UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: May 31, 2008
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No.: 0-16035
SONO-TEK CORPORATION
(Exact name of registrant as specified in its charter)
New York 14-1568099
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2012 Rt. 9W, Milton, NY 12547
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone no., including area code: (845) 795-2020
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 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 |_| Smaller reporting company |X|
Non Accelerated Filer |_| (Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes |_| No |X|
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Class Outstanding as of June 25, 2008
----- -------------------------------
Common Stock, par value $.01 per share 14,361,091
SONO-TEK CORPORATION
INDEX
Part I - Financial Information Page
Item 1 - Consolidated Financial Statements: 1 - 3
Consolidated Balance Sheets - May 31, 2008 (Unaudited) and
February 29, 2008 1
Consolidated Statements of Income - Three Months Ended
May 31, 2008 and 2007 (Unaudited) 2
Consolidated Statements of Cash Flows - Three Months Ended
May 31, 2008 and 2007 (Unaudited) 3
Notes to Consolidated Financial Statements 4 - 7
Item 2 - Management's Discussion and Analysis or Plan of Operations 8 - 11
Item 4 - Controls and Procedures 12
Part II - Other Information 13
Signatures and Certifications 14 - 20
SONO-TEK CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
May 31, February 29,
2008 2008
Current Assets Unaudited
-----------
Cash and cash equivalents $ 1,553,573 $ 2,339,550
Accounts receivable (less allowance of $18,500
at May 31 and February 29) 821,601 614,378
Inventories 1,822,360 1,602,511
Prepaid expenses and other current assets 111,692 69,032
Deferred tax asset 70,000 70,000
----------- -----------
Total current assets 4,379,226 4,695,471
----------- -----------
Equipment, furnishings and leasehold improvements
(less accumulated depreciation of $1,074,750
and $1,046,195 at May 31 and February 29,
respectively) 520,197 536,892
Intangible assets, net 46,220 34,011
Other assets 7,171 7,171
Deferred tax asset 615,803 615,803
----------- -----------
TOTAL ASSETS $ 5,568,617 $ 5,889,348
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 287,761 $ 412,692
Accrued expenses 342,879 452,911
Current maturities of long term debt 21,137 23,909
Deferred tax liability 16,239 16,239
----------- -----------
Total current liabilities 668,016 905,751
Long term debt, less current maturities 23,283 27,628
Deferred tax liability 57,978 57,978
----------- -----------
Total liabilities 749,277 991,357
----------- -----------
Commitments and Contingencies -- --
Stockholders' Equity
Common stock, $.01 par value; 25,000,000 shares
authorized, 14,361,091 shares issued and
outstanding at May 31 and February 29 143,612 143,612
Additional paid-in capital 8,395,687 8,343,880
Accumulated deficit (3,719,959) (3,589,501)
----------- -----------
Total stockholders' equity 4,819,340 4,897,991
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,568,617 $ 5,889,348
=========== ===========
See notes to consolidated financial statements.
1
SONO-TEK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Unaudited
Three Months Ended May 31,
2008 2007
-----------------------------------
Net Sales $ 1,620,521 $ 1,232,643
Cost of Goods Sold 831,657 629,133
------------ ------------
Gross Profit 788,864 603,510
------------ ------------
Operating Expenses
Research and product development costs 205,570 194,740
Marketing and selling expenses 413,910 234,044
General and administrative costs 308,655 214,988
------------ ------------
Total Operating Expenses 928,135 643,772
------------ ------------
Operating (Loss) (139,271) (40,262)
------------ ------------
Interest Expense (803) (1,235)
Interest Income 6,785 24,767
Other Income 2,831 2,831
------------ ------------
8,813 26,363
------------ ------------
(Loss) Before Income Taxes (130,458) (13,899)
Income Tax (Benefit) -- (33,813)
------------ ------------
Net (Loss) Income $ (130,458) $ 19,914
============ ============
Basic Earnings Per Share $ (0.01) $ 0.00
============ ============
Diluted Earnings Per Share $ (0.01) $ 0.00
============ ============
Weighted Average Shares - Basic 14,361,091 14,360,541
============ ============
Weighted Average Shares - Diluted 14,361,091 14,436,298
============ ============
See notes to consolidated financial statements.
2
SONO-TEK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
Three Months Ended May 31,
2008 2007
--------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) Income $ (130,458) $ 19,914
Adjustments to reconcile net (loss) income to net cash
(used in) provided by operating activities:
Depreciation and amortization 50,413 32,459
Stock based compensation expense 51,807 10,538
Gain on sale of equipment 23,384 --
Decrease (Increase) in:
Accounts receivable (207,223) 259,639
Inventories (219,849) (146,790)
Prepaid expenses and other current assets (42,660) (33,552)
Deferred tax asset -- (35,000)
Increase (Decrease) in:
Accounts payable and accrued expenses (234,963) (39,187)
----------- -----------
Net Cash (Used In) Provided By Operating Activities (709,549) 68,021
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Patent application costs (13,142) --
Purchase of equipment and furnishings (56,169) (28,788)
----------- -----------
Net Cash Used In Investing Activities (69,311) (28,788)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of notes payable (7,117) (6,701)
----------- -----------
Net Cash Used In Financing Activities (7,117) (6,701)
----------- -----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (785,977) 32,532
CASH AND CASH EQUIVALENTS
Beginning of year 2,339,550 2,268,976
----------- -----------
End of period $ 1,553,573 $ 2,301,508
=========== ===========
SUPPLEMENTAL DISCLOSURE:
Interest paid $ 801 $ 1,294
=========== ===========
Income taxes paid $ 6,250 $ 1,187
=========== ===========
See notes to consolidated financial statements.
3
SONO-TEK CORPORATION
Notes to Consolidated Financial Statements
Three Months Ended May 31, 2008 and 2007
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES
Consolidation - The accompanying consolidated financial statements of Sono-Tek
Corporation, a New York Corporation (the "Company"), include the accounts of the
Company and its wholly owned subsidiary, Sono-Tek Cleaning Systems, Inc., a New
Jersey Corporation ("SCS") which the Company acquired on August 3, 1999, whose
operations have been discontinued. There have been no operations of this
subsidiary since Fiscal Year Ended February 28, 2002. All significant
intercompany accounts and transactions are eliminated in consolidation.
Cash and Cash Equivalents - Cash and cash equivalents consist of money market
mutual funds, short term commercial paper and short term certificates of deposit
with original maturities of 90 days or less. The Company occasionally has cash
or cash equivalents on hand in excess of the $100,000 insurable limits at a
given bank.
Fair Value of Financial Instruments - The carrying amounts reported in the
balance sheet for cash, receivables, accounts payable and accrued expenses
approximate fair value based on the short-term maturity of these instruments.
Interim Reporting - The attached summary consolidated financial information does
not include all disclosures required to be included in a complete set of
financial statements prepared in conformity with accounting principles generally
accepted in the United States of America. Such disclosures were included with
the financial statements of the Company at February 29, 2008, and included in
its report on Form 10-KSB. Such statements should be read in conjunction with
the data herein.
The financial information reflects all adjustments, normal and recurring, which,
in the opinion of management, are necessary for a fair presentation of the
results for the interim periods presented. The preparation of financial
statements in conformity with generally accepted accounting principles 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 revenues and
expenses during the reporting period. Actual results could differ from those
estimates. The results for such interim periods are not necessarily indicative
of the results to be expected for the year.
Intangible Assets - Include cost of patent applications that are deferred and
charged to operations over seventeen years for domestic patents and twelve years
for foreign patents. The accumulated amortization is $59,883 and $58,949 at May
31, 2008 and February 29, 2008, respectively. Annual amortization expense of
such intangible assets is expected to be $4,600 per year for the next five
years.
4
Reclassifications - Certain reclassifications have been made to the prior period
to conform to the presentations of the current period.
NOTE 2: INVENTORIES
Inventories at May 31, 2008 are comprised of:
Finished goods $ 886,446
Work in process 558,938
Consignment 9,770
Raw materials and sub-assemblies 580,403
-----------
Total 2,035,557
Less: Allowance (213,197)
-----------
Net inventories $ 1,822,360
===========
NOTE 3: STOCK OPTIONS AND WARRANTS
Stock Options - Under the 2003 Stock Incentive Plan, as amended ("2003 Plan"),
options can be granted to officers, directors, consultants and employees of the
Company and its subsidiaries to purchase up to 1,500,000 of the Company's common
shares. The 2003 Plan supplemented and replaced the 1993 Stock Incentive Plan
(the "1993 Plan"), under which no further options may be granted. Options
granted under the 1993 Plan expire on various dates through 2013. As of May 31,
2008 there were 80,000 options outstanding under the 1993 Plan and 1,157,375
options outstanding under the 2003 plan.
Under both the 1993 and 2003 Stock Incentive Plans, option prices must be at
least 100% of the fair market value of the common stock at time of grant. For
qualified employees, except under certain circumstances specified in the plans
or unless otherwise specified at the discretion of the Board of Directors, no
option may be exercised prior to one year after date of grant, with the balance
becoming exercisable in cumulative installments over a three year period during
the term of the option, and terminating at a stipulated period of time after an
employee's termination of employment.
NOTE 4: STOCK BASED COMPENSATION
On March 1, 2006, the Company adopted SFAS No. 123R, "Share Based Payments."
SFAS No. 123R requires companies to expense the value of employee stock options
and similar awards for periods beginning after December 15, 2005, and applies to
all outstanding and vested stock-based awards at a company's adoption date.
During the transition period of the Company's adoption of SFAS 123R, the
weighted-average fair value of options has been estimated on the date of grant
using the Black-Scholes options-pricing model. The weighted-average
Black-Scholes assumptions are as follows:
5
2008 2007
-------------------------------
Expected life 4 years 4 years
Risk free interest rate 1.8% - 3.13% 4.35% - 5.07%
Expected volatility 55% - 70% 39% - 78%
Expected dividend yield 0% 0%
In computing the impact, the fair value of each option is estimated on the date
of grant based on the Black-Scholes options-pricing model utilizing certain
assumptions for a risk free interest rate; volatility; and expected remaining
lives of the awards. The assumptions used in calculating the fair value of
share-based payment awards represent management's best estimates, but these
estimates involve inherent uncertainties and the application of management
judgment. As a result, if factors change and the Company uses different
assumptions, the Company's stock-based compensation expense could be materially
different in the future. In addition, the Company is required to estimate the
expected forfeiture rate and only recognize expense for those shares expected to
vest. In estimating the Company's forfeiture rate, the Company analyzed its
historical forfeiture rate, the remaining lives of unvested options, and the
amount of vested options as a percentage of total options outstanding. If the
Company's actual forfeiture rate is materially different from its estimate, or
if the Company reevaluates the forfeiture rate in the future, the stock-based
compensation expense could be significantly different from what the Company has
recorded in the current period.
For the quarters ended May 31, 2008 and 2007, net income and earnings per share
reflect the actual deduction for stock-based compensation expense. The impact of
applying SFAS 123R approximated $51,807 and $10,538 in additional compensation
expense during the quarters ended May 31, 2008 and 2007, respectively. Such
amount is included in general and administrative expenses on the statement of
operations. The expense for stock-based compensation is a non-cash expense item.
NOTE 5: EARNINGS PER SHARE
The denominator for the calculation of diluted earnings per share at May 31,
2008 and 2007 are calculated as follows:
May 31, 2008 May 31, 2007
------------ ------------
Denominator for basic earnings per share 14,361,091 14,360,541
Dilutive effect of stock options -- 75,757
---------- ----------
Denominator for diluted earnings per share 14,361,091 14,436,298
========== ==========
The effect of stock options for the three months ended May 31, 2008 is not used
in the calculation of diluted earnings per share. Due to the net loss for the
three months ended May 31, 2008, the inclusion of stock options in the
calculation would have an anti-dilutive effect.
6
NOTE 6: OTHER INCOME
As previously reported on Form 8-K, filed on July 5, 2005, the Company
determined that a former employee had misappropriated approximately $250,000 of
the Company's monies, primarily through unauthorized check writing from the
Company's accounts over a period of three calendar years. The Company had
previously expensed substantially all of the misappropriated funds over the
years.
The Company has recovered approximately 73% of these funds to date. The Company
has a promissory note that is being repaid by the former employee. The note has
been fully reserved for as the collectibility is questionable. As previously
discussed, the Company can offer no assurances that it will be successful in its
attempts to collect the balance of the remaining restitution.
7
SONO-TEK CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Forward-Looking Statements
We discuss expectations regarding our future performance, such as our business
outlook, in our annual and quarterly reports, press releases, and other written
and oral statements. These "forward-looking statements" are based on currently
available competitive, financial and economic data and our operating plans. They
are inherently uncertain, and investors must recognize that events could turn
out to be significantly different from our expectations. These factors include,
among other considerations, general economic and business conditions; political,
regulatory, competitive and technological developments affecting the Company's
operations or the demand for its products; timely development and market
acceptance of new products; adequacy of financing; capacity additions, the
ability to enforce patents and the successful implementation of the business
development program.
We undertake no obligation to update any forward-looking statement.
Overview
Sono-Tek has developed a unique and proprietary series of ultrasonic atomizing
nozzles, which are being used in an increasing variety of electronic, medical,
industrial, and nanotechnology applications. These nozzles are electrically
driven and create a fine, uniform, low velocity spray of atomized liquid
particles, in contrast to common pressure nozzles. These characteristics create
a series of commercial applications that benefit from the precise, uniform, thin
coatings that can be achieved. When combined with significant reductions in
liquid waste and less overspray than can be achieved with ordinary pressure
nozzle systems, there is lower environmental impact and lower energy use.
We have a well established position in the electronics industry with our
SonoFlux spray fluxing equipment. It saves customers from 40% to 80% of the
liquid flux required to solder printed circuit boards over other methods, such
as foam fluxing. Less flux equates to less material cost, fewer chemicals in the
workplace, and less clean-up. Also, the SonoFlux equipment reduces the number of
soldering defects, which reduces the amount of rework.
One change that has proven successful is our diversification into the medical
device market. In the past several years, we have focused engineering resources
on the medical device market, with emphasis on providing coating solutions for
the new generation of drug coated stents. We have sold a significant number of
specialized ultrasonic nozzles and MediCoat stent coating systems to large
medical device customers. Sono-Tek's stent coating systems are superior compared
to pressure nozzles in their ability to uniformly coat the very small arterial
stents without creating webs or gaps in the coatings. We sell a bench-top, fully
outfitted stent coating system to a wide range of customers that are
manufacturing stents and/or applying coatings to be used in developmental
trials. We have also introduced and sold several multiple stent coaters known as
Medicoat II, designed for production use.
8
Another change that has stimulated an increase in business has been the
development of the WideTrack coating system, a broad based platform for applying
a variety of coatings to moving webs of glass, textiles, plastic, metal, food
products and packaging materials. The WideTrack is a long-term product and
market development effort. Thus far, we have made successful inroads with
WideTrack systems into the glass, medical textile (bandages), textiles and solar
and fuel cell industries. We plan to increase our marketing efforts into the
broader textile and food industry markets. This will require a continuation of
market and technology development in these areas in the years ahead. Some of
these WideTrack applications involve nano-technology based liquids. We believe
there is an excellent fit between the thin, precise films required in
nano-technology coating applications and our ultrasonic nozzle systems.
The creation of technological innovations and the expansion into new
geographical markets requires the investment of both time and capital. Although
there is no guarantee of success, we expect that over time, these newer markets
will be the basis for Sono-Tek's continued growth and will contribute to future
profitability. It is management's opinion that this strategy will be a better
one than relying solely on our traditional domestics electronics business.
Liquidity and Capital Resources
Working Capital - Our working capital decreased $79,000 from a working capital
of $3,790,000 at February 29, 2008 to $3,711,000 at May 31, 2008. The Company's
current ratio is 6.6 to 1 at May 31, 2008 as compared to 5.2 to 1 at February
28, 2008.
Stockholders' Equity - Stockholder's Equity decreased $79,000 from $4,898,000 at
February 29, 2008 to $4,819,000 at May 31, 2008. The decrease is a result of the
net loss of $130,000 and an adjustment for stock based compensation expense of
$51,000.
Operating Activities - We used $710,000 of cash in our operating activities for
the three months ended May 31, 2008. The use of cash resulted from the current
period net loss of $130,000, an increase in accounts receivable of $207,000, an
increase in inventories of $220,000 and an increase of $43,000 in prepaid
assets. In addition to the above, our accounts payable and accrued expenses
decreased $235,000 during the current period.
Investing Activities - We used $56,000 for the purchase of capital equipment and
$13,000 for patent application costs during the three months ended May 31, 2008.
For the three months ended May 31, 2007, we used $29,000 for the purchase of
capital equipment.
Financing Activities - For the three months ended May 31, 2008 and May 31, 2007,
we used $7,000 in financing activities resulting from the repayment of our notes
payable.
9
Results of Operations
For the three months ended May 31, 2008, our sales increased $388,000 or 31% to
$1,621,000 as compared to $1,233,000 for the three months ended May 31, 2007.
Our sales for the quarter ended May 31, 2008 were improved over the same period
last year due to additional sales of our WideTrack product. In addition, we also
saw an increase in sales of our programmable XYZ precision coating units and
Spray Dryer units. During the quarter ended May 31, 2008, sales of fluxer units,
EVS solder recovery units and stent coating systems decreased when compared to
the quarter ended May 31, 2007.
Our gross profit increased $185,000 to $789,000 for the three months ended May
31, 2008 from $604,000 for the three months ended May 31, 2007. The increase in
gross profit is due to the current period increase in sales. The gross profit
margin was 49% of sales for the three months ended May 31, 2008 and the three
months ended May 31, 2007.
Research and product development costs increased $11,000 to $206,000 for the
three months ended May 31, 2008 from $195,000 for the three months ended May 31,
2007. The increase was principally due to an increase in salary expense.
Marketing and selling costs increased $180,000 to $414,000 for the three months
ended May 31, 2008 from $234,000 for the three months ended May 31, 2007. The
increase in these expenditures is due to the reorganization of our sales force
into two separate Strategic Business Units. We have added additional sales
personnel, increased the number of trade shows we participate in and we have
engaged an outside marketing firm to help increase the awareness of our
products. These increases are part of the business development program which was
initiated last year.
General and administrative costs increased $94,000 to $309,000 for the three
months ended May 31, 2008 from $215,000 for the three months ended May 31, 2007.
The increase was principally due to an increase in salary expense and an
increase in stock based compensation expense.
Critical Accounting Policies
The discussion and analysis of the Company's financial condition and results of
operations are based upon the consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
the Company to make estimates and judgments that affect the reported amount of
assets and liabilities, revenues and expenses, and related disclosure on
contingent assets and liabilities at the date of the financial statements.
Actual results may differ from these estimates under different assumptions and
conditions.
Critical accounting policies are defined as those that are reflective of
significant judgments and uncertainties, and may potentially result in
materially different results under different assumptions and conditions. The
Company believes that critical accounting policies are limited to those
described below. For a detailed discussion on the application of this and other
accounting policies see Note 2 to the Company's consolidated financial
statements included in Form 10-KSB for the year ended February 29, 2008.
10
Accounting for Income Taxes
As part of the process of preparing the Company's consolidated financial
statements, the Company is required to estimate its income taxes. Management
judgment is required in determining the provision on its deferred tax asset. The
Company reduced the valuation reserve for the deferred tax asset resulting from
the net operating losses carried forward due to the Company having demonstrated
consistent profitable operations. In the event that actual results differ from
these estimates, the Company may need to again adjust such valuation reserve.
Stock-Based Compensation
Prior to fiscal year 2007, the Company accounted for employee stock options
under the fair value provisions of SFAS No. 123. On March 1, 2006, the Company
adopted SFAS No. 123R, "Share Based Payments." SFAS No. 123R requires companies
to expense the value of employee stock options and similar awards for periods
beginning after December 15, 2005, and applies to all outstanding and vested
stock-based awards at a company's adoption date. Results from prior periods have
not been restated in the Company's historical financial statements.
Impact of New Accounting Pronouncements
None.
11
SONO-TEK CORPORATION
CONTROLS AND PROCEDURES
The Company has established and maintains "disclosure controls and procedures"
(as those terms are defined in Rules 13a -15(e) and 15d-15(e) under the
Securities and Exchange Act of 1934 (the "Exchange Act'). Christopher L. Coccio,
Chief Executive Officer (principal executive) and Stephen J. Bagley, Chief
Financial Officer (principal accounting officer) of the Company, have evaluated
the Company's disclosure controls and procedures as of May 31, 2008. Based on
this evaluation, they have concluded that the Company's disclosure controls and
procedures were effective to ensure that information required to be disclosed by
the Company in reports that it files or submits under the Exchange Act is (1)
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms, and (2) accumulated and
communicated to Management, including our Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding timely disclosure.
In addition, there were no changes in the Company's internal controls over
financial reporting during the first fiscal quarter of 2009 that have materially
affected, or are reasonably likely to materially affect, internal controls over
financial reporting.
12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports
(a) Exhibits
10.1 Executive Agreement between Sono-Tek Corporation and R. Stephen
Harshbarger dated March 5, 2008.
31.1 - 31.2 - Rule 13a - 14(a)/15d - 14(a) Certification
32.1 - 32.2 - Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
13
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: July 11, 2008
SONO-TEK CORPORATION
(Registrant)
By: /s/ Christopher L. Coccio
-----------------------------
Christopher L. Coccio
Chief Executive Officer
By: /s/ Stephen J. Bagley
-----------------------------
Stephen J. Bagley
Chief Financial Officer
14