10-Q 1 q10rd2002.txt THIRD QUARTER 2002 REPORT ON FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2001 Commission File Number: 0-13763 TECHNOLOGY RESEARCH CORPORATION _______________________________ (Exact name of registrant as specified in its charter) Florida 59-2095002 _______________________________ ________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No,) 5250 140th Avenue North, Clearwater, Florida 33760 ____________________________________________________________________________ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (727) 535-0572 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 a 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at January 31, 2002 ____________________________ _______________________________ Common stock, $.51 par value 5,437,497 TECHNOLOGY RESEARCH CORPORATION INDEX Part I - Financial Information Page Condensed Consolidated Balance Sheets - December 31, 2001 and March 31, 2001............................... 1 Condensed Consolidated Statements of Operations - Three months and nine months ended December 31, 2001 and December 31, 2000.............................................. 2 Condensed Consolidated Statements of Cash Flows - Nine months ended December 31, 2001 and December 31, 2000.......... 3 Notes to Condensed Consolidated Financial Statements...................... 4 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations.............................. 6 Item 3 - Quantitative and Qualitative Disclosure Regarding Market Risk.... 9 Part II - Other Information Item 1 - Legal Proceedings................................................ 10 Item 2 - Changes in Securities............................................ 10 Item 3 - Defaults Upon Senior Securities.................................. 10 Item 4 - Submission of Matters to a vote of Shareholders.................. 10 Item 5 - Other Information................................................ 10 Item 6 - Exhibits and Reports on Form 8-K................................. 10 Signatures................................................................ 11 PART I - FINANCIAL INFORMATION Item 1. Financial Statements TECHNOLOGY RESEARCH CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS December 31 March 31 2001 2001 ----------- --------- ASSETS (unaudited) * Current assets: Cash and cash equivalents $ 586,015 184,772 Accounts receivable, net 2,484,342 3,364,817 Income tax receivable 78,061 278,500 Inventories: Raw material 3,440,761 4,443,662 Work in process 281,744 224,449 Finished goods 1,758,014 1,684,163 ---------- ---------- Total inventories 5,480,519 6,352,274 Prepaid expenses 133,178 145,134 Deferred income taxes 534,003 585,535 ---------- ---------- Total current assets 9,296,118 10,911,032 ---------- ---------- Property, plant, and equipment 9,392,389 9,304,618 Less accumulated depreciation 5,591,839 5,106,407 ---------- ---------- Net property, plant, and equipment 3,800,550 4,198,211 ---------- ---------- Other assets 65,229 47,305 ---------- ---------- $ 13,161,897 15,156,548 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable 487,989 1,579,951 Accrued expenses 272,583 340,796 Dividends payable 68,618 68,058 Deferred income - short term 5,882 23,530 ---------- ---------- Total current liabilities 835,072 2,012,335 Long-term debt 1,000,000 1,750,000 Deferred income - long term 50,000 50,000 Deferred income taxes 17,882 23,663 ---------- ---------- Total liabilities 1,902,954 3,835,998 ---------- ---------- Stockholders' equity: Common stock 2,784,088 2,784,088 Additional paid-in capital 7,526,472 7,526,472 Retained earnings 988,528 1,050,135 ---------- ---------- 11,299,088 11,360,695 Treasury stock (40,145) (40,145) ---------- ---------- Total stockholders' equity 11,258,943 11,320,550 ---------- ---------- $ 13,161,897 15,156,548 ========== ========== * The balance sheet as of March 31, 2001 has been summarized from the Company's audited balance sheet as of that date. See accompanying notes to condensed consolidated financial statements. - 1 - TECHNOLOGY RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Three Months Ended Nine Months Ended December 31 December 31 2001 2000 2001 2000 ---------- ---------- ---------- ---------- Operating revenues: Net sales $ 3,688,432 3,917,394 12,568,494 12,996,489 Royalties 36,296 63,889 134,258 166,445 ---------- ---------- ---------- ---------- 3,724,728 3,981,283 12,702,752 13,162,934 ---------- ---------- ---------- ---------- Operating expenses: Cost of sales 2,608,760 3,146,644 9,301,505 9,783,845 Selling, general, and administrative 801,053 804,239 2,454,589 2,633,688 Research, development and engineering 246,835 280,145 745,502 901,838 ---------- ---------- ---------- ---------- 3,656,648 4,231,028 12,501,596 13,319,371 ---------- ---------- ---------- ---------- Operating income (loss) 68,080 (249,745) 201,156 (156,437) ---------- ---------- ---------- ---------- Other income (deductions): Interest and sundry income 2,418 4,510 5,718 57,360 Interest expense (12,650) (28,562) (71,713) (102,914) Loss on disposal of asset (642) (841) (291) (5,320) ---------- ---------- ---------- ---------- (10,874) (24,893) (66,286) (50,874) ---------- ---------- ---------- ---------- Income (loss) before income taxes 57,206 (274,638) 134,870 (207,311) Income tax expense (benefit) 13,937 (151,383) 33,353 (134,175) ---------- ---------- ---------- ---------- Net income (loss) $ 43,269 (123,255) 101,517 (73,136) ========== ========== ========== ========== Basic earnings (loss) per share $ 0.01 (0.02) 0.02 (0.01) ========== ========== =========== ========= Weighted average number of common shares outstanding 5,427,497 5,442,062 5,427,497 5,440,505 ========== ========== ========== ========== Diluted earnings (loss) per share $ 0.01 (0.02) 0.02 (0.01) ========== ========== =========== ========= Weighted average number of Common and equivalent shares outstanding 5,456,994 5,496,150 5,455,262 5,506,731 ========== ========== ========== ========== Dividends paid $ 0.01 0.01 0.03 0.03 ========== ========== ========== ========== See accompanying notes to condensed consolidated financial statements. - 2 - TECHNOLOGY RESEARCH CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Nine Months Ended December 31 2001 2000 ---------- ---------- Cash flows from operating activities: Net income $ 101,517 (73,136) Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 662,300 608,707 Decrease in accounts receivable 880,475 641,471 Decrease (increase) in inventories 871,755 (1,803,894) Decrease (increase) in prepaid expenses 11,956 (147,435) Decrease (increase) in income taxes receivable 200,439 (218,396) Change in deferred income taxes 45,751 (37,278) Decrease (increase) in other assets (17,924) 26,709 Increase (decrease) in accounts payable (1,091,962) 767,146 Decrease in accrued expenses (68,213) (62,535) Decrease in deferred income (17,648) (97,059) ---------- ---------- Net cash provided by (used in) operating activities 1,578,446 (395,700) ---------- ---------- Cash flows from investing activities: Capital expenditures (264,639) (693,797) ---------- ---------- Net cash used in investing activities (264,639) (693,797) ---------- ---------- Cash flows from financing activities: Net payments of long-term debt (750,000) (1,000,000) Dividends paid (162,564) (165,125) Purchase of treasury stock - (40,145) ---------- ---------- Net cash used in financing activities (912,564) (1,205,270) ---------- ---------- Increase (decrease) in cash and cash equivalents 401,243 (2,294,767) Cash and cash equivalents at beginning of period 184,772 2,696,010 ---------- ---------- Cash and cash equivalents at end of period $ 586,015 401,243 ========== ========== See accompanying notes to condensed consolidated financial statements. - 3 - TECHNOLOGY RESEARCH CORPORATION AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. The financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for the fair statement of results for the interim period. The results of operations for the three-month or nine-month periods ended December 31, 2001 are not necessarily indicative of the results to be expected for the full year. 2. Basic earnings per share has been computed by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share has been computed by dividing net income by the weighted average number of common and equivalent shares outstanding. Common share equivalents included in the computation represent shares issuable upon exercise of stock options which would have a dilutive effect in periods where there are earnings. 3. In 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities" which establishes accounting and reporting standards for derivatives as either assets or liabilities on the balance sheet and measure those instruments at fair values. In June 1999, FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of SFAS No. 133", which deferred the effective date of the adoption of SFAS No. 133. The Company adopted SFAS No. 133 on April 1, 2001. The Company holds no derivative financial instruments; therefore, the adoption of this standard had no effect on the consolidated financial statements. 4. In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities", replacing SFAS No. 125. SFAS 140 revises the standards of accounting for securitizations and other transfers of financial assets and collateral and requires certain disclosures, and otherwise reiterates many of the provisions of SFAS 125. SFAS 140 is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001. SFAS 140 is effective for recognition and reclassification of collateral and for disclosures relating to securitization transactions and collateral for fiscal years ending after December 15, 2000. The adoption of SFAS 140 had no effect on the Company's consolidated financial statements. - 4 - 5. In July 2001, the FASB issued SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS 141 requires that all business combination initiated after June 30, 2001, be accounted for using the purchase method. SFAS 142 will require that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of SFAS 142. SFAS 142 will also require that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of." The Company is required to adopt the provisions of SFAS 141 immediately, and SFAS 142 effective April 1, 2002. The adoption of SFAS 141 had no effect on the consolidated financial statements. 6. In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations", which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and(or) normal use of the asset. Statement No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. The liability is accreted at the end of each period through charges to operating expense. If the obligation is settled for other than the carrying amount of the liability, the Company will recognize a gain or loss on settlement. The Company is required and plans to adopt the provisions of Statement No. 143 for fiscal years beginning after June 2002. To accomplish this, the Company must identify all legal obligations for asset retirement obligations, if any, and determine the fair value of these obligations on the date of adoption. The determination of fair value is complex and will require the Company to gather market information and develop cash flow models. Additionally, the Company will be required to develop processes to track and monitor these obligations. The Company does not expect the adoption of SFAS 143 to have a material impact on the consolidated financial statements. 7. On October 3, 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS 144 supersedes SFAS 121; however, it retains many of the fundamental provisions of that Statement. - 5 - SFAS 144 also supersedes the accounting and reporting provisions of APB Opinion No. 30, "Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions", for the disposal of a segment of a business. However, it retains the requirement in Opinion No. 30 to report separately discontinued operations and extends that reporting to a component of an entity that either has been disposed of (by sale, abandonment, or in a distribution to owners) or is classified as held for sale. By broadening the presentation of discontinued operations to include more disposal transactions, the FASB has enhanced managements' ability to provide information that helps financial statement users to assess the effects of a disposal transaction on the ongoing operations of an entity. The Company is required to adopt the provisions of SFAS 144 on April 1, 2002, and the adoption of SFAS 144 is not expected to have any effect on the consolidated financial statements. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS The following is management's discussion and analysis of certain significant factors which have affected the Company's financial position and operating results during the periods included in the accompanying condensed consolidated financial statements. Current Three and Nine Months Ended December 31, 2001 versus Three and Nine Months Ended December 31, 2000 The Company's operating revenues for the third quarter ended December 31, 2001 were $3,724,728, compared to $3,981,283 reported in the same quarter last year, a decrease of approximately 6%. Net income for the current quarter was $43,269, compared to a net loss of $(123,255), for the same quarter last year. Basic and diluted earnings for the current quarter were $.01 per share compared to basic and diluted losses of $(.02) per share for the same quarter last year. The Company performed well in a tough economy in the third quarter. Although revenues were down, the Company recorded earnings instead of a loss and was able to reduce its debt by $750,000. Earnings would have been substantially higher were it not for two expenses which were recorded in the quarter. First, the Company spent $43,698 on television advertisements supporting the sale of Fire Shield(TM) extension cords, which were offered through Home Depot and Wal-Mart starting in October 2001. Second, the Company, on behalf of its employees, directors and shareholders, donated $50,000 to the NASDAQ Disaster Relief Fund in October in memory of Thomas Casoria, a friend of the Company and a firefighter of Engine Co. 22 and ladder Co. 13 in New York, who gave his life in an effort to help those victims of the terrorist attack on the World Trade Towers on September 11, 2001. The Company's operating revenues for the nine-month period ended December 31, 2001 were $12,702,752, compared to $13,162,934 reported in the same period of the prior year, a decrease of approximately 3%. Net income for the nine-month period was $101,517, compared to a net loss of $(73,136), for the same period in the prior year. Basic and diluted earnings for the nine-month period were $.02 per share compared to basic and diluted losses of $(.01) per share for the same period of the prior year. The Company's turnaround performance from period to period was primarily due to improved manufacturing productivity and reduced operating expenses. - 6 - The decrease in revenues for the nine-month period ended December 31, 2001, compared to the same period in the prior year, was due to commercial sales decreasing by $1,004,507, of which $617,927 was attributed to Xerox and its suppliers. Royalty income decreased by $32,187, and military sales increased by $576,512. The Company's third fiscal quarter is normally its weakest quarter and was impacted further by competitive pressures and the slowing economy. The Company's product development activity continues to be a high priority as the Company looks at opportunities to expand its commercial business through the introduction of new products. The increase in military sales was mainly due to the Company being in full production of the control devices related to the 5/10/15/30/60KW Tactical Quiet Generator ("TQG") and the 3KW TQG programs. The Company believes military sales will remain steady throughout the remainder of its fiscal year. Sales of Fire Shield extension cords through Home Depot and Wal-Mart during the holiday season did not meet Company expectations; however, brand awareness for Fire Shield is being created through such exposure. The Company believes that brand awareness is also being strengthened through the use of Fire Shield on Applica's new line of Black & Decker(R) heaters, by the opportunity for Fire Shield protection on room air conditioners as a result of the 2002 National Electrical Code mandate and through other new Fire Shield applications. Overall, the on-going sales activity for the Company's Fire Shield products remains encouraging. The Company's gross profit margin on net sales was approximately 29% for the quarter and approximately 26% for the nine-month period ended December 31, 2001, compared to 20% and 25% for the same periods last year, reflecting increased manufacturing productivity from period to period. Although the Company's manufacturing performance improved from year to year, higher than expected rework expense was recorded in the quarter due to warranty repairs of inverters associated with the 3KW TQG program. Latent defects of certain vendor supplied parts were responsible for the problems. The Company is in the process of replacing these parts, thus additional warranty repair expense is expected to be recorded in the fourth quarter as well. Selling, general and administrative expenses were $801,053 for the quarter and $2,454,589 for the nine-month period ended December 31, 2001, compared to $804,239 and $2,633,688 for the same periods last year, a decrease of approximately 0% and 7%, respectively. The decrease in expenses for the nine-month period was due to lower advertising costs of $33,096, lower travel expenses of $64,325, lower professional fees of $44,373, lower stockholder relations expenses of $31,751 and a decrease in other costs of $12,212, offset to some extent by a $50,000 donation to the NASDAQ Disaster Relief Fund. In addition, an account receivable write-off of $43,342 was posted in the prior year's period. Selling expenses were $453,509 for the quarter and $1,417,467 for the nine-month period ended December 31, 2001, compared to $463,096 and $1,493,363 for the same periods last year, a decrease of approximately 2% and 5%, respectively. General and administrative expenses were $347,544 for the current quarter and $1,037,122 for the nine-month period ended December 31, 2001, compared to $341,143 and $1,140,325 for the same periods last year, reflecting similar expenses period to period. - 7 - Research, development and engineering expenses were $246,835 for the current quarter and $745,502 for the nine-month period ended December 31, 2001, compared to $280,145 and $901,838 for the same periods last year, a decrease of approximately 12% and 17%, respectively. The decrease in expenses for the nine-month period was due to lower salary related expenses of $80,373, lower health insurance costs of $52,897, lower UL fees of $36,795 and an increase in other expenses of $13,729. Productivity improvements through training and the use of technology resulted in the reduction of salary related expenses. The Company's product development activity continues to be a high priority as the Company looks at opportunities to expand its commercial business. Interest expense, net of interest and sundry income, for the current quarter was $10,232 and $65,995 for the nine-month period ended December 31, 2001, compared to $24,052 and $45,554, for the same periods last year, reflecting lower line of credit balances in the current quarter and lower cash balances in the nine-month period. In accordance with FSAS 109, "Accounting for Income Taxes", the Company does not record deferred income taxes on the foreign undistributed earnings of an investment in a foreign subsidiary that is essentially permanent in duration. Accordingly, the Company's Honduras subsidiary was profitable which caused a decrease in the effective tax rate of the Company. If circumstances change, and it becomes apparent that some or all of the undistributed earnings of the subsidiary will be remitted in the foreseeable future, but U.S. income taxes have not been recognized by the Company, the Company will record as an expense of the current period the U.S. income taxes attributed to that remittance. Liquidity and Capital Resources As of December 31, 2001, the Company's cash and cash equivalents increased to $586,015 from the March 31, 2001 total of $184,772. Cash provided by operating activities was $1,578,446, cash used in investing activities was $264,639 and cash used in financing activities was $912,564, giving a total increase of $401,243. Cash provided by operating activities of $1,578,446 was primarily due to net income of $101,517, depreciation in the amount of $662,300 and a decrease in accounts receivable, inventory and income taxes receivable of $880,475, 871,755 and $200,439, respectively, offset to some extent by a decrease in accounts payable of $1,091,962. The decrease in accounts payable was the result of the Company improving the timeliness of paying its suppliers. Accounts receivable decreased primarily as a result of lower shipments in the quarter compared to the fourth quarter ended March 31, 2001. The decrease in Inventory was the result of the Company moving all material planning to its Clearwater facility thus eliminating that function at its Honduran subsidiary. In addition, an Inventory Action Committee was created within the Company in March 2001 to closely monitor inventory purchases and implement an aggressive material planning strategy to ensure inventory levels reflect changes in demand. Income taxes receivable decreased due to the Company receiving a refund check in the amount of $208,500 in the first quarter for overpayments of taxes for the prior fiscal year. Cash used in investing activities was related to purchases of capital equipment of $264,639 only. - 8 - Cash used in financing activities was due to the Company reducing its Line of Credit by $750,000 and the Company's payment of its cash dividend in the amount of $162,564 for a total of $912,564. On January 18, 2002, the Company renewed its $3,000,000 revolving credit loan with its institutional lender, extending the maturity date to December 14, 2003. The Company has the option of borrowing at the lender's prime rate of interest minus 25 basis points or the 30-day London Interbank Offering Rate ("LIBOR") plus 175 basis points. The Company is currently using the LIBOR option. The loan is collateralized with a perfected first security interest in all of its accounts receivable and inventories, and a blanket security interest on all of its assets. The Company continues to operate well within all the covenants of the loan agreement. The Company's debt from advances on its line of credit was $1,000,000 as of December 31, 2001 leaving $2,000,000 available for borrowing. The Company has no off-balance sheet arrangements and no debt relationships other than what is noted above. The Company's working capital decreased by $437,651 to $8,461,046 at December 31, 2001, compared to $8,898,697 at March 31, 2001. The Company believes cash flow from operations, the available bank line and current cash position will be sufficient to meet its working capital requirements for the immediate future. The Company is not aware of any events, trends, demands, commitments or uncertainties, other than what is noted here, that are reasonably likely to result in a material change in the Company's liquidity. The Company's earnings before interest, income taxes, depreciation and amortization ("EBITDA") was $397,781 for the three-month period and $1,162,663 for the nine-month period ended December 31, 2001, compared to $44,106 for the three-month period and $701,414 for the nine-month period ended December 31, 2000. The Company wishes to present its EBITDA results as an indication of its liquidity and should not be interpreted as earnings. The record date for the Company's third fiscal quarter dividend of $.01 per share was December 31, 2001, and the Company paid that dividend on January 25, 2002. Item 3. Quantitative and Qualitative Disclosure Regarding Market Risk The Company has no derivative securities as of December 31, 2001. The Company's exposure to market risk for changes in interest rates relates primarily to the Company's debt obligations due to its variable LIBOR Rate pricing. Accordingly, a 1% change in LIBOR would result in an interest expense change of approximately $10,000 per year. - 9 - Forward Looking Statements Some of the statements in this report constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934. These statements related to future events, other future financial performance or business strategies, and may be identified by terminology such as "may," "will," "should," "expects," "scheduled," "plans," "intends", "anticipates," "believes," "estimates," "potential," or "continue" or the negative of such terms or other comparable terminology. These statements are only predictions, and actual events or results may differ materially. In evaluating these statements, you should specifically consider the factors described throughout this report. Such key factors include, but are not limited to, the acceptance of any new products, such as "Fire Shield", into the marketplace, the effective utilization of the Company's Honduran manufacturing facility, changes in manufacturing efficiencies and the impact of competitive products and pricing. The Company cannot be assured that future results, levels of activity, performance or goals will be achieved, and the Company disclaims any obligation to revise any forward-looking statements subsequent to events or circumstances or the occurrence of unanticipated events. Part II - Other Information Item 1. Legal Proceedings Not Applicable. Item 2. Changes in Securities Not Applicable. Item 3. Defaults Upon Senior Securities Not Applicable. Item 4. Submission of Matters to a Vote of Security Holders Not Applicable. Item 5. Other Information Not Applicable. Item 6. Exhibits and Reports on Form 8-K The Company filed no reports on Form 8-K during the quarter covered by this Report. - 10 - ___________________________________________ SIGNATURES Pursuant to the requirements of the Security Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TECHNOLOGY RESEARCH CORPORATION (registrant) February 14, 2002 Scott J. Loucks ___________________________ __________________________________ Date Scott J. Loucks Chief Financial Officer, (principal financial, accounting and Duly Authorized Officer) - 11 -