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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003
COMMISSION FILE NUMBER 0001-22563
CDSI HOLDINGS INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-4463937
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
100 S.E. SECOND STREET, 32ND FLOOR
MIAMI, FL 33131
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(305) 579-8000
(ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)
CHECK WHETHER THE ISSUER (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED
BY SECTION 13 OR 15(D) OF THE EXCHANGE ACT 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 [ ]
AS OF NOVEMBER 3, 2003, THERE WERE OUTSTANDING 3,120,000 SHARES OF THE
ISSUER'S COMMON STOCK, $.01 PAR VALUE.
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CDSI HOLDINGS INC.
QUARTERLY REPORT ON FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003
TABLE OF CONTENTS
PAGE
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PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets as of September 30,
2003 and December 31, 2002................................... 2
Condensed Consolidated Statements of Operations for the
three months and nine months ended September 30,
2003 and 2002................................................ 3
Condensed Consolidated Statements of Cash Flows for the
nine months ended September 30, 2003 and 2002................ 4
Notes to the Condensed Consolidated Financial
Statements................................................... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 9
Item 3. Controls and Procedures.......................................... 12
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds........................ 13
Item 6. Exhibits and Reports on Form 8-K................................. 13
SIGNATURE................................................................. 14
CERTIFICATIONS............................................................ 15
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CDSI HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, December 31,
2003 2002
------------- ------------
ASSETS:
Current assets:
Cash and cash equivalents ............................ $ 176,371 $ 215,087
Investment securities available for sale ............. 29,700 --
----------- -----------
Total assets .................................... $ 206,071 $ 215,087
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued expenses ................ $ 16,030 $ 14,106
----------- -----------
Total current liabilities ....................... 16,030 14,106
----------- -----------
Commitments and contingencies ............................ -- --
Stockholders' equity:
Preferred stock, $.01 par value. Authorized 5,000,000
shares; no shares issued and outstanding .......... -- --
Common stock, $.01 par value. Authorized 25,000,000
shares; 3,120,000 shares issued and outstanding ... 31,200 31,200
Additional paid-in capital ........................... 8,209,944 8,209,944
Accumulated deficit .................................. (8,080,803) (8,040,163)
Accumulated other comprehensive income ............... 29,700 --
----------- -----------
Total stockholders' equity ...................... 190,041 200,981
----------- -----------
Total liabilities and stockholders' equity ...... $ 206,071 $ 215,087
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See accompanying Notes to Condensed Consolidated Financial Statements
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CDSI HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
------------------------------- --------------------------------
September 30, September 30, September 30, September 30,
2003 2002 2003 2002
------------- ------------- ------------- -------------
Revenues ................................. $ -- $ -- $ -- $ --
Cost and expenses:
General and administrative .......... 12,654 14,866 42,287 36,194
----------- ----------- ----------- -----------
12,654 14,866 42,287 36,194
----------- ----------- ----------- -----------
Operating loss ........................... (12,654) (14,866) (42,287) (36,194)
----------- ----------- ----------- -----------
Interest income .......................... 431 713 1,647 1,744
----------- ----------- ----------- -----------
Net loss ............................ $ (12,223) $ (14,153) $ (40,640) $ (34,450)
=========== =========== =========== ===========
Net loss per share (basic and and diluted) $ (0.00) $ (0.00) $ (0.01) $ (0.01)
=========== =========== =========== ===========
Shares used in computing net
loss per share ...................... 3,120,000 3,120,000 3,120,000 3,120,000
=========== =========== =========== ===========
See accompanying Notes to Condensed Consolidated Financial Statements
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CDSI HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
------------------------------
September 30, September 30,
2003 2002
------------- -------------
Cash flows used in operating activities:
Net loss ..................................... $ (40,640) $ (34,450)
Adjustments to reconcile net loss to
net cash used in operating activities:
Changes in assets and liabilities:
Accounts payable and accrued expenses ... 1,924 (6,041)
--------- ---------
Net cash used in operating activities ........... (38,716) (40,491)
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Net cash flows provided from investing activities -- --
--------- ---------
Net cash flows from financing activities ........ -- --
--------- ---------
Net decrease in cash ............................ (38,716) (40,491)
Cash and cash equivalents at beginning of period 215,087 265,685
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Cash and cash equivalents at end of period ...... $ 176,371 $ 225,194
========= =========
See accompanying Notes to Condensed Consolidated Financial Statements
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CDSI HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BUSINESS AND ORGANIZATION
CDSI Holdings Inc. (the "Company" or "CDSI") was incorporated in Delaware
on December 29, 1993. On January 12, 1999, the Company's stockholders
voted to change the corporate name of the Company from PC411, Inc. to
CDSI Holdings Inc. Prior to May 8, 1998, the Company's principal business
was an on-line electronic delivery information service that transmitted
name, address, telephone number and other related information digitally
to users of personal computers (the "PC411 Service"). On May 8, 1998, the
Company acquired Controlled Distribution Systems, Inc. ("CDS"), a company
engaged in the marketing and leasing of an inventory control system for
tobacco products. In February 2000, CDSI announced CDS will no longer
actively engage in the business of marketing and leasing the inventory
control system.
At September 30, 2003, the Company had an accumulated deficit of
approximately $8.1 million. The Company has reported an operating loss in
each of its fiscal quarters since inception and it expects to continue to
incur operating losses in the immediate future. The Company has reduced
operating expenses and is seeking acquisition and investment
opportunities. No assurance can be given that the Company will not
continue to incur operating losses.
CDSI intends to explore investments in other business opportunities. As
CDSI has only limited cash resources, CDSI's ability to complete any
acquisition or investment opportunities it may identify will depend on
its ability to raise additional financing, as to which there can be no
assurance. As of the date of this report, the Company has not identified
any potential acquisition or investment. There can be no assurance that
the Company will successfully identify, complete or integrate any future
acquisition or investment, or that acquisitions or investments, if
completed, will contribute favorably to its operations and future
financial condition.
(2) PRINCIPLES OF REPORTING
The financial statements of the Company as of September 30, 2003
presented herein have been prepared by the Company and are unaudited. In
the opinion of management, all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the financial position
as of September 30, 2003 and the results of operations and cash flows for
all periods presented have been made. Results for the interim periods are
not necessarily indicative of the results for the entire year.
These financial statements should be read in conjunction with the audited
financial statements and notes thereto for the year ended December 31,
2002 included in the Company's Form 10-KSB, as amended, filed with the
Securities and Exchange Commission (Commission File No. 0001-22563).
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CDSI HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those
estimates.
(3) THINKDIRECTMARKETING TRANSACTION
On November 5, 1998, the Company contributed the non-cash assets and
certain liabilities of the PC411 Service to ThinkDirectMarketing, Inc.
("TDMI") (formerly known as Digital Asset Management, Inc.). The Company
received preferred stock representing an initial 42.5% interest in TDMI
in exchange for the contribution of the PC411 Service's net assets. The
Company's carrying value in the net assets contributed to TDMI totaled
$73,438. The Company recorded $462,360 as a capital contribution in
connection with the transaction, which represented the Company's 42.5%
interest in the capital raised by TDMI in excess of the carrying value of
the Company's net assets contributed to TDMI. The Company agreed, under
certain conditions, to fund up to $200,000 of an $800,000 working capital
line. The Company funded $100,000 of the working capital line in the
second quarter of 1999. In July 1999, the Company agreed to extend the
maturity of its working capital line and was released from any further
obligation to fund additional amounts under the working capital line.
In October 2000, TDMI and Cater Barnard plc (formerly known as
VoyagerIT.com) entered into an agreement whereby Cater Barnard purchased
for $5,000,000 shares of TDMI's convertible preferred stock and
convertible notes on various dates between November 10, 2000 and June 8,
2001. On October 16, 2001, Cater Barnard agreed to use its best efforts
to fund an additional $1,250,000 to TDMI by January 31, 2002 and on the
same date, the TDMI stockholders granted Cater Barnard an option to
purchase by January 31, 2002 all of TDMI's common stock not held by Cater
Barnard for an aggregate purchase price of 78,750 shares of Convertible
Preferred Stock of Dialog Group Inc. ("Dialog", formerly known as IMX
Pharmaceuticals, Inc.). Dialog was then a majority-owned subsidiary of
Cater Barnard to which Cater Barnard had transferred its interest in
TDMI. The preferred stock was initially convertible into 1,575,000 shares
of Dialog Common Stock.
On January 31, 2002, Dialog acquired all the shares of TDMI it did not
already own by exercising the option previously granted to Cater Barnard.
CDSI received 8,250 shares of Dialog Class B Convertible Preferred Stock
in exchange for its interest in TDMI. Each share of Dialog Class B
Preferred Stock was entitled to receive an annual dividend of $4.00 on
December 31 of each year. The dividend was payable at the option of
Dialog in shares of its Common Stock, which trades on the NASD OTC
Electronic Bulletin Board under the symbol "DLGG". The shares of Dialog
Class B Preferred Stock to be received by the Company were initially
convertible into 165,000 shares of Dialog Common Stock.
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CDSI HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
On November 4, 2002, the holders of Dialog Class B Preferred Stock and
Dialog agreed to (i) increase the number of common shares into which the
Dialog Class B Preferred Stock is convertible from 1,575,000 to 3,150,000
and (ii) eliminate the annual dividend on the Class B Preferred Stock. As
a result, the Class B Preferred Stock held by CDSI became convertible
into 330,000 shares of Dialog Common Stock. Based on public filings by
Dialog, management currently estimates that CDSI's interest in Dialog is
approximately 0.3% on a fully-diluted basis. On February 7, 2003, CDSI
converted its preferred shares into 330,000 shares of Dialog Common
Stock.
As contemplated by the Investors' Rights Agreement dated January 31, 2002
between Dialog and the former TDMI stockholders, Dialog filed a
registration statement on June 25, 2003 with the Securities and Exchange
Commission to register under the Securities Act of 1933, among other
things, the Dialog shares held by CDSI as well as the Dialog Common Stock
issuable on conversion of the Dialog Class B Preferred Stock held by the
other former TDMI stockholders. The registration statement has not yet
been declared effective. On August 18, 2003, the Company filed a notice
of proposed sale under Rule 144 of the Securities Act of 1933 with
respect to its 330,000 shares of Dialog Common Stock. None of the shares
have been sold by the Company as of November 3, 2003. See Note 4.
The Company accounted for its non-controlling interest in TDMI using the
equity basis of accounting since November 5, 1998. In the second quarter
of 1999, the carrying value of the Company's investment in TDMI,
including the $100,000 note receivable, was reduced to zero as the
cumulative equity in TDMI's losses exceeded the Company's investment in
TDMI. Since the Company had no intention or commitment to fund future
TDMI losses, commencing in the second quarter of 1999, the Company
suspended recognizing its share of the additional losses of TDMI. The
Company recorded income of $100,000 for the year ended December 31, 2001
in connection with the repayment of the $100,000 note receivable from
TDMI.
(4) INVESTMENT SECURITIES AVAILABLE FOR SALE
On August 18, 2003, the Company filed a notice of proposed sale under
Rule 144 of the Securities Act of 1933 with respect to its 330,000 shares
of Dialog Common Stock. See Note 3. As a result, in accordance with
Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities", the Company has
classified these shares as "Investment Securities Available for Sale" as
of September 30, 2003. The Dialog Common Stock is carried at fair value,
based on the last trade prior to September 30, 2003, and net unrealized
gains are included as a component of stockholders' equity. However, no
assurance can be given that the Company will ultimately realize fair
value for its Dialog shares as there is only a limited trading market for
the shares and the Company may not be able to sell any material portion
of its shares at prevailing market prices.
(5) RELATED PARTY TRANSACTIONS
Certain accounting and related finance functions are performed on behalf
of the Company by employees of New Valley Corporation, the principal
stockholder of the Company. Expenses incurred relating to these functions
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CDSI HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
are allocated to the Company and paid as incurred to New Valley based on
management's best estimate of the cost involved. The amounts allocated
were immaterial for all periods presented herein.
(6) NET LOSS PER SHARE
Basic loss per share of common stock is computed by dividing net loss
applicable to common stockholders by the weighted average shares of
common stock outstanding during the period (3,120,000 shares). Diluted
per share results reflect the potential dilution from the exercise or
conversion of securities into common stock.
Stock options and warrants (both vested and non-vested) totaling 656,788
shares at September 30, 2003 and 2002, respectively, were excluded from
the calculation of diluted per share results presented because their
effect was anti-dilutive. Accordingly, diluted net loss per common share
is the same as basic net loss per common share. On May 13, 2002, a total
of 2,322,500 of the stock options and warrants expired.
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CDSI HOLDINGS INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Based on public filings by Dialog Group Inc. (formerly known as IMX
Pharmaceuticals Inc.), management currently estimates that the Company owns an
approximate 0.3% interest in Dialog on a fully diluted basis. Dialog is a
provider of relationship marketing communications services and business and
consumer targeting databases for the healthcare, financial, and other
direct-to-consumer, direct-to-professional, business markets in the United
States and anti-virus software in the United Kingdom. The Dialog Common Stock,
which trades on the NASD OTC Electronic Bulletin Board under the symbol "DLGG",
is registered under the Securities Exchange Act of 1934, and Dialog files
periodic and other reports with the Securities and Exchange Commission.
The Company intends to seek new investments in other business
opportunities. As the Company has only limited cash resources, the Company's
ability to complete any acquisition or investment opportunities it may identify
will depend on its ability to raise additional financing, as to which there can
be no assurance. There can be no assurance that the Company will successfully
identify, complete or integrate any future acquisition or investment, or that
acquisitions or investments, if completed, will contribute favorably to its
operations and future financial condition.
THINKDIRECTMARKETING, INC.
On November 5, 1998, the Company contributed substantially all the
non-cash assets and certain liabilities related to its on-line electronic
delivery information service to TDMI, and received preferred stock of TDMI. See
Note 3 to the Condensed Consolidated Financial Statements for additional
information concerning the Company's former investment in TDMI.
The Company's interest in TDMI was accounted for using the equity
method of accounting. Commencing in the second quarter of 1999, the carrying
value of the Company's investment in TDMI was reduced to zero, and the Company
suspended recognizing its share of the additional losses of TDMI.
On January 31, 2002, Dialog acquired all the shares of TDMI it did not
already own by exercising an option previously granted by the remaining TDMI
stockholders. The Company received preferred stock of Dialog in exchange for its
interest in TDMI. The preferred stock was convertible into Dialog Common Stock
and, on February 7, 2003, CDSI converted its Class B Preferred Shares into
330,000 shares of Dialog Common Stock. On August 18, 2003, the Company filed a
notice of proposed sale under Rule 144 of the Securities Act of 1933 with
respect to its Dialog shares. None of the shares have been sold by the Company
as of November 3, 2003. See Notes 3 and 4 to the Condensed Consolidated
Financial Statements.
RESULTS OF OPERATIONS
REVENUES
For the three and nine months ended September 30, 2003 and 2002, the
Company did not generate revenues from operations.
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CDSI HOLDINGS INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (CONTINUED)
EXPENSES
Expenses associated with corporate activities were $12,654 and $42,287
for the three and nine months ended September 30, 2003, respectively, as
compared to $14,866 and $36,194 for the same periods in the prior year. The
expenses were primarily associated with costs necessary to maintain a public
company. The increase in expenses in the nine-month period is primarily
associated with a $1,688 refund of prepaid franchise taxes received in 2002 and
reductions of previously established accruals of $3,750 in 2002. The expenses in
the 2002 periods were reduced by adjustments of previously established accruals
of $1,250 and $3,750. These adjustments related to liabilities established when
the Company conducted an on-line electronic directory service. The Company
evaluates accruals on a quarterly basis and adjusts as appropriate.
OTHER INCOME (EXPENSE)
Interest and other income was $431 and $1,647 for the three and nine
months ended September 30, 2003, compared to $713 and $1,744 for the three and
nine months ended September 30, 2002. The decrease in interest income is due
primarily to lower prevailing interest rates and lower cash balances in 2003
versus 2002.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2003, the Company had an accumulated deficit of
approximately $8.1 million. The Company has reported an operating loss in each
of its fiscal quarters since inception and it expects to continue to incur
operating losses in the immediate future. The Company has reduced operating
expenses and is seeking acquisition and investment opportunities. No assurance
can be given that the Company will not continue to incur operating losses.
The Company has limited available cash, limited cash flow, limited
liquid assets and no credit facilities. The Company has not been able to
generate sufficient cash from operations and, as a consequence, financing has
been required to fund ongoing operations. Since completion of the Company's
initial public offering of its common stock (the "IPO") in May 1997, the Company
has primarily financed its operations with the net proceeds of the IPO. The
funds were used to complete the introduction of the PC411 Service over the
Internet, to expand marketing, sales and advertising, to develop or acquire new
services or databases, to acquire CDS and for general corporate purposes.
In connection with the IPO, the Company issued 2,322,500 Redeemable
Class A Warrants (the "Warrants"), including 1,000,000 of which were held by New
Valley. The Warrants, which entitled the holder to purchase one share of Common
Stock at an initial exercise price of $6.10, expired unexercised on May 13,
2002.
Cash used for operations for the nine months ended September 30, 2003
and 2002 was $38,716 and $40,491, respectively. The decrease is associated
primarily with the timing of payments of accounts payable and accrued
liabilities offset by a higher net loss in the 2003 period. Included in the
Company's accrued liabilities as of September 30, 2003 is $525 of liabilities
established in the disposal of the Company's former business of marketing and
leasing an inventory control system for tobacco products. The Company evaluates
its accruals on a quarterly basis and makes adjustments when appropriate.
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CDSI HOLDINGS INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (CONTINUED)
The Company does not expect significant capital expenditures during the
year ended December 31, 2003.
At September 30, 2003, the Company had cash and cash equivalents of
$176,371. The Company does not currently have any commitments for any additional
financing, and there can be no assurance that any such commitments can be
obtained. Any additional equity financing may be dilutive to its existing
stockholders, and debt financing, if available, may involve pledging some or all
of its assets and may contain restrictive covenants with respect to raising
future capital and other financial and operational matters.
Inflation and changing prices had no material impact on revenues or the
results of operations for the nine months ended September 30, 2003 and 2002.
On August 18, 2003, the Company filed a notice of proposed sale under
Rule 144 of the Securities Act of 1933 with respect to its 330,000 shares of
Dialog Common Stock, which is traded on the NASD OTC Bulletin Board. As a
result, in accordance with Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities", the Company
has classified these shares as "Investment Securities Available for Sale" as of
September 30, 2003. The Dialog Common Stock is carried at fair value ($29,700),
based on the last trade prior to September 30, 2003, and net unrealized gains
are included as a component of stockholders' equity. However, no assurance can
be given that the Company will ultimately realize fair value for its Dialog
shares as there is only a limited trading market for the shares and the Company
may not be able to sell any material portion of its shares at prevailing market
prices.
Management is currently evaluating alternatives to supplement the
Company's present cash and cash equivalents to meet its liquidity requirements
over the next twelve months. Such alternatives include seeking additional
investors and/or lenders and disposing of the shares of Dialog Common Stock held
by the Company. Although there can be no assurance, the Company believes that it
will be able to continue as a going concern for the next twelve months.
The Company or its affiliates, including New Valley, may, from time to
time, based upon present market conditions, purchase shares of the Common Stock
in the open market or in privately negotiated transactions.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The Company and its representatives may from time to time make oral or
written "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 (the "Reform Act"), including any
statements that may be contained in the foregoing "Management's Discussion and
Analysis of Financial Condition and Results of Operations", in this report and
in other filings with the Securities and Exchange Commission and in its reports
to stockholders, which represent the Company's expectations or beliefs with
respect to future events and financial performance. These forward-looking
statements are subject to certain risks and uncertainties and, in connection
with the "safe-harbor" provisions of the Reform Act, the Company has identified
under "Risk Factors" in Item 1 of the Company's Form 10-KSB for the year ended
December 31, 2002 filed with the Securities and Exchange Commission and in this
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CDSI HOLDINGS INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - (CONTINUED)
section important factors that could cause actual results to differ materially
from those contained in any forward-looking statements made by or on behalf of
the Company.
The Company's plans and objectives are based, in part, on assumptions
involving judgments with respect to, among other things, future economic,
competitive and market conditions and future business decisions, all of which
are difficult or impossible to predict accurately and many of which are beyond
the control of the Company. Although the Company believes that its assumptions
underlying the forward-looking statements are reasonable, any of the assumptions
could prove inaccurate and, therefore, there can be no assurance that the
forward-looking statements included in this report will prove to be accurate. In
light of the significant uncertainties inherent in the forward-looking
statements included herein, particularly in view of the Company's limited
operations, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives and plans
of the Company will be achieved. Readers are cautioned not to place undue
reliance on such forward-looking statements, which speak only as of the date on
which such statements are made. The Company does not undertake to update any
forward-looking statement that may be made from time to time on its behalf.
ITEM 3. CONTROLS AND PROCEDURES
Under the supervision and with the participation of the Company's
management, including its principal executive officer and principal financial
officer, the Company has evaluated the effectiveness of its disclosure controls
and procedures as of the end of the period covered by this report, and, based on
that evaluation, its principal executive officer and principal financial officer
have concluded that these controls and procedures are effective. There were no
changes in the Company's internal control over financial reporting during the
period covered by this report that have materially affected, or are reasonably
likely to materially affect, the Company's internal control over financial
reporting.
Disclosure controls and procedures are the Company's controls and other
procedures that are designed to ensure that information required to be disclosed
by it in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the Securities and Exchange Commission's rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by it in the reports that it
files or submits under the Exchange Act is accumulated and communicated to its
management, including its principal executive officer and principal financial
officer, as appropriate to allow timely decisions regarding disclosure.
- 12 -
CDSI HOLDINGS INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
No securities of the Company that were not registered under the
Securities Act of 1933 have been issued or sold by the Company during
the quarter ended September 30, 2003.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
31.1 Certification of Chief Executive Officer, Pursuant to
Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer, Pursuant to
Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer, Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Financial Officer, 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.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CDSI HOLDINGS INC.
(Registrant)
Date: November 3, 2003 By: /s/ J. BRYANT KIRKLAND III
---------------------------------
J. Bryant Kirkland III
Vice President, Treasurer
and Chief Financial Officer
(Duly Authorized Officer and
Chief Accounting Officer)
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