President George W. Bush signed the Sarbanes-Oxley Act of 2002 (the "Act") into law on July 30, 2002. Among the stated purposes of the Act is to protect investors by improving the accuracy and reliability of corporate disclosure made pursuant to securities laws. Specifically, section 302 requires the Securities and Exchange Commission ("SEC") to adopt rules regarding certification requirements for corporate officers on an annual and quarterly basis and section 906 imposes criminal liability for inaccurate certifications made knowingly and willfully. Accordingly, on August 29, 2002, the SEC issued rules implement the Act's certification requirements. The following is intended to provide a brief overview of the new requirements and the penalties that may be imposed for noncompliance.

Section 302

Application:

The Act's certification requirements, as set forth in section 302, apply to public companies filing periodic reports under section 13(a) or 15(d) -14 of the new Exchange Act, promulgated in order to implement the certification requirements of section 302, apply to principal executive officers and principal financial officers (the chief executive officer ("CEO") and the chief financial officer ("CFO"), or those individuals performing similar functions) of the issuing company filing quarterly or annual reports with the SEC. The certifications required by the Act are broader than those previously required by the SEC. Section 302 applies to annual reports on forms 10-K, 10-KSB, 20-F, and 4o-F and to quarterly reports on forms 10-Q and 10-QSB. Certification must also be made to any amendments and transition reports on the foregoing reports as well. Forms 6-K and 8-K, because they are current reports and not periodic such as quarterly or annual reports, are not covered by the certification requirements under section 302. As section 302 makes no distinction between domestic or foreign issuers, the Act applies to foreign private issuers when filing annual reports on form 20-F and 40-F

Requirements:

The SEC has amended forms 10-Q, 10-QSB, 10-K, 10-KSB, 20-F, and 40-F in order that certifications will be filed immediately after the signature sections of these reports. The certification requirements are in addition to – and do not alter – the current SEC signature requirements for quarterly and annual reports. The SEC has also provided the exactform that an issuer's CEO and CFO are required to use in order to satisfy section 302 certification requirements. The wording of these certification forms may not be altered. The underlying purpose of the certification requirements is to insure that the information collected and disclosed pursuant to the Exchange Act reports is complete and accurate. Therefore, the certifying officers are not permitted to have another sign the certification on his or her behalf – even through a power of attorney. This personal certification further helps to ensure accuracy of reports in light of the harsh penalties that may be imposed upon these officers should any misstatements occur. As previously stated, certification requirements under section 302 apply to annual and quarterly reports filed under the Exchange Act after August 29, 2002. The new Exchange Rules 13a-14 and 15d-14 require the CEO and the CFO, or those performing similar functions, to personally certifythe truth and accuracy of those reports. The certification must include the following:

He or she has reviewed the report being filed;

Based on his or her knowledge, the report does not contain untrue statements or omissions of material fact and the statements made are not misleading; Based on his or her knowledge , the financial statements and other financial information in the report fairly represent the financial conditions of the issuing company;

That he or she is among those responsible for the establishment and maintenance of internal disclosure and procedures, and further, that (a) those controls were designed to insure that material information is made known to him or her, particularly during the period in which the report is actually prepared, (b) he or she had evaluated the effectiveness of the issuer's disclosure controls within 90 days prior to the filing date of the report, and (c) he or she has presented his or her conclusions about the effectiveness of the disclosure controls and procedures as of that date;

He or she has disclosed all significant deficiencies in the design of the operation of internal controls to the issuer's auditors and to the audit committee of the board of directors, including (a) any deficiencies affecting the issuer's ability to record, summarize, and report financial data, and (b) any fraud – whether or not material – involved in the management of the issuer's internal controls; and Indicate whether significant changes in the internal controls have occurred subsequent to the date of the most recent evaluation. "Disclosure controls and procedures" are defined by new SEC rules as controls and other procedures of an issuer that are designed to insure that the information required to be disclosed in the reports filed pursuant to the Exchange Act is recorded, processed, summari9zed and reported, within the time period specified by SEC regulations and forms. Although the SEC has not set forth the specific "disclosure controls and procedures" to be followed, it has defined the term in such a way that it encompasses controls and procedures addressing the quality and timeliness of disclosure. The SEC expects each issuer to develop its own process consistent with its specific business and internal management practices. However, the SEC strongly recommends that issuers create a disclosure committee responsible for considering the materiality of information and for determining disclosure obligations, in order to allow for disclosure on a timely basis.

Section 906

The certification requirements create a new legal obligation for certifying officers. Section 906 of the Act imposes criminal liability for inaccurate certifications that are made knowingly and willfully. The section applies to annual reports on forms 10-K, 20-F, and 40-F and quarterly reports on forms 10-Q. Again, as with section 302, section 906 does not apply to current reports on forms 8-K or 6-K. Officers that certify inaccurate reports may be fined up to $1 million or imprisoned for up to 10 years, or both. Those officers who willfully certify an inaccurate statement may be fined up to $5 million or imprisoned up to 20 years or both.

Section 906 imposes harsh penalties upon executive officers in an effort to secure strict corporate responsibility for financial reports. Those providing a false certification could be subject to liabilities including criminal penalties separate and apart from those provided by section 906. For example, they may also be subject to private actions for violating rule 10(b)-5. In order to comply with the Act and the rules recently promulgated by the SEC, issuers should immediately evaluate the steps taken to prepare annual and quarterly reports with a critical eye and closely monitor internal controls in order to comply with the new requirements of the Act.