##### Table of Contents



FORM 10-Q/A

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934



---



For the First Quarter Ended April 21, 2002
        
        Commission File No. 0-19840




---



SHOLODGE, INC.

(Exact name of registrant as specified in its charter)




---



Tennessee
        
        62-1015641(State or other jurisdiction
        
        (I.R.S. Employerof incorporation or organization)
        
        Identification Number)130 Maple Drive North, Hendersonville, Tennessee
        
        37075(address of principal executive offices)
        
        (Zip Code)Registrants telephone number, including area code
        
        (615) 264-8000




---



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 as 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 [  ]

Indicate the number of shares outstanding of each of the registrants classes of common stock as
of the latest practicable date.

As of June 4, 2002, there were 5,118,278 shares of ShoLodge, Inc. common
stock outstanding.





---

TABLE OF CONTENTS



|                                                                                      |  |  |  |  |  |  |  | 
|------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                           
|Managements Discussion and Analysis of Financial Condition and Results of Operations
|PART I                                                                               
|PART II  OTHER INFORMATION                                                          
|SIGNATURES                                                                           
|CERTIFICATION                                                                        
|EX-99.1  906 CERTIFICATION OF CEO AND CFO                                            



---



##### Table of Contents



ShoLodge, Inc. and Subsidiaries
Consolidated Balance Sheets

April 21,
        December 30,2002
        
        2001(1)(unaudited)AssetsCurrent assets:Cash and cash equivalents
        
        $
        580,762
        
        
        $
        2,704,161Restricted cash
        
        
        200,000
        
        
        
        200,000Accounts receivable:Accounts receivable-trade, net
        
        
        4,059,904
        
        
        
        3,557,591Construction contracts
        
        
        3,039,645
        
        
        
        4,016,502Costs and estimated earnings in excess of
billings on construction contracts
        
        
        3,597,814
        
        
        
        3,063,747Prepaid expenses
        
        
        545,477
        
        
        
        365,849Notes receivable, net
        
        
        2,624,779
        
        
        
        1,728,340Other current assets
        
        
        174,708
        
        
        
        153,766Total current assets
        
        
        14,823,089
        
        
        
        15,789,956Notes receivable, net
        
        
        67,813,714
        
        
        
        68,227,306Restricted cash
        
        
        24,164
        
        
        
        1,781,747Property and equipment
        
        
        120,666,321
        
        
        
        123,112,190Less accumulated depreciation and amortization
        
        
        (22,777,675
        )
        
        
        (21,944,927
        )97,888,646
        
        
        
        101,167,263Land under development or held for sale
        
        
        11,183,246
        
        
        
        9,254,986Deferred charges, net
        
        
        5,990,296
        
        
        
        6,111,825Goodwill, net
        
        
        2,387,100
        
        
        
        2,387,100Trademark and franchise costs, net
        
        
        401,081
        
        
        
        408,559Other assets
        
        
        1,572,710
        
        
        
        1,457,907$
        202,084,046
        
        
        $
        206,586,649




|(1) |  | Derived from fiscal year ended December 30, 2001 audited financial statements.
|--- |  | ------------------------------------------------------------------------------



| |  | See accompanying notes.
| |  | -----------------------





---



##### Table of Contents



ShoLodge, Inc. and Subsidiaries
Consolidated Balance Sheets (continued)

April 21,
        December 30,2002
        
        2001(1)(unaudited)Liabilities and shareholders equityCurrent liabilities:Accounts payable and accrued expenses
        
        $
        10,333,877
        
        
        $
        14,171,631Taxes payable other than on income
        
        
        462,751
        
        
        
        476,809Income taxes payable
        
        
        3,595,233
        
        
        
        3,859,873Current portion of long-term debt
        
        
        3,962,763
        
        
        
        4,058,700Total current liabilities
        
        
        18,354,624
        
        
        
        22,567,013Long-term debt, less current portion
        
        
        91,127,526
        
        
        
        86,293,381Deferred income taxes
        
        
        992,275
        
        
        
        992,275Deferred gain on sale/leaseback
        
        
        
        
        
        
        4,129,962Deferred credits
        
        
        2,473,274
        
        
        
        2,545,004Minority interests in equity of consolidated subsidiaries and
partnerships
        
        
        799,535
        
        
        
        786,477Total liabilities
        
        
        113,747,234
        
        
        
        117,314,112Shareholders equity:Preferred stock (no par value; 1,000,000 shares authorized;
no shares issued)
        
        
        
        
        
        
        Series A redeemable nonparticipating stock
(no par value; 1,000 shares authorized, no
shares issued)
        
        
        
        
        
        
        Common stock (no par value; 20,000,000 shares
authorized, 5,118,778 and 5,088,278 shares
issued and outstanding as of April 21, 2002
and December 30, 2001, respectively)
        
        
        1,000
        
        
        
        1,000Additional paid-in capital
        
        
        23,579,621
        
        
        
        23,519,506Retained earnings
        
        
        65,985,759
        
        
        
        67,001,529Unrealized gain on securities available-for-sale, net of income
taxes
        
        
        138,431
        
        
        
        100,307Notes receivable from officer, net of discount of $163,250 and
$181,444, as of April 21, 2002 and December 30, 2001,
respectively
        
        
        (1,367,999
        )
        
        
        (1,349,805
        )Total shareholders equity
        
        
        88,336,812
        
        
        
        89,272,537$
        202,084,046
        
        
        $
        206,586,649




|(1) |  | Derived from fiscal year ended December 30, 2001 audited financial statements.
|--- |  | ------------------------------------------------------------------------------



| |  | See accompanying notes.
| |  | -----------------------





---



##### Table of Contents



ShoLodge, Inc. and Subsidiaries
Consolidated Statements of Earnings (unaudited)

16 weeks endedApril 21,
        
        April 22,2002
        
        2001Revenues:Hotel
        
        $
        4,141,345
        
        
        $
        4,024,316Franchising, management and reservation services
        
        
        1,685,932
        
        
        
        772,914Construction and development
        
        
        3,531,231
        
        
        
        4,827,179Rent income
        
        
        1,047,565
        
        
        
        1,103,704Other income
        
        
        39,851
        
        
        
        11,078Total revenues
        
        
        10,445,924
        
        
        
        10,739,191Cost and expenses:Hotel
        
        
        3,309,589
        
        
        
        3,135,566Franchising, management and reservation services
        
        
        1,036,330
        
        
        
        487,565Construction and development
        
        
        3,522,236
        
        
        
        4,319,729Rent expense, net
        
        
        153,968
        
        
        
        158,543General and administrative
        
        
        1,970,989
        
        
        
        1,741,431Depreciation and amortization
        
        
        1,231,876
        
        
        
        1,459,679Total costs and expenses
        
        
        11,224,988
        
        
        
        11,302,513Operating loss
        
        
        (779,064
        )
        
        
        (563,322
        )(Loss) gain on sale of property and leasehold interests
        
        
        (83,861
        )
        
        
        3,606,717Gain on early extinguishments of debt
        
        
        251,841
        
        
        
        86,765Interest expense
        
        
        (2,535,154
        )
        
        
        (2,463,881
        )Interest income
        
        
        1,739,171
        
        
        
        2,090,530(Loss) earnings from continuing operations
before income taxes and minority interests
        
        
        (1,407,067
        )
        
        
        2,756,809Income tax benefit (expense)
        
        
        415,000
        
        
        
        (1,166,000
        )Minority interests in earnings of consolidated
subsidiaries and partnerships
        
        
        (13,054
        )
        
        
        (17,610
        )(Loss) earnings from continuing operations
        
        
        (1,005,121
        )
        
        
        1,573,199Discontinued operations:(Loss) income from operations of hotel disposed of,
net of income tax effect
        
        
        (10,649
        )
        
        
        12,466Net (loss) earnings
        
        $
        (1,015,770
        )
        
        $
        1,585,665Net (loss) earnings per common share:Basic:Continuing operations
        
        $
        (0.20
        )
        
        $
        0.28Discontinued operations:Operations of hotel disposed of
        
        
        (0.00
        )
        
        
        0.01Net (loss) earnings
        
        $
        (0.20
        )
        
        $
        0.29DilutedContinuing operations
        
        $
        (0.20
        )
        
        $
        0.28Discontinued operations:Operations of hotel disposed of
        
        
        (0.00
        )
        
        
        0.01Net (loss) earnings
        
        $
        (0.20
        )
        
        $
        0.29Weighted average common shares outstanding:Basic
        
        
        5,103,098
        
        
        
        5,542,366Diluted
        
        
        5,103,098
        
        
        
        6,839,419


See accompanying notes.





---



##### Table of Contents



ShoLodge, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)

16 weeks endedApril 21,
        April 22,2002
        
        2001Cash flows from operating activitiesNet (loss) earnings from continuing operations
        
        $
        (1,005,121
        )
        
        $
        1,573,199Adjustments to reconcile net (loss) earnings to net cash used in
operating activities:(Loss) gain from discontinued operations
        
        
        (10,649
        )
        
        
        12,466Depreciation and amortization
        
        
        1,231,876
        
        
        
        1,459,679Amortization of deferred charges recorded as interest expense
        
        
        147,381
        
        
        
        198,650Recognition of previously deferred gains
        
        
        (71,730
        )
        
        
        (156,160
        )Loss (gain) on sale of property and other assets
        
        
        83,861
        
        
        
        (3,606,717
        )Gain on early extinguishments of debt
        
        
        (251,841
        )
        
        
        (86,765
        )Increase in minority interest in equity of consolidated subsidiaries
and partnerships
        
        
        13,054
        
        
        
        17,610Changes in assets and liabilities:Trade receivables
        
        
        (502,313
        )
        
        
        (218,825
        )Construction contract receivables
        
        
        976,857
        
        
        
        825,034Costs and estimated earnings in excess of billings on
construction contracts
        
        
        (534,067
        )
        
        
        (2,094,143
        )Income and other taxes receivable and payable
        
        
        420,813
        
        
        
        331,665Prepaid expenses
        
        
        (179,628
        )
        
        
        (135,121
        )Other assets
        
        
        (147,772
        )
        
        
        176,618Accounts payable and accrued expenses
        
        
        (3,837,754
        )
        
        
        1,156,435Net cash used in operating activities
        
        
        (3,667,033
        )
        
        
        (546,375
        )Cash flow from investing activitiesDecrease (increase) in restricted cash
        
        
        1,758,364
        
        
        
        (118,541
        )Advances on notes receivable
        
        
        (565,091
        )
        
        
        (6,274
        )Capital expenditures
        
        
        (4,885,992
        )
        
        
        (4,626,212
        )Proceeds from sale of property and leasehold interests
        
        
        212,041
        
        
        
        2,258,102Net cash used in investing activities
        
        
        (3,480,678
        )
        
        
        (2,492,925
        )Cash flow from financing activitiesDeferred loan costs
        
        
        (50,002
        )
        
        
        2,529Proceeds from long-term debt
        
        
        11,100,000
        
        
        
        Payments on long-term debt
        
        
        (6,085,801
        )
        
        
        (558,915
        )Exercise of stock options
        
        
        208,125
        
        
        
        4,001Purchase of treasury stock
        
        
        (148,010
        )
        
        
        (54,175
        )Net cash provided by (used in) financing activities
        
        
        5,024,312
        
        
        
        (606,560
        )Net decrease in cash and cash equivalents
        
        
        (2,123,399
        )
        
        
        (3,645,860
        )Cash and cash equivalents  beginning of period
        
        
        2,704,161
        
        
        
        5,339,689Cash and cash equivalents  end of period
        
        $
        580,762
        
        
        $
        1,693,829


See accompanying notes.





---



##### Table of Contents



SHOLODGE, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)




|A. |  | BASIS OF PRESENTATION
|-- |  | ---------------------



| |  | The accompanying unaudited consolidated financial statements have
been prepared in accordance with accounting principles generally
accepted in the United States for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | In Managements opinion, the information and amounts furnished in
this report reflect all adjustments which are necessary for the fair
presentation of the financial position and results of operations for
the periods presented. All adjustments are of a normal and recurring
nature. These financial statements should be read in conjunction
with the Companys Annual Report on Form 10-K, as amended, for the
fiscal year ended December 30, 2001.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The fiscal year consists of a 52/53 week year ending the last Sunday
of the year. The Companys fiscal quarters have 16, 12, 12, and 12
weeks in first, second, third and fourth quarters, respectively, in
each fiscal year. When the 53rd week occurs in a fiscal year, it is
added to the fourth fiscal quarter, making it 13 weeks in length.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Company has historically reported lower earnings in the first
and fourth quarters of the year due to the seasonality of the
Companys business. The results of operations for the quarters
ended April 21, 2002 and April 22, 2001 are not necessarily
indicative of the operating results for the entire year.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Certain reclassifications have been made in the 2001 consolidated
financial statements to conform to the classifications used in 2002.
| |  | --------------------------------------------------------------------------------------------------------------------------------------



|B. |  | EXCHANGE AND SALE OF PROPERTIES
|-- |  | -------------------------------



| |  | The Company opened a new AmeriSuites hotel in October 2001 and
another in February 2002. In accordance with the July 2000
agreement in which the Company sold its operating interests in 27
AmeriSuites hotels, the Company was obligated to exchange either one
or both of the AmeriSuites hotels with the purchaser, at its option,
for one or two specific existing hotels of the same brand and number
of rooms previously operated by the Company prior to July 2000. The
purchaser elected in the first quarter of 2002 to exercise its
exchange option on both hotels, and the exchanges were completed in
the first quarter of 2002. The two hotels received in the exchanges
were recorded at their fair market values as purchases of the
businesses. The book value of the two new AmeriSuites hotels, less
the previously deferred gain on sale/leaseback, represented the cost
of the acquisitions. The costs exceeded the fair values by $182,803
for the two transactions, resulting in a loss of this amount
recorded in the first quarter of 2002. Pro forma financial
information reflecting the operations of the two hotels in 2002
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





---



##### Table of Contents





| |  | and
2001, as if the transactions had occurred as of the first day of the
period reported on, would not differ significantly from the
historical amounts presented and, accordingly, has not been
presented. The Company sold two hotels and three restaurants in the first
quarter ended April 22, 2001, resulting in the recognition of
$3,606,717 in gain on sale of properties, and the deferral of an
additional $717,941 to be recognized in future periods under the
installment method of accounting. The restaurant properties were
leased to third parties prior to the sales. Cumulative sales prices
for the five properties were $9,590,606, of which $2,258,102 was
cash proceeds.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





---



##### Table of Contents





|C. |  | EARNINGS PER SHARE
|-- |  | ------------------



| |  | Earnings per share was computed by dividing net income by the weighted average
number of common shares outstanding. The following table reconciles earnings
and weighted average shares used in the earnings per share calculations for the
fiscal quarters ended April 21, 2002, and April 22, 2001:
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

16 Weeks EndedApril 21, 2002
        
        April 22, 2001Basic:(Loss) earnings from continuing operations
        
        $
        (1,005,121
        )
        
        $
        1,573,199(Loss) earnings from discontinued operations
        
        
        (10,649
        )
        
        
        12,466Net (loss) earnings applicable to common stock
        
        $
        (1,015,770
        )
        
        $
        1,585,665Shares:Weighted average common shares outstanding
        
        
        5,103,098
        
        
        
        5,542,366Basic (loss) earnings per share:Continuing operations
        
        $
        (0.20
        )
        
        $
        0.28Discontinued operations
        
        
        (0.00
        )
        
        
        0.01Net (loss) earnings
        
        $
        (0.20
        )
        
        $
        0.29Diluted:(Loss) earnings from continuing operations
        
        $
        (1,005,121
        )
        
        $
        1,573,199(Loss) earnings from discontinued operations
        
        
        (10,649
        )
        
        
        12,466Net (loss) earnings applicable to common stock
        
        
        (1,015,770
        )
        
        
        1,585,665Dilutive effect of 7.50% convertible debentures
        
        
        
        
        
        
        381,647Numerator for diluted earnings per share
        
        $
        (1,015,770
        )
        
        $
        1,967,312Shares:Weighted average common shares outstanding
        
        
        5,103,098
        
        
        
        5,542,366Effect of dilutive securities (options)
        
        
        
        
        
        
        59,599Effect of dilutive securities (7.50%
convertible debentures)
        
        
        
        
        
        
        1,237,454Weighted average common and common equivalent
shares outstanding
        
        
        5,103,098
        
        
        
        6,839,419Diluted (loss) earnings per share:Continuing operations
        
        $
        (0.20
        )
        
        $
        0.28Discontinued operations
        
        
        (.00
        )
        
        
        .01Net (loss) earnings
        
        $
        (0.20
        )
        
        $
        .29






---



##### Table of Contents





|D. |  | OPERATING SEGMENT INFORMATION
|-- |  | -----------------------------



| |  | The Companys significant operating segments are hotel operations,
franchising, management and reservation services, and construction
and development. None of the Companys segments conduct foreign
operations. Operating profit includes the operating revenues and
expenses directly identifiable with the operating segment.
Identifiable assets are those used directly in the operations of
each segment. A summary of the Companys operations by segment
follows (in thousands of dollars):
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

16 Weeks EndedApril 21,
        
        April 22,2002
        
        2002Revenues:Hotel revenues
        
        $
        5,489
        
        
        $
        5,314Franchising, management and reservation services
        
        
        2,065
        
        
        
        1,208Construction and development
        
        
        5,538
        
        
        
        7,940Elimination of intersegment revenue
        
        
        (2,646
        )
        
        
        (3,723
        )Total revenues
        
        $
        10,446
        
        
        $
        10,739Operating profit (loss):Hotel
        
        $
        980
        
        
        $
        801Franchising, management and reservation services
        
        
        (1,762
        )
        
        
        (1,918
        )Construction and development
        
        
        3
        
        
        
        554Total operating profit (loss)
        
        $
        (779
        )
        
        $
        (563
        )Capital expenditures:Hotel
        
        $
        2,757
        
        
        $
        3,280Franchising, management and reservation services
        
        
        350
        
        
        
        1,346Construction and development
        
        
        1,779
        
        
        
        Total capital expenditures
        
        $
        4,886
        
        
        $
        4,626Depreciation and amortization:Hotel
        
        $
        986
        
        
        $
        1,112Franchising, management and reservation services
        
        
        228
        
        
        
        334Construction and development
        
        
        18
        
        
        
        14Total depreciation and amortization
        
        $
        1,232
        
        
        $
        1,460


As of
        
        As ofApril 21,
        
        December 30,2002
        
        2001Total assets:Hotel
        
        $
        149,107
        
        
        $
        152,142Franchising, management and reservation services
        
        
        43,555
        
        
        
        44,500Construction and development
        
        
        9,422
        
        
        
        9,945Total assets
        
        $
        202,084
        
        
        $
        206,587






---



##### Table of Contents





|E. |  | CONTINGENCIES
|-- |  | -------------



| |  | The Company is a party to legal proceedings incidental to its
business. In the opinion of management, any ultimate liability with
respect to these actions will not materially affect the consolidated
financial position or results of operations of the Company.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The construction of a hotel was completed for a third party during
2001 and a balance of approximately $2,000,000 remains uncollected.
The Company has a lien against the property and has filed an
arbitration claim against the owner. The arbitration hearing has
been scheduled for July 22, 2002. While the outcome of the
proceeding cannot presently be determined, management does not
believe it is probable that the carrying value of the receivable has
been impaired. Accordingly, an allowance for doubtful
collectibility was not necessary at April 21, 2002. Should the
Company be unsuccessful in the arbitration hearing, the required
write-off of the receivable would be charged to operations at that
time.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Company has filed an arbitration proceeding against Prime
Hospitality Corp., seeking $20,000,000 in monetary damages related
to the non-use of the Companys reservation center as agreed. The
arbitration hearing was held during the week of April 15, 2002.
However, the outcome of the arbitration proceeding cannot presently
be determined. Any monetary damages awarded to the Company from the
arbitration proceeding would be recorded as income upon receipt.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|F. |  | RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
|-- |  | -----------------------------------------



| |  | In June 2001, the Financial Accounting Standards Board (FASB)
issued SFAS No. 141, Business Combinations, (SFAS No. 141) and
SFAS No. 142, Goodwill and Other Intangible Assets(SFAS No. 142).
SFAS No. 141 was effective July 1, 2001, and SFAS No. 142 is
effective January 1, 2002. Under the new rules in SFAS No. 142,
goodwill and indefinite lived intangible assets will no longer be
amortized effective January 1, 2002, but will be subject to annual
impairment tests. Other intangible assets will continue to be
amortized over their useful lives.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Company has applied the new rules on accounting for
goodwill and intangible assets beginning in the first quarter of
2002. By June 30, 2002, the Company will complete the first of the
required impairment tests of goodwill and indefinite lived
intangible assets as of January 1, 2002, with any impairments
identified treated as the cumulative effect of a change in
accounting principle. The Company has not yet determined what the
effect of these tests will be on the earnings and financial position
of the Company.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





---



##### Table of Contents





| |  | A reconciliation of previously reported net income to the pro
forma amounts adjusted for the exclusion of goodwill and indefinite
lived intangible assets amortization, net of related income tax
effect, follows:
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

16 Weeks EndedApril 21,
        
        April 22,2002
        
        2001Reported net (loss) earnings
        
        $
        (1,015,770
        )
        
        $
        1,585,665Add: Goodwill and indefinite lived
assets amortization, net of tax
        
        
        
        
        
        
        80,261Pro forma adjusted net (loss) earnings
        
        $
        (1,015,770
        )
        
        $
        1,665,926




| |  | In August 2001, the FASB issued SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets(SFAS No. 144),
which supercedes SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of,
(SFAS No. 121), and the accounting and reporting provisions of APB
No. 30, Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions. SFAS No. 144 removes goodwill from its
scope and clarifies other implementation issues related to SFAS No.
121. SFAS No. 144 also provides a single framework for evaluating
long-lived assets to be disposed of by sale. The provisions of this
statement were adopted at the beginning of fiscal 2002 and had no
effect on the Companys results of operations or financial position.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13,
and Technical Corrections.SFAS No. 145 rescinds Statement 4, which
required all gains and losses from extinguishment of debt to be
aggregated and, if material, classified as an extraordinary item,
net of related income tax effect. Since the issuance of Statement
4, the use of debt extinguishment has become part of the risk
management strategy of many companies, including the Company. These
debt extinguishments do not meet the criteria for classification as
extraordinary items in APB Opinion No. 30, Reporting the Results of
Operations  Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions, and therefore, should not be classified as
extraordinary after the adoption of SFAS No. 145. Adoption of SFAS
No. 145 is required for fiscal years beginning after May 15, 2002,
but earlier application is encouraged. The Company elected to adopt
the provisions of SFAS No. 145 at the beginning of fiscal 2002. The
gain on extinguishment of debt of $86,765 for the 16 weeks ended
April 22, 2001, previously classified as an extraordinary item in
prior periods has been reclassified to conform with the provisions
of Statement 145.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





---



##### Table of Contents





|G. |  | SUBSEQUENT EVENTS
|-- |  | -----------------



| |  | On May 3, 2002, the Company acquired all of the common stock of
GuestHouse International Franchise Systems, Inc. (GuestHouse) in a
cash transaction. GuestHouse is the exclusive franchisor of the
GuestHouse Inns & Suites hotel brand, consisting of 71 properties
open and operating, has an additional 12 properties currently under
development of which 5 are scheduled to open by mid-2002, and has an
additional 27 license agreements in various stages of completion.
As a result of the acquisition, the Company will now be in charge of
the operation and growth of the GuestHouse brand, and expects the
transaction to be accretive to earnings beginning with the fiscal
year ending December 29, 2002. On May 21, 2002, the Company
announced its plan to convert the name of the Shoneys Inns and
Shoneys Inns & Suites hotel chain to GuestHouse International Inns
& Suites as soon as practical.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | In the second quarter of 2002, the Company sold one hotel. The
effect of this hotels operations has been removed from operating
earnings for all periods presented in accordance with Statement of
Financial Accounting Standards No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. Balance sheet
reclassifications as of April 21, 2002 and December 30, 2001, and
cash flow statement reclassifications for each of the quarters ended
April 21, 2002 and April 22, 2001, were not made because of the
insignificance of such amounts to the consolidated amounts. At April
21, 2002, this hotel had $68,341 in current assets, $4,213,921 in
property and equipment (net of accumulated depreciation), $22,921 in
other assets, $81,069 in current liabilities, $7,248,675 due to
related parties, and $3,024,561 in stockholders deficit. At
December 30, 2001, this hotel had $63,812 in current assets,
$4,442,462 in property and equipment (net of accumulated
depreciation), $22,921 in other assets, $137,135 in current
liabilities, $7,182,419 due to related parties, and $2,790,359 in
stockholders deficit.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|H. |  | RELATED PARTY TRANSACTION
|-- |  | -------------------------



| |  | The president and chief executive officer renewed his
non-interest bearing, unsecured, full-recourse promissory note in
the amount of $937,500 that came due on February 11, 2002 with the
Company for one year at an interest rate of prime plus 250 basis
points. The Company collected the promissory note and related
interest receivable in full before the renewed maturity date.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





---



##### Table of Contents



ShoLodge, Inc. and Subsidiaries




Managements Discussion and Analysis of Financial
Condition and Results of Operations


Overview

The following discussion should be read in conjunction with the Companys
condensed consolidated financial statements and notes thereto appearing
elsewhere in this quarterly report.

The Company is an operator and the exclusive franchisor of Shoneys Inns.
As of April 21, 2002, the Shoneys Inn lodging system consists of 70 Shoneys
Inns containing 6,681 rooms of which 12 containing 1,377 rooms are owned and
operated by the Company. Shoneys Inns are currently located in 16 states with
a concentration in the Southeast. Shoneys Inns operate in the upper economy
limited-service segment and are designed to appeal to both business and leisure
travelers, with rooms usually priced between $40 and $65 per night. The
typical Shoneys Inn includes 60 to 120 rooms and, in most cases, meeting
rooms.

On May 2, 2002, the Company became the exclusive franchisor of GuestHouse
Inns & Suites, which consists of 71 properties containing 4,666 rooms currently
open and operating in 21 states, including nine states in which Shoneys Inns
operate. GuestHouse Inns & Suites operate in the mid-market limited service
segment, with rooms typically priced between $50 and $70 per night. The
properties range in size from 21 to 180 rooms, and in most cases, contain
meeting rooms. They are designed to appeal to both business and leisure
travelers.

The Company plans to convert the name of the Shoneys Inn chain to the
GuestHouse brand as soon as practical.

The Companys operations have been supplemented by contract revenues from
construction and development of hotels for third parties. Revenues from these
activities have varied widely from period to period, depending upon whether the
Companys construction and development activities were primarily focused on its
own facilities or on outside projects. Construction revenues are recognized on
the percentage of completion basis.

The Company has historically reported lower earnings in the first and
fourth quarters of the year due to the seasonality of the Companys business.
The results of operations for the quarters ended April 21, 2002 and April 22,
2001 are not necessarily indicative of the operating results for the entire
year.





---



##### Table of Contents



Results of Operations

For the Quarters Ended April 21, 2002 and April 22, 2001

Total operating revenues for the quarters ended April 21, 2002, were $10.4
million, or 2.7% less than the total operating revenues of $10.7 million
reported for the first quarter of 2001.

Revenues from hotel operations increased by $117,000, or 2.9%, from the
$4.0 million reported for the same period last year. For the 11 same hotels
opened for all of both quarterly periods, a decrease of 1.2% in average daily
room rates, from $50.25 in the first quarter of 2001 to $49.65 in the first
quarter of 2002, and a decrease in average occupancy rates on these hotels from
46.6% to 43.7% this year, were the primary causes of a decrease in same hotel
revenues of 8.6% from $3.4 million in the first quarter of 2001 to $3.1 million
in the first quarter of 2002. The Company sold two Shoneys Inns in April of
2001, acquired a Baymont Inn & Suites in November of 2001, and opened two
AmeriSuites hotels  one in October of 2001 and one in February of 2002. The
two Shoneys Inns sold contributed $638,000 to hotel revenues in the first
quarter of 2001. The three hotels added since the first quarter of 2001
contributed $1.0 million to hotel revenues in the first quarter of 2002.

The Company owns and operates primarily Shoneys Inns. RevPAR (revenue
per available room) for all Company-owned Shoneys Inns decreased from $23.88
in the first quarter of 2001 to $21.73 in the first quarter of 2002. The 11
Shoneys Inns same-hotels RevPAR decreased by 7.3%, from $23.41 in the first
quarter of 2001 to $21.70 in the first quarter of 2002.

Franchising, management and reservation service revenues increased by
$913,000, or 118.1%, in the first quarter of 2002 from the first quarter of
2001. Initial and termination franchise fees increased by $32,000, royalty
fees decreased by $26,000, management fees decreased by $3,000 and reservation
fees increased by $910,000 from the first quarter of last year. Initial
franchise and termination fee revenue varies from quarter to quarter depending
on the level of franchise sales activities and terminations.

Revenues from construction and development activities were $3.5 million in
the first quarter of 2002 on two third party construction contracts in progress
versus $4.8 million in the first quarter of 2001 on six third party
construction contracts in progress. Revenues from construction and development
can vary widely from period to period depending upon the volume of outside
contract work and the timing of those projects.

Rent income in the first quarter of 2002 decreased by $56,000, to $1.0
million, from $1.1 million, in the first quarter of 2001. The primary source
of rent income is from the lease of three AmeriSuites hotels which are being
operated by Prime Hospitality Corp. The decrease in rent income was due to the
sale of some restaurants to the lessees.





---



##### Table of Contents



Operating expenses from hotel operations for the first quarter of 2002
increased by $174,000, or 5.5%, from $3.1 million in the first quarter of 2001.
Hotel operating expenses on the 11 same-hotels were $2.6 million in the first
quarter of 2002 compared to $2.7 million in the first quarter of 2001. The
operating expenses as a percentage of operating revenues for this activity
increased from 77.9% in the first quarter of 2001 to 79.9% in the first quarter
of 2002; operating expenses as a percentage of operating revenues on the 11
same-hotels increased from 79.0% in the first quarter of 2001 to 83.9% in the
first quarter of 2002. Hotel operating expenses on same-hotels were not reduced
as much as the decline in hotel revenues, thus reducing gross operating profit
margin on these hotels.

Franchising, management and reservation service operating expenses
increased by $549,000, or 112.6%, from the first quarter of 2001. The
increases were primarily in reservation center expenses incurred in order to
support the additional revenues earned from services provided to additional
chains and independent hotel properties since the first quarter of 2001.

Construction and development costs in the first quarter of 2002 were $3.5
million on the two third party construction contracts in progress versus $4.3
million in the first quarter of 2001 on the six third party construction
contracts in progress at that time.

Rent expense decreased by $5,000 in the first quarter this year from last
years first quarter.

General and administrative expenses increased by $230,000, or 13.2%, from
the first quarter of 2001. This increase was due primarily to increased
professional fees and insurance costs.

Depreciation and amortization expense decreased by $228,000, or 15.6%,
from the first quarter of 2001, of which $130,000 was due to the adoption of
Statement of Financial Accounting Standard No. 142, Goodwill and Other
Intangible Assetseffective with the 2002 fiscal year. Further reductions of
$118,000 were due to the sale of two hotels in the first quarter of 2001,
offset with increases in depreciation of $179,000 due to the hotels added since
the first quarter of 2001. Depreciation of the 11 hotels owned and operated
for all of both quarterly periods decreased by $184,000, and depreciation
increased by $25,000 due to other net additions to depreciable assets other
than hotels.

The loss recognized on sale of property in the first quarter of 2002 was
$84,000, primarily from losses on the exchange of two hotels, partially offset
by gains from the sale of excess land in the quarter; the gain recognized on
the sales of property in the first quarter of 2001 totaled $3.6 million and was
from the Companys sale of one hotel and three restaurants. Another hotel was
sold near the end of the first quarter of 2001, but the gain (approximately
$543,000) was deferred and is being recognized under the installment method of
accounting until full accrual accounting is warranted. A portion of the gain
(approximately $175,000) on the sale of two of the restaurants was also
deferred and is being recognized under the installment method of accounting.





---



##### Table of Contents



Pursuant to a plan adopted in 1999 to repurchase a portion of the
Companys outstanding subordinated indebtedness in the open market and in
negotiated transactions, the Company repurchased $900,000 of its 7.50%
subordinated debentures in the first quarter of 2002 at a discount, recognizing
a gain of $252,000. In the first quarter of 2001, the Company repurchased
$250,000 of these debentures at a discount, recognizing a gain of $87,000. The
Company adopted Statement of Financial Accounting Standards No. 145 at the
beginning of fiscal 2002. Accordingly, gains and losses from debt
extinguishments are no longer classified in the statement of earnings as
extraordinary items. See further discussion in Liquidity and Capital
Resources below.

Interest expense increased by $71,000, or 2.9%, while interest income
decreased by $351,000, or 16.8%, from the first quarter of 2001. Interest
income increased due to seller financing of a portion of the sales price of two
Shoneys Inns sold to franchisees in mid-April, 2001, but was more than offset
by decreases in the interest rates charged on other notes receivable due to the
general decline in interest rates and the interest rate terms of those notes.

Liquidity and Capital Resources

The Companys cash flows used in operating activities were $3.7 million in
the first quarter of 2002, compared with $546,000 used in operating activities
in the first quarter of 2001.

The Companys cash flows used in investing activities were $3.5 million in
the first quarter of 2002, compared with $2.5 million for the comparable period
in 2001. The Companys capital expenditures are principally for the
construction and acquisition of new lodging facilities and the purchase of
equipment and leasehold improvements. Capital expenditures for such purposes
were $4.9 million in the first quarter of 2002 and $4.6 million in the first
quarter of 2001. Proceeds from the sale of property and leasehold interests
were $212,000 in the first quarter of 2002 versus $2.3 million for the
comparable period in 2001.

Net cash provided by financing activities was $5.0 million in the first
quarter of 2002 compared with $607,000 used in financing activities in the
first quarter of 2001. Borrowings, net of repayments, on long-term debt and
capitalized lease obligations were $5.0 million in the first quarter of 2002
versus $559,000 repayments in excess of borrowings in the first quarter of
2001. The repayments in the first quarter of 2002 and the first quarter of 2001
include $900,000 and $250,000, respectively, of long-term debt repurchased in
the open market or in privately negotiated transactions. In the first quarter
of 2002, the Company repurchased 25,000 shares of its common stock for $148,000
pursuant to a plan to repurchase up to $23.0 million of the Companys
outstanding common stock; in the first quarter of 2001, the Company repurchased
11,000 shares of its common stock for $54,000.





---



##### Table of Contents



The Company established a three-year credit facility with a financial
institution effective August 27, 1999. An amendment to the credit facility
became effective October 3, 2001, which, among other changes, extended the
maturity to September 30, 2004. The credit facility is for $30 million (a $10
million term loan and a $20 million revolving line of credit), secured by a
pledge of certain promissory notes payable to the Company received in
connection with the sale of 16 of the Companys lodging facilities in the third
quarter of 1998. The borrowing base is the lower of (a) 85% of the outstanding
principal amount of the pledged notes, (b) 65% of the appraised market value of
the underlying real property collateral securing the pledged notes, or (c) $30
million. Effective October 3, 2001, the interest rate on the term loan is at
the lenders base rate plus 100 basis points, and the interest rate on the
revolving line of credit is at the lenders base rate plus 250 points, with a
floor of 7.00% on both portions of the facility. The Company is to pay
commitment fees on the unused portion of the facility at .50% per annum. The
credit facility also contains covenants which limit or prohibit the incurring
of certain additional indebtedness in excess of a specified debt to total
capital ratio, prohibit additional liens on the collateral, restrict mergers
and the payment of dividends and restrict the Companys ability to place liens
on unencumbered assets. The credit facility contains financial covenants as to
the Companys minimum net worth. As of April 21, 2002, the Company had $19
million in borrowings outstanding under this credit facility, consisting of the
$10 million term loan and $9 million on the revolving line of credit.

The Company also maintains a $1 million unsecured line of credit with
another bank, bearing interest at the lenders prime rate, maturing May 31,
2003. As of April 21, 2002, the Company had no borrowings outstanding under
this credit facility.

The Company opened one new hotel in the first quarter of 2002 and none in
the first quarter of 2001. As of the end of the first fiscal quarter of 2002,
no Company-owned hotels were under construction. There are no plans to develop
or operate additional Company-owned hotels in the near term. This decision was
based on current market conditions, rooms supply in certain areas, capital
availability, and the sale of leasehold interests in 2000.

The Companys Board of Directors has previously authorized the use of up
to $23.0 million for the repurchase of shares of the Companys common stock.
The purchases, including block purchases, are to be made from time to time in
the open market at prevailing market prices, or in privately negotiated
transactions at the Companys discretion. No time limit has been placed on the
duration of the stock repurchase plan, and the Company may discontinue the plan
at any time. As of the end of the first fiscal quarter of 2002, approximately
3.6 million shares had been repurchased at a cost of $20.5 million.





---



##### Table of Contents



The Company is investigating various alternatives to maximize shareholder
value. These alternatives could include, without limitation, the franchising
and operation of additional GuestHouse Inns & Suites, a sale of the remaining
Company-owned Inns, negotiating new credit arrangements, developing hotels for
other owners, the repurchase of additional shares of the Companys common stock
or outstanding debt securities, or any combination of these or other
strategies. The Company believes that a combination of existing cash, the
collection of notes receivable, net cash provided by operations, and borrowings
under existing credit facilities or mortgage debt, will be sufficient to fund
its hotel development, stock repurchase plan, debt repayments and operations
for at least the next twelve months.

Market Risk

There have been no material changes in the Companys exposure to market
risk in the first fiscal quarter ended April 21, 2002.

Forward-looking Statement Disclaimer

The statements appearing in this report which are not historical facts are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended, and are subject to risks and uncertainties that could cause
actual results to differ materially from those set forth in the forward-looking
statements, including delays in concluding or the inability to conclude
transactions, the establishment of competing facilities and services,
cancellation of leases or contracts, changes in applicable laws and regulation,
in margins, demand fluctuations, access to debt or equity financing, adverse
uninsured determinations in existing or future litigation or regulatory
proceedings and other risks.





---



##### Table of Contents






PART I

Item 4. Controls and Procedures

(a)     Within the ninety day period prior to the date of this report, we
carried out an evaluation, under the supervision and with the participation of
our management, including our principal executive officer and our principal
financial officer, of the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c)
under the Securities Exchange Act of 1934). Based upon that evaluation, our
management, including our principal executive officer and our principal
financial officer, concluded that the designed and operation of these
disclosure controls and procedures were effective to timely alert them to any
material information relating to the company (including its consolidated
subsidiaries) that must be included in our periodic SEC filings.

(b)     There have been no significant changes in our internal controls or in
other factors that could significantly affect internal controls subsequent to
the date we carried out this evaluation.





---



##### Table of Contents






PART II  OTHER INFORMATION

Item 1.
        
        On June 25, 2001 the Company filed an arbitration proceeding against
Prime Hospitality Corporation (Prime) based on Primes failure to
commence use of the Companys reservation services for a fee as agreed by
Prime in an Agreement for Reservation Services dated July 9, 2000. The
Company is seeking $20 million in monetary damages. The parties selected
an arbitrator, and the arbitration hearing was held during the week of
April 15, 2002. However, the outcome of the arbitration proceeding cannot
presently be determined.No material developments occurred during the first quarter ended
April 22, 2001 with respect to any other pending litigation.Item 4.
        
        Submission of Matters to a vote of Security HoldersNot applicableItem 6.
        
        Exhibits and Reports on Form 8-K6(a) Exhibits -Exhibit 99.1  Certifications required by Section 906 of
the Sarbanes-Oxley Act of 2002.No reports on Form 8-K were filed by the Company during the fiscal quarter ended
April 21, 2002.





SIGNATURES

Pursuant to the requirements 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.

ShoLodge, Inc.Date: April 8, 2003
        
        /s/ Leon MooreLeon MoorePresident, Chief Executive OfficerPrincipal Executive Officer, DirectorDate: April 8, 2003
        
        /s/ Bob MarloweBob MarloweSecretary, Treasurer, Chief Accounting Officer,Principal Accounting Officer,Chief  Financial Officer, Director






---



##### Table of Contents






CERTIFICATION

I, Leon Moore, certify that:

1.     I have reviewed this quarterly report on Form 10-Q/A of ShoLodge, 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 officer 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





---



##### Table of Contents



6.     The registrants other certifying officers and I have indicated in this
quarterly report whether 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.

Dated: April 8, 2003
        
        /s/ Leon Moore[signature]President, Chief Executive Officer,Principal Executive Officer






---



##### Table of Contents



CERTIFICATION

I, Bob Marlowe, certify that:

1.     I have reviewed this quarterly report on Form 10-Q/A of ShoLodge, 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 officer 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





---



##### Table of Contents



6.     The registrants other certifying officers and I have indicated in this
quarterly report whether 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.

Dated: April 8, 2003
        
        /s/ Bob Marlowe[signature]Secretary, Treasurer, Chief Accounting Officer,Principal Accounting Officer,Chief Financial Officer