Plan
 
In June 2002, the Company changed its business plan and ceased its Internet portal web site operations.  The Company has now transitioned into the oil and gas industry.  The Company's primary objective is to identify, acquire and develop working interest percentages in smaller, underdeveloped oil and gas projects located in California that do not meet the requirements of the larger producers and developers.
 
NOTE B.   Restricted Cash - Letter of Credit
 
The Company was required to post an Idle Well Bond with the Government prior to beginning operations on the oil well leases.  The funds are being held in an investment certificate, by the bank, which bears interest currently at .8 %. 
 
NOTE C.   Assets Available For Sale  
 
As of July 31, 2003, the Company owed First Nevisian (FN) $843,000 and $245,142 in related accrued interest. In addition, FN holds property and equipment owned by the Company with a book value of approximately $309,743. The two parties are still in negotiations on a settlement agreement whereby FN would reduce the balance of principal and interest owed on the loans in exchange for the Company's property and equipment held by FN. The net realizable value of the property and equipment held by FN is included in the accompanying consolidated financial statements as "assets available for sale".
 

       Depreciation

 

The Company had not recorded any depreciation in thisquarter as no operating benefit has accrued during the period.

 

NOTE D.   Oil and GasProperty Leases

 

The Company follows the full cost method ofaccounting for its oil and gas activity. Accordingly, all costs associated withthe acquisition, exploration and development of oil and gas properties arecapitalized within the appropriate cost center.  Any internal costs that arecapitalized are limited to those costs that can be directly identified withacquisition, exploration, and development activities undertaken by the Companyfor its own account, and do not include any costs related to production, generalcorporate overhead, or similar activities.

 

All capitalized costs within a cost centerare depleted on the units-of-production method based on estimated provedreserves attributable to the oil and gas properties owned by the Company. 

 

For each cost center, capitalized costs lessaccumulated depletion and related deferred income taxes, may not exceed the costcenter ceiling.  Any excess is charged to expense during the period in which theexcess occurs.  The cost center ceiling is equal to the sum of:

 

(a) The present value of estimated futurenet revenues from proved oil and gas reserves, less estimated futureexpenditures to be incurred in developing the proved reserves computed using a10 percent discount factor; (b) the cost of properties not being amortized; (c)the lower of cost or fair market value of unproven properties included in thecosts being amortized; and (d) income tax effects related to the differencesbetween the book and tax basis of the properties.

 

If a significant portion of the Company'soil and gas interests are sold, a gain or loss would be recognized; otherwise,proceeds from sales are applied as a reduction of oil and gas properties. TheCompany did not sell any of its oil and gas properties during the quarter endedJuly 31, 2003. 
 

The Company recorded $7,478 in Depletion expense for thequarter.  There was no expense in the first quarter of 2002 as we had noresource operations at that time.

 

Page F-5

 

**ITEM 2.  MANAGEMENT'SDISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS**

 

This report containsforward-looking statements within the meaning of Section 21E of the SecuritiesExchange Act of 1934, as amended and Section 27A of the Securities Act of 1933,as amended. For this purpose, any statements contained herein that are notstatements of historical fact may be deemed forward-looking statements. Withoutlimiting the foregoing, the words "believes", "anticipates", "plans", "expects"and similar expressions are intended to identify forward-looking statements.Readers are cautioned not to place undue reliance on forward-looking statements,which speak only as of the date hereof. The Company undertakes no obligation topublicly release the results of any revisions to these forward-lookingstatements that may be made to reflect events or circumstances after the datehereof or to reflect the occurrence of unanticipated events.  Theseforward-looking statements should be read in conjunction with the Company'sdisclosures included in their Form 10-KSB for the fiscal year ended April 30,2003.

 
**Overview**

 
Sonoran Energy, Inc. (the "Company", "Sonoran" and sometimes "we," "us," "our"and derivatives of such words), formerly named Showstar Online.com Inc., wasincorporated on July 14, 1995 in the State of Colorado as Cerotex Holdings,Inc.  Prior to June 2002 the company had developed software and an art site onthe Internet. The project had to be discontinued due to lack of funding. On June3, 2002 the Company changed its name to Sonoran Energy, Inc. and began theacquisition of undervalued oil and gas properties.

 **General
****
Results from the first quarter were highlighted by anincrease in the price per barrel received at the Company's oil productionoperations in June and July.  While prices stayed at the year-end price of$21/bbl in May, they rose to $24-25/bbl in June and $25-26/bbl in July.  Sinceour operating partners took over the operation of the  Company's oil  projects ,they have met anticipated production levels at Keystone and have been able toeffect a 15% increase in the Merzonian  project.  The Emjayco Glideproject required considerable work to get it back into production and we weresuccessful in getting some production in April and then about 50% of expectedproduction in May and June as the Company's operating partnercontinued to upgrade the site and work on a damaged oil tank.  After twoattempts at repairs and considerable lost production, the decision was made toreplace the tank which temporarily curtailed production on the property.  Thetank replacement was completed in July and production started up in August.

 

Sonoran Energy's holdings in its three gasproperties also benefited from price increases in the quarter, receiving $5.01/mcf inMay and $5.33 in June.  The higher prices were offset byslightly lower than expected production on the Denverton and Malton-Blackproperties.  Production on the Maine Prairie Gas Field property was temporarilyshut down in May following the closure of a low pressure line.  In June a twostage compressor was brought in to allow production into a high pressure line. Production remained low and a three stage compressor was brought in to replacethe single and two stage compressors.  By July production on the Maine PrairieGas Field was back to expected levels.  The Company received and paid cash callsfor the reworking of two wells operated by Aspen Exploration and the one welloperated by Gotland Oil. The impact of the successful reworking of the wellswill show up in our second quarter results. 

 
The Company and it's operating partners have beenable to work through the issues that have arisen over the past six monthssetting the stage for profitable operations for the balance of the year. Management looks forward to continued growth through development of our newreserves on the Glide and Deer Creek properties as well as through additionalacquisitions that meet our criteria.

 

Page 4  

****
**Analysis of Operations**

****
Results of Operations for the First Quarter EndedJuly 31, 2003 compared to the First Quarter Ended July 31, 2002:

 

REVENUES

 

Revenue was $107,092 in July 31, 2003 and $0 inJuly 31, 2002. As the Company changed its business plan early in June 2002 toenter the oil and gas industry there were no revenue generating operations inthe first quarter of last year.  The factors impacting revenue for July 31, 2003are discussed above in the general comments.   

 

OPERATING EXPENSES

 

Operating expense was $72,174 in July 31, 2003 and$0 in July 31, 2002.  The operating expense was a little higher than expecteddue to repairs as discussed in the general comments above.

 

GENERAL AND ADMINISTRATIVE EXPENSES

 

General and administrative expenses decreased byapproximately 21 % for the quarter ended July 31, 2003, when compared with thesame period for 2002. Stock based compensation increased slightly during thequarter as the Company was able to pay for the listed services with stock ratherthan cash.  

 

INTEREST EXPENSE

 

Interest expense was $72,950 in July 31, 2003 and$24,923 in July 31, 2002. The increase in expense is due primarily to the NotePayable issued in connection with the acquisition of property in December 2002. 

 

PROVISION FOR DEPLETION, DEPRECIATION ANDAMORTIZATION

 

The provision for depletion, depreciation andamortization was $7,478 for the quarter ended July 31, 2003 reflecting the costassociated with the first quarters operation from the oil and gas leases whichwere not part of the Company in 2002.

 

OTHER INCOME (EXPENSE)

 

The liability settlement gains arise from theCompany being able to settle longer term debt from expense incurred prior to itsentry into the oil and gas industry.

 
Liquidity and Capital Resources
 

TheCompany believes that its existing current assets and the amount of cash itanticipates it will generate from current operations will be sufficient to fundthe anticipated liquidity and capital resource needs of the Company for thefiscal year ended April 30, 2004.  The Company expects to increase its capitalexpenditures during the current fiscal year to increase its current oil and gasproduction capacities through acquisitions and on-site development in currentholdings. The Company will need to continue to attract additional financing inorder to move forward with these efforts. 

 

The Company is not a party to off-balance sheetarrangements and does not engage in trading activities involving non-exchangetraded contracts.  In addition, the Company has no financial guarantees, debt orlease agreements or other arrangements that could trigger a requirement for anearly payment or that could change the value of the Company's assets. Management continues to examine various alternatives for increasing capitalresources including, among other things, participation with industry and/orprivate partners and specific rework of existing properties to enhanceproduction and expansion of its sales of crude oil and natural gas inCalifornia.  

 

ForeignCurrency Exposure
 
Sonoran is not exposed to fluctuations in foreign currencies relative to the U.S. dollar at this time but, as Sonoran expands its operations, it may begin to collect revenues from customers in currencies other than the U.S. dollar. Sonoran does not currently engage in any hedging activities.
 

 
**Item 3.   Controls and Procedures.**

 

The Company's Chief Executive Officer and Chief Financial Officer have concluded, basedon an evaluation conducted within 90 days prior to the filing date of this quarterly report on Form10-QSB, that the Company's disclosure controls and procedures have functioned effectively so asto provide those officers the information necessary whether:
 

        (i) this quarterly report on Form 10-QSB contains any untrue statement of a materialfact or omits to state a material fact necessary to make the statements made, in lightof the circumstances under which such statements were made, not misleading withrespect to the period covered by this quarterly report on Form 10-QSB, and
 

        (ii) the financial statements, and other financial information included in this quarterlyreport on Form 10-QSB, fairly present in all material respects the financial condition,results of operations and cash flows of the Company as of, and for, the periodspresented in this quarterly report on Form 10-QSB.
There have been no significant changes in the Company's internal controls or in other factorssince the date of the Chief Executive Officer's and Chief Financial Officer's evaluation that couldsignificantly affect these internal controls, including any corrective actions with regards to significantdeficiencies and material weaknesses. 

 

Page 5

 

 

**PART II - OTHER INFORMATION**

**Item 1.     Legal information**

 

                              No response required

 

**Item 2.     Changes insecurities**

 

                              Stock issues are reported on the Change in Equity Statement filed with thisreport

 

**Item 3.     Defaults UponSenior Securities:**

 

                              No response required

 

**Item 4.     Submission ofMatters to a Vote of Security Holders**

 

                              No response required

 

**Item 5.     OtherInformation**

 

                              No response required

                                  

**Item 6.    Exhibits and Reportson Form 8-K**

 

a)    Exhibits:
        

   99.1 - Certifications Pursuant to Section 906 of the Sarbannes-Oxley Act of 2002 and Certification pursuant to Section 302 of theSarbannes-Oxley Act of 2002

 

b)    Reports onForm 8-K:
 
    None

 

 
 

        
Page6
 
**SIGNATURES**

         In accordance with the requirements of the Exchange Act, the registrant caused this reportto be signed on its behalf by the undersigned, thereunto duly authorized.

                                             
**SONORAN ENERGY, INC.**
(Registrant)

Dated: September12, 2003                                                                     By: /s/ J. Punzo                                                                                                                     J. Punzo

                                                                                                        President, and Chief Executive Officer
 
Dated: September12,2003                                                                      By: /s/ Russ Costin
                                                                                                                Russ Costin
                                                                                                                Chief Financial Officer
 

 

 

Page 7

 

**Exhibit 99.1**

 

**CERTIFICATION PURSUANT TO 18 U.S.C. Section 1350, AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

    In connection with the Quarterly Report ofSonoran Energy, Inc.on Form 10-QSB for the period ending July 31, 2003, as filed with theSecurities and Exchange Commission on the date hereof (the "Report"), I,John Punzo, Chief Executive Officer and President of the Company, certify, pursuantto 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: (1)the Report fully complies with the requirements of Section 13(a) or 15(d) of theSecurities Exchange Act of 1934; and (2) the information contained in the Reportfairly presents, in all material respects, the financial condition and result ofoperations of the Company. 

/s/ John Punzo

John Punzo

Chief ExecutiveOfficer & President 

September 12, 2003

 

**CERTIFICATION PURSUANT TO 18 U.S.C. Section 1350, AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

    In connection with the Quarterly Report ofSonoran Energy, Inc.on Form 10-QSB for the period ending July 31, 2003, as filed with theSecurities and Exchange Commission on the date hereof (the "Report"), I,Russ Costin, Chief Financial Officer of the Company, certify, pursuantto 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: (1)the Report fully complies with the requirements of Section 13(a) or 15(d) of theSecurities Exchange Act of 1934; and (2) the information contained in the Reportfairly presents, in all material respects, the financial condition and result ofoperations of the Company. 

/s/ Russ Costin

Russ Costin

Chief FinancialOfficer

September 12, 2003
Pursuant to the    requirements of Rule 13a-14 of the Securities Exchange Act of 1934, as    amended, John Punzo provides the following certification.         I, John Punzo, President and Chief Executive    Officer of    Sonoran Energy, Inc.(the "Company"), certify that:1. I have reviewed this    quarterly report on Form 10-QSB of the Company;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 Company as of, and for, the periods presented in this quarterly    report; 4.      I am    responsible for establishing and maintaining disclosure controls and    procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the    registrant and have designed such disclosure controls and procedures to    ensure that material information relating to the Company is made known to me    by others, particularly during the period in which this quarterly report is    being prepared; 5.      I    have disclosed, based on my most recent evaluation, to the Company's    auditors and the audit committee of our 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 Company's ability to record, process, summarize and    report financial data and have identified for the Company'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 Company's internal controls; and **6.**I    have indicated in this quarterly report whether or not there were    significant changes in internal controls or in other factors that could    significantly affect internal controls subsequent to the date of my most    recent evaluation, including any corrective actions with regard to    significant deficiencies and material weaknesses.    Date: September 12,    2003  /s/ John Punzo          John Punzo, President and CEO
  
Page 8
Pursuant to the    requirements of Rule 13a-14 of the Securities Exchange Act of 1934, as    amended, Russ Costin provides the following certification.         I, Russ Costin, Chief Financial    Officer of Sonoran Energy, Inc.(the "Company"), certify that:1. I have reviewed this    quarterly report on Form 10-QSB of the Company;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 Company as of, and for, the periods presented in this quarterly    report; 4.      I am    responsible for establishing and maintaining disclosure controls and    procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the    registrant and have designed such disclosure controls and procedures to    ensure that material information relating to the Company is made known to me    by others, particularly during the period in which this quarterly report is    being prepared; 5.      I    have disclosed, based on my most recent evaluation, to the Company's    auditors and the audit committee of our 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 Company's ability to record, process, summarize and    report financial data and have identified for the Company'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 Company's internal controls; and **6.**I    have indicated in this quarterly report whether or not there were    significant changes in internal controls or in other factors that could    significantly affect internal controls subsequent to the date of my most    recent evaluation, including any corrective actions with regard to    significant deficiencies and material weaknesses.  
   
Dated: September    12,    2003                                                         /s/ Russ Costin

                                                                                                Russ Costin,  Chief Financial Officer

 

    Page 9**