10-Q 1 form10q93003.txt FORM 10Q - SEPTEMBER 30, 2003 10QSB form10qsb6303.txt FORM 10QSB 9-30-2003 COMPANY DATA: COMPANY CONFORMED NAME: DUPONT DIRECT FINANCIAL HOLDINGS, INCORPORATED. CENTRAL INDEX KEY: 0000807904 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 59-3461241 STATE OF INCORPORATION: GEORGIA FISCAL YEAR END: 03/31 FILING VALUES: FORM TYPE FORM 10QSB SEC FILE NUMBER: 000-15900 BUSINESS ADDRESS 1: 42 BROADWAY, SUITE 1100-26 NEW YORK, NEW YORK 10004 BUSINESS TELEPHONE: 917-320-4800 FORMER CONFORMED NAME: FAB GLOBAL, INC. DATE OF NAME CHANGE: 20000307 1 FORMER CONFORMED NAME: MARCI INTERNATIONAL IMPORTS, INC. DATE OF NAME CHANGE: 19970523 FORM 10QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION 450 Fifth Street, N.W. Washington, D.C. 20549 [x] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-15900 For the Quarter ended September 30, 2003. FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 DUPONT DIRECT FINANCIAL HOLDINGS, INC. (Exact name of Issuer as specified in its charter) Georgia 59-3461241 (Jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 42 Broadway, Suite 1100-26 New York, New York 10004 (Address of principal executive offices) (Zip Code) Issuer's telephone number: (917) 320-4800 Indicate by check mark whether the Issuer (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 Issuer was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No[_] State the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable dates. At September 30, 2003, there were 15,452,246 shares of common stock and equivalents, 500,000 nonvoting, redeemable, convertible (2:1) Series C Preferred shares, and 10 Series D nonvoting, redeemable Preferred shares issued and outstanding. 2 The Issuer's revenues for its most recent fiscal year, ended 03/31/2003, were $5,274,565 compared to $5,125,410 for the prior fiscal year. The revenues for the most recent fiscal quarter were $1,280,913; and $1,526,577 for the quarter ended June 30, 2003. FINANCIAL STATEMENTS. The financial statements required to be set forth in this Item precede and accompany this narrative description. The balance sheets as of September 30, 2003, and as of March 31, 2003 (the end of the last completed fiscal year) are presented and the changes discussed. The income statements for the September 30th quarter, and the comparable year-earlier period, are presented and the comparable results are discussed below. 3 DUPONT DIRECT FINANCIAL HOLDINGS INC. CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2003 (UNAUDITED) AND MARCH 31, 2003 SEPTEMBER 30 MARCH 31 2003 2003 (UNAUDITED) ------------ ------------

Note-The Company has determined that its 47.5% owned subsidiary, Native American Financial Services, Inc.(NAFSCO)constitutes a Variable Interest Entity, as defined, which we consolidated with the Company on the effective date of the related Financial Account Standards Board Interpretation. NAFSCO had unaudited consolidated assets of approx $276,000 as of September 30, 2003 and had unaudited consolidated revenues of approx. $420,000 for the six months ended September 30, 2003. However virtually all such were derived from the Company. 4 DUPONT DIRECT FINANCIAL HOLDINGS INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND CHANGES IN STOCKHOLDERS' EQUITY FOR THE SIX MONTHS ENDED SEPTEMBER 30,(UNAUDITED) 2003 2002 ------------- ------------

5 DUPONT DIRECT FINANCIAL HOLDINGS INC. STATEMENTS OF CONSOLIDATED CASH FLOW FOR THE SIX MONTHS ENDED SEPTEMBER 30, (UNAUDITED) 2003 2002 ------------ ------------

6 DUPONT DIRECT FINANCIAL HOLDINGS INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND CHANGES IN RETAINED EARNINGS (DEFICIT) FOR THE THREE MONTHS ENDED SEPTEMBER 30, (UNAUDITED) 2003 2002

7 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. A. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. Certain statements contained in this section and elsewhere in this Form 10-QSB constitute "forward looking statements" within the meaning of the Private Securities Reform Act of 1995. Such forward-looking statements involve a number of known and unknown risks, uncertainties, and other factors which may cause actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, changes in the markets for the Company's products and services, regulatory and economic factors, economic cycles competition, litigation, client or customer arrangements that may expand or contract, adverse weather conditions, possible technological advances or obsolescences in existing or future products or services, the variability in the value of the Company's securities inventory products, customer concentration, and other risks detailed in the Company's other periodic reports filed with the United States Securities and Exchange Commission (SEC). The words "believe," "expect," "anticipate," "may," "plan," and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. B. FINANCIAL RESULTS OF OPERATIONS. During the six month period ended September 30, 2003, that is, since the close of the last fiscal year, the Company has materially improved over the year-ago quarter. Revenues increased over 2.25 times or $2,808,294 to $1,246,105 over the same period a year ago. However, for the three month period ending September 30, 2003, there was a decrease in revenues of approximately 13%. Reported revenue on September 30,2003 totaled $1,280,913; on September 30, 2002, reported revenue was $1,459,753. The increased revenues were generated by improving retail equity commissions, up substantially from ($414) to $293,719 for the quarter. However, firm proprietary equity trading, up approximately $893,520, compared to the year earlier six month period, but down $630,577 in the current quarter as compared to the year ago quarter. 8 The volatility of interest rates, particularly in July, resulted in the loss of revenue. Since the firm's proprietary equity trading represents a larger portion of revenue than does retail equity commissions, the effect of gains in the retail equity commissions did not offset the losses in proprietary equity trading. The effect on business was negative. On a per share basis (average outstanding shares) this computes to a loss, after provision for taxes, of $0.03 per share for the quarter, however, in the year-earlier period, the loss per share was $0.06. The largest component of revenues was derived from customer-driven riskless (or nearly riskless) principal proprietary transactions of $435,837. This revenue component fell by approximately 109% over the same period of September 30, 2002, a decrease reflected throughout fixed income markets and particularly in the Company's customer driven riskless transactions, where a rise in yield, as occurred in July and August, negatively impacted the volume of transactions. Customer-driven riskless principal transactions themselves have two primary components. In this statement, each of the components has been separated into its own category "customer driven principal transactions" and "Certificate of Deposit trading." Certificate of Deposit trading prior to July 1, 2003 was included with the revenues for customer driven principal transactions. The first component of customer-driven riskless principal revenue stems from a yield enhancement program offered to institutional investors with a portion of assets dedicated to investment in government zero-coupon bonds. Introduced through its Native American investment affiliate, the Company provides these clients a means to improve returns on that portion of their portfolios by taking advantage of market anomalies through swapping different, substantially identical, series of zero coupon bonds. The Company's clients now have approximately $230,000,000 dedicated to this program. To the best of the Company's knowledge and information, this zero coupon based yield enhancement program is unique. Although the zero coupon securities market is somewhat thin in comparison to some other fixed income government securities market segments, the Company is capable of enlarging this program to the extent of and beyond any remotely conceivable client demand. This revenue line experienced no growth over the year earlier period, principally because there was increased volatility and rise in yield in the zero market. The second component of customer-driven riskless principal transactions is based the Company's brokered deposit business, more commonly known as the brokered CD (Certificate of Deposit) business. This is a business line that exists to service financial institutions such as banks and savings and loan associations to attract deposits at the lowest possible costs. While the relationship of deposits to the operation of a bank or savings and loan is beyond the scope of this report, there is a ready demand for deposits, and CD instruments. The Company engages in the brokered deposit business on primarily a wholesale basis, and typically maintains a inventory of CD instruments. To a lesser extent, the Company also places CDs with end users, i.e., individual retail customers. The Company is pleased with the development of its brokered deposit business, an expansion of it is expected and planned in the forthcoming fiscal quarters. The Company opened a New Jersey office in April specifically to pursue the expansion of the brokered CD business line. This revenue component was increased by 10% for the quarter. Management believes this to be due to the attraction of several new customers that participate in an active CD trading strategy program similar to the program employed in the zero coupon trading program. 9 The Company's corresponding costs were also up over the year earlier period by approximately $80,478, or under 5%. Much of this cost containment is attributable to reductions in direct compensation associated with revenue decline. General and administrative expenses, fees and license fees, over which the Company has less influence or control, continue to increase. There are no other known trends, events or uncertainties that have had, or are reasonably likely to have, a material impact on the Company's short-term or long-term liquidity. All of the Company's liquidity requirements during the quarter were met by internal sources, and are expected to be met by such internal sources throughout the remainder of the current fiscal year which ends on March 31, 2004. The Company made no material commitments for capital expenditures during the quarter and does not expect to do so during the balance of the fiscal year. There were no significant elements of income or loss that did not arise from continuing operations. The Company's business does not typically have any seasonal aspects that have a material effect on the Company's financial condition or results of operations. C. BACKGROUND. The Company is a Georgia corporation formed in 1980. From its organization, the Company's business consisted of a chain of retail import stores in Georgia, South Carolina and Alabama; they offered a wide assortment of home furnishings imported principally from the orient. The Company also offered domestically manufactured solid brass beds, home furnishings and gifts. The Company conducted an initial public offering in February 1987 pursuant to a Form S-18 Registration Statement under the Securities Act of 1933 (the "Securities Act"). In connection with an application to list its Common Stock on the NASDAQ system, the Company also registered its Common Stock pursuant to Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange Act"). After pursuing its business for several years, the Company filed a voluntary petition under Chapter 11 of the Bankruptcy Code on March 16, 1989. This proceeding was filed with the U.S. Bankruptcy Court for the Northern District of Georgia. On September 10, 1990, the Company's Chapter 11 case was voluntarily converted to a case in Chapter 7, which resulted in the orderly liquidation of all corporate assets and the use of the proceeds to repay the Company's creditors. On July 14, 1995 the Company's case under Chapter 7 was closed by an order of the Court and the trustee was discharged. As a result of the conversion of the Company's Chapter 11 case to a case under Chapter 7, the Company had no assets, liabilities, management or ongoing operations and had not engaged in any business activities since September 10, 1990. The Company remained inactive until June 1998 when its stockholders approved a plan of reorganization. This plan of reorganization called for the Company to seek a suitable business combination. The Company decided to pursue the simplest form of business combination commonly known as a "reverse takeover." In a reverse takeover transaction, the Shareholders of a privately-held company exchange their private company shares for newly issued stock of the public company. As a result of the transaction, the privately-held company becomes a wholly-owned subsidiary of the public company and due to the large number of public company shares that are customarily issued to Shareholders of the privately-held company, those Shareholders end up with a controlling interest in the public company and are then free to appoint their own slate of officers and directors. 10 The Company's first attempt to complete a reverse takeover transaction failed. The second attempt has resulted in the emergence of the Company substantially as presently constituted. Pursuant to that reverse takeover transaction, the Company transformed itself from a dormant company without any significant business or operations into a financial services holding company owning several operating businesses and several substantial investments. The principal operating business during the September 30, 2003, quarter was Dupont Securities Group, Inc. ("DSGI"), a broker-dealer registered with the United States Securities and Exchange Commission ("SEC") with membership in the National Association of Securities Dealers, Inc. ("NASD"). The other businesses the Company owns are Wavecount Advisory Services, Inc. (WASI), in which the Company performs its investment banking and advisory services functions that do not necessarily require the issuance of securities and therefore the services of a registered broker-dealer, and a forty-seven and one-half percent (47.5%) interest in Native American Financial Services Company (NAFSCO) NASFCO owns 100% of a broker-dealer named Native American Securities Co., Inc. (NASCO) that is managed exclusively by the Company. The Company also owns 100% of an inactive broker-dealer known as American International Securities, Inc. (AIS). D. THE OPERATING COMPANIES. With respect to the operating businesses aside from DSGI, a brief description of each of the other businesses has been included in the Company's Annual, Interim and Current Reports on Forms 10-KSB, 10-QSB, and 8-K filed since on or about February 8, 2000. Those discussions are incorporated herein by reference as fully as though they were set forth here verbatim. Dupont Securities Group, Inc. Dupont Securities Group, Inc. (DSGI) is the Company's most active and productive operating business. DSGI provides a broad range of securities services to a diverse clientele, including high net worth individuals, institutions, and other broker/dealers, and corporation finance and investment banking services to a variety of businesses. DSGI is registered as a broker-dealer with the Securities and Exchange Commission (SEC) pursuant to section 15 of the Securities Exchange Act of 1934,('34 Act or Exchange Act), and is a member of the National Association of Securities Dealers, Inc. (NASD), a national securities association registered with the SEC pursuant to section 15A of the '34 Act. It is also registered with the Municipal Securities Rulemaking Board (MSRB), a board appointed by the SEC and under its supervision, and a subscriber to the coverage of the Securities Investors Protection Corporation (SIPC). As a result of these various qualifications, it is eligible to conduct its operations nationwide and worldwide, including all U.S. districts and territories, and is directly licensed to conduct its retail equity business in 45 domestic jurisdictions. 11 DSGI provides principal dealing services to Institutional and Retail Clients. Currently, the firm has opened as accounts a number of well-known International Banks, Investment Funds and municipal pension funds to trade in a variety of Investment Grade Securities. Generally, a salesperson will receive a firm order to buy or sell a security or group of securities from an Institutional account. Typically, these orders are executed with large market-making bond dealers, usually those designated as Primary Dealers by the Federal Reserve Bank, or institutions of like standing. DSGI trades with these large accounts facilitated with Guaranty Letters provided by one of its clearing agent Pershing, LLC ,or Wexford, LLC. As the business was originally envisioned, the main business lines were expected to center around Fixed Income Securities, including Brokerage Execution Services, Management of Funds to be invested in Fixed Income and assistance in raising funds via Fixed Income offerings. DSGI also specializes in providing Fixed Income execution services to small dealers without their own bond desks or by providing expertise to other bond traders in specialized securities. DSGI's staff has many years of experience in a wide variety of Fixed Income products. Each of the Company's senior managers has over 20 years of investment experience, particularly Fixed Income. The senior managers have an established clientele of institutional investors and individual investors who require a wide variety of analytical and brokerage services, and that demand hands-on trading and order execution capabilities that are not generally available through similar- sized competitive firms in the securities brokerage, commodities brokerage and investment banking industries. DSGI has established alliances for this purpose with many other dealers, with their exact number and identity constantly changing, and generally increasing in number. DSGI is a member of the NASD operating under Net Capital rules as a $100,000 broker dealer. This entitles DSGI to provide a full line of investment services including underwriting, market-making in both Fixed Income and Equities, Private Placements, and regular transactional brokerage services. DSGI limits its investment banking/advisory activities to businesses that do not contemplate a near-term (within twelve months) need to raise capital. The Company is often approached by small businesses that wish to become publicly-owned through a "reverse takeover" type of transaction similar to the one by which this Company itself acquired its operating businesses. Such an approach to "going public" provides a client with securities that it can use to attract employees and private investors. The Company currently limits its trading and investing to maintaining inventory for the servicing of retail clients and investments in which the principals have particular expertise, or are willing to school themselves as may be required. Native American Securities Co., Inc. As a specialty, the Company has focused on providing assistance to Native American Nations in analyzing their financing requirements, structuring offerings, evaluating business proposals for these needs and raising funds and managing funds. This business is conducted by DIRX through its 47.5% investment in Native American Financial Services Company (NAFSCO), that itself owns 100% of Native American Securities Co., Inc., an SEC registered, NASD member, $100,000 net capital broker-dealer. This portion of DIRX' business is now visible in the consolidated financial statements as "minority owned affiliates." 12 American International Securities, Inc. On or about March 16, 2001, the Company agreed to acquire another NASD member broker-dealer, Erste Bank Artesia Securities Corp. (EBAS) from its shareholders. The terms of the acquisition were that the Company would acquire 100% of the stock of EBAS plus $30,000 in exchange for warrants to purchase the Company's common stock. Because of a change in NASD Rules in late 2000, the stock of EBAS could not be transferred to the Company prior to providing the NASD with thirty (30) days prior notice. Accordingly, the EBAS stock was conveyed to the Company on or about April 20, 2001. In connection with this acquisition, EBAS' name was changed to American International Securities, Inc. (AIS). The Company acquired EBAS for the purpose of housing within it certain business lines, primarily a wholesale fixed income brokerage, that for practical business reasons, such as market acceptability and risk management, it did not and does not wish to develop within DSGI or NASCO. The opportunity to develop this business line was available and apparent to the Company at the time it acquired AIS/EBAS disappeared when regulatory approval for the change in ownership was delayed. AIS/EBAS has thus been inactive since its acquisition. The Company is actively seeking a purchaser for AIS/EBAS. PART II. OTHER INFORMATION. LEGAL PROCEEDINGS As of September 30, 2003, several legal proceedings, including proceedings before arbitral forums, have been initiated and are proceeding against the Company or its subsidiaries, and, or in the alternative, sometimes certain officers (primarily Messrs. Strausberg and Parsons) in the normal course of its business. Almost all of these proceedings are frivolous, or brought when the claimants learned that the Company was no longer dormant and might be a "deep pocket" for claims that are otherwise meritless as to the Company, are for exaggerated sums, or all three. Over the course of the year, several such matters have been settled for relatively modest amounts that the Company's management considers to be "nuisance" value, i.e., to avoid the demands such matters make on the Company's limited management resources. With respect to any matter that cannot be resolved for such nominal sums, it is management's intention to defend all such matters vigorously. Pursuant to Item 103 of Regulation S-B the following matter may be required to be specifically disclosed. The Company and its DSGI subsidiary are defendants in a civil action in the Supreme Court of New York for New York County styled Sharon Gale Kisiel, Frank Barnard, Phillip E. Cobb, O. Dale Coburn, Leo Corrigan III, Rex Cumming, Sharon Gale as Custodian for Taylor Gale, Sharon Gale as Custodian for Victoria Gale, Sharon Gale on behalf of the Sharon Devault Gale Special Account, Doris Heidbrink, Richard Heidbrink, Individually and on behalf of Richard M. Heidbrink IRA, Clarice Henderson, David Kubes, Steve Mathews, Dwayne Meacham, Barbara Meacham, Mrs. C. E. Meacham, Kimberly, Michael Miesch, Helen Shepler, Philip and Nancy Shalen, Kent Stobaugh, Nancy Stobaugh, Caroline Street, Gene Street, Gene and Leisa Street on behalf of Gene Street Special Account, Gene and Leisa Street on behalf of Street Children Custodial Account, H. Edward Toles, Jr. H. Edward Toles III on behalf of H. Edward Toles, Jr., H. Edward Toles, III on behalf of H. Edward Toles, IV, Gene Wilson, Martin Woodall, Sue Wymond, James M. Wosenitz, Frank Elliott, M.D., Individually and on behalf of the Frank Elliott, M.D. P.A. Profit Sharing Plan and Connie Bushnell as authorized representative of the Elliott Family Irrevocable Trust vs. Dupont Direct Financial Holdings, Inc. f/k/a FAB Global, Inc., Dupont Securities Group, Inc. and FAB Securities of America, Inc. 13 The suit seeks to hold the defendants liable for the judgment debt of a former employer of two of its officers and directors, Messrs. Strausberg and Parsons, based on theories that the Company is the successor in interest to the former employer, or is the recipient of assets of the former employer fraudulently conveyed to it, or is otherwise somehow liable. The action was initiated in late April 2002. The underlying judgment debt of the former employer for which the petitioners seeks to hold the Company liable is for over $32,000,000. The underlying judgment debt is based on facts which occurred before 1995, well before Messrs. Strausberg and Parsons had even heard of the former employer. The Petitioners' motion for summary judgment was denied on April 29,2003 and discovery continues, based on the non-final disposition of the motion. There are no other matters that may be required to be specifically identified pursuant to Item 103 of Regulation S-B, but nonetheless, the following is presented for the reader's consideration. The Company owns two broker-dealers registered with the SEC, and manages a third. The SEC has, in large part, delegated ordinary, day-to-day oversight of broker-dealers to the self-regulatory organizations of the stock market, i.e., the stock exchanges and the NASD. The Designated Examining Authority (DEA) for all of the dealers is the NASD. The dealers are subject to routine examination at any time by both the SEC and the NASD, although they are subject to cyclical routine examinations by the NASD, usually every two years. As a regular matter in the ordinary course the dealers receive regulatory inquiries on a wide range of securities industry subjects several times a year. The dealers are also subject to the regulatory authority of every state jurisdiction in which it is registered. If the dealers fail to comply with applicable laws and regulations, they may face penalties or other sanctions that may be detrimental to business. That is, for an alleged failure to comply with an applicable law or regulation, Government regulators and self regulatory organizations may institute administrative or judicial proceedings against the Company that could result in censure, fine, civil penalties (including treble damages in the case of insider trading violations), the issuance of cease-and-desist orders, the loss of status as a broker-dealer, the suspension or disqualification of officers or employees or other adverse consequences. It would not be unusual for the Company to settle such matters without respect to the underlying merits of the allegations since it would unduly tax the Company's executive and staff resources to contest such allegations, even though the Company may well not be culpable in such situations. The imposition of any material penalties or orders on any of the dealers could have a material adverse effect on the Company's business, operating results and financial condition. 14 CHANGES IN SECURITIES AND USE OF PROCEEDS. None. DEFAULTS UPON SENIOR SECURITIES. None. SUBMISSION OF MATTERS TO SHAREHOLDERS' VOTE. None. OTHER INFORMATION. None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. For the period covered by this Report, there are no exhibits required by Item 601 of Regulation S-B. No information was reported on Form 8-K during the quater for in this report is filed. SIGNATURES. In accordance with Section 13 or 15(d) of the Exchange Act. The registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, Dupont Direct Financial Holdings, Inc. (Registrant) David W. Parsons, Chairman and CEO (Signature and Title) Date: November 14, 2003 In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: Carol Ann Ferrotta, Chief Financial Officer Date: November 14, 2003 15 CERTIFICATION I, David W. Parsons, Chief Executive Officer and Chief Legal Officer of Dupont Direct Financial Holdings, Inc., certify as follows. 1. I have reviewed this quarterly report on Form 10-QSB. 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 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-14 and 15d- 14) for the registrant and 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 for which this report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and (c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date. 5. I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ David W. Parsons -------------------------------------------- David W. Parsons, Chairman, CEO and Secretary and Chief Legal Officer Date: November 14, 2003 16 CERTIFICATION I, Marc Greenspan, Acting Treasurer of Dupont Direct Financial Holdings, Inc., certify as follows. 1. I have reviewed this quarterly report on Form 10-QSB. 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 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-14 and 15d- 14) for the registrant and 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 for which this report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and (c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date. 5. I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ Marc Greenspan -------------------------------------------- Marc Greenspan, Acting Treasurer Dated: November 14, 2003 17 CERTIFICATION I, Carol Ann Ferrotta, Chief Financial Officer of Dupont Direct Financial Holdings, Inc., certify as follows. 1. I have reviewed this quarterly report on Form 10-QSB. 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 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-14 and 15d- 14) for the registrant and 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 for which this report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and (c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date. 5. I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ Carol Ann Ferrotta -------------------------------------------- Carol Ann Ferrotta Acting Chief Financial Officer Date: November 14, 2003 18 CERTIFICATION I, Lewis Goldman, Acting Executive Vice President of Dupont Direct Financial Holdings, Inc., certify as follows. 1. I have reviewed this quarterly report on Form 10-QSB. 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 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-14 and 15d- 14) for the registrant and 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 for which this report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and (c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date. 5. I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ Lewis Goldman -------------------------------------------- Lewis Goldman, Acting Executive Vice President Date: November 14, 2003 19 CERTIFICATION I, Elroy Drake, Acting Director of Dupont Direct Financial Holdings, Inc., certify as follows. 1. I have reviewed this quarterly report on Form 10-QSB. 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 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-14 and 15d- 14) for the registrant and 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 for which this report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and (c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date. 5. I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; an (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ Elroy Drake -------------------------------------------- Elroy Drake, Director Date: November 14, 2003 20

DUPONT DIRECT FINANCIAL HOLDINGS INC 10-Q