UNIVERSAL SECURITY INSTRUMENTS INC - Quarter Report: 2013 September (Form 10-Q)

WASHINGTON, D.C. 20549

 

 

 

For the Quarterly period ended September 30, 2013

 

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

(Exact name of registrant as specified in its charter)

 

 

 

Registrant’s telephone number, including area code: (410) 363-3000

 

Inapplicable

(Former name, former address and former fiscal year if changed from last report.)

 

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 such 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 by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  x  No  ¨

 

Indicate by check mark if the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ¨ Accelerated filer ¨ Non-Accelerated Filer ¨ Smaller Reporting Company x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨  No  x

 

At  November 12, 2013, the number of shares outstanding of the registrant’s common stock was 2,287,887.

 

 

 

 

 

 

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		September 30, 2013			March 31, 2013
		Unaudited			As Revised
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	1,017,402		$	2,438,892
Accounts receivable:
Trade less allowance for doubtful accounts of approximately $57,000 at September 30, 2013 and March 31, 2013			189,929			153,175
Receivable from employees			65,580			65,375
Receivable from Hong Kong Joint Venture			490,605			419,219
			746,114			637,769
Amount due from factor			1,534,147			2,281,662
Inventories			6,043,640			4,341,652
Prepaid expenses			361,757			598,686
TOTAL CURRENT ASSETS			9,703,060			10,298,661
DEFERRED TAX ASSET			-			2,310,835
INVESTMENT IN HONG KONG JOINT VENTURE			15,010,284			14,906,573
PROPERTY AND EQUIPMENT – NET			134,116			152,201
INTANGIBLE ASSET - NET			78,255			80,491
OTHER ASSETS			38,134			38,134
TOTAL ASSETS		$	24,963,849		$	27,786,895
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable		$	315,197		$	548,388
Hong Kong Joint Venture accounts payable			111,237			-
Accrued liabilities:
Payroll and employee benefits			90,485			103,890
Commissions and other			65,377			75,712
TOTAL CURRENT LIABILITIES			582,296			727,990
Long-term obligation – other			25,000			25,000
COMMITMENTS AND CONTINGENCIES			-			-
SHAREHOLDERS’ EQUITY
Common stock, $.01 par value per share; authorized 20,000,000 shares; 2,287,887 shares issued and outstanding at September 30, 2013 and March 31, 2013, respectively			22,879			22,879
Additional paid-in capital			12,793,724			12,749,256
Retained earnings			10,306,612			12,885,360
Accumulated other comprehensive income			1,233,338			1,376,410
TOTAL SHAREHOLDERS’ EQUITY			24,356,553			27,033,905
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	24,963,849		$	27,786,895

 

		Three Months Ended September 30,
		2013			2012
Net sales		$	3,195,611		$	3,456,813
Cost of goods sold – acquired from Joint Venture			1,974,681			2,112,370
Cost of goods sold – other			411,775			171,111
GROSS PROFIT			809,155			1,173,332
Research and development expense			94,508			123,549
Selling, general and administrative expense			1,031,746			1,242,911
Operating loss			(317,099)			(193,128)
Other income:
Interest income and other			5,403			69,429
LOSS BEFORE EQUITY IN EARNINGS OF JOINT VENTURE			(311,696)			(123,699)
Equity in earnings (loss) of Joint Venture			232,379			(80,657)
Loss from operations before income taxes			(79,317)			(204,356)
Provision for income tax expense			2,479,901			13,837
NET LOSS		$	(2,559,218)		$	(218,193)
Loss per share:
Basic			(1.12)			(0.09)
Diluted			(1.12)			(0.09)
Shares used in computing net loss per share:
Basic			2,287,887			2,314,714
Diluted			2,287,887			2,314,714

 

 

 

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		Six Months Ended September 30,
		2013			2012
Net sales			6,201,280		$	6,516,165
Cost of goods sold - acquired from Joint Venture			4,132,093			4,093,955
Cost of goods – other			510,708			270,533
GROSS PROFIT			1,558,479			2,151,677
Research and development expense			221,144			249,695
Selling, general and administrative expense			2,121,490			2,602,835
Operating loss			(784,155)			(700,853)
Other income :
Interest income and other			11,822			79,076
LOSS BEFORE EQUITY IN (LOSS) EARNINGS OF JOINT VENTURE			(772,333)			(621,777)
Equity in earnings (loss) of Joint Venture			504,420			(126,911)
Loss from operations before income taxes			(267,913)			(748,688)
Provision for current income tax expense (benefit)			2,310,835			(167,897)
NET LOSS		$	(2,578,748)		$	(580,791)
Loss per share:
Basic			(1.13)			(0.25)
Diluted			(1.13)			(0.25)
Shares used in computing net loss per share:
Basic			2,287,887			2,320,655
Diluted			2,287,887			2,320,655

 

 

 

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		Three Months Ended Sept. 30						Six Months Ended Sept. 30,
		2013			2012			2013			2012
NET LOSS		$	(2,559,218)		$	(218,193)		$	(2,578,748)		$	(580,791)
Other Comprehensive Income (Loss)     Company’s portion of Hong Kong Joint Venture’s
other comprehensive income (loss):
Currency translation			(8,485)			38,609			(15,330)			248,919
Investment Securities			46,353			134,708			(127,742)			120,911
Total Comprehensive Income (Loss)			37,868			134,708			(143,072)			369,830
COMPREHENSIVE (LOSS) INCOME		$	(2,521,350)		$	(83,485)		$	(2,721,820)		$	(210,961)

 

 

 

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		Six Months Ended September 30,
		2013			2012
OPERATING ACTIVITIES
Net loss		$	(2,578,748)		$	(580,791)
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (Increase) in deferred taxes			2,310,835			(137,784)
Depreciation and amortization			20,319			23,762
Stock base compensation			44,468			44,467
Loss (earnings) of the Joint Venture			(504,420)			126,911
Changes in operating assets and liabilities:
Decrease in accounts receivable and amounts due from factor			639,170			47,693
Increase in inventories and prepaid expenses			(1,465,059)			(992,668)
Decrease in accounts payable and accrued expenses			(145,693)			(375,236)
NET CASH USED IN OPERATING ACTIVITIES			(1,679,128)			(1,843,646)
INVESTING ACTIVITIES:
Purchase of property and equipment			-			(8,704)
Dividends received from Joint Venture			257,638			57,539
NET CASH PROVIDED BY INVESTING ACTIVITIES			257,638			48,835
FINANCING ACTIVITIES
Repurchase of common stock			-			(121,070)
NET CASH USED IN FINANCING ACTIVITIES			-			(121,070)
NET DECREASE IN CASH			(1,421,490)			(1,915,881)
Cash at beginning of period			2,438,892			3,186,274
CASH AT END OF PERIOD		$	1,017,402		$	1,270,393
SUPPLEMENTAL INFORMATION:
Interest paid			-			-
Income taxes			-			-

 

 

 

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The condensed consolidated financial statements include the accounts of Universal Security Instruments, Inc. (USI or the Company) and its majority owned subsidiaries.  Except for the consolidated balance sheet as of March 31, 2013, which was derived from audited financial statements, the accompanying condensed consolidated financial statements are unaudited.  Significant inter-company accounts and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the interim condensed consolidated financial statements include all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted. The interim condensed consolidated financial statements should be read in conjunction with the Company’s March 31, 2013 audited financial statements filed with the Securities and Exchange Commission on Form 10-K. The interim operating results are not necessarily indicative of the operating results for the full fiscal year.

 

The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (US-GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.

 

The Company and its co-venturer, a Hong Kong corporation, each owns a 50% interest in a Hong Kong joint venture, Eyston Company Limited (the “Hong Kong Joint Venture”), that manufactures security products in its facilities located in the People’s Republic of China.  The following represents summarized balance sheet and income statement information of the Joint Venture as of and for the six months ended September 30, 2013 and 2012:

 

		2013			2012
Net sales		$	12,762,882		$	10,571,417
Gross profit			3,681,014			2,296,928
Net income			1,165,070			196,721
Total current assets			15,019,984			14,526,828
Total assets			35,206,745			34,012,303
Total current liabilities			4,925,122			4,933,787

 

During the six months ended September 30, 2013 and 2012 the Company purchased $4,326,557 and $5,030,518, respectively, of products directly from the Hong Kong Joint Venture for resale. For the six month periods ended September 30, 2013 and 2012 the Company has adjusted its earnings of the Joint Venture to reflect an increase of $145,041 and $225,271, respectively, to eliminate inter-Company profit on purchases held by the Company in inventory.

 

We calculate our interim tax provision in accordance with the guidance for accounting for income taxes in interim periods. At the end of each interim period, we estimate the annual effective tax rate and apply that tax rate to our ordinary quarterly pre-tax income. The tax expense or benefit related to discrete events during the interim period is recognized in the interim period in which those events occurred. In addition, the effect of changes in enacted tax laws or rates or tax status is recognized in the interim period in which the change occurs.

 

 

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The Company recognizes a liability or asset for the deferred tax consequences of temporary differences between the tax basis of assets or liabilities and their reported amounts in the financial statements.  These temporary differences may result in taxable or deductible amounts in future years when the reported amounts of the assets or liabilities are recovered or settled. The deferred tax assets are reviewed periodically for recoverability and a valuation allowance is provided whenever it is more likely than not that a deferred tax asset will not be realized. The Company established an initial valuation allowance of $300,000 on its deferred tax assets during the year ended March 31, 2013 to recognize that certain foreign tax credits expiring in future periods will likely not be realized.  Upon further review of updated projected taxable income and the components of the deferred tax asset in accordance with applicable accounting guidance at September 30, 2013, it was determined that it is more likely than not that the tax benefits associated with the remaining components of the deferred tax assets will not be realized. This determination was made based on continued taxable losses during fiscal 2014, that were not in line with projections, as well as product offering delays which cause uncertainty as to whether the Company will generate sufficient taxable income to use the deferred tax assets prior to expiration in 2016.  Accordingly, the valuation allowance was increased by approximately $2,479,000 to fully offset the value of the deferred tax assets at September 30, 2013.  Our ability to realize the tax benefits associated with the deferred tax assets depends primarily upon the timing of future taxable income and the expiration dates of the components of the deferred tax assets. If sufficient future taxable income is generated, we may be able to offset a portion of future tax expenses.

 

The Company follows ASC 740-10 that gives guidance to tax positions related to the recognition and measurement of a tax position taken or expected to be taken in a tax return and requires that we recognize in our financial statements the impact of a tax position, if that position is more likely than not to be sustained upon an examination, based on the technical merits of the position.  Interest and penalties related to income tax matters are recorded as income tax expenses. The Company has recorded a long-term liability of $25,000 for an uncertain income tax position, tax penalties and any imputed interest thereon.

 

Management considers amounts due from the Company’s factor to be “financing receivables”. Trade accounts receivable, other receivables, and receivables from our Hong Kong Joint Venture are not considered by management to be financing receivables.

 

The Company assigns the majority of its short-term receivables arising in the ordinary course of business to our factor. At the time a receivable is sold to our factor the credit risk associated with the credit worthiness of the debtor is assumed by the factor. The Company continues to bear any credit risk associated with delivery or warranty issues related to the products sold.

 

Management assesses the credit risk of both its trade accounts receivable and its financing receivables based on the specific identification of accounts that have exceeded credit terms. An allowance for uncollectible receivables is provided based on that assessment. Changes in the allowance account from one accounting period to the next are charged to operations in the period the change is determined. Amounts ultimately determined to be uncollectible are eliminated from the receivable accounts and from the allowance account in the period that the receivables’ status is determined to be uncollectible.

 

Based on the nature of the factoring agreement and prior experience, no allowance for uncollectible financing receivables has been provided. At September 30, 2013 and 2012, an allowance of $57,000 has been provided for uncollectible trade accounts receivable.

 

Basic earnings per common share are computed based on the weighted average number of common shares outstanding during the periods presented. Diluted earnings per common share is computed based on the weighted average number of common shares outstanding plus the effect of stock options and other potentially dilutive common stock equivalents. The dilutive effect of stock options and other potentially dilutive common stock equivalents is determined using the treasury stock method based on the Company’s average stock price.

 

Diluted income per common share for the three and six month periods ended September 30, 2013 and 2012 excludes 97,000 shares issuable upon the exercise of outstanding “out-of-the-money” stock options and 25,000 shares issuable upon the exercise of “in-the-money” stock options as their impact on our net loss is anti-dilutive. As a result, basic and diluted weighted average common shares outstanding are identical for the three and six month periods ended September 30, 2013 and 2012. A reconciliation of the weighted average shares of common stock utilized in the computation of basic and diluted earnings per share for the three and six month periods ended September 30, 2013 and 2012, is as follows:

 

 

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From time to time, the Company is involved in various lawsuits and legal matters. It is the opinion of management, based on the advice of legal counsel, that the ultimate outcome of these matters will not have a material adverse effect on the Company’s financial statements.

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (FASB) in the form of accounting standards updated (ASU’s) to the FASB’s Accounting Standards Codification.

 

The Company considers the applicability and impact of all ASU’s. Recently issued ASU’s were evaluated and determined to be either not applicable or are not expected to have a material impact on our consolidated financial statements.

 

Certain amounts appearing in the condensed consolidated balance sheet as of March 31, 2013, have been restated to conform to the current year’s presentation. The Company had not previously recorded its proportionate share of the Hong Kong Joint Ventures other comprehensive income amounts. These amounts consist of the impact of foreign currency exchange rates on the translation of certain subsidiaries of the Hong Kong Joint Venture and changes in the fair value of investments held by the Hong Kong Joint Venture that are classified as available for sale. As a result, the Company increased its investment in the Hong Kong Joint Venture and Accumulated Other Comprehensive Income as of March 31, 2013 by $1,376,410. Since these two components represented the only components of other comprehensive income, the Company has not previously presented a Statement of Comprehensive Income (Loss). The Company has, in the accompanying Financial Statements, presented a separate condensed consolidation statement of comprehensive loss for the three and six month periods ended September 30, 2013 and 2012. 

 

 

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The following table presents the changes in Accumulated Other Comprehensive Income by component for the six months ended September 30, 2013:

 

		Currency Translation			Investment Securities			Total
Balance – March 31, 2013		$	1,172,486		$	203,924		$	1,376,410
Other comprehensive loss		$	(15,330)		$	(127,742)		$	(143,072)
Balance – September 30, 2013		$	1,157,156		$	76,182		$	1,233,338

  

 

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ITEM 2.          MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

As used throughout this Report, “we,” “our,” “the Company” “USI” and similar words refers to Universal Security Instruments, Inc.

 

This Quarterly Report on Form 10-Q contains certain forward-looking statements reflecting our current expectations with respect to our operations, performance, financial condition, and other developments.  These forward-looking statements may generally be identified by the use of the words “may”, “will”, “believes”, “should”, “expects”, “anticipates”, “estimates”, and similar expressions. These statements are necessarily estimates reflecting management’s best judgment based upon current information and involve a number of risks and uncertainties.  We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made, and readers are advised that various factors could affect our financial performance and could cause our actual results for future periods to differ materially from those anticipated or projected. While it is impossible to identify all such factors, such factors include, but are not limited to, those risks identified in our periodic reports filed with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K.

 

 

 

 

 

Sales. Net sales for the three months ended September 30, 2013 were $3,195,611 compared to $3,456,813 for the comparable three months in the prior fiscal year, a decrease of $261,202 (7.6%). The primary reasons for the decrease in net sales volumes were lower sales of carbon monoxide detectors during the quarter ended September 30, 2013.

 

Gross Profit Margin. Gross profit margin is calculated as net sales less cost of goods sold expressed as a percentage of net sales. Our gross profit margin was 25.3% and 33.9% of sales for the quarters ended September 30, 2013 and 2012, respectively. The decrease in gross profit margin was primarily due to the mix of products sold.

 

 

 

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Management’s discussion and analysis of our condensed consolidated financial statements and results of operations are based on our condensed Consolidated Financial Statements included as part of this document. The preparation of these condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate these estimates, including those related to bad debts, inventories, income taxes, and contingencies and litigation. We base these estimates on historical experiences, future projections and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 

We believe the following critical accounting policies affect management’s more significant judgments and estimates used in the preparation of its condensed consolidated financial statements. For a detailed discussion on the application on these and other accounting policies, see Note A to the consolidated financial statements included in Item 8 of the Form 10-K for the year ended March 31, 2013. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty and actual results could differ from these estimates. These judgments are based on our historical experience, terms of existing contracts, current economic trends in the industry, information provided by our customers, and information available from outside sources, as appropriate. Our critical accounting policies include:

 

Revenue Recognition. We recognize sales upon shipment of products net of applicable provisions for any discounts or allowances. The shipping date from our warehouse is the appropriate point of revenue recognition since upon shipment we have substantially completed our obligations which entitle us to receive the benefits represented by the revenues, and the shipping date provides a consistent point within our control to measure revenue. Customers may not return, exchange or refuse acceptance of goods without our approval. We have established allowances to cover anticipated doubtful accounts based upon historical experience.

 

Inventories. Inventories are valued at the lower of market or cost.  Cost is determined on the first-in first-out method. We have recorded a reserve for obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. Management reviews the reserve quarterly.

 

Income Taxes.  The Company recognizes a liability or asset for the deferred tax consequences of temporary differences between the tax basis of assets or liabilities and their reported amounts in the financial statements.   These temporary differences may result in taxable or deductible amounts in future years when the reported amounts of the assets or liabilities are recovered or settled.  The deferred tax assets are reviewed periodically for recoverability and a valuation allowance is provided whenever it is more likely than not that a deferred tax asset will not be realized.  This determination was made based on continued taxable losses during fiscal 2014, that were not in line with projections, as well as product offering delays which cause  uncertainty as to whether the Company will generate sufficient taxable income to use the deferred tax assets prior to expiration in 2016.  The Company established an initial valuation allowance of $300,000 on its deferred tax assets during the year ended March 31, 2013 to recognize that certain foreign tax credits expiring in future periods will likely not be realized.   Upon further review of updated projected taxable income and the components of the deferred tax asset at September 30, 2013, it was determined that it is more likely than not that the tax benefits associated with the remaining components of the deferred tax assets will not be realized under current accounting guidance.   Accordingly, the valuation allowance was increased by approximately $2,479,000 to fully offset the value of the deferred tax assets at September 30, 2013.   Our ability to realize the tax benefits associated with the deferred tax assets depends primarily upon the timing of future taxable income and the expiration dates of the components of the deferred tax assets.  If sufficient future taxable income is generated, we may be able to offset a portion of future tax expenses.    

 

The Company follows the financial pronouncement that gives guidance related to the financial statement of recognition and measurement of a tax position taken or expected to be taken in a tax return and requires that we recognize in our financial statements the impact of a tax position, if that position is more likely than not to be sustained upon an examination, based on the technical merits of the position.  Interest and penalties related to income tax matters are recorded as income tax expenses.

 

Financing Receivables. Management considers amounts due from the Company’s factor to be “financing receivables”. Trade accounts receivable, other receivables, and receivables from our Hong Kong Joint Venture are not considered by management to be financing receivables.

 

The Company assigns the majority of its short-term receivables arising in the ordinary course of business to our factor. At the time a receivable is sold to our factor the credit risk associated with the credit worthiness of the debtor is assumed by the factor. The Company continues to bear any credit risk associated with delivery or warranty issues related to the products sold. 

 

 

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Management assesses the credit risk of both its trade accounts receivable and its financing receivables based on the specific identification of accounts that have exceeded credit terms. An allowance for uncollectible receivables is provided based on that assessment. Changes in the allowance account from one accounting period to the next are charged to operations in the period the change is determined. Amounts ultimately determined to be uncollectible are eliminated from the receivable accounts and from the allowance account in the period that the receivables’ status is determined to be uncollectible.

 

Based on the nature of the factoring agreement and prior experience, no allowance for uncollectible financing receivables has been provided. At September 30, 2013, an allowance of $57,000 has been provided for uncollectible trade accounts receivable.

Contingencies. From time to time, we are subject to lawsuits and other claims, related to patents and other matters. Management is required to assess the likelihood of any adverse judgments or outcomes to these matters, as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is based on a careful analysis of each individual issue with the assistance of outside legal counsel. It is the opinion of management, based on advice of legal counsel, that the ultimate outcome of these matters will not have a material adverse effect on the Company’s financial statements.

 

Warranties. We generally provide warranties from one to ten years to the non-commercial end user on all products sold. The manufacturers of our products provide us with a one-year warranty on all products we purchase for resale. Claims for warranty replacement of products beyond the one-year warranty period covered by the manufacturers are immaterial and we do not record estimated warranty expense or a contingent liability for warranty claims.

Changes to accounting principles generally accepted in the United Stated of America (U.S. GAAP) are established by the Financial Accounting Standards Board (FASB) in the form of accounting standards updated (ASU’s) to the FASB’s Accounting Standards Codification.

 

We consider the applicability and impact of all ASU’s. Recently issued ASU’s were evaluated and determined to be either not applicable or are not expected to have a material impact on our consolidated financial statements.

 

ITEM 4.                  CONTROLS AND PROCEDURES

We maintain controls and procedures that are designed to provide reasonable assurance that information, which is required to be disclosed by us in the reports that we file or submit under the Securities and Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and is accumulated and communicated to management in a timely manner.  Our Chief Executive Officer and Chief Financial Officer have evaluated the controls and procedures as of the end of the period covered by this quarterly report, and have concluded that they are effective at the reasonable assurance level.  There have been no changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 

 

 

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From time to time, the Company is involved in various lawsuits and legal matters. It is the opinion of management, based on the advice of legal counsel, that these matters will not have a material adverse effect on the Company’s financial statements.

 

ITEM 6.          EXHIBITS

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