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, 2003
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition Period from _____________ to _____________
Commission file number 000-19949
SCARAB SYSTEMS, INC.
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(Exact name of small business issuer as specified in its charter)
Colorado 84-1153522
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
406-280 Nelson Street, Vancouver, British Columbia V6B 2E2
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(Address of principal executive offices)
(604) 417-6172
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(Issuer's telephone number)
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(Former name, former address and former fiscal year, if
changed since last report)
Check whether the registrant filed all documents and reports required to be
filed by Section l2, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [X] No [ ]
As of September 30, 2003, 94,722,903 shares of Common Stock of the Issuer were
outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
Part I -- Financial Information
Item 1. Financial Statements
The consolidated financial statements included herein have been prepared by
Scarab Systems, Inc. (the "Company") without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC). Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted
pursuant to such SEC rules and regulations. In the opinion of the Company the
accompanying statements contain all adjustments necessary to present fairly the
financial position of the Company as of September 30, 2003, and its results of
operations for the six-month periods ended September 30, 2003 and 2002 and its
cash flows for the six-month periods ended September 30, 2003 and 2002. The
results for these interim periods are not necessarily indicative of the results
for the entire year. The accompanying financial statements should be read in
conjunction with the financial statements and the notes thereto filed as a part
of the Company's annual report on Form 10-KSB.
SCARAB SYSTEMS, INC.
(A development stage enterprise)
Consolidated Balance Sheets
(Expressed in U.S. Dollars)
================================================================================
September 30 September 30
2003 2002
(unaudited) (unaudited)
ASSETS
Current
Cash and cash equivalents $ 2,133 $ 3,000
Prepaid expenses and deposits $ - $ 13,000
Accounts Receivable $ - $ 146,000
Total current assets $ $ 162,000
2,133
Fixed assets, net of accumulated $ 929 $ 9,000
depreciation of $1,265
Other Assets
Investment in subsidiary $ - $ 337,000
Total other assets $ - $ 337,000
Total assets $ 3,062 $ 508,000
LIABILITIES
Current
Accounts payable and accrued liabilities $ 188,806 $ 218,000
Promissory notes (Note 3) $ 93,421 $ 2,000
Total current liabilities $ 282,227 $ 220,000
Promissory notes - non current $ 5,000 $ -
Total liabilities $ 287,227 $ 220,000
STOCKHOLDERS' EQUITY
Share capital
Authorized:
100,000,000 common shares with a par value
of $0.001 per share
Issued and outstanding:
91,662,903 Common shares
(September 30, 2002 - 99,999,903) $ 91,663 $ 100,000
Additional paid in capital $ 203,126 $ 466,000
Deficit accumulated during the $ (578,954) $ (278,000)
development stage
Total stockholders' equity (deficit) $ (284,165) $ (288,000)
Total liabilities and stockholders' $ 3,062 $ 508,000
(deficiency)
The accompanying notes are an integral part of these financial statements.
SCARAB SYSTEMS, INC.
(A development stage enterprise)
Consolidated Statements of Operations
(Expressed in U.S. Dollars)
================================================================================
Six months Six months
ended ended
Sep. 30,2003 Sep. 30, 2003
(unaudited) (unaudited)
Revenues
Sales $ - $ 399,000
Cost of Sales $ - $ 272,000
Gross Profit $ - $ 127,000
General and administrative expenses $ - $ 283,000
Consulting (Note 4) $ 64,500 $ -
Operating (loss) $ (64,500) $ (156,000)
Net loss for the period $ (64,500) $ (156,000)
Basic and diluted earning (loss) per share,
Loss from continued operations $ (0.001) $ (0.001)
Net (loss) for the period $ (0.001) $ (0.001)
Weighted average number of common shares $ 88,029,483 $ 99,999,903
outstanding
The accompanying notes are an integral part of these financial statements.
SCARAB SYSTEMS, INC.
(A development stage enterprise)
Consolidated Statements of Cash Flows
(Expressed in U.S. Dollars)
================================================================================
Six months Six months
ended ended
Sep. 30,2003 Sep. 30, 2003
(unaudited) (unaudited)
Cash flows from (used in) operating
activities
Net (loss) for the period $ (64,500) $ (156,000)
Adjustment to reconcile net loss to
net cash used in operating activities:
- Increase in accounts receivable $ - $ (146,000)
- Increase in prepaid expenses and $ - $ (13,000)
deposits
Changes in non-cash working capital
items:
- accounts payable and accrued $ 59,133 $ 220,000
liabilities
Net Cash used in operating activities $ 5,367 $ (169,000)
Cash flows used in investing activities $ - $ (9,000)
- Investment in subsidiary $ - $ (337,000)
Net Cash (used) in investing activities $ - $ (348,000)
Cash flows provided by financing activities
Loan from unrelated party (Note 3) $ 7,500 $ -
- Proceeds from issuance of common $ - $ 520,000
stock
Net Cash provided by financing activities $ - $ 520,000
Increase (decrease) in cash and cash $ 2,133 $ 3,000
equivalents
Cash and cash equivalents, beginning of $ - $ -
period
Cash and cash equivalents, end of period $ 2,133 $ 3,000
The accompanying notes are an integral part of these financial statements.
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
1. Incorporation and Continuance of Operations
The consolidated financial statements presented are those of Scarab
Systems, Inc. and its wholly-owned subsidiary Catalyst Technologies Inc.
("Catalyst"). Collectively, they are referred to herein as "the Company".
Scarab Systems Inc. ("Scarab") was incorporated on October 8, 2001 under
the laws of the State of Nevada. The Company, a development stage
enterprise, is in the business of providing a comprehensive range of
services to the e-commerce sector.
On March 25, 2002, iRV, Inc. ("iRV"), a company incorporated in Colorado on
August 1, 1999, entered into an Agreement and Plan of Reorganization with
Scarab, whereby iRV issued 82,600,000 share of its common stock in exchange
for all of the outstanding common stock of Scarab. As part of the
definitive agreement and plan of reorganization, iRV will transfer all its
assets and liabilities to its subsidiaries and then spin off the
subsidiaries and iRV will then become a non-operating shell company without
any assets or liabilities. Immediately prior to the Agreement and Plan of
Reorganization, iRV had 14,462,903 shares of common stock issued and
outstanding. The acquisition was accounted for as a recapitalization of
Scarab because the shareholders of Scarab controlled iRV after the
acquisition. Scarab was treated as the acquiring entity for accounting
purposes and iRV was the surviving entity for legal purposes. The issued
and outstanding common stock of Scarab prior to the completion of
acquisition was restated to reflect the 82,600,000 common stock issued by
iRV.
Subsequent to the completion of Reorganization, Scarab transferred all its
assets and liabilities to iRV and ceased to exist, and iRV's name changed
to Scarab Systems Inc. Accordingly, the consolidated financial statements
are the continuation of Scarab.
The consolidated financial statements for the six months ended September
30, 2003 and 2002 have been prepared in accordance with generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and the satisfaction of liabilities and commitments
in the normal course of business. Management believes the statements
include all adjustments of a normal recurring nature necessary to present
fairly the results of operations for the interim periods.
The Company has not generated any revenue and requires additional funds to
maintain its operations. Management's plans in this regard are to raise
equity financing as required. These conditions raise substantial doubt
about the Company's ability to continue as a going concern. These
consolidated financial statements do not include any adjustments that might
result from this uncertainty.
2. Significant Accounting Policies
The Consolidated Financial Statements for the six months ended September
30, 2003 and 2002 have been prepared in accordance with the accounting
policies described in the Company's annual report on Form 10-KSB. The
preparation of financial statements requires the Company's management to
make estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Management believes the
statements include all adjustments of a normal recurring nature necessary
to present fairly the results of operations for the interim periods.
Notes to Consolidated Financial Statements (continued)
(Expressed in U.S. Dollars)
3. Promissory Notes
On June 10, 2003, the Company issued an unsecured promissory note to an
unrelated investor for $7,500 in connection with a debt financing. The
note bears interest at the rate of 3% per year and is repayable on June 10,
2005. Proceeds from the financing were used by the Company for operating
capital.
4. Related Party Transactions
In the six month period ended September 30, 2003, the Company paid or
accrued consulting fees of $64,500 to the directors and senior officers of
the Company. In the quarter ended September 30, 2003, the Company paid or
accrued consulting fees of $27,000 to the directors and senior officers
of the Company.
Item 2. Management's Discussion and Analysis or Plan of Operations
The following discusses our financial condition and results of operations based
upon our consolidated financial statements which have been prepared in
accordance with United States generally accepted accounting principles. It
should be read in conjunction with our financial statements and the notes
thereto and other financial information included in this Form 10-QSB for the
quarter ended September 30, 2003.
Overview
Our business is to provide services to the e-commerce industry. Historically,
these services have been comprised of marketing, e-commerce development and the
sale and distribution of transaction processing and payment services, including
rechargeable stored value payment and money transfer systems that can be used
for both electronic commerce and point of sale purchases. In fiscal year 2003
we ceased operations with respect to marketing and the sale and distribution of
transaction processing and payment services. Our e-commerce operations
presently earn nominal revenue.
We currently have no facilities and no employees. Our administrative affairs
are conducted by our executive officers as independent contractors. Our address
is 406-280 Nelson Street, Vancouver, British Columbia V6B 2E2. Our telephone
number is (604)417-6172.
Results of Operations
The Company incurred a loss from operations during the three-month period ending
September 30, 2003, of $27,000.
The Company incurred a loss from operations during the six-month period ending
September 30, 2003, of $64,500.
The Company did not earn any revenue from operations during the three-month
period ending September 30, 2003.
The Company did not earn any revenue from operations during the six-month period
ending September 30, 2003.
Liquidity and Capital Resources
The Company has not been able to generate cash flows from operations in amounts
required to meet its cash requirements.
The Company will be required to locate debt or equity financing within the next
12 months of operations, which may include loans from its executive officers.
There is no guarantee that the Company will be successful in obtaining such
financing.
Other than the foregoing, Management knows of no trends, demands or
uncertainties that are reasonably likely to have an impact on the Company's
liquidity or capital resources.
Plan of Operations
We believe that it is in the best interests of the Company and its shareholders
that we actively seek acquisition candidates. We believe the Company can offer
owners of potential merger or acquisition candidates the opportunity to acquire
a controlling ownership interest in a public company at substantially less cost
than is required to conduct an initial public offering. The target company will,
however, incur significant post-merger or acquisition registration costs in the
event target company shareholders wish to offer a portion of their shares for
subsequent sale. Further, while target company shareholders will receive
"restricted securities" in any merger or acquisition transaction, those
restricted securities will represent, if a trading market develops for our
common stock, ownership in a "publicly-traded" as opposed to a "privately-held"
company. We also believe target company shareholders may benefit in obtaining a
greater ownership percentage in the Company remaining after a merger or
acquisition than may be the case in the event a target company offered its
shares directly for sale to the public. Nevertheless, our officers and directors
have not conducted market research and are not aware of statistical data which
would support the perceived benefits of a merger or acquisition transaction for
target company shareholders.
We expect to concentrate primarily on the identification and evaluation of
prospective merger or acquisition "target" entities including private companies,
partnerships or sole proprietorships. We do not intend to act as a general or
limited partner in connection with partnerships we may merge with or acquire. We
have not identified any particular area of interest within which it will
concentrate its efforts.
We plan to seek to merge with or acquire a target company with either assets or
earnings, or both, and that preliminary evaluations undertaken by us will assist
in identifying possible target companies. We have not established a specific
level of earnings or assets below which it would not consider a merger or
acquisition with a target company. Moreover, we may identify a target company,
which is generating losses, which it will seek to acquire or merge with it. The
merger with or acquisition of a target company which is generating losses or
which has negative shareholders' equity may have a material adverse affect on
the price of our common stock.
It should be noted, however, that our independent accountants audit report for
the fiscal year ended March 31, 2003 contains a qualification and explanatory
language that due to our recurring losses from operations and net capital
deficiency, substantial doubts exist about our ability to continue as a going
concern.
Plan of Acquisition
We plan to follow a systematic approach to identify our most suitable
acquisition candidates. In the past, our officers and directors have not used
consultants in an effort to identify potential target companies, although it is
possible that such consultants may be used in the future. To date, there have
been no discussions with and there exists no agreements or understandings with
any particular consultant to provide such services for us. If a finder or
consultant is engaged, of which there can be no assurance, we will make an
effort to limit the scope and duration of the services to be performed by such
consultant so as to minimize any costs associated with such services
As a reporting Company under Section 13 of the Exchange Act, we will be required
to prepare and file an annual report on Form 10-KSB containing audited financial
statements certified by an independent public accountant. In addition, we will
be required to file Quarterly Reports on 10-QSB for the first, second and third
interim periods which include unaudited financial statements for the quarter and
year to date. In addition to the Quarterly and Annual Reports, extraordinary
events outside of the ordinary course of business must be reported on Form 8-K,
such as a change of control, a material acquisition or disposition of assets,
changes in accountants and the like. Under certain circumstances, an acquisition
of significant assets or a significant subsidiary will require the preparation
of additional audited financial statements for the acquired business as well as
pro forma financial information. Our officers, directors and ten-percent
shareholders will also be subject to the beneficial ownership reporting
requirements and short swing trading restrictions contained in Section 16 of the
Exchange Act. All of the foregoing reporting requirements, and the associated
costs of complying with such requirements, could limit the pool of potential
acquisition or merger candidates.
While we will make every effort to fully comply with its reporting obligations
under the Exchange Act, should such obligations be suspended for any reason in
the future, we intend to continue to voluntarily file periodic reports.
First, we intend to concentrate on identifying any number of preliminary
prospects which may be brought to the attention of management through present
associations, personal contacts of our affiliates, or by virtue of very limited
advertising campaigns we may conduct. As is customary in the industry, we may
pay a fee to a non-affiliate for locating a merger or acquisition candidate. If
any such fee is paid, it will be approved by our Board of Directors and will be
in accordance with industry standards. After preliminary candidates are
identified, we will then apply certain broad criteria to the prospects.
Essentially, this will entail a determination by us as to whether or not the
prospects are in an industry which appears promising and whether or not the
prospects themselves have potential within their own industries. During this
initial screening process, we will ask and receive answers to questions framed
to provide appropriate threshold information, depending upon the nature of the
prospects' businesses. Such evaluation is not expected to be an in-depth
analysis of the target company's operations although it will encompass a look at
most, if not all, of the same areas to be examined once one or more target
companies are selected for an in-depth review. For example, at this stage, we
may look at a prospect's unaudited balance sheet. Once a prospect is selected
for an in-depth review, we will review the prospect's audited financial
statements. Nevertheless, this evaluation is anticipated to provide a broad
overview of the business of the target company and should allow a large
percentage of preliminary prospects to be eliminated from further consideration.
Assuming we are able to complete the preliminary evaluation process and select a
limited number of companies for further study, of which there can be no
assurance, it may enter into preliminary negotiations with target company
management in order to obtain detailed financial and operational information.
Following our receipt of such information, we will conduct an in-depth analysis
of five major areas of concern with respect to the target company as follows:
1. Managerial and Financial Stability. We will review audited financial
statements of the target company, to the extent available, and will also
research the background of each director and member of management of the target
company in order to discern whether the stability of the company is such that
further negotiations are warranted.
2. Industry Status. We will research the potential of the target company's
industry. The concern here is whether the industry is in a growth, stagnant or
declining stage.
3. Production of Product. If the target company is a manufacturer, we will
review whether it has the necessary resources or access to the necessary
resources and supplies to produce a quality product in a timely manner.
4. Acceptance and Potential of Product. We will review the acceptance of the
target company's product in the market place and assess the competition. We will
also review whether or not the product is realistic: is there potential for the
product to be workable and to fulfill its intended purpose.
5. Development of Target Company. We will review the target company's stage
of development (examples: start-up stage, established company, etc.).
The foregoing is an outline of the areas of concern which most often arise and
merit careful scrutiny by management. Because of the possible varieties of
target companies, which may come to our attention, additional factors will most
likely be considered in any given analysis. Also, the procedures used in such a
review are expected to vary depending upon the target company being analyzed. We
may select a target company for further negotiations even though the target may
not receive a favorable evaluation as to some of the five areas of concern.
We expect to enter into further negotiations with target company management
following successful conclusion of financial and evaluation studies.
Negotiations with target company management will be expected to focus on the
percentage of the Company that target company shareholders would acquire in
exchange for their shares in the target company. Depending upon, among other
things, the target company's assets and liabilities, our shareholders will in
all likelihood hold a lesser percentage ownership interest in the Company
following any merger or acquisition. Assets of a merger or acquisition candidate
would be valued at historical cost for transactional purposes. The percentage
ownership may be subject to significant reduction in the event we acquire a
target company with substantial assets. Any merger or acquisition we effect can
be expected to have a significant dilutive effect on the percentage of shares
held by our then shareholders.
The final stage of any merger or acquisition to be effected by us will require
us to retain the services of our counsel and a qualified accounting firm in
order to properly effect the merger or acquisition. We may be expected to incur
significant legal fees and accounting costs during the final stages of a merger
or acquisition. Also, if the merger or acquisition is successfully completed, we
anticipate that certain costs will be incurred for public relations, such as the
dissemination of information to the public, to the shareholders and to the
financial community. If we are unable to complete the merger or acquisition for
any reason, our capital may be substantially depleted if legal fees and
accounting costs have been incurred. We intend to retain legal and accounting
services only on an as-needed basis in the latter stages of a proposed merger or
acquisition.
We anticipate that it may be necessary to raise additional funds within the next
12 months to meet expenditures required for operations. There are no current
plans or commitments in this regard, and there can be no assurance that we will
be able to raise the funds necessary to continue its limited operations.
It is possible that acquisition targets are seeking a business combination with
us as part of their efforts to raise additional capital. We do not intend to
raise capital, either through the public or private sale of equity or debt
securities to enable us to provide bridge capital to any potential acquisition
candidate. Nor do we intend to borrow any funds or use any proceeds of any
equity or debt offering to make payments to any of our management, promoters, or
their respective affiliates or associates.
Role of Management in Acquisition Process
The consummation of any acquisition will likely result in a change in control of
the Company, pursuant to which the officers, directors and principal
shareholders of the acquired company will be issued sufficient numbers of shares
of our common stock to exercise voting control immediately following the
acquisition. In addition, the transaction may involve the sale by our current
principal shareholders of all or a portion of their beneficial ownership of our
common stock to the control persons of the acquired company. Such sale would be
upon terms privately negotiated between the principals of the acquired company
and our principal shareholders. Our shareholders will, in all likelihood, not be
provided with information, including financial statements, of a business to be
acquired or be afforded an opportunity to approve or consent to any stock buy-
out transaction involving our principal shareholders. Moreover, our other
shareholders will in all likelihood not be offered an opportunity to sell their
shares of our common stock on the same or similar terms and conditions. We have
not adopted and do not plan to adopt in the future any policy that would
restrict, limit or prohibit management or our principal shareholders from
negotiating a buy-out of their stock in connection with an acquisition
transaction.
Competition
We will remain an insignificant participant among the firms, which engage in
mergers with and acquisitions of privately financed entities. There are many
established venture capital and financial concerns that have significantly
greater financial and personnel resources and technical expertise than we do. In
view of our combined limited financial resources and limited management
availability, we will continue to be at a significant competitive disadvantage
compared to our competitors. Also, we will be competing with numerous other
small, blank check, public companies.
Regulation and Taxation
We could be subject to regulation under the Investment Company Act of 1940 in
the event we obtain and continue to hold a minority interest in a number of
entities. Our plan of operation is based upon the us obtaining a controlling
interest in any merger or acquisition target company and, accordingly, we may be
required to discontinue any prospective merger or acquisition of any company in
which a controlling interest will not be obtained.
We could also be required to register under the Investment Company Act of 1940
in the event it comes within the definition of an Investment Company contained
in that Act due to its assets consisting principally of shares held in a number
of other companies. We intend to seek at most one or two mergers or
acquisitions, which transactions we believe will not result in the Company being
deemed an "investment company" since its interests will be in majority or wholly
owned subsidiaries which themselves will not be investment companies.
Any securities that we acquire in exchange for our common stock will be
"restricted securities" within the meaning of the Securities Act of 1933 (the
"1933 Act"). If we elected to resell such securities, such sale could not
proceed unless a registration statement had been declared effective by the
Securities and Exchange Commission or an exemption from registration was
available. Section 4(1) of the 1933 Act, which exempts sales of securities not
involving a distribution, would in all likelihood be available to permit a
private sale if various restrictions pertaining to such a sale are complied
with. Although our plan of operation does not contemplate resale of securities
acquired, in the event such a sale were necessary, we would be required to
comply with the provisions of the 1933 Act.
As a condition to any merger or acquisition, it is possible that the target
company management may request registration of our common stock to be received
by target company shareholders. In such event, we could incur registration
costs, and we intend to require the target company to bear most, if not all, of
the cost of any such registration. If we do contribute toward the cost of such
registration, our maximum contribution will be limited to the extent that we
have assets available for such contribution. Alternatively, we may issue
"restricted securities" to any prospective target company, which securities may
be subsequently registered for sale or sold in accordance with Rule 144 of the
Securities Act of 1933.
We intend to structure a merger or acquisition in such a manner as to minimize
federal and state tax consequences to the Company and any target company.
Item 3. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures.
Our Chief Executive Officer and Chief Financial Officer have, within 90 days of
the filing date of this report, evaluated our internal controls and procedures
designed to ensure that information required to be disclosed in reports under
the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within specified time periods. After such review, the Company's Chief
Executive Officer and Chief Financial Officer have concluded that said
information was accumulated and communicated to management as appropriate to
allow timely decisions regarding required disclosure.
(b) Changes in Internal Controls.
There were no significant changes in our internal controls or in other factors
that could significantly affect these controls subsequent to the evaluation
referred to in paragraph (a) above.
Part II. Other Information
Items 1, 2, 3, 4 and 5 are not applicable and have been omitted.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Description
31.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
31.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.1 Officers' Certification
>
(b) Date of Current Description
Report
July 8, 2003 Form 8-K reporting withdrawal of Form 15
August 1, 2003 Form 8-K reporting that appointee declined
directorship.
Signatures
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SCARAB SYSTEMS, INC.
(Registrant)
Date: November 15, 2003 /s/ Thomas E. Mills
Thomas E. Mills, President
Date: November 15, 2003 /s/ John Allen
John Allen
Chief Financial Officer
Exhibit 31.1
Certification
I, Thomas E. Mills, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Scarab Systems,
Inc.;
2. Based on my knowledge, this annual 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 annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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 we 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 annual 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 annual report (the "Evaluation Date"); and
c) presented in this annual 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
function):
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 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.
November 15, 2003
By /s/ Thomas E. Mills
Thomas E. Mills
Chief Executive Officer and President
Exhibit 31.2
Certification
I, John S. Allen, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Scarab Systems,
Inc.;
2. Based on my knowledge, this annual 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 annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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 we 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 annual 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 annual report (the "Evaluation Date"); and
c) presented in this annual 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
function):
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 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.
November 15, 2003
By /s/ John S. Allen
John S. Allen
Chief Financial Officer
EXHIBIT 32.1
CERTIFICATIONS PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Scarab Systems, Inc. on Form 10-QSB
for the quarter ended September 30, 2003 as filed with the Securities and
Exchange Commission on the date hereof (the Report), we, Thomas E. Mills, Chief
Executive Officer and President of the Company, and John S. Allen, Chief
Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 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, as amended; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Date: November 15, 2003 By /s/ Thomas E. Mills
Thomas E. Mills
Chief Executive Officer and President
Date: November 15, 2003 By /s/ John S. Allen
John S. Allen
Chief Financial Officer