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Current Management Conclusions Concerning Disclosure Controls and Procedures
In January 2005, we carried out an evaluation under the supervision and with the participation of management, including the current CEO and
current CFO, pursuant to Rule 13a-15 under the Exchange Act, of the effectiveness of our disclosure controls and procedures as at
December 31, 2003 (the end of the period covered by this report) and as at January 10, 2005. The CEO and CFO were appointed to such
positions as at April 28, 2004, with the CFO having served in such capacity on an interim basis since March 15, 2004.
In making this evaluation, the CEO and CFO considered, among other matters:
Based on this evaluation, the CEO and CFO have concluded that our disclosure controls and procedures, as at December 31, 2003 and
January 10, 2005, were not effective to provide reasonable assurance that information required to be disclosed in the reports we file and submit
under the Exchange Act is recorded, processed, summarized and reported as and when required.
In light of this conclusion and as part of the extensive work undertaken in connection with the Second Restatement, we have applied
compensating procedures and processes as necessary to ensure the reliability of our financial reporting. Accordingly, management believes,
based on its knowledge, that (i) this 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 they were made, not misleading with respect to the period covered by this
report and (ii) the financial statements, and other financial information included in this report, fairly present in all material respects our
financial condition, results of operations and cash flows as at, and for, the periods presented in this report.
The Second Restatement and other matters listed above have also resulted in the re-evaluation, in January 2005, of the effectiveness of our
disclosure controls and procedures as at December 31, 2002, March 31, 2003, June 30, 2003 and September 30, 2003. Based on these
evaluations and in consideration of the Second Restatement and other matters listed above, the CEO and CFO have concluded that our
disclosure controls and procedures, as at December 31, 2002, March 31, 2003, June 30, 2003 and September 30, 2003, were not effective to
provide reasonable assurance that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded,
processed, summarized and reported as and when required.
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• the Second Restatement and the revisions to our preliminary unaudited results for the year ended December 31, 2003;
• the findings of the Independent Review summarized above in the Independent Review Summary;
• the terminations for cause of our former president and chief executive officer, former chief financial officer, former controller and
seven additional senior finance employees during the course of the Independent Review and the reasons therefor as described in the
Independent Review Summary;
• the material weaknesses in our internal control over financial reporting that we and our external auditor, D&T have identified (as
more fully described below);
• the measures we have identified, developed and begun to implement beginning in November 2003 to remedy those material
weaknesses (as more fully described below);
• our omission of 1999 and 2000 selected financial data from this report, and our decision not to amend our 2002 Form 10-K/A and
our 2003 quarterly reports (as more fully described below); an
d
• the decision of the Audit Committee to undertake the Revenue Independent Review (as more fully described below).