Document/Exhibit Description Pages Size
1: 10-Q Dualstar 10-Q 16 71K
2: EX-10.23 Material Contract 3 14K
3: EX-31.1 Certification per Sarbanes-Oxley Act (Section 302) 2± 9K
4: EX-31.2 Certification per Sarbanes-Oxley Act (Section 302) 2± 9K
5: EX-32.1 Certification per Sarbanes-Oxley Act (Section 906) 1 6K
6: EX-32.2 Certification per Sarbanes-Oxley Act (Section 906) 1 6K
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the Quarterly Period Ended March 31, 2004.
Or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition Period From to .
----------------------------- --------------
Commission file number 0-25552
-------
DUALSTAR TECHNOLOGIES CORPORATION
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3776834
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11-30 47th Avenue, Long Island City, NY 11101
--------------------------------------------------------------------------------
(Address, including zip code of principal executive offices)
(718) 340-6655
--------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
--------------------------------------------------------------------------------
(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 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 .
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's common stock,
as of the latest practicable date.
Common Stock, $.01 Par Value --- 24,161,467 shares as of May 11, 2004
--------------------------------------------------------------------------------
Index
DualStar Technologies Corporation
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - March 31, 2004 (Unaudited)
and June 30, 2003
Condensed Consolidated Statements of Operations for the Three months
and Nine months ended March 31, 2004 and 2003 (Unaudited)
Condensed Consolidated Statements of Cash Flows for the Nine months
ended March 31, 2004 and 2003 (Unaudited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
- March 31, 2004
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
Exhibits
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
DUALSTAR TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
[Enlarge/Download Table]
March 31, June 30,
2004 2003
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $2,599,842 $3,055,255
Accounts receivable - net of allowance for doubtful accounts 16,834,043 17,067,241
Retainage receivable 3,826,255 3,049,667
Costs and estimated earnings in excess of billings on uncompleted
contracts 4,524,761 768,409
Assets held for sale - 483,756
Prepaid expenses and other current assets 181,353 220,823
-------------------- ------------------
Total current assets 27,966,254 24,645,151
Property and equipment - net of accumulated depreciation and amortization 89,721 1,144,282
Other 74,555 431,363
-------------------- ------------------
Total assets $28,130,530 $26,220,796
==================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $10,110,008 $5,466,501
Senior secured promissory note payable - 16,827,583
Billings in excess of costs and estimated earnings on uncompleted
contracts 1,692,405 2,788,820
Liabilities held for sale - 52,575
Accrued expenses and other current liabilities 5,165,086 4,521,913
-------------------- ------------------
Total current liabilities 16,967,499 29,657,392
-------------------- ------------------
-------------------- ------------------
Total liabilities 16,967,499 29,657,392
-------------------- ------------------
Commitments and contingencies
Shareholders' equity (deficit):
Common stock 241,615 165,016
Additional paid-in capital 51,854,613 41,832,721
Accumulated deficit (40,933,197) (45,434,333)
-------------------- ------------------
Total shareholders' equity (deficit) 11,163,031 (3,436,596)
-------------------- ------------------
Total liabilities and shareholders' equity (deficit) $28,130,530 $26,220,796
==================== ==================
See notes to condensed consolidated financial statements
DUALSTAR TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
[Enlarge/Download Table]
For the Three Months Ended March 31, For the Nine Months Ended March 31,
---------------------------------------- -----------------------------------
2004 2003 2004 2003
------------------- ----------------- ------------------ -------------
Revenues earned $16,209,071 $14,837,973 $52,758,284 $43,107,737
Cost of revenues earned, excluding depreciation
and amortization 15,917,882 11,258,624 48,006,351 35,394,399
------------------- ----------------- ------------------ -----------------
Gross profit 291,189 3,579,349 4,751,933 7,713,338
------------------- ----------------- ------------------ -----------------
Operating expenses:
General and administrative expenses, excluding
depreciation and amortization 1,529,523 2,420,918 5,110,774 6,209,117
Depreciation and amortization 12,479 68,969 99,767 206,386
------------------- ----------------- ------------------ -----------------
Operating income (loss) (1,250,813) 1,089,462 (458,608) 1,297,835
------------------- ----------------- ------------------ -----------------
Other income (expense):
Interest income 14 11,582 1,482 23,188
Interest expense - (454,854) (532,910) (1,477,641)
Gain on disposition of property and
equipment - - 5,627,753 -
------------------- ----------------- ------------------ -----------------
Other income (expense) - net 14 (443,272) 5,096,325 (1,454,453)
------------------- ----------------- ------------------ -----------------
Income (loss) before provision for
income taxes (1,250,799) 646,190 4,637,717 (156,618)
Provision for income taxes 211 4,113 11,092 24,373
------------------- ----------------- ------------------ -----------------
Net income (loss) from continuing
operations (1,251,010) 642,077 4,626,625 (180,991)
Discontinued operations
Loss from discontinued communications
business - 463,675 125,490 2,156,854
Income tax (benefit) - - - -
------------------- ----------------- ------------------ -----------------
Loss from discontinued operations - 463,675 125,490 2,156,854
------------------- ----------------- ------------------ -----------------
Net income (loss) $(1,251,010) $178,402 $4,501,135 $(2,337,845)
=================== ================= ================== =================
Basic and diluted income (loss) per share:
Income (loss) from continuing operations $(0.05) $0.04 $0.22 $(0.01)
(Loss) from discontinued operations, net
of taxes 0.00 (0.03) (0.01) (0.13)
------------------- ----------------- ------------------ -----------------
Basic income (loss) $(0.05) $0.01 $0.21 $(0.14)
=================== ================= ================== =================
Diluted income (loss) $(0.05) $0.01 $0.21 $(0.14)
=================== ================= ================== =================
Weighted average shares outstanding 24,161,467 16,501,568 20,874,674 16,501,568
=================== ================= ================== =================
See notes to condensed consolidated financial statements
DUALSTAR TECHNOLOGIES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
[Enlarge/Download Table]
For the Nine Months Ended
March 31,
---------------------------------------
2004 2003
-------------------- ------------------
Net cash provided by (used in) operating activities $(399,814) $1,722,955
-------------------- ------------------
Cash flows from investing activities:
Acquisition of property and equipment (55,599) (73,644)
Proceeds from sale of communications assets - 295,280
Long term investment - (6,764)
-------------------- ------------------
Net cash provided by (used in) investing activities (55,599) 214,872
-------------------- ------------------
Cash flows from financing activities:
Principal payments on mortgage - (1,693,885)
-------------------- ------------------
Net cash used in financing activities - (1,693,885)
-------------------- ------------------
Net increase (decrease) in cash and cash equivalents (455,413) 243,942
Cash and cash equivalents at beginning of period 3,055,255 2,535,419
-------------------- ------------------
Cash and cash equivalents at end of period $2,599,842 $2,779,361
==================== ==================
Non-cash transactions:
Schedule of non-cash investing and financing activities:
Property and equipment exchanged for reduction of note payable $1,515,825
====================
Interest capitalized to note payable $501,264
====================
Reduction of note payable in exchange for property and
equipment $7,230,356
====================
Note payable exchanged for stock $10,098,491
====================
See notes to condensed consolidated financial statements
DUALSTAR TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
DualStar, through its wholly owned subsidiaries, (collectively, "DualStar" or
the "Company") operates construction-related businesses. The Company completed
the discontinuance of its communications business in August 2003.
On August 1, 2003, the Company and its wholly owned subsidiary, ParaComm, Inc.
("Paracomm"), consummated the sale to an affiliate of its senior lender,
Madeleine, LLC ("Madeleine"), of substantially all of ParaComm's assets,
pursuant to an Asset Purchase Agreement dated as of July 2003 by and among the
Company, ParaComm, Madeleine, and PCM Acquisitions Corp. Such assets related to
ParaComm's satellite television and private cable services business in Florida.
The consideration for the sale was the reduction of $4.2 million (principal plus
capitalized accrued interest) of the amount of a note of the Company to
Madeleine.
Until October 27, 2003, the Company owed Madeleine approximately $13.1
million under the Madeleine Loan (defined below). As reported in the Company's
Current Report on Form 8-K filed on November 12, 2003, the Company completed
transactions by which the Company reduced to zero its indebtedness to Madeleine
on October 27, 2003. On that date, the Company and its wholly owned subsidiary
Property Control, Inc. sold and conveyed to an affiliate of Madeleine certain
real property in Long Island City, New York. The consideration for the sale was
the reduction of $3 million principal amount of the Company's outstanding note
to Madeleine. Also on October 27, 2003, the Company issued to Madeleine an
aggregate of 7,659,899 shares of the Company's common stock. The issuance of
such shares was in consideration of the reduction to zero of the Company's
remaining indebtedness to Madeleine in the approximate aggregate amount of $10.1
million (principal plus capitalized accrued interest). The Company also granted
certain registration rights to Madeleine. In connection with the transaction,
certain officers and management employees surrendered options to purchase an
aggregate of 2,248,000 shares of common stock and an affiliate of Madeleine
terminated warrants to purchase 3,125,000 shares of common stock. New options
may be granted to management, subject to shareholder approval of certain items
to effect such grants. Madeleine currently owns approximately 31.7% of the total
outstanding common stock of the Company.
The issuance of the common stock in connection with the exchange was deemed to
be exempt from registration under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance on Section 4(2) of the Securities Act or
Regulation D promulgated thereunder. The Company had reason to believe that the
purchaser was familiar with or had access to information concerning its
operations and financial condition, and the purchaser represented that it was an
accredited investor as defined in the Securities Act. At the time of the
issuance, the common stock was deemed to be restricted securities for purposes
of the Securities Act and the instruments representing such securities included
legends to that effect.
On November 8, 2000, the Company consummated a $12.5 million senior secured
loan transaction with Madeleine, an affiliate of Blackacre Capital Management
L.L.C. and Cerberus Capital Management L.P., (the "Madeleine Loan"). With the
consummation of the transactions with Madeleine and its affiliates, which
occurred on August 1, 2003 and on October 27, 2003, the Company extinguished
$17.3 million of indebtedness to Madeleine. The Company presently has no
indebtedness to Madeleine and is not in default with respect to the Madeleine
Loan.
DUALSTAR TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
In the recent past, the bonding industry has come under increased pressure and
claims, and in general, the bonding market has tightened. Consequently, it has
become more difficult for the Company to secure surety bonds in connection with
its construction business due to the Company's financial position as well as
overall market conditions. The Company is currently considering ways to improve
its ability to continue to obtain bonding. There can be no assurance that the
Company will be able to continue to obtain bonding or, if so, at a reasonable
cost. If the Company is unable to obtain surety bonds as needed, this may have a
material adverse effect on the Company.
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include certain information and
disclosures required by accounting principles generally accepted in the United
States of America for complete consolidated financial statements. In the opinion
of management, all adjustments considered necessary for a fair presentation have
been included and are of normal and recurring nature. Operating results for the
three and nine-month periods ended March 31, 2004 are not necessarily indicative
of the results that may be expected for the fiscal year ending June 30, 2004.
The interim statements should be read in conjunction with the financial
statements and notes, thereto included in the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 2003.
NOTE B - PER SHARE DATA
The computation of basic and diluted net loss per share is based on the weighted
average number of shares of common stock outstanding. For diluted net loss and
income per share, when dilutive, stock options and warrants are included as
share equivalents using the treasury stock method, and shares available for
conversion under the convertible note are included as if converted at the date
of issuance. For the three and nine months ended March 31, 2003, stock options
and warrants have been excluded from the calculation of diluted loss per share
as their effect would have been antidilutive. On October 27, 2003, the
outstanding options and warrants were surrendered.
NOTE C - CONTINGENCIES
(a) In connection with its construction-related businesses, the Company is
contingently liable to sureties under a general indemnity agreement. The Company
agrees to indemnify the sureties for any payments made on contracts of
suretyship, guarantee or indemnity. That is, on certain work at the request of
the Company, the sureties provide a full guarantee of performance and/or payment
to third parties in the form of a bond. If the sureties pay an amount to third
parties pursuant to such bond, the Company is obligated to fully reimburse the
sureties. There is no dollar amount limit on the amount of the indemnity
provided to the sureties.
(b) In August 2001, OnTera, a wholly owned subsidiary of the Company,
signed a promissory note and security agreement with Nokia to finance the
purchase of various network equipment totaling approximately $668,000. The note
bears interest at a rate of 11% per annum and requires eighteen monthly
installments effective April 1, 2001. The note is secured by the network
equipment financed by the note. OnTera has not made monthly installments since
June 2001, therefore the Company is in default of the agreement. In August 2002,
Nokia filed suit in the District Court of Dallas County, Texas, claiming damages
of approximately $607,000 plus interest, costs and attorneys on the promissory
note.
DUALSTAR TECHNOLOGIES CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE C - CONTINGENCIES (continued)
(c) In July 2002, plaintiff Harvey Wayne filed a verified shareholders'
derivative complaint against directors and officers of the Company, various
other entities and the Company as a nominal defendant, in the United States
District Court for the Eastern District of New York. The complaint alleges
breach of fiduciary duties and seeks to compel the Company to hold a
shareholders' meeting for the election of directors. The complaint seeks
injunctive relief and unspecified damages. Motions to dismiss have been filed by
the Company and other defendants and are pending before the Court.
(d) In the ordinary course of business, the Company is involved in claims
concerning personal injuries and property damage, all of which the Company
refers to its insurance carriers. The Company believes that the claims are
covered under its liability policies and that no loss to the Company is
probable. No provision for such claims has been made in the accompanying
condensed consolidated financial statements.
NOTE D - DISCONTINUED OPERATIONS
In August 2003, the Company sold, substantially all of the assets of ParaComm.
The carrying value of the ParaComm assets sold represented substantially all of
the assets of the Company's communications business. The communications
operations for the three and nine months ended March 31, 2004 are reported as
discontinued on the Company's condensed consolidated statement of operations for
the three and nine months ended March 31, 2004.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
DualStar Technologies Corporation, through its wholly owned subsidiaries
(collectively, "DualStar" or the "Company"), operates construction-related
businesses. For a description of the Company's businesses and operations, see
Item 1 of the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 2003.
The Company completed the discontinuance of its communications business in
August 2003. As discussed herein, in the fourth quarter of 2003, the Company
completed transactions by which the Company reduced to zero its indebtedness to
Madeleine, L.L.C. ("Madeleine"), an affiliate of Blackacre Capital Management
L.L.C., and Cerberus Capital Management, L.P. As a result of such transactions,
at October 27, 2003, Madeleine owned approximately 31.7% of the Company's total
outstanding common stock.
In the recent past, the bonding industry has come under increased pressure and
claims, and in general, the bonding market has tightened. Consequently, it has
become more difficult for the Company to secure surety bonds in connection with
its construction business due to the Company's financial position as well as
overall market conditions. The Company is currently considering ways to improve
its ability to continue to obtain bonding. There can be no assurance that the
Company will be able to continue to obtain bonding or, if so, at a reasonable
cost. If the Company is unable to obtain surety bonds as needed, this may have a
material adverse effect on the Company.
The statements contained in this Quarterly Report on Form 10-Q, including the
exhibits hereto, relating to operations of the Company may constitute
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. Please note that the words "intends,"
"expects," "plans," "estimates," "projects," "believes," "anticipates" and
similar expressions are intended to identify forward-looking statements. Actual
results of the Company may differ materially from those in the forward-looking
statements and may be affected by a number of factors including the ability of
the Company to raise and provide the capital resources to fund any continuing
operating losses, the Company's ability to obtain bonding or insurance coverage,
regulatory or legislative changes, the Company's dependence on key personnel,
and the Company's ability to manage growth, in addition to those risk factors,
set forth in the section captioned "Risk Factors" and the assumptions, risks and
uncertainties set forth in the other sections of the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 2003 as well as in DualStar's other
filings with the SEC. The Company can give no assurance that its plans,
intentions, and expectations will be achieved and actual results could differ
materially from forecasts and estimates.
Capital Resources and Liquidity
Cash balances at March 31, 2004 and June 30, 2003 were $2.6 million and $3.1
million, respectively. The Company used $0.4 million of cash in the nine months
ended March 31, 2004 in operating activities. The net use of cash was primarily
due to the increase of costs and estimated earnings in excess of billings on
uncompleted contracts of $3.8 million, the decrease of billings in excess of
costs and estimated earnings on uncompleted contracts of $1.1 million, the
increase in accounts payable of $4.6 million, and the increase in accounts
receivable of $0.5 million, all of which resulted from the Company's
difficulties in obtaining surety bonds. The Company used $0.1 million for the
acquisition of property and equipment. The Company was provided with $1.7
million of cash in the nine months ended March 31, 2003 by operating activities.
The net provision of cash was primarily due to decrease in receivables of the
construction businesses. Due to the relatively high dollar value of each
construction contract, generally ranging from $2 million to $20 million, should
the collection of contract receivables be delayed, it may have a material
adverse effect on the Company's operations.
The Company incurred significant losses in the last several fiscal years,
primarily in the communications segment. The Company completed the
discontinuance of its communications business in August 2003. There can be no
assurance that the construction segment will sustain profitability or positive
cash flow from future operations. Given the current U.S. economic climate and
market conditions and the financial condition of the Company, there is a
substantial likelihood that the Company will be unable to raise additional funds
on terms satisfactory to it, if at all, to fund any future operating losses that
may occur through the operation of its construction related businesses.
Moreover, until October 27, 2003, the Company owed approximately $13.1
million under a $12.5 million senior secured loan agreement (the "Madeleine
Loan"). As reported in the Company's Current Report on Form 8-K filed on
November 12, 2003, the Company completed transactions by which the Company
reduced to zero its indebtedness to Madeleine on October 27, 2003. On that date,
the Company and its wholly owned subsidiary Property Control, Inc. sold and
conveyed to an affiliate of Madeleine certain real property in Long Island City,
New York. The consideration for the sale was the reduction of $3 million
principal amount of the Company's outstanding note to Madeleine. Also on October
27, 2003, the Company issued to Madeleine an aggregate of 7,659,899 shares of
the Company's common stock. The issuance of such shares was in consideration of
the reduction to zero of the Company's remaining indebtedness to Madeleine in
the approximate aggregate amount of $10.1 million (principal plus capitalized
accrued interest). The Company also granted certain registration rights to
Madeleine. Madeleine currently owns approximately 31.7% of the total outstanding
common stock of the Company.
Results of Operations
Revenue increased $1.4 million or 9.5% from $14.8 million in the three months
ended March 31, 2003 to $16.2 million in the three months ended March 31, 2004.
The increase was primarily due to more construction contracts started in fiscal
2004.
Revenue increased $9.7 million or 22.5% from $43.1 million in the nine months
ended March 31, 2003 to $52.8 million in the nine months ended March 31, 2004.
The increase was primarily due to more construction contracts started in fiscal
2004.
Cost of revenue increased $4.6 million or 40.7% from $11.3 million in the three
months ended March 31, 2003 to $15.9 million in the three months ended March 31,
2004. The increase was primarily due to the increase in construction revenue.
Gross profit percentages were 1.9% and 24.3% in the three months ended March 31,
2004 and 2003, respectively. The decrease in gross profit percentage was due
primarily to a lower gross margin percentage in the new contracts started in
fiscal 2004.
Cost of revenue increased $12.6 million or 35.6% from $35.4 million in the nine
months ended March 31, 2003 to $48.0 million in the nine months ended March 31,
2004. The increase was primarily due to the increase in construction revenue.
Gross profit percentages were 9.1% and 17.9% in the nine months ended March 31,
2004 and 2003, respectively. The decrease in gross profit percentage was due
primarily to a lower gross margin percentage in the new contracts started in
fiscal 2004.
Operating results decreased $2.4 million or 218.2% from $1.1 million in the
three months ended March 31, 2003 to $(1.3) million in the three months ended
March 31, 2004. The decrease was due primarily to the decrease in gross margin
percentage in the new contracts started in fiscal 2004.
Operating results decreased $1.8 million or 138.5% from $1.3 million in the nine
months ended March 31, 2003 to $(0.5) million in the nine months ended March 31,
2004. The decrease was due primarily to the decrease in gross margin percentage
in the new contracts started in fiscal 2004.
General and administrative expenses decreased $0.9 million or 37.5% from $2.4
million in the three months ended March 31, 2003 to $1.5 million in the three
months ended March 31, 2004. The decrease in general and administrative expenses
included a $0.7 million decrease in payroll and related costs, and a $0.1
million decrease in professional fees.
General and administrative expenses decreased $1.1 million or 17.8% from $6.2
million in the nine months ended March 31, 2003 to $5.1 million in the nine
months ended March 31, 2004. The decrease in general and administrative expenses
included a $1.0 million decrease in payroll and related costs, and a $0.1
million decrease in professional fees.
Depreciation and amortization decreased $0.1 million or 100.0% from $0.1 million
in the three months ended March 31, 2003 to an immaterial amount in the three
months ended March 31, 2004. The decrease was primarily due to the disposition
of property and equipment.
Depreciation and amortization decreased $0.1 million or 50.0% from $0.2 million
in the nine months ended March 31, 2003 to $0.1 million in the nine months ended
March 31, 2004. The decrease was primarily due to the disposition of property
and equipment.
Interest expense decreased $0.5 million or 100% from $0.5 million in the three
months ended March 31, 2003 to zero in the three months ended March 31, 2004.
The decrease was primarily due to the reduction of the senior secured promissory
note payable to zero.
Interest expense decreased $1.0 million or 66.7% from $1.5 million in the nine
months ended March 31, 2003 to $5.0 million in the nine months ended March 31,
2004. The decrease was primarily due to the reduction of the senior secured
promissory note payable to zero.
New Accounting Standards Adopted
None.
New Accounting Standards Not Yet Adopted
None.
Item 3 - Quantitative and Qualitative Disclosures about Market Risk
None.
Item 4 - Controls and Procedures
Evaluation of Disclosure Controls and Procedures. Regulations under the
Securities Exchange Act of 1934 require public companies, including our company,
to maintain "disclosure controls and procedures," which are defined to mean a
company's controls and other procedures that are designed to ensure that
information required to be disclosed in the reports that it files or submits
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported, within the time periods specified in the Commission's rules and forms.
Our Chief Executive Officer and our Chief Financial Officer, based on their
evaluation of our disclosure controls and procedures as of the end of the period
covered by this report, concluded that our disclosure controls and procedures
were effective for this purpose.
Changes in Internal Control Over Financial Reporting. Regulations under the
Securities Exchange Act of 1934 require public companies, including our company,
to evaluate any change in our "internal control over financial reporting," which
is defined as a process to provide reasonable assurance regarding the
reliability of financial reporting and preparation of financial statements for
external purposes in accordance with generally accepted accounting principles in
the United States. In connection with their evaluation of our disclosure
controls and procedures as of the end of the period covered by this report, our
Chief Executive Officer and Chief Financial Officer did not identify any change
in our internal control over financial reporting during the three-month period
ended March 31, 2004 that materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) The following exhibits are filed with the report:
10.23 Form of General Agreement of Indemnity
31.1 Rule 13a-14(a)/15d-14(a) Certification by Mr. Cuneo.
31.2 Rule 13a-14(a)/15d-14(a) Certification by Mr. Birnbach.
32.1 Section 1350 Certification by Mr. Cuneo
32.2 Section 1350 Certification by Mr. Birnbach
(b) Reports on Form 8-K. None.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DualStar Technologies Corporation
Date: May 14, 2004 By: /s/ GREGORY CUNEO
------------------- -------------------------------
Gregory Cuneo
President and Chief Executive Officer
Date: May 14, 2004 By: /s/ ROBERT BIRNBACH
------------------- -------------------------------
Robert Birnbach
Executive Vice President and Chief
Financial Officer
Date: May 14, 2004 By: /s/ MICHAEL GIAMBRA
------------------- -------------------------------
Michael Giambra
Vice President, Chief Accounting Officer
and Corporate Controller
EXHIBIT INDEX
Following is the list of Exhibits, as required by Item 601 of Regulation
S-K, filed as part of this Report on Form 10-Q:
Exhibit No.
Regulation S-K
Item 601
Designation Exhibit Description
10.23 Form of General Agreement of Indemnity
31.1 Rule 13a-14(a)/15d-14(a) Certification by Mr. Cuneo.
31.2 Rule 13a-14(a)/15d-14(a) Certification by Mr. Birnbach
32.1 Section 1350 Certification by Mr. Cuneo
32.2 Section 1350 Certification by Mr. Birnbach
Dates Referenced Herein and Documents Incorporated by Reference
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