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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2003
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from ___________ to___________
For the Quarter ended Commission File No.
June 30, 2003 0-24282
MONMOUTH CAPITAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
New Jersey 21-0740878
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Juniper Business Plaza,3499 Route 9 North,Suite 3C,Freehold, NJ
07728
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code:(732)577-9981
___________________________________________________________
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15 (d) of
the Securities and 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 _____
Indicate by check mark whether the registrant is an
accelerated filer (as defined in Rule 12b-2 of the Exchange
Act).Yes ___ No _X_
The number of shares or other units outstanding of each of
the issuer's classes of securities as of August 1, 2003 was
2,992,743 shares.
MONMOUTH CAPITAL CORPORATION
FOR THE QUARTER ENDED JUNE 30, 2003
CONTENTS
PART I - FINANCIAL INFORMATION PAGE NO.
Item 1 - Financial Statements (Unaudited):
Consolidated Balance Sheets 3-4
Consolidated Statements of Income 5
Consolidated Statements of Cash Flow 6
Notes to Consolidated Financial Statements 7-9
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10- 13
Item 3 - Quantitative and Qualitative
Disclosure
About Market Risk
There have been no material changes to information
required regarding quantitative and qualitative
disclosures about market risk from the end of the
preceding year to the date of this Form 10-Q.
Item 4 - Controls and Procedures 12
PART II - OTHER INFORMATION 13
SIGNATURES 14
Page 2
MONMOUTH CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30,2003 AND DECEMBER 31,2002
June 30, December 31,
ASSETS 2003 2002
__________ __________
Real Estate Investments:
Land $2,099,065 $2,099,065
Buildings, Improvements and
Equipment, net of accumulated
depreciation of $412,567 and
$285,852, respectively 9,623,433 9,750,148
__________ __________
Total Real Estate Investments 11,722,498 11,849,213
Cash and Cash Equivalents 248,468 174,099
Securities Available for Sale,
at Fair Value:
Federal National Mortgage
Association 1,214,438 3,348,671
Government National Mortgage
Association 112,906 149,758
Other Securities Available
for Sale 8,043,872 9,346,508
Accounts Receivable 9,732 27,625
Loans Receivable, net of
allowance for losses of $100,845,
at June 30, 2003 and
December 31, 2002 1,636,892 1,888,094
Inventory 146,558 118,009
Prepaid Expenses and Other Assets 27,107 13,942
Financing Costs, net of accumulated
amortization 177,212 185,613
__________ __________
TOTAL ASSETS $23,339,683 $27,101,532
========== ==========
-UNAUDITED-
See Notes to the Consolidated Financial Statements
Page 3
MONMOUTH CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS (CONT'D.)
AS OF JUNE 30,2003 AND DECEMBER 31,2003
June 30, December 31,
2003 2002
__________ __________
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgages Payable $8,452,925 $8,616,405
Accounts Payable and Accrued Expenses 233,837 327,391
Loans Payable 2,777,178 8,660,162
Other Liabilities 35,000 35,000
__________ __________
Total Liabilities 11,498,940 17,638,958
__________ __________
Minority Interest 345,911 352,564
__________ __________
Shareholders' Equity:
Common Stock (par value $1.00 per
share; authorized 10,000,000
shares; issued and outstanding
2,896,343 and 2,277,537 shares
respectively 2,896,343 2,277,537
Additional Paid-In Capital 6,601,870 4,993,306
Accumulated Other Comprehensive
Income 1,785,769 1,734,189
Retained Earnings 210,850 104,978
__________ __________
Total Shareholders' Equity 11,494,832 9,110,010
__________ __________
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $23,339,683 $27,101,532
========== ==========
-UNAUDITED-
See Notes to the Consolidated Financial Statements
Page 4
MONMOUTH CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS AND SIX MONTHS ENDED
JUNE 30, 2003 AND 2002
THREE MONTH SIX MONTHS
___________ ___________
6/30/03 6/30/02 6/30/03 6/30/02
__________ __________ __________ __________
Income:
Interest and Dividend
Income $187,044 $314,168 $524,051 $592,923
Rental and Occupancy
Charges 352,883 214,655 700,561 430,425
Sales of Manufactured
Homes 155,500 157,500 198,756 159,000
Gain on Securities
Available for Sale
Transaction, net 147,432 37,174 275,843 181,002
Other Income 458 47 483 384
__________ __________ __________ __________
Total Income 843,317 723,544 1,699,694 1,363,734
__________ __________ __________ __________
Expenses:
Cost of Sales of
Manufactured
Homes 75,582 150,720 117,577 152,220
Selling Expense 1,129 5,470 1,129 5,470
Professional Fees 73,982 43,635 115,283 138,742
Interest Expense 187,688 184,011 385,980 370,409
Depreciation Expense 63,357 41,698 126,715 78,000
Other Expenses 138,624 119,057 263,199 250,366
__________ __________ __________ __________
Total Expenses 540,362 544,591 1,009,883 995,207
__________ __________ __________ __________
Income before Minority
Interest 302,955 178,953 689,811 368,527
Minority Interest 3,052 11,371 13,927 24,771
__________ __________ __________ __________
INCOME BEFORE INCOME
TAXES 299,903 167,582 675,884 343,756
INCOME TAXES -0- -0- -0- 50,000
__________ __________ __________ __________
NET INCOME $299,903 $167,582 $675,884 $293,756
========== ========== ========== ==========
NET INCOME PER
SHARE - BASIC AND
DILUTED $ .10 $ .09 $ .25 $ .16
========== ========== ========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING
Basic 2,842,682 1,828,880 2,657,936 1,778,659
========== ========== ========== ==========
Diluted 2,881,742 1,853,637 2,687,045 1,793,681
========== ========== ========== ==========
-UNAUDITED-
See Notes to Consolidated Financial Statement
Page 5
MONMOUTH CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE SIX MONTHS ENDED JUNE 30,2003 AND 2002
2003 2002
__________ __________
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $675,884 $293,757
Income Allocated to Minority Interest 13,927 24,771
Depreciation and Amortization 135,116 84,198
Provision for Loan Losses -0- 52,500
Gain on Sale of Securities Available
for Sale (275,843) (181,002)
Changes In Operating Assets and
Liabilities:
Accounts Receivable 17,893 133,667
Inventory 12,705 152,220
Prepaid Expenses and Other Current
Assets (13,165) (168,484)
Accounts Payable and Accrued Expenses (93,554) 61,650
Other Liabilities -0- 86
__________ __________
Net Cash Provided by Operating Activities 472,963 453,363
__________ __________
CASH FLOWS FROM INVESTING ACTIVITIES
Loans Made -0- (110,600)
Collections and Other Decreases in
Loans Receivable 209,948 114,318
Purchase of Securities Available for Sale -0- (2,670,789)
Proceeds from Sales and Other Decreases
in Securities Available for Sale 3,801,142 1,391,891
Additions to Land, Building,
Improvements and Equipment -0- (2,698)
__________ __________
Net Cash Provided by (Used in) Investing
Activities 4,011,092 (1,277,878)
__________ __________
CASH FLOWS FROM FINANCING ACTIVITIES
Net Decrease in Loans Payable and
Inventory Financing (5,882,984) (128,363)
Principal Payments of Mortgage (163,480) (79,617)
Decrease in Minority Interest (20,580) (20,580)
Proceeds from the Issuance of Class A
Common Stock 2,046,432 593,541
Proceeds from exercise of stock options 55,000 -0-
Dividends Paid (444,074) -0-
__________ __________
Net Cash Provided by (Used) in Financing
Activities (4,409,686) 364,981
__________ __________
Net Increase (Decrease) in Cash 74,369 (459,534)
Cash at Beginning of Period 174,099 607,443
__________ __________
Cash at End of Period $248,468 $147,909
========== ==========
-UNAUDITED-
See Notes to the Consolidated Financial Statements
Page 6
MONMOUTH CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2003
NOTE 1 - ACCOUNTING POLICY
The interim consolidated financial statements furnished
herein reflect all adjustments which were, in the opinion of
management, necessary to present fairly the financial
position, results of operations, and cash flows at June 30,
2003 and for all periods presented. All adjustments made
in the interim period were of a normal recurring nature.
Certain footnote disclosures which would substantially
duplicate the disclosures contained in the audited financial
statements and notes thereto included in the annual report
of Monmouth Capital Corporation (the Company) for the year
ended December 31, 2002 have been omitted.
The Company has elected to be taxed as a real estate
investment trust (REIT). As a REIT, the Company would not
be taxed on the portion of its income which is distributed
to shareholders, provided it meets certain requirements.
Certain reclassifications have been made to the financial
statements for the prior period to conform to the current
period presentation.
NOTE 2 - NET INCOME PER SHARE
Basic net income per share is calculated by dividing net
income by the weighted-average number of common shares
outstanding during the period. Diluted net income per share
is calculated by dividing net income by the weighted-average
number of common shares outstanding plus the weighted-
average number of net shares that would be issued upon
exercise of stock options pursuant to the treasury stock
method. Options in the amount of 39,060 and 24,757 for the
quarter ended June 30, 2003 and 2002, respectively, and
options in the amount of 29,109 and 15,022 for the six
months ended June 30, 2003 and 2002, respectively are
included in the diluted weighted average shares outstanding.
NOTE 3 - COMPREHENSIVE INCOME
Total comprehensive income, including unrealized gains
(loss) on securities available for sale for the three and
six months ended June 30, 2003 and 2002, is as follows:
June 30, 2003 June 30, 2002
_____________ _____________
Three Months $647,486 $629,202
Six Months 727,464 776,110
NOTE 4 - SECURITIES AVAILABLE FOR SALE AND LOANS PAYABLE
During the six months ended June 30, 2003, the Company sold
or redeemed $3,801,142 of securities for a net gain of
$275,843. During the six months ended June 30, 2003, the
Company made $5,882,984 net payments on its margin loans and
other notes payable.
7
NOTE 5 - DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
On June 16, 2003, the Company paid $570,012 as a dividend of
$.20 per share to shareholders of record May 15, 2003. For
the six months ended June 30, 2003, the Company received
$2,172,370 from the Dividend Reinvestment and Stock Purchase
Plan. There were 598,806 shares issued, resulting in
2,896,343 shares outstanding.
NOTE 6 - EMPLOYEE STOCK OPTIONS
The Company had elected to follow APB Opinion No. 25 in
accounting for its stock option plan prior to January 1,
2003, and accordingly no compensation cost had been
recognized prior to January 1, 2003. Had compensation cost
been determined consistent with SFAS No. 123, the Company's
net income and earnings per share would have been reduced to
the pro forma amounts as follows:
Three Three Six Six
Months Months Months Months
6/30/03 6/30/02 6/30/03 6/30/02
__________ ___________ ___________ ___________
Net Income as Reported $299,903 $167,582 $675,884 $293,756
Compensation expense if
the fair value method had been
applied -0- 500 -0- 1,000
_________ _________ _________ _________
Net Income Pro forma $299,903 $167,082 $675,884 $292,756
========= ========= ========= =========
Net Income per share -
Basic and Diluted
As Reported $ .10 $ .09 $ .25 $ .16
Pro forma $ .10 $ .09 $ .25 $ .16
The fair value of each option is estimated on the date of
grant using the Black-Scholes option pricing model with the
following weighted-average assumptions used for grants in
2002: dividend yield of 10%; expected volatility of 25%;
risk free interest rates of 3.4%; and expected lives of five
years.
The Company adopted the fair value recognition provisions of
SFAS No. 123, "Accounting for Stock Based Compensation" on
January 1, 2003. Under the prospective method of adoption
selected by the Company under the provisions of SFAS No.
148, "Accounting for Stock Based Compensation, Transition
and Disclosure", no compensation costs have been recognized
in 2003, as the Company did not grant stock-based employee
compensation during the six months ended June 30, 2003.
Two participants exercised their stock options and purchased
20,000 shares for a total of $55,000 during the six months
ended June 30, 2003.
As of June 30, 2003, there were options outstanding to
purchase 130,000 shares and 150,000 shares available for
grant under the Company's stock option plan.
Page 8
NOTE 7 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest and taxes during the six months ended
June 30, 2003 and 2002 were as follows:
2003 2002
_______ _______
Interest $385,980 $370,409
Taxes 24,027 42,266
During the six months ended June 30, 2003 and 2002, the
Company had dividend reinvestments of $125,938 and $-0-,
respectively, which required no cash transfers.
During the six months ended June 30, 2003 and 2002, the
Company repossessed the collateral for loans receivable of
$41,254 and $92,050, respectively, and placed it into
inventory.
NOTE 8 - RECENT ACCOUNTING PRONOUNCEMENTS
In January 2003, the Financial Accounting Standards Board
("FASB") issued FASB Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities, an
interpretation of Accounting Research Bulletin No. 51",
which addresses consolidation by business enterprises of
variable interest entities. The Interpretation clarifies the
application of Accounting Research Bulletin No. 51,
Consolidated Financial Statements, to certain entities in
which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities
without additional subordinated financial support from other
parties. FIN 46 applies immediately to variable interest
entities created after January 31, 2003, and to variable
interest entities in which an enterprise obtains an interest
after that date. Management believes that this
Interpretation will not have a material impact on the
Company's financial statements.
In April 2003, the FASB issued Statement No. 149, "Amendment
of Statement 133 on Derivative Instruments and Hedging
Activities" ("SFAS No. 149"). SFAS No. 149 amends and
clarifies accounting for derivative instruments, including
certain derivative instruments embedded in other contracts,
and for hedging activities under Statement 133. SFAS No. 149
is effective for contracts entered into or modified after
June 30, 2003, with some exceptions, and for hedging
relationships designated after June 30, 2003. The guidance
should be applied prospectively. Management believes that
this Statement will not have a material impact on the
Company's financial statements.
In May 2003, the FASB issued Statement No. 150, "Accounting
for Certain Financial Instruments with Characteristics of
both Liabilities and Equity" ("SFAS No. 150). SFAS No. 150
establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics
of both liabilities and equity. It requires that an issuer
classify a financial instrument that is within its scope as
a liability (or an asset in some circumstances). Many of
those instruments were previously classified as equity.
SFAS No. 150 is effective for 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. It is to be implemented by
reporting the cumulative effect of a change in an accounting
principle for financial instruments created before the
issuance date of the Statement and still existing at the
beginning of the interim period of adoption. Restatement is
not permitted. Management believes that this Statement will
not have a material impact on the Company's financial
statements.
Page 9
MONMOUTH CAPITAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
MATERIAL CHANGES IN FINANCIAL CONDITION
The Company generated net cash provided for the six months
ended June 30, 2003 by operating activities of $472,963.
The Company raised $2,172,370 from the issuance of shares of
common stock through its Dividend Reinvestment and Stock
Purchase Plan (DRIP) for the six months ended June 30, 2003.
Securities available for sale decreased by $3,473,721
primarily as a result of sales of other securities of
$1,714,414, and principal repayments of $2,086,730 on the
mortgage-backed securities.
Loans receivable decreased by $251,202 during the six months
ended June 30, 2003. This was primarily the result of
collections of $209,948 and repossession of the collateral
for loans of $41,254.
Mortgages payable decreased by $163,480 during the six
months ended June 30, 2003 due to principal repayments.
Loans payable decreased by $5,882,984 during the six months
ended June 30, 2003. This was primarily the result of
repayments on margin loans.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Income is comprised primarily of interest and dividend
income and rental and occupancy charges.
Interest and dividend income decreased by $127,124 for the
three months ended June 30, 2003 as compared to the three
months ended June 30, 2002, and by $68,872 for the six
months ended June 30, 2003 as compared to the six months
ended June 30, 2002. This was primarily due to sales and
redemptions of securities available for sale during 2003.
Rental and occupancy charges increased by $138,228 for the
three months ended June 30, 2003 as compared to the three
months ended June 30, 2002, and $270,136 for the six months
ended June 30, 2003 as compared to the six months ended June
30, 2002, primarily due to the purchase of the leasehold
interest in a facility during September, 2002.
Sales of manufactured homes and Cost of sales of
manufactured homes for the six months ended June 30, 2003
relate to the disposition of repossessed inventory, which
originally were sold when the Company operated as a
manufactured home sales business prior to March 30, 2001.
For the three months ended June 30, 2003, the increase in
professional fees is due mainly to increased personnel costs
for personnel hired in April, 2003.
Page 10
MATERIAL CHANGES IN RESULTS OF OPERATIONS, (CONT'D.)
Interest expense increased from $184,011 for the three
months ended June 30, 2002 to $187,688 for the three months
ended June 30, 2003 and from $370,409 for the six months
ended June 30, 2002 to $385,980 for the six months ended
June 30, 2003. This was primarily the result of the
purchases of securities available for sale on margin and the
mortgages on the new acquisition.
Depreciation expense increased from $41,698 for the three
months ended June 30, 2002 to $63,357 for the three months
ended June 30, 2003, and from $78,000 for the six months
ended June 30, 2002 to $126,715 for the six months ended
June 30, 2003 due to the new acquisition during 2002.
Other expenses increased from $119,051 for the three months
ended June 30, 2002 to $138,624 for the three months ended
June 30, 2003 and from $250,366 for the six months ended
June 30, 2002 to $263,199 for the six months ended June 30,
2003 due mainly to an increase in insurance expense and real
estate taxes due to the new acquisition during 2002.
Funds from operations (FFO), is defined as net income,
excluding gains (or losses) from sales of depreciable
assets, plus depreciation. FFO should be considered as a
supplemental measure of operating performance used by real
estate investment trusts (REITs).
FFO excludes historical cost depreciation as an expense and
may facilitate the comparison of REITs which have different
cost bases. The items excluded from FFO are significant
components in understanding and assessing the Company's
financial performance.
FFO (1) does not represent cash flow from operations as
defined by generally accepted accounting principles; (2)
should not be considered as an alternative to net income as
a measure of operating performance or to cash flows from
operating, investing and financing activities; and (3) is
not an alternative to cash flow as a measure of liquidity.
FFO, as calculated by the Company, may not be comparable to
similarly entitled measures reported by other REITs.
The Company's FFO for the three and six months ended June
30, 2003 and 2002 is calculated as follows:
Three Months Six Months
___________ __________
2003 2002 2003 2002
________ ________ ________ ________
Net Income $299,903 $167,582 $675,884 $293,756
Depreciation 63,357 41,698 126,715 78,000
Expense
________ ________ ________ ________
FFO $363,260 $209,280 $802,599 $371,756
======== ======== ======== ========
Page 11
MATERIAL CHANGES IN RESULTS OF OPERATIONS, (CONT'D.)
The following are the cash flows provided (used) by
operating, investing and financing activities for the six
months ended June 30, 2003 and 2002:
2003 2002
________ ________
Operating Activities $ 472,963 $ 453,363
Investing Activities 4,011,092 (1,277,878)
Financing Activities (4,409,686) 364,981
LIQUIDITY AND CAPITAL RESOURCES
The Company's ability to generate cash adequate to meet its
needs is dependent primarily on income from its real estate
investments and its securities portfolio, the sale of real
estate investments and securities, refinancing of mortgage
debt, leveraging of real estate investments, availability of
bank borrowings, proceeds from the Dividend Reinvestment and
Stock Purchase Plan, and access to the capital markets.
Purchases of new properties, purchases of securities,
payments of expenses related to real estate operations,
capital improvements programs, debt service, management and
professional fees, and dividend requirements place demands
on the Company's liquidity.
CONTROLS AND PROCEDURES
The Company's Chief Executive Officer and Chief Financial
officer, with the assistance of other members of the
Company's management, have evaluated the effectiveness of
the Company's disclosure controls and procedures as of the
end of the period covered by this Quarterly Report on Form
10Q. Based on such evaluation, the Company's disclosure
controls and procedures are effective.
The Company's Chief Executive Officer and Chief Financial
Officer have also concluded that there have not been any
changes in the Company's internal control over financial
reporting that has materially affected, or is reasonably
likely to materially affect, the Company's internal control
over financial reporting.
SAFE HARBOR STATEMENT
This Form 10-Q contains various "forward-looking statements"
within the meaning of the Securities Act of 1933 and the
Securities Exchange Act of 1934, and the Company intends
that such forward-looking statements be subject to the safe
harbors created thereby. The words "may", "will", "expect",
"believe", "anticipate", "should", "estimate", and similar
expressions identify forward-looking statements. These
forward-looking statements reflect the Company's current
views with respect to future events and finance performance,
but are based upon current assumptions regarding the
Company's operations, future results and prospects, and are
subject to many uncertainties and factors relating to the
Company's operations and business environment which may
cause the actual results of the Company to be materially
different from any future results expressed or implied by
such forward-looking statements.
Page 12
SAFE HARBOR STATEMENT (CONT'D.)
Such factors include, but are not limited to, the following:
(i) changes in the general economic climate, including
interest rates; (ii) increased competition in the geographic
areas in which the Company operates; and (iii) changes in
government laws. The Company undertakes no obligation to
publicly update or revise any forward-looking statements
whether as a result of new information, future events, or
otherwise.
Page 13
MONMOUTH CAPITAL CORPORATION
PART II - OTHER INFORMATION
FOR THE QUARTER ENDED JUNE 30, 2003
Item 1 - Legal Proceedings - None
Item 2 - Changes in Securities - None
Item 3 - Defaults Upon Senior Securities - None
Item 4 - Submission of Matters to a Vote of Security
Holders - None
Item 5 - Other Information - None
Item 6 - Exhibits and Reports on Form 8-K -
(a) Exhibits
31.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
31.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
32
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
None
Page 14
SIGNATURES
Pursuant to the requirements of the Securities and
Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its Behalf by the
undersigned thereunto duly authorized.
MONMOUTH CAPITAL CORPORATION
Date: August 11, 2003 By: /s/ Eugene W. Landy
EUGENE W. LANDY
President and Chief
Executive Officer
Date: August 11, 2003 By: /s/Anna T. Chew
ANNA T. CHEW
Chief Financial Officer
Page 15