RICHARD T. CLARK AND JOEL C. HOLT V. HERBERT TABIN AND GARY SCHULTHEIS, United
States District Court Northern District of Oklahoma, Case No. 03-CV-289K(J). On
March 28, 2003, Plaintiffs Richard Clark and Joel Holt ("Plaintiffs") filed a
petition in the Tulsa County District Court alleging claims against the Company
and its President, CEO and Director, Herbert Tabin ("Tabin"), for, among other
things, fraud, breach of fiduciary duty, and breach of contract. On May 1, 2003,
the Company, along with Tabin, removed this action to the United States District
Court for the Northern District of Oklahoma and filed a Motion to Dismiss all
claims. On October 15, 2003, Plaintiffs withdrew their claims and filed an
Amended Complaint asserting claims against Tabin, both individually and
derivatively, on behalf of the Company. Plaintiffs also asserted claims against
the Company. Plaintiffs sought damages in the amount of $300,000 each, as well
as punitive damages. The Company retained independent counsel to conduct an
investigation into the allegations by Plaintiffs made derivatively on behalf of
the Company and, based on that investigation, determined that no action on
behalf of the Company was warranted. Defendants also filed a Motion to Dismiss
all of the allegations in the Amended Complaint. On October 19, 2004, Plaintiffs
filed a Second Amended Complaint in which they dropped the Company as a
defendant and dropped the derivative shareholder claims. Plaintiffs added Gary
Schultheis as an individual defendant. The Second Amended Complaint alleges
claims against Tabin and Schultheis individually. Defendants filed Motions to
Dismiss the Second Amended Complaint which was denied by the Court. On December
2, 2005, Plaintiffs filed a Third Amended Complaint alleging claims against
Tabin and Schultheis individually for breach of contract, breach of fiduciary
duty, civil conspiracy, and violations of Oklahoma securities laws. Plaintiffs
seek damages in the amount of $300,000 each, plus the amount of lost opportunity
to gain on their investments, less the value of their investments at the time of
trial, along with interest costs, attorneys' fees and punative damages.
Plaintiffs also seek rescission of their investments in Onspan. On April 28,
2006 defendants filed a motion for summary judgement.
23
The Company has agreed to indemnify the directors against losses from litigation
and has provided for any expected losses resulting from various legal
proceedings.
2. Potential Tax Liability:
In 2003, the North Carolina Department of Revenue contacted the Company with
regard to state income taxes for the tax year ended September 30, 1999. Upon
investigation, the Company has determined that former management did not file a
state income tax return in North Carolina for that year, although a return was
filed in Florida for that year and returns were filed in North Carolina for two
then subsidiaries of the company. The Company is in the process of investigating
the situation and of evaluating what action should be taken as a result of the
inquiry by the North Carolina Department of Revenue. The Company has been unable
to estimate with any reasonable certainty what liability it may have to the
State of North Carolina.
ITEM 3. CONTROLS AND PROCEDURES
We carried out an evaluation, under the supervision and with the participation
of our management, including our Chief Executive Officer and Principal Financial
Officer, of the effectiveness of our disclosure controls and procedures, as
defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934
as of the end of the period covered by this report. Based on that evaluation,
our Chief Executive Officer and Principal Financial Officer have concluded that
our disclosure controls and procedures as of March 31, 2006 (the "Evaluation
Date") were effective to ensure that information required to be disclosed by us
in reports that we file or submit under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms.
There were no significant changes in our internal controls or in other factors
that could significantly affect these controls during the quarter ended March
31, 2006.
Disclosure controls and procedures (as defined in the Exchange Act Rules
13a-14(c) and 15d-14(c)) are controls and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act are recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed in our reports filed under the Exchange Act is accumulated and
communicated to management to allow timely decisions regarding required
disclosure.
The Certifying Officers have also indicated that there were no significant
changes in our internal controls or other factors that could significantly
affect such controls subsequent to the date of their evaluation, and there were
no corrective actions with regard to significant deficiencies and material
weaknesses.
24
Our management, including each of the Certifying Officers, does not expect that
our disclosure controls or our internal controls will prevent all error and
fraud. A control system, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of the control
system are met. In addition, the design of a control system must reflect the
fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, within a company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple
error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people or by management
override of the control. The design of any systems of controls also is based in
part upon certain assumptions about the likelihood of future events, and their
can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions. Over time, control may become inadequate
because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate. Because of these inherent limitations in a
cost-effective control system, misstatements due to error or fraud may occur and
not be detected.
ITEM 5. OTHER INFORMATION
There is no immediate family relationship between or among any of the Directors
and Executive Officers, except Ms. Dermer who is the sister-in-law of Mr. Tabin.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following documents are filed as a part of this report or are incorporated
by reference to previous filings, if so indicated:
(a) EXHIBITS
31.1 Certification dated May 15, 2006 pursuant to Exchange Act Rule
13a-14(a) or 15d-14(a) of the Principal Executive Officer as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002, by Herbert Tabin, Chief Executive Officer
31.2 Certification dated May 15, 2006 pursuant to Exchange Act Rule
13a-14(a) or 15d-14(a) of the Principal financial Officer as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002, by Marissa Dermer, Chief Financial Officer
32.1 Certification dated May 15, 2006 pursuant to 18 U.S.C. Section
1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, made by Herbert Tabin, Chief Executive Officer.
32.2 Certification dated May 15, 2006 pursuant to 18 U.S.C. Section
1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, made by Marissa Dermer, Chief Financial Officer.
25
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.
ONSPAN NETWORKING, INC.
Date: May 15, 2006 By: /s/ Herbert Tabin
-----------------
Herbert Tabin, President
Date: May 15, 2006 By: /s/ Marissa Dermer
------------------
Marissa Dermer, Chief Financial
and Principal Accounting Officer
26
EXHIBIT 31.1
CERTIFICATION OF PRESIDENT
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
AND ITEM 307 OF REGULATION S-K
I, Herbert Tabin, President of Onspan Networking, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Onspan Networking,
Inc.;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 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-15(e) and 15d-(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) 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 report is being prepared;
b. Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c. Evaluated the effectiveness of the registrant's disclosure controls and
procedures presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period; and
d. Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of
directors:
a. All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
Date: May 15, 2006 By: /s/ Herbert Tabin
-----------------
Herbert Tabin, President
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
AND ITEM 307 OF REGULATION S-K
I, Marissa Dermer, Chief Financial Officer of Onspan Networking, Inc., certify
that:
1. I have reviewed this quarterly report on Form 10-QSB of Onspan Networking,
Inc.;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 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-15(e) and 15d-(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) 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 report is being prepared;
b. Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c. Evaluated the effectiveness of the registrant's disclosure controls and
procedures presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period; and
d. Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of
directors:
a. All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
CERTIFICATION 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 Onspan Networking Inc,. (the
"Registrant") on Form 10-QSB for the period ended March 31, 2006 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), the
undersigned Herbert Tabin, President of Onspan Networking, Inc. (the "Company")
certifies, 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) or5
15(d) of the Securities Exchange Act of 1934, and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of
the Registrant.
Date: May 15, 2006 By: /s/ Herbert Tabin
-----------------
Herbert Tabin, President
EXHIBIT 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
CERTIFICATION 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 Onspan Networking Inc,. (the
"Registrant") on Form 10-QSB for the period ended March 31, 2006 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), the
undersigned Marissa Dermer Chief Financial Officer of Onspan Networking, Inc.
(the "Company") certifies, 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) or5
15(d) of the Securities Exchange Act of 1934, and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of
the Registrant.
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