UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period ended September 30, 2002
OR
[ ] Transition Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File Number 0-13981
ELECTRONIC TELE-COMMUNICATIONS, INC.
(Exact name of small business issuer as specified in its charter)
Wisconsin 39-1357760
(State of incorporation) (IRS Employer Identification No.)
1915 MacArthur Road Waukesha, Wisconsin 53188
(Address of principal executive offices)
(262) 542-5600
(Issuer's telephone number)
As of November 11, 2002, there were outstanding 2,009,149 shares of Class A
common stock and 499,998 shares of Class B common stock. The Class B common
stock, 87.9% of which is owned by affiliates, is the only voting stock. The
Class B common stock is not traded on an exchange.
ELECTRONIC TELE-COMMUNICATIONS, INC.
INDEX
Page
PART I Financial Information
Item 1. Financial Statements
Balance Sheets .......................................................... 2
Statements of Operations ................................................ 3
Statements of Cash Flows ................................................ 4
Notes to Financial Statements ........................................... 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ............................................. 7
Item 3. Controls and Procedures ................................................. 10
PART II Other Information
Item 6. Exhibits and Reports on Form 8-K ........................................ 10
SIGNATURES ................................................................................ 10
CERTIFICATIONS ............................................................................ 11
-1-
ELECTRONIC TELE-COMMUNICATIONS, INC.
BALANCE SHEETS
September 30, 2002 and December 31, 2001
(UNAUDITED) (Note 1)
SEPTEMBER 30 December 31
2002 2001
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 189,437 $ 64,811
Trade accounts receivable, net 414,167 431,310
Inventories (Note 2) 1,236,491 1,380,151
Net investment in sales-type leases 349,190 391,060
Prepaid expenses and other current assets 88,891 91,140
------------ ------------
Total current assets 2,278,176 2,358,472
PROPERTY, PLANT AND EQUIPMENT, NET 308,032 434,945
NET INVESTMENT IN SALES-TYPE LEASES 376,610 618,910
GOODWILL (Note 3) 790,596 790,596
OTHER ASSETS (Note 4) 116,597 --
------------ ------------
Total Assets $ 3,870,011 $ 4,202,923
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving credit facility (Note 5) $ -- $ --
Accounts payable 180,293 99,806
Accrued expenses 394,812 381,141
Income taxes payable 66,644 65,630
Deferred revenue and customer deposits 86,830 123,931
Deferred gain on sale of building 62,675 62,675
------------ ------------
Total current liabilities 791,254 733,183
DEFERRED GAIN ON SALE OF BUILDING 370,364 417,370
------------ ------------
Total liabilities 1,161,618 1,150,553
STOCKHOLDERS' EQUITY:
Preferred stock, authorized 5,000,000 shares, none issued -- --
Class A common stock, authorized 10,000,000 shares,
par value $.01, issued and outstanding 2,009,149 shares 20,091 20,091
Class B common stock, authorized 10,000,000 shares,
par value $.01, issued and outstanding 499,998 shares 5,000 5,000
Additional paid-in capital 3,335,647 3,335,647
Retained earnings (deficit) (652,345) (308,368)
------------ ------------
Total stockholders' equity 2,708,393 3,052,370
------------ ------------
Total Liabilities and Stockholders' Equity $ 3,870,011 $ 4,202,923
============ ============
The accompanying notes are an integral part of these financial statements.
-2-
ELECTRONIC TELE-COMMUNICATIONS, INC.
STATEMENTS OF OPERATIONS
THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001 -
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------------------ ------------------------------
2002 2001 2002 2001
------------ ------------ ------------ ------------
NET SALES $ 728,375 $ 918,605 $ 3,138,403 $ 3,805,355
COST OF PRODUCTS SOLD 436,990 652,614 1,546,600 2,412,008
------------ ------------ ------------ ------------
GROSS PROFIT 291,385 265,991 1,591,803 1,393,347
OPERATING EXPENSES:
General and administrative 166,071 215,258 540,540 820,628
Marketing and selling 241,392 308,529 818,063 1,323,657
Research and development 182,278 273,032 635,441 1,174,427
------------ ------------ ------------ ------------
589,741 796,819 1,994,044 3,318,712
------------ ------------ ------------ ------------
EARNINGS (LOSS) FROM OPERATIONS (298,356) (530,828) (402,241) (1,925,365)
OTHER INCOME (EXPENSE):
Interest expense -- (3,880) (2,736) (38,383)
------------ ------------ ------------ ------------
EARNINGS (LOSS) BEFORE INCOME TAXES (298,356) (534,708) (404,977) (1,963,748)
Income taxes (benefit) (63,000) 1,000 (61,000) 3,000
------------ ------------ ------------ ------------
NET EARNINGS (LOSS) $ (235,356) $ (535,708) $ (343,977) $ (1,966,748)
============ ============ ============ ============
BASIC AND DILUTED EARNINGS
(LOSS) PER SHARE:
Class A common $ (0.09) $ (0.21) $ (0.14) $ (0.78)
Class B common $ (0.09) $ (0.21) $ (0.14) $ (0.78)
The accompanying notes are an integral part of these financial statements.
-3-
ELECTRONIC TELE-COMMUNICATIONS, INC.
STATEMENTS OF CASH FLOWS
NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001 - (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30
------------------------------
2002 2001
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ (343,977) $ (1,966,748)
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Depreciation and amortization 139,532 210,970
(Gain) loss from sale of property, plant and equipment (68,132) (17,231)
Changes in operating assets and liabilities:
Accounts receivable 17,143 1,008,870
Inventories 143,660 33,209
Net investment in sales-type leases 284,170 270,644
Prepaid expenses and other current assets 2,249 (29,478)
Accounts payable and accrued expenses 94,158 (157,441)
Income taxes 1,014 51,037
Deferred revenue and customer deposits (37,101) 41,193
------------ ------------
Total adjustments 576,693 1,411,773
------------ ------------
Net cash provided by (used in) operating activities 232,716 (554,975)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (5,387) (42,581)
Proceeds from sale of property, plant and equipment 23,332 1,264,896
Capitalized software production costs (126,035) --
------------ ------------
Net cash provided by (used in) investing activities (108,090) 1,222,315
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Payments) borrowings on revolving credit facility, net -- (870,000)
------------ ------------
Net cash provided by (used in) financing activities 0 (870,000)
------------ ------------
Net increase (decrease) in cash and cash equivalents 124,626 (202,660)
Cash and cash equivalents at beginning of year 64,811 242,612
------------ ------------
Cash and cash equivalents at end of period $ 189,437 $ 39,952
============ ============
Supplemental disclosures of cash flow information:
Cash received from income tax refunds $ 63,643 $ 50,000
Cash paid for income taxes 1,727 1,963
Cash paid for interest expense 2,736 43,921
The accompanying notes are an integral part of these financial statements.
-4-
ELECTRONIC TELE-COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2002 - (UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared by the
Company in accordance with accounting principles generally accepted in the
United States of America (GAAP) for interim financial information and with the
instructions to Form 10-QSB and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by GAAP for
complete financial statements. The information furnished herein reflects all
adjustments and accruals that management believes is necessary to fairly state
the operating results for the respective periods. Operating results for the
three-month and nine-month periods ended September 30, 2002, are not necessarily
indicative of the results that may be expected for the year ended December 31,
2002.
The balance sheet at December 31, 2001, has been derived from the audited
financial statements at that date, but does not include all of the information
and footnotes required by GAAP for complete financial statements.
For further information, refer to the financial statements and footnotes thereto
included in the Company's 2001 Annual Report to Shareholders.
2. INVENTORIES
Inventories consisted of the following:
SEPTEMBER 30 December 31
2002 2001
------------ ------------
Raw materials and supplies $ 413,264 $ 417,752
Work-in-process and finished goods 678,728 785,778
Maintenance and demo parts 248,521 302,849
Reserve for obsolescence (104,022) (126,228)
------------ ------------
Total inventories $ 1,236,491 $ 1,380,151
============ ============
3. NEW ACCOUNTING PRONOUNCEMENT
In June 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 142 supersedes APB Opinion No. 17, "Intangible Assets." SFAS
No. 142 addresses how intangible assets acquired outside of a business
combination should be accounted for upon acquisition and how goodwill and other
intangible assets should be accounted for after they have been initially
recognized. SFAS No. 142 eliminates the amortization for goodwill and other
intangible assets with indefinite lives. Other intangible assets with a finite
life will be amortized over their useful life. Goodwill and other intangible
assets with indefinite useful lives shall be tested for impairment annually or
more frequently if events or changes in circumstances indicate that the asset
may be impaired. SFAS No. 142 is effective for fiscal years beginning after
December 15, 2001. The Company adopted SFAS No. 142 effective January 1, 2002.
The impairment analysis for goodwill and other intangible assets with indefinite
useful lives has been completed and no impairment charge was taken at the time
of adoption or during the three-month or nine-month periods ended September 30,
2002. The amount of goodwill amortization taken in 2001, the year prior to
adoption of SFAS No. 142, was $30,256.
-5-
ELECTRONIC TELE-COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2002 - (UNAUDITED)
(CONTINUED)
4. OTHER ASSETS
Other assets of $116,597 as of September 30, 2002, consisted entirely of
capitalized software production costs in accordance with SFAS No. 86,
"Accounting for Computer Software to be Sold, Leased, or Otherwise Marketed."
These costs are being amortized on a straight-line basis over the remaining
estimated economic life of the product. As of September 30, 2002, gross
capitalized software production costs of $126,035 were reduced by $9,438 of
accumulated amortization.
5. REVOLVING CREDIT FACILITY
On January 22, 2002, the Company signed a revolving credit facility with esitec,
llc, an affiliate. The term of the revolving credit facility ends December 31,
2002. Under the revolving credit facility, the Company can borrow up to a
maximum of $200,000. Interest is payable monthly at a rate of 2% over prime, and
any outstanding balances of principal and interest are due at the end of the
term. The revolving credit facility is secured by trade accounts receivable. As
of September 30, 2002, the Company had no borrowings under the revolving credit
facility. Interest paid for borrowings on the revolving credit facility during
the nine-month period ended September 30, 2002 was $2,736.
-6-
ELECTRONIC TELE-COMMUNICATIONS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales were $728,375 and $918,605 for the three-month periods ended September
30, 2002 and 2001, respectively. Net sales for the nine-month period ended
September 30, 2002, were $3,138,403, compared to $3,805,355 for the
corresponding period of 2001. The decrease in net sales for the three-month and
nine-month periods ended September 30, 2002, was due primarily to lower customer
demand for the Company's interactive voice information systems versus the
comparable periods in the prior year and lower revenues from leases and
services. Included in net sales were revenues from sales of the Company's
interactive voice information systems of $993,338 or 32% of net sales, and
$1,126,790 or 30% of net sales, for the nine-month periods ended September 30,
2002 and 2001, respectively. The Company's customers continue to be severely
impacted by slow economic conditions, especially in the domestic
telecommunications industry, where falling stock prices, financial losses, and
workforce reductions have adversely impacted customers' buying decisions. It is
not possible to predict the duration of depressed conditions in these customer
industries. In addition, the terrorist attacks of September 11, 2001, further
slowed customer purchasing cycles. Revenues from operating leases, sales-type
leases, and services were $2,078,834 or 66% of net sales for the 2002 nine-month
period, compared to $2,461,035 or 65% of net sales for the corresponding 2001
nine-month period. The decrease in these sales dollars was due primarily to
lower lease revenue from the Company's time weather temperature systems. It is
anticipated that lease revenue will continue to fall but will be replaced by
revenue from increased services provided to the sold time weather temperature
systems that replace the leased units. Product pricing for the Company's
equipment remained relatively constant between periods. Inflation did not have a
material impact on revenues.
For the three-month periods ended September 30, 2002 and 2001, the gross profit
percentage was 40% and 29%, respectively. Gross profit as a percentage of sales
for the nine-month periods ended September 30, 2002 and 2001, were 51% and 37%
respectively. The gross profit percentage in the 2002 three-month and nine-month
periods showed a substantial increase due to the effect of the Company's cost
reduction measures that were implemented during 2001, including reductions of
manufacturing personnel and related costs. Overall, gross profit percentages in
all periods presented were lower than historical gross profit percentages due to
lower sales volumes over which to spread fixed manufacturing costs. In addition,
the product mix in the 2002 periods included more of the Company's newer Emcee
and Z-10 products which contributed to the higher gross margins.
For the three-month periods ended September 30, 2002 and 2001, total operating
expenses were $589,741 or 81% of net sales, and $796,819 or 87% of net sales,
respectively. Total operating expenses were $1,994,044 or 64% of net sales for
the nine-month period ended September 30, 2002, compared to $3,318,712 or 87%
for the corresponding period of 2001. Total operating expenses as a percentage
of net sales for all periods presented were higher than historical percentages
due to the substantially lower sales volumes over which to spread fixed
operating expenses. General and administrative expenses, sales and marketing
expenses, and research and development expenses were all significantly lower for
the 2002 three-month and nine-month periods due to cost reduction programs and
staff downsizing implemented beginning late in the first quarter of 2001 and
continuing into the third quarter of 2001. The staff downsizing has reduced the
Company's workforce by approximately 50% and included all departments within the
Company. The reductions implemented since the first quarter of 2001 are designed
to save the Company approximately $3,000,000 on an annualized basis. In
addition, general and administrative expenses included goodwill amortization of
$22,692 in the 2001 nine-month period that did not occur in the comparable 2002
period because of the adoption of SFAS No. 142.
Net other expenses were $2,736 for the nine-month period ended September 30,
2002, compared to $38,383 for the corresponding nine-month period of 2001. The
decrease between periods of net other expenses was due to less interest expense
incurred on lower borrowings during the 2002 nine-month period.
-7-
ELECTRONIC TELE-COMMUNICATIONS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
For the three-month period ended September 30, 2002, net loss was $235,356,
compared to a net loss of $535,708 for the three-month period ended September
30, 2001. Net loss for the nine-month period ended September 30, 2002 was
$343,977 compared to a net loss of $1,966,748 for the corresponding period of
2001. The significant decreases in the loss for the three-month and nine-month
periods ended September 30, 2002, were due primarily to the cost reduction
programs and staff downsizing which improved gross margins and reduced operating
expenses. The income tax benefit in the 2002 periods was due to a refund of
federal taxes received by carrying back the 2001 net loss and offsetting it
against prior year income. The income tax expense in the 2001 periods was
related to minimum state taxes due in various states.
LIQUIDITY AND SOURCES OF CAPITAL
Working capital was $1,486,922 at September 30, 2002, compared to $1,625,289 for
December 31, 2001. The decrease in working capital was primarily due to the net
loss, partially offset by payments received on sales-type leases and sales of
inventory and fixed assets. Cash provided by operating activities in the 2002
nine-month period of $232,716 was a result of a decrease in inventories and
increased collections on sales-type leases, partially offset by the net loss.
Cash used by operating activities in the 2001 nine-month period of $554,975 was
due primarily to the net loss, partially offset by a large decrease in accounts
receivable which was a result of the timing of several large sales made in the
fourth quarter of 2000 that were paid in the first quarter of 2001.
For the nine-month period ended September 30, 2002, cash provided by a decrease
in inventories and increased collections on sales-type leases was used to
finance the net loss. For the nine-month period ended September 30, 2001, cash
provided by the reduction in accounts receivable and a sale and leaseback
transaction with an affiliate for the Company's principal office and land was
used to finance the net loss, pay off bank borrowings, and purchase capital
equipment.
The Company has sustained substantial operating losses over the past two years.
Although the level of losses had been decreasing over the last five quarters
ending June 30, 2002, the Company incurred another loss in the quarter ending
September 30, 2002. In addition, the Company has used substantial amounts of
working capital in its operations. The losses and use of working capital were a
result of the significant decrease in sales caused by lower customer demand for
the Company's products. The Company's customers were severely impacted by
slowing economic conditions, especially in the domestic telecommunications
industry, where falling stock prices, financial losses and workforce reductions
adversely impacted customers' buying decisions. In addition, the terrorist
attacks of September 11, 2001 further slowed customers' purchasing cycles.
To address the resultant cash flow requirements caused by the decrease in sales,
the Company entered into a sale leaseback transaction in 2001 with an affiliate
for the building and associated land in Waukesha, Wisconsin which serves as the
Company's principal office and manufacturing facility. The proceeds from the
transaction were used to pay off remaining amounts outstanding under a revolving
credit facility with a bank and to fund working capital. The revolving credit
facility agreement with the bank was subsequently terminated. In addition, the
Company reduced its workforce by almost 50% during 2001 through a combination of
terminations and lay-offs.
-8-
ELECTRONIC TELE-COMMUNICATIONS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
To supplement cash flow in the short-term, the Company entered into an agreement
with an affiliate for up to $200,000 of borrowing availability. As of September
30, 2002, the Company had no borrowings on the revolving credit facility.
Working capital was $1,486,922, and the Company's current ratio was 2.9 at
September 30, 2002. With the workforce reductions in 2001 and strict control of
all costs, the Company has significantly reduced the sales levels necessary to
turn its operations profitable. Sales increased steadily during the fourth
quarter of 2001 and the first and second quarters of 2002 before falling off in
the third quarter of 2002. The Company began shipments in December 2001 of two
new products, the Emcee and Z-10. The order backlog is approximately $501,000 as
of September 30, 2002, compared to $342,000 at September 30, 2001. The Company
will continue to monitor its operations to determine if additional cost savings
measures need to be implemented to improve cash flow.
Management is optimistic that market conditions and demand for the Company's new
products will improve and that the Company's operations will return to
profitability over the next 12 months. If the Company's operations return to
profitability, management believes the Company can generate sufficient internal
cash flow to support its operations. In addition, assuming profitable
operations, management believes the Company will be able to secure additional
financing from a bank to provide additional working capital as needed. However,
there can be no assurance that any or all of these items will be accomplished.
If the Company does not return to profitability, however, it is unlikely that it
will be able to secure such bank financing. In such case, the Company may be
able to further reduce costs to a level which would permit it to operate
profitably by relying on the revenue stream generated by its
time/weather/temperature and services business.
The Company did not pay a dividend on Class A common stock in 2000 or 2001. If
the Company does not pay a minimum dividend of $.08 per share on Class A common
stock in 2002, or approximately $161,000, the holders of Class A common stock
will be entitled to vote in 2003. The Company has not yet determined if it will
pay a dividend in 2002.
Management believes that the actions it has taken as described above, together
with continuing to control costs and the close monitoring of operations, provide
the opportunity for the Company to continue as a going concern.
FORWARD LOOKING INFORMATION
From time to time, information provided by the Company, statements made by its
employees, and information included in its filings with the Securities and
Exchange Commission which are not historical facts are forward-looking in nature
and relate to trends and events that may affect the Company's future financial
position and operating results. Such forward-looking information is provided
pursuant to the Safe Harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are not guarantees of future
performance and involve a number of risks and uncertainties including, but not
limited to, improved conditions in the Company's markets, the availability of
adequate working capital and credit facilities, the ability successfully to
complete development of and bring to market new products for which there is
customer demand, technology changes, backlog, status of the economy,
governmental regulations, sources of supply, expense structure, product mix,
major customers, competition, litigation, and other risk factors detailed in the
Company's filings of Form 10-KSB with the Securities and Exchange Commission.
Investors are encouraged to consider the risks and uncertainties included in
those filings.
-9-
ITEM 3. CONTROLS AND PROCEDURES
Within the 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision of the Company's Chief Executive Officer and
Chief Financial Officer and with the participation of the Company's management,
of the effectiveness of the design and operation of the Company's disclosure
controls and procedures pursuant to Exchange Act Rule 13a-14. Base upon that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that the Company's disclosure controls and procedures are effective in timely
alerting them to material information relating to the Company required to be
included in the Company's periodic Securities and Exchange Commission filings.
No significant changes were made in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 11 Computation of Earnings Per Share
Exhibit 99.1 Certification of Dean W. Danner
pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
Exhibit 99.2 Certification of Jeffrey M. Nigl
pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
None.
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.
ELECTRONIC TELE-COMMUNICATIONS, INC.
/s/ Dean W. Danner
-----------------------------------------
Dean W. Danner
President and
Chief Executive Officer
/s/ Jeffrey M. Nigl
-----------------------------------------
Jeffrey M. Nigl
Vice President, Chief Financial
Officer, Treasurer and Principal
Accounting Officer
Date: November 11, 2002
-10-
CERTIFICATIONS
I, Dean W. Danner, President and Chief Executive Officer of Electronic
Tele-Communications, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Electronic
Tele-Communications, 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 officers 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
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 11, 2002
/s/ Dean W. Danner
----------------------------------
Dean W. Danner
President and
Chief Executive Officer
-11-
CERTIFICATIONS
I, Jeffrey M. Nigl, Vice President, Chief Financial Officer, and Treasurer of
Electronic Tele-Communications, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Electronic
Tele-Communications, 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 officers 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
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 11, 2002
/s/ Jeffrey M. Nigl
----------------------------------
Jeffrey M. Nigl
Vice President, Chief
Financial Officer,
and Treasurer
-12-