SECURITIES EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period
from........to...........
COMMISSION FILE NUMBER 001-16381
CERISTAR, INC.
(Exact name of the registrant as specified in its charter)
DELAWARE 87-0642448
(State or other jurisdiction (IRS employer identification number)
of incorporation or organization)
50 WEST BROADWAY, SUITE 1100
SALT LAKE CITY, UTAH 84119
(Address of principal executive officers)
801-350-2017
(Registrant's telephone number, including area code)
Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
State the number of shares outstanding of each of the issuer classes of
common equity as of June 30, 2003.
Common Stock, par value $.001 7,054,108
(Title of each class) (Number of shares)
CERISTAR CORPORATION
TABLE OF CONTENTS
Special Note Regarding Forward Looking Statements
PART I - FINANCIAL STATEMENT
Item 1. Financial Statements
Condensed Consolidated Unaudited Balance Sheet at June 30, 2003
Condensed Consolidated Unaudited Statements of Operations for the
three and six months ended June 30, 2003 and 2002
Condensed Consolidated Unaudited Statements of Cash Flows for
the six months ended June 30, 2003 and 2002
Notes to Condensed Consolidated Unaudited Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3. Controls and Procedures
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
Exhibit. Other Information - Certificates - Certification Pursuant to 18
U.S.C. Section 1350
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Investors are cautioned that certain statements in the Form 10-QSB are
forward looking statements that involve risks and uncertainties. Words, such as
"expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates"
and "views" are intended to identify forward-looking statements. Such statements
are based on current expectations and projections about our business and
assumptions made by the management and are no guarantee of future performance.
Therefore, actual events and results may differ materially from those expressed
or forecasted in the forward looking statements due to risk factors identified
in the Management's Discussion and Analysis of Financial Condition and Results
of Operations.
1
CERISTAR, INC.
CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEET
JUNE 30, 2003
June 30,
Assets 2003
------ -----------------
(unaudited)
Current assets:
Cash $ -
Accounts receivable, net of allowance for
doubtful accounts of $7,917 80,694
Prepaid expenses 3,954
Deposits 8,338
-----------------
Total current assets 92,986
Property and equipment, net 598,771
-----------------
$ 691,757
-----------------
--------------------------------------------------------------------------------
Liabilities and Stockholders' Deficit
-------------------------------------
Current liabilities:
Checks written in excess of cash in bank $ 2,332
Accounts payable 367,939
Accrued payroll liabilities 214,949
Unearned revenue 154,027
Equipment purchase obligation 375,996
Receivable repurchase obligation 10,866
Related party convertible debt 103,000
-----------------
Total current liabilities 1,229,109
Stockholders' deficit:
Preferred stock, $.001 par value; 1,000,000 shares
authorized, no shares issued and outstanding -
Common stock, $.001 par value, voting, 25,000,000 shares
authorized, 7,054,108 shares issued and outstanding 7,054
Additional paid-in capital 9,444,260
Deferred compensation (312,344)
Subscriptions receivable (422,672)
Accumulated deficit (9,253,650)
-----------------
Total stockholders' deficit: (537,352)
-----------------
Total liabilities and stockholders'deficit $ 691,757
-----------------
See accompanying notes to financial statements
2
CERISTAR, INC.
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS
For The Periods Ended June 30,
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
--------------------------------- --------------------------------
Sales $ 82,973 $ 178,782 $ 189,195 $ 336,645
Cost of sales 126,475 28,327 250,643 111,517
Selling, general, and administrative expense 865,266 289,916 1,968,959 613,025
--------------------------------- ---------------------------------
Loss from operations (908,768) (139,461) (2,030,407) (387,897)
Other income (expense) 373 (95) 731 2
Interest expense (41,796) (11,692) (44,370) (13,655)
--------------------------------- --------------------------------
Loss before benefit for income taxes (950,191) (151,248) (2,074,046) (401,550)
Benefit for income taxes - - - -
--------------------------------- --------------------------------
Net loss $ (950,191) $ (151,248) $ (2,074,046) $ (401,550)
--------------------------------- --------------------------------
Loss per common share basic and diluted $ (0.14) $ (0.04) $ (0.33) $ (0.10)
--------------------------------- --------------------------------
Weighted average shares - basic and diluted 6,613,681 4,180,078 6,237,000 4,180,078
--------------------------------- --------------------------------
See accompanying notes to financial statements
3
CERISTAR, INC.
CONDENSED CONSOLIDATED UNAUDITED STATEMENT OF CASH FLOWS
For The Six Months Ended June 30,
Six Months Ended
June 30,
2003 2002
-----------------------------
Cash flows from operating activities:
Net loss $ (2,074,046) $ (401,550)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 40,349 24,018
Stock issued for services 34,988 -
Stock warrants issued for financing costs 76,000 -
Amortization of deferred compensation 153,334 140,000
Stock subscription satisfied with services 1,131,150 -
Amortization of discount on long-term debt 3,227 -
Bad debt expense (8,200) -
Decrease (increase) in:
Accounts receivable (19,549) (14,741)
Prepaid expense - (3,000)
Increase (decrease) in:
Accounts payable (17,676) 81,885
Accrued liabilities 125,601 19,945
Deferred revenue 41,727 14,286
-----------------------------
Net cash used in operating activities (513,095) (139,157)
-----------------------------
Cash flows used in investing activities-
Purchase of property and equipment (5,265) (20,243)
-----------------------------
Cash flows from financing activities:
Cash over-draft 2,332 -
Proceeds from issuance of common stock 379,887 -
Proceeds from related party note 103,000 88,334
Proceeds from note payable 27,916 -
Payments on note payable (17,050)
Proceeds on convertible long-term debt - 75,000
Payments on convertible long-term debt (5,935) (1,887)
-----------------------------
Net cash provided by financing activities 490,150 161,447
-----------------------------
Net (decrease) increase in cash
and cash equivalents (28,210) 2,047
Cash and cash equivalents at beginning of period 28,210 2,518
-----------------------------
Cash and cash equivalents at end of period $ - $ 4,565
-----------------------------
See accompanying notes to financial statements
4
CERISTAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2003
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation--The accompanying condensed financial statements are
unaudited. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States have been condensed or omitted pursuant to the
rules and regulations of the Securities and Exchange Commission. Ceristar Inc.,
(the "Company") believes that the following disclosures are adequate to make the
information presented not misleading.
These condensed financial statements reflect all adjustments (consisting only of
normal recurring adjustments) that, in the opinion of management, are necessary
to present fairly the financial position and results of operations for the
periods presented. These financial statements should be read in conjunction with
the CeriStar's financial statements and notes thereto for the year ended
December 31, 2002 included in the Company's annual report on Form 10-KSB
Operating results for the six months ended June 30, 2003, are not necessarily
indicative of the operating results to be expected for the year ending December
31, 2003.
Net Loss Per Common Share--Basic and diluted net loss per common share are
calculated by dividing net loss attributable to common stockholders by the
weighted average number of shares of common stock outstanding during the period.
At June 30, 2003, there were outstanding warrants to purchase 565,201 shares of
common stock that were not included in the computation of diluted net loss per
common share as their effect would have been anti-dilutive, thereby decreasing
the net loss per common share.
Revenue Recognition-Revenue is recognized when a valid contract or purchase
order has been executed or received, services have been performed or product has
been delivered, the selling price is fixed or determinable, and collectibility
is reasonably assured. Sales of equipment related to long-term service
contracts, which do not meet this criteria, are deferred and recognized ratably
over the period of the contract and are recorded as unearned revenue.
Stock-Based Compensation- The Company accounts for stock options granted to
employees under the recognition and measurement principles of APB Opinion No.
25, Accounting for Stock Issued to Employees, and related Interpretations, and
has adopted the disclosure-only provisions of Statement of Financial Accounting
Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation."
Accordingly, no compensation expense is recognized in the financial statements
when options granted under those plans have an exercise price equal to or
greater than the market value of the underlying common stock on the date of
grant. The Company granted no options during the periods ending June 30, 2003
and 2002 to employees. However the Company did issue 175,000 warrants to
purchase the Company's common stock for consulting services and interest expense
valued at approximately $76,000. No warrants or options were issued during the
six months ended June 2002.
5
The fair value of each warrant grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions for the
periods ended June 30:
2003 2002
--------------------------------
Expected dividend yield $ - $ -
Expected stock price volatility 91.41% NA
Risk-free interest rate 4.75% 4.75%
Expected life of options 3-5years NA
The weighted average fair value of each warrant granted during the periods
months ended June 30, 2003 were $.43.
NOTE 2--GOING CONCERN
The Company has a working capital deficit, a stockholders' deficit, and
recurring net losses. These factors create substantial doubt about the Company's
ability to continue as a going concern. The financial statements do not include
any adjustment that might be necessary if the Company is unable to continue as a
going concern.
The ability of the Company to continue as a going concern is dependent on the
Company generating cash from the sale of its common stock or obtaining debt
financing and attaining future profitable operations. Management's plans include
selling its equity securities and obtaining debt financing to fund its capital
requirements and ongoing operations, however, there can be no assurance the
Company will be successful in these efforts.
NOTE 3 - EQUIPMENT PURCHASE OBLIGATION
The Company is obligated for certain equipment purchases initially funded by
some of its customers. During the six months ended June 30, 2003 the Company
entered into a revised agreement with Wired LLC, in which the Company purchased
equipment in exchange for 45,000 warrants to purchase the Company's common
shares at an exercise price $1.05, and an agreement to share revenues from
certain customers. The equipment will be used in a revenue sharing venture in
which Wired LLC will receive all net profits from communications services as
provided in the agreement until it has recovered the equipment sales price of
$307,000 plus 12%. After Wired LLC has recovered the sales price of the
equipment plus 12%, net profits will be divided approximately evenly from
communications service revenue. The Company has an obligation to service, and
maintain the equipment, and support the communications services for the duration
of the contract years. The Obligation has no stipulated maturity date and is
secured by the equipment.
NOTE 4 - SHORT-TERM RELATED PARTY CONVERTIBLE DEBT
During the six months ended June 30, 2003, the Company issued convertible debt
to the President of the Company and relatives of the President in the amount of
$103,000. The debt bears interest at 12%, is due December 31, 2003, is unsecured
and is convertible into the Company's common stock at $.50 per share.
NOTE 5 - COMMON STOCK TRANSACTIONS
The Company sold 184,390 common shares for cash of $379,887 and issued 1,114,464
shares for services.
NOTE 6 - RECEIVABLE REPURCHASE OBLIGATION
The Company sold a receivable with recourse. Since the Company does not have
sufficient experience to estimate the ultimate amount to be realized, the net
proceeds that are subject to recourse are presented as a liability in the
financial statements.
6
NOTE 7 - CASH FLOW INFORMATION
Actual amounts paid for interest for the six months ended June 30 2003 and 2002,
were $5,446 and $3,905 respectively. No income taxes were paid for the
respective periods.
During the six months ended June 30, 2003, the Company received a commission
which reduced its deferred purchase obligation and was recorded as an increase
of $18,000 to deferred revenue.
During the six months ended June 30, 2003, the Company reacquired 96,600 shares
of its common stock for a reduction in deferred compensation of $149,333 and
subscriptions receivable of $9,317.
During the six months ended June 30, 2003, the Company disposed of equipment in
exchange for extinguishment of an accrued liability of $12,540.
During the six months ended June 30, 2003, the Company financed the purchase of
$307,000 of equipment through a deferred purchase obligation.
During the six months ended June 30, 2003, the Company issued 1,080,000 shares
of its common stock for future consulting services, which were recorded as
subscriptions receivable in the amount of $566,850.
During the six months ended June 30, 2002, the Company acquired $103,196 of
equipment in exchange for a deferred purchase obligation.
During the six months ended June 30, 2002, the Company warrants with a
beneficial conversion feature attached to long-term debt, which resulted in a
$75,000 discount which was the full face value of the debt.
NOTE 8 - RECENT ACCOUNTING PRONOUNCEMENTS
In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. SFAS No. 149 amends and clarifies
financial accounting and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively referred to as
derivatives) and for hedging activities under SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities. This Statement is effective for
contracts entered into or modified after June 30, 2003, with certain exceptions,
and for hedging relationships designated after June 30, 2003. Management is
currently evaluating the effect that the adoption of SFAS No. 149 but believes
it will have on material affect on its results of operations and financial
position.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150
requires that certain financial instruments, which under previous guidance may
have been accounted for as equity, must now be accounted for as liabilities (or
an asset in some circumstances). The financial instruments affected include
mandatory redeemable stock, certain financial instruments that require or may
require the issuer to buy back some of its shares in exchange for cash or other
assets and certain obligations that can be settled with shares of stock. This
Statement is effective for all such financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. SFAS 150 was adopted in the
quarter ended June 30, 2003 and did not have a material impact on Ceristar's
results of operations or financial position.
7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results for Operations
CeriStar is in the data communications industry, providing a new
generation of services using fiber optics. Its principal product is the delivery
of voice, video and data services over a single fiber network. These services
include local and long distance telephone, video conferencing, cable television
with video on demand, computer email and host of other related services.
On September 10, 2002, CeriStar merged with a wholly owned subsidiary
of Planet Resources Inc., a non-operating company, together referred to as
Planet, in which all of the issued and outstanding stock of CeriStar, including
shares of Common Stock, shares of Series A Convertible Preferred Stock and
shares of Series B Convertible Preferred Stock were exchanged for shares of
Planet Common Stock. The shares of Series A and B Convertible Preferred Stock of
CeriStar were each exchanged for .757 shares of Planet Common Stock and the
Common Stock of CeriStar were each canceled and converted into .322 shares of
Common Stock of Planet. Prior to the merger Planet authorized a 1 for 5.23
reverse stock split. The merger was accounted for as a reverse merger with
CeriStar being the accounting acquirer. On October 15, 2002, Planet Resources
Inc. was renamed CeriStar, Inc.
Results of Operations
For the comparative six months ended June 30, 2003 and 2002
CeriStar had a net loss for the six months ended June 30, 2003 and 2002
of $2,074,000 and $402,000, respectively. For the six months ended June 30, 2003
and 2002 revenues were $189,000 and $337,000, respectively. This change is a
result of sales revenue recognized on initial installations of equipment under
short-term contracts of approximately $265,000 in 2002. During the six months
ended June 30, 2003, CeriStar increased its ongoing service revenue by $123,000
over the prior year period due to an increase in its services customer base.
Revenues generated from labor, including revenues related to engineering and
design for a specific IP applications, decreased by $6,000 in the six month
period of 2003 vs. 2002.
Gross margins decreased from 67% for the six months ended June 30, 2002
to a negative 32% for the comparable period of 2003. Because CeriStar is
developing its customer base, the margins for the first six months of 2002
reflect mark-ups on initial equipment sales on short-term contracts. The margins
on the first six months of 2003 reflects service revenues in which the cost
exceeds revenues because of the purchase of excess bandwidth for the support of
the growing customer base. New connections are expected to increase revenues
without a substantial increase in bandwidth costs.
8
Selling and administrative expenses increased by $1,356,000 from
$613,000 for the six months ended 2002 to $1,969,000 in the corresponding period
of 2003. The most significant factor related to this increase was due to
consulting expenses to assist us in product positioning, financing, and customer
identification and acquisition. These costs increased to $1,266,000 for the six
months ended June 30, 2003 as compared to $24,000 June 2002. Of the consulting
expenses recognized in the 2003 six month period, approximately $1,207,000 was
paid in the Company's common stock or common stock warrants. These consulting
costs are to assist us in establishing our operations and marketing our IP
(Internet Protocol) application products and services. Other expenses which
increased in the six months ended June 30, 2003 compared to 2002 were a $66,000
increase in payroll to $472,000 in 2003 as employees were added to service a
growing residential customer base, marketing related travel expense increased
$16,000 from $8,000 to $24,000 and promotion and advertising expenses increased
by $26,000 in 2003 to attract customers.
For the comparative three months ended June 30, 2003 and 2002
CeriStar had a net loss in the second quarter of 2003 of $950,000 the
loss in the second quarter of 2002 was $151,000. Revenues were $83,000 in the
second quarter of 2003 compared to $179,000 in the second quarter of 2002. The
decline in revenue was primarily due to a $149,000 reduction in equipment
installation sales on short-term service contracts off-set by an increase in
service revenue of approximately $53,000.
Gross margins in the second quarter of 2003 were a negative 52%
compared to a positive 84% in 2002. As CeriStar transitions to an operation
company additional bandwidth has been purchased to meet the needs of customers
in a variety of locations. New customers coming on line in those locations can
be added to the existing network with little or no additional bandwidth cost.
Margins in 2002 were related to initial equipment installation sales, which
accompanied short-term service contracts.
Selling and administrative expenses increased by $575,000 to $865,000
in the second quarter of 2003 compared to $290,000 in 2002 primarily due to an
increase in consulting expenses in 2003 Labor costs increased by $49,000 to
$242,000 in the second quarter of 2003 compared to $193,000 in the same period
of 2002. Depreciation expense increased by $20,000, as significant new equipment
was acquired through Wired LLC in the amount of $307,000. Other increases were
experienced in travel, advertising, and office expense.
Liquidity and Capital Resources
CeriStar's revenues are not capable of supporting its current
operations. CeriStar will be dependent on the capital markets for funding its
current operations. At June 30, 2003 the Company has a working capital deficit
of approximately $1,136,000. To meet these continuing funding needs CeriStar is
actively seeking funding through the sale of its common stock and issuance of
debt securities. No assurance can be made that the company will be successful in
raising sufficient capital.
CeriStar believes it has proven its technology and can now efficiently
deliver a technically advanced product to a wide range of residential,
commercial, educational and governmental customers. In the past CeriStar has
been focused on development and testing of its technology, now the focus is on
marketing this technology. Expansion in CeriStar's current geographical area can
be done fairly inexpensively, as prior capital expenditures can service a
significantly larger customer base. Expansion into new market areas will be
limited by the amount of investment capital and equipment financing that can be
acquired. CeriStar's current plan will require additional equity and debt
capital to fund operations. A majority of this funding will need to be raised in
the equity markets. It is anticipated that debt financing of equipment will
become increasingly available as the Company's products gain acceptance and our
markets expand thus leveraging its investment capital. In the short term,
CeriStar will remain dependent on new equity capital. No assurance can be made
that the company will be successful in raising sufficient capital.
9
Item 3. Controls and Procedures
The Company's President and Chief Executive Officer and its Chief
Financial Officer (the "Certifying Officers"), are responsible for establishing
and maintaining disclosure controls and procedures for the Company. The
Certifying Officers have concluded (based on their evaluation of these controls
and procedures as of the filing date of this report) that the design and
operation of the Company's disclosure controls and procedures (as defined in
Rule 13a-14c under the Securities Exchange Act of 1934) are effective. No
significant changes were made in the Company's internal controls or in other
factors that could significantly affect those controls subsequent to the date of
the evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
No legal proceedings filed.
Item 2. Changes in Securities
(a) Securities were materially modified as follows as a result of a
Forward Triangular Merger of CeriStar Inc and Planet Inc.
On September 10, 2002, CeriStar merged with a wholly owned subsidiary
of Planet Resources Inc., a non-operating company, together referred to as
Planet, in which all the issued and outstanding stock of CeriStar, including
shares of Common Stock, shares of Series A Convertible Preferred Stock and
shares of Series B Convertible Preferred Stock were exchanged for shares of
Planet Common Stock. The shares of Series A and B Convertible Preferred Stock of
CeriStar were each exchanged for .757 shares of Planet Common Stock and the
Common Stock of CeriStar were each canceled and converted into .322 shares of
Commons Stock of Planet. Prior to the merger Planet authorized a 1 for 5.23
reverse stock split. The merger was accounted for as a reverse merger with
CeriStar being the accounting acquirer. On October 15, 2002, Planet Resources
Inc. was renamed CeriStar, Inc.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
10
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: The following exhibits are included as part of this report:
SEC
Exhibit Reference
Number Number Title of Document Location
-------------------------------------------------------------------------------------------------------------
31.01 31 Certification of Chief Executive Officer Pursuant to Rule This filing
13a-14
-------------------------------------------------------------------------------------------------------------
31.02 31 Certification of Chief Financial Officer Pursuant to Rule This filing
13a-14
-------------------------------------------------------------------------------------------------------------
32.01 32 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted This filing
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Chief Executive Officer)
-------------------------------------------------------------------------------------------------------------
32.02 32 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted This filing
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Chief Financial Officer)
The following Exhibits are filed herewith pursuant to Rule 601 of
Regulation S-B or are incorporated herein by reference to previous filings.
No. Document
3.1 Certificate of Incorporation (1)
3.2 Amended Certificate of Incorporation (1)
3.3 Bylaws (1)
4.1 Specimen Common Stock Certificate (1)
10.1 2002 Directors, Officers and Consultants Stock Option, Stock
Warrant and Stock Award Plan (2)
(1) Incorporation by reference from Form 8-K, as filed on March 1,
2001
(2) Incorporation by reference from Registration Statement on Form
S-8, as filed on September 10, 2002.
(3) Incorporation by reference from Form 8-K, as filed on September
17, 2002.
(b) Reports on Form 8-K None
On November 25, the Company filed Form 8-K/A regarding the merger
between CeriStar, Inc. and Planet Resources, Inc.
11
Signatures
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date August 14, 2003 /s/ David L. Bailey
----------------- -------------------
David L. Bailey
Chief Executive Officer
Date August 14, 2003 /s/ G. Earl Demorest
---------------- --------------------
G. Earl Demorest
Chief Financial Officer
12