** **

**U.S.SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10–QSB**

 

| **ý**                                                      |   | **QUARTERLY REPORT UNDER SECTION 13  OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.** |   |
|-----------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------|--------|
|                                                            |   |                                                                                    |   |
| **For  the quarterly period ended September 30, 2001**          |   |
|                                                            |   |                                                                                    |   |
| **o**                                                           |   | **TRANSITION REPORT UNDER SECTION 13 OR 15(d)  OF THE EXCHANGE ACT**               |   |
|                                                            |   |                                                                                    |   |
| **For  the transition period from____________ to ____________** |   |
|                                                            |   |                                                                                    |   |
| **Commission  File No: 0–12382**                           |   |
|                                                                 |        |                                                                                         |        |  |

 

 

**Alpha Virtual, Inc.**

**(formerlyPerceptronics, Inc.)**

(Exact name of Registrantas specified in its Charter)

##  

| **Delaware**                     |   | **95–2577731**     |
|----------------------------------|--------|-------------------------|
| (State or other  jurisdiction of |   | (I.R.S. Employer        |
| incorporation or  organization)  |   | Identification  Number) |

 

| **10345  West Olympic Boulevard, Los Angeles, CA** |   | **90064** |
|----------------------------------------------------|--------|-----------|
| (Address of  Principal Executive Offices)          |   | Zip Code  |

 

Registrant's telephone number,including area code:    **(310) 432-6200**

 

Securities registeredpursuant to Section 12(b) of the Act:

 

**NONE**

 

 

Securities registeredpursuant to Section 12(g) of the Act:

 

**COMMONSTOCK – $.001 PAR VALUE**

(Title of Class)

 

Check whether the Registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theRegistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days. YES ý    NO o

 

State the numberof shares outstanding of each of the issuer's classes of common equity, as ofthe latest practicable date: [13,244,896] shares of common stock as ofSeptember 30, 2001.

 

Transitional SmallBusiness Disclosure Format (check one):

Yes o  No ý

 

 

# INDEX

 

ALPHA VIRTUAL, INC.

 
| PART I.  FINANCIAL INFORMATION |
|-------------------------------------|
|                                |   |
| Item 1.                             | Financial Statements |
|                                |   |
|                                | Balance sheets, Alpha Virtual, Inc.,  September 30, 2001 and March 31, 2001. |
|                                |   |
|                                | Statements of  operations, Alpha Virtual, Inc., three and six months ended September 30,  2001 and three and six months ended September 30, 2000. |
|                                |   |
|                                | Statements of cash  flows, Alpha Virtual, Inc., three months ended September 30, 2001 and  September 30, 2000. |
|                                |   |
|                                | Notes to  financial statements. |
|                                |   |
| Item  2.                            | Management’s  discussion and analysis of financial condition and results of operations. |
|                                |   |
| PART II. OTHER  INFORMATION         |
|                                |   |
| Item 2.                             | Changes in securities |
|                                |   |
| Item 6.                             | Exhibits and Reports on  Form 8-K. |
|                                |   |
|                                | The Registrant filed a  Form 8-K on August 10, 2001 |

 

Part I.               FINANCIAL INFORMATION

 

Item 1.            FinancialStatements

 

**ALPHA VIRTUAL, INC.**

**BALANCE SHEETS**

**(UNAUDITED)**

 
|                                                                                                                                                                |   | **Sept. 30, 2001** |    | **March 31, 2001** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|---------|--------------------|--------|
| **ASSETS:**                                                                                                                                                         |   |               |    |               |   |
| **Current Assets:**                                                                                                                                                 |   |               |    |               |   |
| Cash and short term investments                                                                                                                                     |   | $                  | 129,182 |               | $      | 12, 444 |   |
| Receivables-Note C                                                                                                                                                  |   | 17,613             |    | 31,021             |   |
| Prepaid expenses                                                                                                                                                    |   | 1,119              |    | 1,350              |   |
|                                                                                                                                                                |   |               |    |               |   |
| **Total current assets:**                                                                                                                                           |   | 147,914            |    | 44,815             |   |
|                                                                                                                                                                |   |               |    |               |   |
| **Equipment & Leasehold Improvements, at cost**                                                                                                                 |   | 30,915             |    | 29,500             |   |
| Less accumulated depreciation and  amortization                                                                                                                     |   | 22,848             |    | 22,848             |   |
|                                                                                                                                                                |   | 8,067              |    | 6,652              |   |
|                                                                                                                                                                |   |               |    |               |   |
| Deferred Taxes                                                                                                                                                      |   | 932,566            |    | 932,566            |   |
| Other Assets                                                                                                                                                        |   | 11,080             |    | 4,080              |   |
|                                                                                                                                                                |   |               |    |               |   |
| **TOTAL ASSETS**                                                                                                                                                    |   | 1,099,627          |    | 988,113            |   |
|                                                                                                                                                                |   |               |    |               |   |
| **LIABILITIES AND SHAREHOLDERS' EQUITY:**                                                                                                                           |   |               |    |               |   |
| **Current Liabilities:**                                                                                                                                            |   |               |    |               |   |
| Current portion of long term debt-Note D                                                                                                                            |   | 35,306             |    | 35,306             |   |
| Short term debt                                                                                                                                                     |   | 54,000             |    | 54,000             |   |
| Accounts payable-Note B                                                                                                                                             |   | 41,053             |    | 326,868            |   |
| Accrued compensation                                                                                                                                                |   | 298,292            |    | 298,292            |   |
| Loans payable to shareholders                                                                                                                                       |   | 38,000             |    | 38,000             |   |
| Other accrued liabilities                                                                                                                                           |   | 115,313            |    | 139,844            |   |
|                                                                                                                                                                |   |               |    |               |   |
| **Total current liabilities:**                                                                                                                                      |   | 581,964            |    | 892,310            |   |
|                                                                                                                                                                |   |               |    |               |   |
| **Long-Term Liabilities:**                                                                                                                                          |   |               |    |               |   |
| Long term debt, net of current  portion-Note D                                                                                                                      |   |               |    |               |   |
|                                                                                                                                                                |   |               |    |               |   |
| **Total Liabilities**                                                                                                                                               |   | 581,964            |    | 892,310            |   |
|                                                                                                                                                                |   |               |    |               |   |
| **COMMITMENTS AND CONTIGENCIES**                                                                                                                                    |   |               |    |               |   |
|                                                                                                                                                                |   |               |    |               |   |
| **SHAREHOLDERS' EQUITY:**                                                                                                                                           |   |               |    |               |   |
| **Common Stock**, par value $.001 per share,  authorized 30,000,000 shares, issued and outstanding 13,244,896 shares at  9/30/01 and 9,281,260 shares at 03/31/2001 |   | 13,245             |    | 9,281              |   |
| Additional paid in capital                                                                                                                                          |   | 15,057,286         |    | 13,961,251         |   |
| Accumulated deficit                                                                                                                                                 |   | (14,552,868        | )       | (13,874,729        | )      |
|                                                                                                                                                                |   |               |    |               |   |
| **TOTAL SHAREHOLDERS' EQUITY**                                                                                                                                      |   | 517,663            |    | 95,.803            |   |
|                                                                                                                                                                |   |               |    |               |   |
| **TOTAL LIABILITIES AND SHAREHOLDERS'****EQUITY**                                                                                                                   |   | 1,099,627          |    | 988,113            |   |
|                                                                                                                                                                     |        |                    |         |                    |        |  |  |

 

See Notes to Pro FormaFinancial Statements (Unaudited)

 

**ALPHA VIRTUAL, INC.**

**CONDENSED STATEMENTS OFOPERATIONS**

**(UNAUDITED)**

 
|                                                      |   | **Three Months Ended  September 30** |   | **Six Months Ended  September 30** |   |
|-----------------------------------------------------------|--------|--------------------------------------|--------|------------------------------------|--------|
|                                                      |   | **2001**                             |   | **2000**                           |   | **2001** |   | **2000** |   |
| Net Sales                                                 |   | $                                    | 0      |                               | $      | 76,437 |   | $ | 0 |   | 76,437 |   |
| Cost of Sales                                             |   | 0                                    |   | 67,742                             |   | 0 |   | 84,251 |   |
|                                                      |   |                                 |   |                               |   |   |   |   |   |
| Gross Profit                                              |   | 0                                    |   | 8,695                              |   | 0 |   | (7,814 | ) |
|                                                      |   |                                 |   |                               |   |   |   |   |   |
| Costs and expenses:                                       |   |                                 |   |                               |   |   |   |   |   |
| Selling, general and administrative                       |   | 401,817                              |   | 90,711                             |   | 603,660 |   | 276,742 |   |
| Research & development                                |   | 65,935                               |   | 56,079                             |   | 211,979 |   | 169,616 |   |
|                                                      |   |                                 |   |                               |   |   |   |   |   |
| Operating (loss)                                          |   | (467,752                             | )      | (138,095                           | )      | (815,639 | ) | (454,172 | ) |
|                                                      |   |                                 |   |                               |   |   |   |   |   |
| Gain on Sale of Assets                                    |   | -                                    |   | 154,981                            |   |   |   | 154,981 |   |
| Interest income                                           |   | -                                    |   | -                                  |   |   |   | 1,012 |   |
| Interest expense                                          |   | -                                    |   | -                                  |   | 0 |   | (5,760 | ) |
| Other Income Note B                                       |   | 137,500                              |   |                               |   | 137,500 |   |   |   |
|                                                      |   |                                 |   |                               |   |   |   |   |   |
| Income (loss) before taxes                                |   | (330,252                             | )      | 16,886                             |   | (678,139 | ) | (303,939 | ) |
| Income tax provision                                      |   |                                 |   | -                                  |   |   |   |   |   |
|                                                      |   |                                 |   |                               |   |   |   |   |   |
| Net Income (loss)                                         |   | (330,252                             | )      | $                                  | 16,886 |   | (678,139 | ) | (303,939 | ) |
|                                                      |   |                                 |   |                               |   |   |   |   |   |
| Earnings per share:                                       |   |                                 |   |                               |   |   |   |   |   |
| Basic:                                                    |   | (0.03                                | )      | $                                  | 0.00   |   | (0.06 | ) | (0.04 | ) |
| Net Income (loss)                                         |   |                                 |   |                               |   |   |   |   |   |
| Diluted:                                                  |   | N/A                                  |   | N/A                                |   | N/A |   | N/A |   |
|                                                      |   |                                 |   |                               |   |   |   |   |   |
| **Weighted average common and common equivalent shares:** |   |                                 |   |                               |   |   |   |   |   |
| Basic                                                     |   | 12,188,078                           |   | 7,841,510                          |   | 11,659,669 |   | 7,791,510 |   |
|                                                      |   |                                 |   |                               |   |   |   |   |   |
| Diluted                                                   |   | N/A                                  |   | N/A                                |   | N/A |   | N/A |   |
|                                                           |        |                                      |        |                                    |        |  |  |  |  |  |  |  |

 

See Notes to Pro FormaFinancial Statements (Unaudited)

 

**ALPHA VIRTUAL, INC.**

**CONDENSED STATEMENT OF CASH FLOWS**

**(UNAUDITED)**

 
|                                                                           |   | **Six Months Ended  September 30** |   |
|--------------------------------------------------------------------------------|--------|------------------------------------|--------|
|                                                                           |   | **2001**                           |   | **2000** |   |
| CASH FLOWS FROM OPERATING ACTIVITIES                                           |   |                               |   |   |   |
| Net Income (loss)                                                              |   | (678,139                           | )      | (303,939 | ) |
| Adjustments to reconcile net income to net  cash used in operating activities: |   |                               |   |   |   |
| Depreciation and amortization                                                  |   |                               |   | 12,440 |   |
|                                                                           |   |                               |   |   |   |
| Changes in assets and liabilities:                                             |   |                               |   |   |   |
| Receivables                                                                    |   | 13,408                             |   | (24,285 | ) |
| Inventory                                                                      |   |                               |   | 80,260 |   |
| Prepaid expenses                                                               |   | (231                               | )      | (6,575 | ) |
| Pre-contract costs                                                             |   |                               |   | 220,000 |   |
| Other assets                                                                   |   | (7,000                             | )      | 4,123 |   |
| Accounts payable                                                               |   | (285,815                           | )      | (203,899 | ) |
| Accrued compensation                                                           |   |                               |   | 7,799 |   |
| Notes to affiliates                                                            |   |                               |   | 13,345 |   |
| Other accrued liabilities                                                      |   | (24,531                            | )      | (4,871 | ) |
| Other long term liabilities                                                    |   |                               |   | (57,500 | ) |
|                                                                           |   |                               |   |   |   |
| Net cash (used) by operating activities:                                       |   | (981,846                           | )      | (263,102 | ) |
|                                                                           |   |                               |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                           |   |                               |   |   |   |
| Purchase of Equipment                                                          |   | (1,416                             | )      |   |   |
| Net cash used by investing activities                                          |   | (1,416                             | )      |   |   |
|                                                                           |   |                               |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                           |   |                               |   |   |   |
| Exercise of stock options and warrants                                         |   |                               |   | 480 |   |
| Payment of long-term debt                                                      |   |                               |   | (177,609 | ) |
|                                                                           |   |                               |   |   |   |
| Proceeds from sale of common stock                                             |   | 1,100,000                          |   | 107,340 |   |
|                                                                           |   |                               |   |   |   |
| Net cash provided in financing activities                                      |   | 1,100,000                          |   | (67,789 | ) |
|                                                                           |   |                               |   |   |   |
| NET INCREASE (DECREASE) IN CASH                                                |   | 116,738                            |   | (332,891 | ) |
|                                                                           |   |                               |   |   |   |
| Cash, beginning of period                                                      |   | 12,444                             |   | 355,781 |   |
| Cash, end of period                                                            |   | 129,182                            |   | 22,890 |   |
|                                                                           |   |                               |   |   |   |
| Cash paid during period for income taxes                                       |   | 0                                  |   |   |   |
| Cash paid during period for interest  expense                                  |   | 0                                  |   | 5,760 |   |

 

See Notes to Pro Forma Financial Statements (Unaudited)

 

ALPHA VIRTUAL, INC. ANDSUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

NOTE A – UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

The unaudited consolidated financial statements havebeen prepared in conformity with generally accepted accounting principles andinclude all adjustments which are, in the opinion of management, necessary forfair presentation of the results for the interim periods presented. All suchadjustments are, in opinion of management, of a normal recurring nature.Results for the three month period ended September 30, 2001 are not necessarilyindicative of the operating results to be expected for the full year.

 

Certain information and footnote disclosures normallyincluded in financial statements prepared in accordance with generally acceptedaccounting principles have been condensed or omitted. It is suggested thatthese financial statements are read in conjunction with the financialstatements and notes thereto included in the Company’s annual report on Form10-KSB for the year ended March 31, 2001.

 

NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

**Descriptionof the Company:** Alpha Virtual, Inc., the "Company"develops, produces and markets peer-to-peer software products and services thatallow Internet Web site developers and owners as well as Internetinfrastructure and services providers to create online multi-media collaborativeexperiences that meet the growing demand for expanded multi-user interactivityon the Internet.

 

**Basis ofPresentation:** The financial statements have been prepared inconformity with generally accepted accounting principles, which contemplate continuationof the Company as a going concern.  Theability of the Company to operate profitably and generate sufficient positivecash flows is dependent on the generation of license revenues and raisingadditional investment capital to fund development of commercial softwareproducts. The Company’s financial statements do not include any adjustments toreflect the possible future effects on the recoverability and classification ofassets or the amounts and classification of liabilities that may result from thepossible inability of the Company to continue as a going concern.

 

**Settlementof Liabilities**

 

After receiving the fourth warrant under the stockpurchase agreement with Global Alpha, the company was able to settleapproximately $200,000 of its accounts payable with cash totaling approximately$62,500.  The accounts payable weresettled in August.

 

On May 4, 2001, in consideration for Global AlphaCorporation’s agreement to invest in the Company, CEO Richard Moskowitz andPresident Dr. Gershon Weltman entered into general release and waiveragreements with the Company whereby Moskowitz and Weltman agreed to cancelpreviously booked obligations of approximately $175,000 and $63,000,respectively, arising from accrued salary, vacation and loans to the Company,and to accept payment of one hundred dollars ($100) each as full and finalpayment of the obligations. This further total reduction of approximately$238,000 in liabilities depended on the Company receiving from Global AlphaCorporation on or before August 3, 2001 payment of approximately $1.3 millionfor exercise of the fourth warrant under the stock purchase agreement betweenthe Companies, which was not assured. By agreement between Global Alpha and the Company dated August 3, 2001,the terms of the fourth warrant were changed to provide a series of monthlywarrants.  The general release andwaiver agreements were modified to reflect this change, so that failure byGlobal Alpha to fund any future warrant results in restoration of theobligation on the Company’s books. Payment was received from Global Alpha on August 6, 2001 for the firstmonthly warrant, and Global Alpha appears to be encouraged with itsrelationship with Alpha Virtual.

 

**CashEquivalents:** All highly liquid investments maturing in threemonths or less when purchased are considered cash equivalents.

 

**Inventory:**Inventory is stated at the lower of cost or market.  Cost is determined principally by thefirst-in, first-out method.

 

**Equipmentand Leasehold Improvements:** Equipment and leaseholdimprovements are stated at cost. Depreciation of equipment is provided for bythe straight-line method over their estimated useful lives, which range from 3to 5 years. Amortization of leasehold improvements is provided by thestraight-line method over the shorter of the useful lives or the terms of theleases.

 

**RevenueRecognition:**All sales were recorded using thepercentage-of-completion (cost to cost) method of accounting. Under thismethod, sales are recorded as costs (including general and administrativeexpenses) are incurred, plus a portion of the profit expected to be realized oneach contract in the ratio that costs incurred to date bear to total estimatedcost at completion. General and administrative expenses in excess of ratesbilled on contracts are recorded in the period incurred. Costs related toanticipated future losses on contracts are accrued and charged to expense inthe period when the losses are identified.

 

**IncomeTaxes:**Provisions for federal and state income taxes arecalculated on reported financial statement income based on the current tax law.Such provisions differ from the amounts currently payable because certain itemsof income and expense, known as temporary differences, are recognized indifferent tax periods for financial reporting purposes than for income taxpurposes. Deferred income taxes are the result of the recognition of taxbenefits that management expects to realize from the utilization of netoperating loss carryforwards. The amounts recorded are net of valuationallowance and represent management’s estimate of the amount that is more likelythan not to be realized.

 

**PerShare Data:**Per share data is based upon the weighted averagenumber of shares of common and dilutive common stock equivalents outstandingusing the treasury stock method. Refer to Note F for a reconciliation of theshares used to compute earnings per share.

 

**Use ofEstimates:** Company management has made a number of estimatesand assumptions relating to the reporting of assets and liabilities and thereported amounts of revenues and expenses, in conformity with generallyaccepted accounting principles. Actual amounts could differ from theseestimates.

 

NOTE C - RECEIVABLES

 

Billed receivables at September 30, 2001 and March 31,2001 were $17,613 and $31,021, respectively. These represent amounts that have been invoiced on commercial and UnitedStates Government contracts and agreements that remain unpaid.

 

NOTE D- LONG TERM DEBT

 

Long-term debt included the following at September 30and March 31, 2001:

 
|                                                        |   | **September 30,** |   | **March 31,** |   |
|-------------------------------------------------------------|--------|-------------------|--------|---------------|--------|
|                                                        |   | **2001**          |   | **2001**      |   |
|                                                        |   |              |   |          |   |
| Note  Payable-Consultant issued to resolve open accounts    |   |              |   |          |   |
| Payable  balance. Payable in monthly installments of $4,521 |   |              |   |          |   |
| Including  interest at 8% per annum.                        |   | $35,306           |   | $35,306       |   |
|                                                        |   |              |   |          |   |
| Current  portion of long-term notes payable                 |   | $35,306           |   | $35,306       |   |

 

Short-term debt includedthe following at September 30, 2001 and March 31, 2001:

 

As of September 30, 2001 and March 31, 2001, there wasa loan outstanding of $50,000 with a foreign customer and a note with a formeremployee of $4,000. The notes bear interest at 6% per year. The terms of thenote required repayment by March 1, 1996 and December 31, 1995respectively.   As of June 30, 2001there are Convertible Promissory Notes totaling $38,000 with a number ofofficers, directors and others that require repayment by December 31, 2002,bear interest at 10% per year and can be converted before repayment to commonstock at $0.15 per share.

 

Item 2. Management’s discussion and analysis of financialcondition and results of operations.

 

**General**

 

Alpha Virtual, Inc., (the “Company”), is focusedentirely on developing new commercial products in the area of InternetCollaboration. The products, called the IC3Dtm Framework and WyTHtmtechnologies, are directed toward the rapidly growing market for multi-person,online, real-time collaborative interactions involving multiple media accessedover the Internet. The major vertical markets for the products areentertainment, education, e-commerce and business communication.

 

With the investment from Global Alpha, Alpha Virtualhas been able to increase its software engineering team.  The company is planning product launches inthe first quarter of the 2002 calendar year.

 

**RESULTS OF OPERATIONS**

 

**NetSales.**  Net sales forthe three-month and six month period ended September 30, 2001 were zero. Thecompany is in a state of transition and no sales resulted in the period.

 

**Cost ofSales**. Cost of sales for the three-month and six month periodended September 30, 2001 decreased 100% as a result of the 100% decrease insales as discussed above.

 

**Selling,General and Administrative Expenses**. Selling, general andadministrative expenses increased $311,106 or 343% in the three-month periodended September 30, 2001 and increased $326918 or 118% in the six month periodended September 30, 2001, compared to the comparable three-month and six monthperiods in the prior fiscal year.  Thelarge increase in spending was due to the company receiving the outsideinvestment from Global Alpha which allowed Alpha Virtual to increase itsoperational expenses.

 

**InterestExpense. **Interestexpense booked was $0 in the three month period ended September 30, 2001compared to the comparable three month period in the prior fiscal year.

 

**Liquidityand Capital Resources.** At September 30, 2001, the Company’sunrestricted cash balances of $129,182 were the result of equity investmentsmade during the second quarter of fiscal 2002. The Company had negative workingcapital of $434,050 at September 30, 2001, compared to negative working capitalof $847,495 at March 31, 2001. At September 30, 2001, vendor accounts totalingapproximately $15,000 were past due. See Note B of the Notes to the  Financial Statements, which is herebyincorporated herein by reference.

 

Over the next seven months, the company shouldcontinue to receive funding from Global Alpha in $300,000 increments permonth.  There is no assurance that theCompany will be able to continue to raise the financing required to fundoperations in the future and whether the commercial software products willstart to generate revenue and profits. Also, the terms of any financing couldbe unfavorable to the Company and dilutive to its shareholders.  The Company is also exploring alternativesources for financing such as strategic business alliances and potentialbusiness combinations in order to meet short and long-term objectives.

 

The Company’s operating activities used cash of$301,122 during the quarter ended September, 30, 2001 resulting primarily fromthe operating loss incurred during the period.

 

The Company’s investing activities used no cash duringthe quarter ended September 30, 2001. The Company is primarily a developer of computer software and thereforenot capital intensive.  The Company doesnot currently have any material commitments for the purchase of capital assets.

 

The Company’s financing activities provided cash of$1,100,000 during the six-month period ended September 30, 2001. The fundingcame from its main investor, Global Alpha.

 

**FORWARDLOOKING STATEMENTS**

 

The Company hereby incorporates by reference “ForwardLooking Statements” contained in the “Management’s Discussion And Analysis OfFinancial Condition And Results Of Operations” of the Company’s Form 10-KSBdated March 31, 2001.

 

Signatures

 

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the registrant has duly caused this report to the signedon its behalf by the undersigned hereunto duly authorized.

 

 
|                          |   | Alpha Virtual,  Inc.    |
|-------------------------------|--------|-------------------------|
|                          |   | Registrant              |
|                          |   |                    |
|                          |   |                    |
|                          |   |                    |
| Date:  November 19, 2001 | By:    | /s/ Dan Mapes           |
|                          |   | Dan Mapes               |
|                          |   | Chief Executive Officer |