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 March 31, 2003
---------------------------------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _____________ to _____________
Commission File No. 0-29245
HEALTH & NUTRITION SYSTEMS INTERNATIONAL, INC.
----------------------------------------------
(Exact name of small business issuer as specified in its charter)
Florida
(State or other jurisdiction of incorporation or organization)
65-0452156
(I.R.S. Employer Identification Number)
3750 Investment Lane, Suite 5, West Palm Beach, Florida 33407
-------------------------------------------------------------
(Address of principal executive offices)
(561) 863-8446
--------------
(Issuer's telephone number)
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 3,632,813 shares of Common Stock as
of May 14, 2003.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
HEALTH AND NUTRITION SYSTEMS INTERNATIONAL, INC.
INDEX
Page
---------------
Facing Sheet..................................................................... Cover Page
Index............................................................................ ii
Part I - Financial Information 1
Item 1. Condensed Financial Statements 1
Condensed Balance Sheet
as of March 31, 2003 ............................................. 1
Condensed Statements of Operations
for the three months ended March 31, 2003 and 2002 (Unaudited).... 2
Condensed Statements of Cash Flows
for the three months ended March 31, 2003 and 2002 (Unaudited).... 3
Notes to Condensed Financial Statements................................. 4 - 5
Item 2. Management's Discussion and Analysis or Plan
of Operations.................................................. 6 - 10
Item 3. Controls and Procedures............................................ 10
Part II - Other Information 11
Item 1. Legal Proceedings.................................................. 11
Item 2. Changes in Securities.............................................. 11
Item 3. Defaults Upon Senior Securities.................................... 11
Item 4. Submission of Matters to a Vote of Security Holders................ 11
Item 5. Other Information.................................................. 11
Item 6. Exhibits and Reports on Form 8-K................................... 12
Signature........................................................................ 13
ii
HEALTH & NUTRITION SYSTEMS INTERNATIONAL, INC.
CONDENSED BALANCE SHEET
MARCH 31, 2003
(UNAUDITED)
- --------------------------------------------------------------------------------
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ASSETS
------
Current assets:
Cash $ 101,670
Accounts receivable, net 219,348
Inventory 206,447
-----------
Total current assets 527,465
-----------
Property and equipment, net 32,564
-----------
Other assets, net 29,811
-----------
Total assets $ 589,840
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
Accounts payable $ 833,997
Accrued expenses 60,485
Notes payable, current protion 326,948
-----------
Total current liabilities 1,221,430
-----------
Notes payable, less current portion 50,575
-----------
Total liabilities 1,272,005
-----------
Stockholders' deficit:
Common stock, $ 0.001 par value, authorized 30,000,000
shares; 3,632,813 shares issued and outstanding 3,630
Additional paid-in capital 834,812
Accumulated deficit (1,520,607)
-----------
Total stockholders' deficit (682,165)
-----------
Total liabilities and stockholders' deficit $ 589,840
===========
See accompanying notes to condensed financial statements.
1
HEALTH & NUTRITION SYSTEMS INTERNATIONAL, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(UNAUDITED)
- --------------------------------------------------------------------------------
2003 2002
----------- -----------
Revenue $ 1,065,548 $ 839,095
Cost of sales 451,418 312,390
----------- -----------
Gross profit 614,130 526,705
----------- -----------
Operating expense:
General and administrative expense 341,194 335,235
Advertising and promotion 162,411 141,803
Depreciation and amortization 7,443 7,616
----------- -----------
Total operating expense 511,048 484,654
----------- -----------
Income from operations 103,082 42,051
----------- -----------
Other income (expense):
Interest expense (10,829) (1,604)
----------- -----------
Income before income taxes 92,253 40,447
----------- -----------
Benefit (provision) for income taxes -- --
----------- -----------
Net income $ 92,253 $ 40,447
=========== ===========
Net income per share - basic $ 0.03 $ 0.01
=========== ===========
Net income per share - diluted $ 0.03 $ 0.01
=========== ===========
Weighted average number of shares - basic 3,629,813 3,629,813
=========== ===========
Weighted average number of shares - diluted 3,629,813 3,629,813
=========== ===========
See accompanying notes to condensed financial statements.
2
HEALTH & NUTRITION SYSTEMS INTERNATIONAL, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(UNAUDITED)
- --------------------------------------------------------------------------------
2003 2002
--------- ---------
Net cash provided by operating activities $ 189,106 $ 3,595
--------- ---------
Cash flows from financing activities:
Repayments on notes payable (101,500) (19,333)
Repayments on capital leases (714) (6,870)
--------- ---------
Net cash used in financing activities (102,214) (26,203)
--------- ---------
Net increase (decrease) in cash 86,892 (22,608)
Cash, beginning of period 14,778 81,932
--------- ---------
Cash, end of period $ 101,670 $ 59,324
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
- -----------------------------------
Conversion of accounts payable to notes payable $ -- $ 700,000
========= =========
See accompanying notes to condensed financial statements.
3
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited condensed financial statements of Health & Nutrition
Systems International, Inc. (the "Company") have been prepared in accordance
with generally accepted accounting principles for interim financial information
and Regulation S-B. Accordingly, they do not include all of the information and
footnotes required for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation of the results for the
interim periods presented have been included.
These results have been determined on the basis of generally accepted accounting
principles and practices applied consistently with those used in the preparation
of the Company's Annual Financial Statements for the year ended December 31,
2002. Operating results for the three months ended March 31, 2003 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2003.
It is recommended that the accompanying condensed financial statements be read
in conjunction with the financial statements and notes for the year ended
December 31, 2002, found in the Company's Form 10-KSB.
NOTE 2 - LEGAL MATTERS
- ----------------------
The Company from time to time is a party of various legal proceedings. In the
opinion of management, none of the proceedings are expected to have a material
impact on its financial position of results of operations.
NOTE 3 - MANAGEMENT'S PLANS AND ISSUES AFFECTING LIQUIDITY
- ----------------------------------------------------------
The Company's condensed financial statements have been prepared assuming that
the Company will continue as a going concern. During the three months ended
March 31, 2003, the Company has successfully controlled costs and attained
profitability, including net income of $92,253 and cash flow from operations of
$189,106. However, at March 31, 2003, the Company has a working capital deficit
of $693,966 and adverse liquidity ratios.
Management intends to continue controlling costs and monitoring financial
capabilities. Management believes these factors will contribute toward achieving
sustained profitability.
There remains substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not include any adjustments to
reflect the possible effects on the recoverability and classification of assets
or the amounts and classification of liabilities that may result from the
outcome of this uncertainty.
4
NOTE 4 - STOCK OPTIONS
The non-qualified stock option plan adopted by the Company in May 1998
authorized the Company to grant 1,250,000 of its common shares.
The Company has elected to account for the stock options under the Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and
related interpretations. Accordingly, no compensation expense has been
recognized on the employee stock options. The Company accounts for stock options
granted to consultants under Financial Accounting Standards Board Statement No.
123, "Accounting for Stock-Based Compensation."
During the three months ended March 31, 2003, no new options were granted to
officers, directors and employees of the Company.
Had the compensation expense for the stock option plan been determined based on
the fair value of the options at the grant date consistent with the methodology
prescribed under Statement of Financial Standards No. 123, "Accounting for
Stock-Based Compensation," at March 31, the Company's net income and earnings
per share would have been reduced to the proforma amounts indicated below:
March 31, 2003
--------------
Net income
As reported $ 92,253
=========
Pro forma $ 90,968
=========
Earnings per share
As reported $ 0.03
=========
Proforma $ 0.03
=========
The fair value of each option is estimated on the date of grant using the fair
market value option-pricing model with the following assumptions:
Risk-free interest rate 4.5% - 6.5%
Expected life (years) Various
Expected volatility 1.23
Expected dividends None
NOTE 5 - RECLASSIFICATION AND CORRECTION OF AN ERROR
- ----------------------------------------------------
Certain reclassifications have been made to the 2002 financial statements to
conform to the 2003 financial statement presentation. These reclassifications
have the effect of reducing revenue and reducing expense. Slotting fees expense
and new store discounts, charged back by customers were previously recorded as
marketing expense. In order to correct the accounting principle, the Company has
reclassified these costs as a reduction of gross sales. These reclassifications
have no effect on reported net income.
5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
This Quarterly Report on Form 10-QSB contains forward-looking statements. Any
statements that are not statements of historical fact should be regarded as
forward-looking statements. For example, the words "intends," "believes,"
"anticipates," "plans," and "expects" are intended to identify forward-looking
statements. There are a number of important factors that could cause our actual
results to differ materially from those indicated by such forward-looking
statements. These factors include without limitation those factors contained in
our Form 10-KSB filed with the Securities and Exchange Commission. We do not
undertake any obligation to update any such factors or to publicly announce the
result of any revision to any of the forward looking statements contained herein
to reflect future events or developments.
The following discussion of our results of operations and financial condition
should be read together with our unaudited Financial Statements contained in
Part I, Item 1 and the related Notes in this Form 10-QSB, and our audited
Financial Statements and the related Notes contained in our Form 10-KSB filed
with the Securities and Exchange Commission.
CRITICAL ACCOUNTING POLICIES
Financial Reporting Release No. 60, which was recently released by the U.S.
Securities and Exchange Commission, encourages all companies to include a
discussion of critical accounting policies or methods used in the preparation of
financial statements. Our financial statements include a summary of the
significant accounting policies and methods used in the preparation of our
financial statements.
Management believes the following critical accounting policies affect the
significant judgments and estimates used in the preparation of the financial
statements.
REVENUE RECOGNITION
Revenues are recognized at the time of shipment of the respective merchandise.
Revenues in the accompanying financial statements for the three months ended
March 31, 2003 and 2002 are presented net of returns and allowances, sales
discounts, new store opening discounts and coop advertising and promotions in
the amounts of $551,237 and $381,448 respectively, an increase of $169,789. The
increase for the three months ended March 31, 2003 was primarily due to
advertising, promotions, and marketing efforts by the Company. Freight expenses
are included in cost of sales.
6
USE OF ESTIMATES
Management's discussion and analysis of financial condition and results of
operations is based upon our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires management to
make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues, and expenses, and related disclosure of contingent assets
and liabilities. On an ongoing basis, management evaluates these estimates,
including those related to valuation allowance for the deferred tax asset,
estimated useful life of fixed assets and the carrying value of long-lived
assets, intangible assets and allowances for sales returns, doubtful accounts,
and obsolete and slow moving inventory and reserve for customer liabilities.
Management bases these estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying value of
assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or
conditions.
OVERVIEW
We continued to implement the Company's strategic plan to diversify our product
line by developing and promoting new products. This strategy is aimed at
minimizing the impact of a shift in consumer preferences with regard to any one
of our products, a change in retailer attitude with respect to any of our
products, or any other cause of reduced sales either for a particular product or
in a particular geographical area.
NET SALES
Gross revenues for the three months ended March 31, 2003 were $1,616,785 an
increase of $396,241 or a 32%, as compared to gross revenue for the three months
ended March 31, 2002 of $1,220,544. Net revenues for the three months ended
March 31, 2003 were $1,065,548, an increase of $226,453 or 27%, as compared to
net sales of $839,095 for the three months ended March 31, 2002. The increase
was primarily due to the increased sales of Carb Cutter, Eat Less and Phase2 in
the amount of $766,222. For the three months ended March 31, 2003, the revenues
with respect to our largest customers were as follows: (i) Wal-Mart accounted
for $428,706 or 27% of sales: (ii) GNC accounted for $255,814 or 16% of sales;
(iii) Walgreens accounted for $194,184 or 12% of sales; and (iv) CVS accounted
for $212,425 or 13% of sales. No other account represented more than 5% of sales
during the quarter.
COST OF SALES
Cost of sales for the three months ended March 31, 2003 was $451,418 or 42% of
net sales as compared to $312,390 or 37% of net sales for the three months ended
March 31, 2002. The cost of sales as a percentage of gross revenues were 28% and
26% respectively. The dollar amount is higher due to the increased sales and the
percentage increase is due to the new products having a higher cost of goods and
the higher amount of reductions to gross revenues, namely co-operative
advertising costs and slotting fees paid.
7
GROSS PROFIT
Gross profit for the three months ended March 31, 2003 was $614,130 an increase
of $87,425 or 17% compared to gross profit of $526,705 for the three months
ended March 31, 2002. As a percent of net sales, gross profit was 58% for the
three months ended March 31, 2003, compared to 63% for the three months ended
March 31, 2002. The increase in gross profit was primarily due to the sales
increases in the Carb Cutter, Eat Less and Phase2 in the aggregate amount of
$766,222. The decrease in percentage is due to the higher cost of sales
percentage and the higher amount of reductions to gross revenue.
OPERATING EXPENSES
Operating expenses were $511,048 for the three months ended March 31, 2003,
representing an increase of $26,394, compared to $484,654 for the three months
ended March 31, 2002. As a percent of net sales, operating expenses were 48% for
the three months ended March 31, 2003, compared to 58% for the three months
ended March 31, 2002. Advertising and promotion expenses for the three months
ended March 31, 2003, were $162,411 representing an increase of $20,608,
compared to $141,803 for the three months ended March 31, 2002. The general and
administrative expenses were $341,194 for the three months ended March 31, 2003
compared to $335,235 for the three months ended March 31, 2002 or an increase of
$5,959, this amount was made up of various expense items. The Company is
successfully controlling costs in order to attain profitability.
NET PROFIT FROM OPERATIONS
Net profit from operations was $103,082 for the three months ended March 31,
2003, compared to a net profit from operations of $42,051 for the three months
ended March 31, 2002. Net profit was $92,253 or $0.03 per share for the three
months ended March 31, 2002, as compared to a net profit of $40,447 or $0.01 per
share for the three months ended March 31, 2002.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2003, the Company had a working capital deficit of $693,965
compared to a $504,245 working capital deficit at March 31, 2002.
Net cash provided by operating activities for the three months ended March 31,
2003 was $189,106 compared to $3,595 provide by operating activities for the
three months ended March 31, 2002. The resulting increase in cash is primarily
due to a net profit realized from the increase in sales during the three months
ended March 31, 2003, due to higher sales and lower general and administrative
costs.
8
Cash used in investing activities was $ 0 for the three months ended March 31,
2003 compared to $ 0 used in investing activities for the three months ending
March 31, 2002.
Net cash used in financing activities for the three months ended March 31, 2003
was $102,214 compared to net cash used by financing activities of $26,203 for
the three months ended March 31, 2002, as sufficient cash flow is being provided
by operations.
On April 11, 2002, the Company entered into an agreement with Garden State
Nutritionals (GSN), sole manufacturer, to repay $700,000 owed to GSN as of the
date of the agreement. The repayment schedule requires equal quarterly payments,
without interest, over the next eight quarters, starting June 1, 2002. In
connection with this agreement, the Company granted to GSN a blanket second
priority lien on the Company's assets under a Security Agreement, which may only
be, foreclosed upon the event the Company fails to make (3) consecutive
quarterly principle payments in accordance with the terms of the promissory
note. The occurrence of any of the following events shall constitute a default
under this promissory note: (i) the failure of Company to pay when due any
payment of principal and such failure continues for fifteen (15) days after
Lender notifies the Company in writing; (ii) the Company files for or is granted
certain relief pursuant to or within the meaning of the United States Bankruptcy
Code or any other federal or state law relating to insolvency or relief of
debtors (a "Bankruptcy Law") and (iii) Christopher Tisi ceases to be the
President and Chief Executive Officer of the Company (unless a replacement
reasonably acceptable to Lender is obtained within thirty days)
Also, on April 11, 2002, we entered into an exclusive manufacturing agreement
with GSN pursuant to which GSN has provided us with a $450,000 line of credit,
on current invoices, with 60-day terms. GSN informally allowed the Company to
purchase up to $1,000,000 on the line of credit. At March 31, 2003 the balance
owed to GSN under this line of credit is $746,130.
COMMITMENTS AND CONTINGENCIES
Regulatory Matters - Our discontinued products Fat Cutter Plus(TM), ThinTab(R)
and our formally owned Carbolizer(TM) product, contain ephedra, also known as
"Ma Huang," an herb that contains naturally occurring ephedrine. These products
represented approximately 19% of our gross revenue for the twelve months ended
December 31, 2002. Ephedra containing products have been the subjects of adverse
publicity in the United States and other countries relating to alleged harmful
effects. The company has discontinued all sales of products containing ephedra.
PRODUCT LIABILITY
The Company, like other marketers of products that are intended to be ingested,
faces the inherent risk of exposure to product liability claims in the event
that the use of our products results in injury. The Company maintains product
liability insurance coverage of $6,000,000. It may become increasingly difficult
to obtain and maintain product liability insurance coverage for products
containing ephedra at premiums that the Company can afford.
9
Although no material product liability claims have been asserted against us, if
they are in the future, our product liability insurance coverage could prove to
be inadequate and these claims could result in material losses.
MANAGEMENT'S PLANS AND ISSUES AFFECTING LIQUIDITY
The Company's condensed financial statements have been prepared assuming that
the Company will continue as a going concern. During the three months ended
March 31, 2003, the Company has successfully controlled costs and attained
profitability, including net income of $92,253 and cash flow from operations of
$189,106. However, at March 31, 2003, the Company has a working capital deficit
of $693,966 and adverse liquidity ratios.
Management intends to continue controlling costs and monitoring financial
capabilities. Management believes these factors will contribute toward achieving
sustained profitability.
There remains substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not include any adjustments to
reflect the possible effects on the recoverability and classification of assets
or the amounts and classification of liabilities that may result from the
outcome of this uncertainty.
ITEM 3. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
- ------------------------------------------------
Within the 90 days prior to the filing date of this report, the Company carried
out an evaluation of the effectiveness of the design and operation of its
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. This
evaluation was done under the supervision and with the participation of the
Company's Chairman, President and its Controller. Based upon that evaluation,
they concluded that the Company's disclosure controls and procedures are
effective in gathering, analyzing and disclosing information needed to satisfy
the Company's disclosure obligations under the Exchange Act.
Change in internal controls
- ---------------------------
There were no significant changes in the Company's internal controls or in other
factors that could significantly affect those controls since the most recent
evaluation of such controls.
10
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
J.C. Herbert Bryant, III and KMS-Thin Tab 100, Inc.
In 2000, the Company sued a former officer and director of the Company and KMS
Thin-Tab 100, Inc., a corporation controlled by the former director, for
trademark infringement, unfair competition and cyberpiracy. The former director
and KMS counterclaimed alleging a breach of distribution agreement with the
Company. On September 19, 2002, the Company announced the settlement of all
litigation between HNS and J.C. Herbert Bryant and KMS-Thin Tab 100, Inc.
The settlement agreement generally requires Bryant and KMS to transfer the
registration and ownership of the domain names Thintab.com, Thintab.cc and
Carbcutter.cc to HNS and to take other action to eliminate confusion over the
ownership of the Thin Tab@ name. Additionally, it provides for each of the
adverse parties to generally release the others.
As part of the settlement, HNS entered into a distribution agreement with
Bryant, beginning on September 26, 2002 and ending on September 25, 2007,
permitting Bryant to purchase certain of its products from HNS and to
exclusively distribute those products in Florida from Orlando south. HNS also
has agreed not to sell its products directly to certain KMS customers. HNS book
a legal settlement expense of $58,836 associated with this settlement.
The Company from time to time is a party of various legal proceedings. In the
opinion of management, none of the proceedings are expected to have a material
impact on its financial position of results of operations.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None
11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Index and Exhibits
Exhibit 99.1 Certification 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 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 during the fiscal quarter ended March 31, 2003.
None
12
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: May 15, 2003 Health & Nutrition Systems International, Inc.
(The "Registrant")
By: /s/ Christopher Tisi
------------------------------------------
Chris Tisi
Interim Chairman of the Board,
Chief Executive Officer and President
(Principal executive officer)
13
CERTIFICATIONS
I, Chris Tisi, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Health &
Nutrition Systems International, 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.
May 15, 2003 /s/ Christopher Tisi
--------------------------------
Chris Tisi
Interim Chairman of the Board and
Chief Executive Officer
14
CERTIFICATIONS
I, Al Dugan, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Health &
Nutrition Systems International, 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.
May 15, 2003 /s/ Al Dugan
----------------------------------------
Al Dugan
Controller (Principal Accounting Officer)
15
17
Exhibit Index
-------------
Exhibit
Number Description
- ------ -----------
99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
16
Exhibit 99.1
HEALTH & NUTRITION SYSTEMS INTERNATIONAL, INC.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Health & Nutrition Systems
International, Inc. (the "Company") on Form 10-QSB for the period ending March
31, 2003 as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, Chris Tisi, Interim Chairman of the Board and Chief Executive
Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted
pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and result of
operations of the Company.
/s/ Christopher Tisi
- ---------------------------------
Chris Tisi
Interim Chairman of the Board and
Chief Executive Officer
May 15, 2003
Exhibit 99.2
HEALTH & NUTRITION SYSTEMS INTERNATIONAL, INC.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Health & Nutrition Systems
International, Inc. (the "Company") on Form 10-QSB for the period ending May 31,
2003 as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, Al Dugan, Controller (Principal Accounting Officer) of the
Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906
of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and result of
operations of the Company.
/s/ Al Dugan
- ----------------------------------------
Al Dugan
Controller (Principal Accounting Officer)
May 15, 2003