SONO-TEK CORPORATION FORWARD-LOOKING STATEMENTS
We discuss expectations regarding our future performance, such as our business outlook, in our annual and quarterly reports, news 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 and could cause actual results to differ materially. These factors include, among other considerations, general economic and business conditions; political, regulatory, tax, competitive and technological developments affecting our operations or the demand for our products; the duration and scope of the COVID-19 pandemic; the extent and duration of the pandemic's adverse effect on economic and social activity, consumer confidence, discretionary spending and preferences, labor and healthcare costs, and unemployment rates, any of which may reduce demand for some of our products and impair the ability of those with whom we do business to satisfy their obligations to us; our ability to sell and provide our services and products, including as a result of continued pandemic related travel restrictions, mandatory business closures, and stay-at home or similar orders; any temporary reduction in our workforce, closures of our offices and facilities and our ability to adequately staff and maintain our operations resulting from the pandemic; the ability of our customers and suppliers to continue their operations as result of the pandemic, which could result in terminations of contracts, losses of revenue; the recovery of the Electronics/ Microelectronics and Medical markets following COVID-19 related slowdowns; and further adverse effects to our supply chain; maintenance of increased order backlog, including effects of any COVID-19 related cancellations; the imposition of tariffs; timely development and market acceptance of new products and continued customer validation of our coating technologies; adequacy of financing; capacity additions, the ability to enforce patents; maintenance of operating leverage; maintenance of increased order backlog; consummation of order proposals; completion of large orders on schedule and on budget; continued sales growth in the medical and alternative energy markets; successful transition from primarily selling ultrasonic nozzles and components to a more complex business providing complete machine solutions and higher value subsystems; and realization of quarterly and annual revenues within forecasted range of sales guidance.
We undertake no obligation to update any forward-looking statement.
Overview Founded in 1975,Sono-Tek Corporation designs and manufactures ultrasonic coating systems that apply precise, thin film coatings to a multitude of products for the microelectronics/electronics, alternative energy, medical and industrial markets, including specialized glass applications in construction and automotive. We also sell our products to emerging research and development and other markets. We have invested significant resources to enhance our market diversity by leveraging our core ultrasonic coating technology. As a result, we have increased our portfolio of products, the industries we serve and the countries in which we sell our products. Our ultrasonic nozzle systems use high frequency, ultrasonic vibrations that atomize liquids into minute drops that can be applied to surfaces at low velocity providing thin layers of functional or protective materials over a surface such as glass or metals. Our solutions are environmentally-friendly, efficient and highly reliable. They enable dramatic reductions in overspray, savings in raw materials, water and energy usage and provide improved process repeatability, transfer efficiency, high uniformity and reduced emissions. We believe product superiority is imperative and that it is attained through the extensive experience we have in the coatings industry, our proprietary manufacturing know-how and skills and the unique work force we have built over the years. Our growth strategy is to leverage our innovative technologies, proprietary know-how, unique talent and experience, and global reach to further advance the use of ultrasonic coating technologies for the microscopic coating of surfaces in a broader array of applications that enable better outcomes for our customers' products and processes. We are a global business with approximately 64% of our sales generated from outsidethe United States andCanada in the first six months of fiscal 2022. Our direct sales team and our distributor and sales representative network are located inNorth America ,Latin America ,Europe andAsia . We continue to expand our sales capabilities by increasing the size of our direct sales force and adding new distributors and sales representatives ("reps"). In addition, we have established testing labs at our distribution partner sites inChina ,Taiwan ,Germany ,Turkey ,Korea andJapan , while also expanding our first testing lab that is co-located with our manufacturing facilities inNew York . These labs provide significant value for demonstrating to prospective customers the capabilities of our equipment and enabling us to develop custom solutions to meet their needs. Providing customers visiting our labs with a high level of application engineering expertise to develop their unique coating processes is our focus, as we continually expandSono-Tek's services to best support the
needs of our customers.
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Over the last decade, we have shifted our business from primarily selling our
ultrasonic nozzles and components to a more complex business providing complete
machine solutions and higher value subsystems to original equipment
manufacturers ("OEMs"). This strategy has resulted in significant growth of our
average unit selling price; with our larger machines often selling for over
$300,000 and system prices sometimes reaching over $1,000,000 . As a result of
this transition, we have broadened our addressable market and we believe that we
can grow sales on a larger scale. We expect that we will experience wide
variations in both order flow and shipments from quarter to quarter.
Second Quarter Fiscal 2022 Highlights (compared with the second quarter of
fiscal 2021 unless otherwise noted) We refer to the three-month periods ended
August 31, 2021 and 2020 as the second quarter of fiscal 2022 and fiscal 2021,
respectively.
· Net sales were
systems to the
· Gross Profit increased 28% to
· Gross Margin expanded 440 basis points to 51.0% primarily due to product mix.
· Operating income increased 123% to
profit, partially offset by increases in operating expenses.
· Income before taxes increased 125% to
· Backlog on
45% compared with backlog of
Q1) and increased 64% compared to backlog of
First Half Fiscal 2022 Highlights (compared with the first half of fiscal 2021 unless otherwise noted) We refer to the six-month periods endedAugust 31, 2021 and 2020 as the first half of fiscal 2022 and fiscal 2021, respectively.
·
the semiconductor and electronic diagnostic coating markets.
· Gross Profit increased 23% to
· Gross Margin expanded 440 basis points to 50.5% primarily due to product mix
and lower than expected warranty and installation costs.
· Operating Income increased 105% to
profit, partially offset by increases in operating expenses.
· Income before taxes increased 94% to
loan forgiveness of
· As of
RESULTS OF OPERATIONS
Sales:
Product Sales
Three Months Ended Six Months Ended
August 31, Change August 31, Change
2021 2020 $ % 2021 2020 $ %
Fluxing Systems
38,000 9%
Integrated Coating
Systems 565,000 673,000 (108,000 ) (16% ) 720,000 1,849,000 (1,129,000 ) (61% ) Multi-Axis Coating Systems
1,891,000 1,985,000 (94,000 ) (5% ) 3,970,000 2,898,000 1,072,000 37%
OEM Systems 845,000 232,000 613,000 264% 1,171,000 654,000 517,000 79%
Other 652,000 497,000 155,000 31% 1,378,000 1,070,000 308,000 29%
TOTAL $ 4,070,000 $ 3,481,000 589,000 17% $ 7,715,000 $ 6,909,000 806,000 12%
Sales growth of 17% during the second quarter of fiscal 2022 was primarily
driven by a significant shipment of multi-axis coating systems used to coat
electronic diagnostic devices for rapid COVID-19 test kits, as well as strong
sales of OEM systems used in the Semiconductor and Spray Fluxing markets. The
sales increases in these product lines more than offset the decrease in
Integrated Coating Systems sales, which were lower due to the shipment of a
large integrated coating machine in last year's first quarter.
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Market Sales
Three Months Ended Six Months Ended
August 31, Change August 31, Change
2021 2020 $ % 2021 2020 $ %
Electronics/Microelectronics
79% $ 3,707,000 $ 3,051,000 656,000 22%
Medical 1,097,000 961,000 136,000 14% 1,814,000 1,653,000 161,000 10%
Alternative Energy 957,000 826,000 131,000 16% 1,389,000 1,221,000 168,000 14%
Emerging R&D and Other 269,000 479,000 (210,000 ) (44% ) 435,000 516,000 (81,000 ) (16% )
Industrial 299,000 404,000 (105,000 ) (26% ) 370,000 468,000 (98,000 ) (21% )
TOTAL $ 4,070,000 $ 3,481,000 589,000 17% $ 7,715,000 $ 6,909,000 806,000 12%
Sales to the Electronics market recorded significant growth of 79% in the second
quarter, primarily driven by strong sales to China for our OEM systems which are
used in the semiconductor market, and continued acceleration of Sono-Tek
products for coating electronic diagnostic devices used in rapid COVID-19 test
kits. The Alternative Energy market was also strong with growing investments in
the clean energy sector from both government and private industry driving demand
for Sono-Tek machines for coating membranes used in fuel cells and carbon
capture applications.
Geographic Sales
Three Months Ended Six Months Ended
August 31, Change August 31, Change
2021 2020 $ % 2021 2020 $ %
1,631,000 455,000 1,176,000 258% 2,853,000 2,377,000 476,000 20%
Europe , Middle
East, Asia (EMEA) 593,000 767,000 (174,000 ) (23% ) 1,436,000 1,198,000 238,000 20%
Latin America 293,000 103,000 190,000 184% 645,000 423,000 222,000 52% TOTAL
$ 4,070,000 $ 3,481,000 589,000 17%$ 7,715,000 $ 6,909,000 806,000 12% In the first half of fiscal 2022, approximately 64% of sales originated outside ofthe United States andCanada compared with 58% in the first half of fiscal 2021.
In the second quarter of fiscal 2022, approximately 62% of sales originated
outside of
Strong sales in Q2 FY2022 were primarily driven from APAC, reflecting the transition of several countries emerging from COVID-19 lockdowns to bring their manufacturing operations back online. APAC shipments during the second quarter included both a newly developed medical device coating machine for implantable devices and several stent coating machines toChina , a newly developed EMI coating system toSingapore , and a repeat order for our latest balloon catheter coating machine that was shipped toJapan . Sales to theU.S. &Canada dipped in Q2 FY2022, primarily due to the shipment of a large float glass coating line in Q2 FY2021, which did not repeat in Q2 FY2022. Sales of large industrial float glass machines typically varies from period to period.Sono-Tek continues to adapt and refocus its sales efforts to those countries that are operational during COVID-19 peaks and dips. This strategy has been helpful in softening the impact of the pandemic on the Company's operations and will continue to be part ofSono-Tek's go-to-market strategy for the foreseeable future. Gross Profit: Three Months Ended Six Months Ended August 31, Change August 31, Change 2021 2020 $ % 2021 2020 $ %
Net Sales$ 4,070,000 $ 3,481,000 589,000 17%$ 7,715,000 $ 6,909,000 806,000 12% Cost of Goods Sold 1,996,000 1,860,000 136,000 7% 3,817,000 3,727,000 90,000 2% Gross Profit$ 2,074,000 $ 1,621,000 453,000 28%$ 3,898,000 $ 3,182,000 716,000 23%
Gross Profit % 51.0% 46.6% 50.5% 46.1%
For the second quarter of fiscal 2022, gross profit increased$453,000 , or 28%, compared with the second quarter of fiscal 2021. The gross profit margin was 51.0% compared with 46.6% for the prior year period. The improvement in the gross profit margin is due to increased sales combined with higher sales margins. 14 Gross profit increased$716,000 , or 23%, to$3,898,000 for the first half of fiscal 2022 compared with$3,182,000 in the first half of fiscal 2021. The gross profit margin was 50.5% compared with 46.1% for the prior year period. The improvement in the gross profit margin is due to increased sales combined with higher sales margins. Operating Expenses: Three Months Ended Six Months Ended August 31, Change August 31, Change 2021 2020 $ % 2021 2020 $ % Research and product development$ 412,000 $ 424,000 (12,000 ) (3% )$ 827,000 $ 835,000 (8,000 ) (1% ) Marketing and selling 740,000 682,000 58,000 9% 1,504,000 1,389,000 115,000 8% General and administrative 473,000 314,000 159,000 51% 776,000 572,000 204,000 36% Total Operating Expenses$ 1,625,000 $ 1,420,000 205,000 14%$ 3,107,000 $ 2,796,000 311,000 11%
Research and Product Development:
Research and product development costs decreased in the second quarter of fiscal 2022 due to decreased salaries and related costs. In the second quarter of fiscal 2022, some of our personnel, previously assigned to research and development projects, were assigned to specific customer sales orders and the associated costs were recorded in inventory, as incurred.
Marketing and Selling:
Marketing and selling costs increased in the second quarter of fiscal 2022 due to increases in commissions, salaries and travel expenses. These increases were partially offset by decreased trade show expenses as a result of the COVID-19 outbreak.
Marketing and selling costs increased in the first half of fiscal 2022 due to increased commission expense. This increase was partially offset by decreased trade show expenses in the first half of fiscal 2022. In the second quarter of fiscal 2022, we expended approximately$163,000 for commissions as compared with$117,000 for the second quarter of fiscal 2021, an increase of$46,000 . In the first half of fiscal 2022, we expended approximately$387,000 for commissions as compared with$247,000 for the first half of fiscal 2021, an increase of$140,000 . The increase in commission expense in the first quarter and second half of fiscal 2022 is due to an increase in external commission expense. General and Administrative: In the second quarter of fiscal 2022 and first half of fiscal 2022 we experienced increases in salaries, professional fees, corporate expenses and stock- based compensation expense. InAugust 2021 , the Company's stock was approved for listing on the Nasdaq Capital Market. In the second quarter of fiscal 2022, the Company expensed$75,000 in application and entry fees related to its listing on the Nasdaq Capital Market.
Operating Income:
Our operating income increased$248,000 , to$449,000 in the second quarter of fiscal 2022 compared with$201,000 for the second quarter of fiscal 2021. Growth in revenue and gross profit were key factors in the improvement of operating income partially offset by increases in operating expenses in the second quarter of fiscal 2022. Operating margin for the quarter increased to 11% compared with 5.8% in the prior year period. For the first half of fiscal 2022, operating income increased$405,000 , to$791,000 compared with$386,000 for the first half of fiscal 2021. Growth in revenue and gross profit were key factors in the improvement of operating income partially offset by increases in operating expenses income in the first half of fiscal 2022. Operating margin for the first half of fiscal 2022 increased to 10.3% compared with 5.6% in the first half of fiscal 2021.
Interest and Dividend Income:
Interest and dividend income increased$5,000 to$8,000 in the second quarter of fiscal 2022 as compared with$3,000 for the second quarter of fiscal 2021. In the first half of fiscal 2022 interest and dividend income decreased$14,000 to$11,000 as compared with$25,000 for the first half of fiscal 2021. The decrease in the first half of fiscal 2022 is due to the decline in market rates. Our present investment policy is to invest excess cash in highly liquid, lower riskUS Treasury securities. AtAugust 31, 2021 , the majority of our holdings are rated at or above investment grade. 15 Income Tax Expense:
We recorded income tax expense of$112,000 for the second quarter of fiscal 2022 compared with$25,000 for the second quarter of fiscal 2021. For the first half of fiscal 2022 we recorded income tax expense of$197,000 compared with$67,000 for the first half of fiscal 2021.
The increase in income tax expense in the second quarter and first half of fiscal 2022 is due to a decrease in available research and development tax credits combined with the increase in income before taxes.
Paycheck Protection Program Loan Forgiveness:
During fiscal 2021, we entered into a loan transaction pursuant to which we received proceeds of$1,001,640 (the "PPP Loan") under the Paycheck Protection Program ("PPP"). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"), provides for loans to qualifying companies and is administered by theU.S. Small Business Administration (the "SBA"). The PPP Loan was evidenced by a promissory note (the "Note"), between the Company and M&T Bank, (the "Bank"). The Note had a two-year term, accrued interest at the rate of 1.0% per annum, and was prepayable at any time without payment of any premium. No payments of principal or interest were due during the six-month period beginning on the date of the Note. Beginning on the seventh month following the date of the Note, we were required to make 18 monthly payments of principal and interest in the amount of$56,370 . Under the terms of the CARES Act, PPP Loan recipients can apply for and be granted forgiveness for all or a portion of loan granted under the PPP, with such forgiveness to be determined, subject to limitations, based on the use of the loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities. However, at least 75 percent of the PPP Loan proceeds must be used for eligible payroll costs. The terms of any forgiveness may also be subject to further requirements in any regulations and guidelines the SBA may adopt. The Company applied for forgiveness of the PPP Loan inDecember 2020 . OnApril 1, 2021 , the Company received notice from the Bank that the Bank had received confirmation from the SBA that the application for forgiveness of the PPP Loan had been approved. The loan forgiveness request in the amount of$1,001,640 was applied to the Company's entire outstanding PPP Loan balance with the Bank. During the six months endedAugust 31, 2021 , the Company recorded a gain on the forgiveness of the PPP Loan and accrued interest in the amount of$1,005,372 . The gain on the forgiveness of the PPP Loan is a non-taxable event.
Net Income:
Net income increased by$166,000 to$344,000 for the second quarter of fiscal 2022 compared with$178,000 for the second quarter of fiscal 2021. The increase in net income during the second quarter is a result of an increase in operating income offset by an increase in income taxes. Net income increased by$1,265,000 to$1,611,000 for the first half of fiscal 2022 compared with$346,000 for the first half of fiscal 2021. The increase in net income in the first half of fiscal 2022 is a result of an increase in operating income combined with the PPP Loan forgiveness offset by an increase in income taxes. Impact of COVID-19 InDecember 2019 , the COVID-19 outbreak occurred inChina and has since spread to other parts of the world. OnMarch 11, 2020 , theWorld Health Organization declared COVID-19 to be a global pandemic and recommended containment and mitigation measures. OnMarch 13, 2020 ,the United States declared a national emergency concerning the outbreak. Along with these declarations, extraordinary and wide-ranging actions have been taken by international, federal, state, and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19 in regions acrossthe United States and the world. These actions include quarantines, social distancing and "stay-at-home" orders, travel restrictions, mandatory business closures and other mandates that have substantially restricted individuals' daily activities and curtailed or ceased many businesses' normal operations.
In response to the pandemic and these actions, we began implementing changes in
our business in
· We implemented social distancing and other health and safety protocols.
· We have flexed the workforce in our manufacturing operations based on business
needs, including the addition of a second shift and the implementation of
remote, alternative and flexible work arrangements.
· We have enhanced cleaning and sanitary procedures.
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· We temporarily eliminated domestic and international travel.
· We restricted access to our facilities to only employees and essential
non-employees with strict protocols. While all of these measures have been necessary and appropriate, they may result in additional costs and may adversely impact our business and financial performance. As our response to the pandemic evolves, we may incur additional costs and will potentially experience adverse impacts to our business, each of which may be significant. In addition, an extended period of remote work arrangements could impair our ability to effectively manage our business, and introduce additional operational risks, including, but not limited to, cybersecurity risks and increased vulnerability to security breaches, cyber-attacks, computer viruses, ransomware, or other similar events and intrusions. We may experience, decreases in demand and customer orders for our products in all sales channels, as well as temporary disruptions and closures of our facilities due to decreased demand and government mandates. COVID-19 has also impacted various aspects of the supply chain as our suppliers experience similar business disruptions due to operating restrictions from government mandates. We continue to monitor procurement of raw materials and components used in the manufacturing, distribution and sale of our products, but continued disruptions in the supply chain due to COVID-19 may cause difficulty in sourcing materials or unexpected shortages or delays in delivery of raw materials and components, and may result in increased costs in our supply chain. We have implemented plans to reduce spending in certain areas of our business, including reductions or delays in capital expenditures, reduced trade show participation costs, reduced travel expenditures and may need to take additional actions to reduce spending in the future. We are closely monitoring and assessing the impact of the pandemic on our business. The extent of the impact on our results of operations, cash flow, liquidity, and financial performance, as well as our ability to execute near- and long-term business strategies and initiatives, will depend on numerous evolving factors and future developments, which are highly uncertain and cannot be reasonably predicted. Given the inherent uncertainty surrounding COVID-19, the pandemic may continue to have an adverse impact on our business in the near term. Should these conditions persist for a prolonged period, the COVID-19 pandemic, including any of the above factors and others that are currently unknown, may have a material adverse effect on our business, results of operations, cash flow, liquidity, and financial condition.
Liquidity and Capital Resources
Working Capital - Our working capital increased$728,000 to$9,630,000 atAugust 31, 2021 from$8,902,000 atFebruary 28, 2021 . The increase in working capital was mostly the result of the current period's net income and noncash charges partially offset by purchases of equipment. The Company aggregates cash and cash equivalents and marketable securities in managing its balance sheet and liquidity. For purposes of the following analysis, the total is referred to as "Cash." AtAugust 31, 2021 andFebruary 28, 2021 , our working capital included: August 31, February 28, Cash 2021 2021 Increase (Decrease) Cash and cash equivalents$ 6,143,000 $ 4,084,000 $ 2,059,000 Marketable securities 3,554,000 4,563,000 (1,009,000 ) Total$ 9,697,000 $ 8,647,000 $ 1,050,000
The following table summarizes the accounts and the major reasons for the
Impact on Cash Reason
Net income, adjusted for
non-cash items $ 845,000
Accounts receivable decrease 276,000 Timing of cash receipts.
Inventories increase (288,000 ) Required to support backlog.
Equipment purchases (147,000 ) Equipment and facilities upgrade.
Customer deposits increase 750,000 Received for new orders.
Accounts payable and accrued
expenses decrease (563,000 ) Timing of disbursements.
Taxes payable increase 150,000 Timing of disbursements.
Other - net 27,000 Timing of disbursements.
Net increase in cash $ 1,050,000
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Stockholders' Equity - Stockholders' Equity increased
Operating Activities - We generated$1,197,000 of cash in our operating activities in the first half of fiscal 2022 compared with using$782,000 of cash in the first half of fiscal 2021. The increase in cash generated by operating activities was mostly the result of a decrease in accounts receivable and increases in customer deposits and income taxes payable. These sources of cash were partially offset by an increase in inventories and decreases in accounts payable and accrued expenses. Investing Activities - For the first half of fiscal 2022, our investing activities generated$862,000 of cash compared with$176,000 in the first half of fiscal 2021. For the first halves of fiscal years 2022 and 2021, we used$147,000 and$290,000 , respectively, for the purchase or manufacture of equipment, furnishings and leasehold improvements. For the first half of 2022, our marketable securities provided$1,009,000 compared with$367,000 in the first half of fiscal 2021. In the second quarter of fiscal 2021, we received$100,000 in grant proceeds from the utility which provides our electricity as a result of our completion of certain energy efficiency related improvements.
Financing Activities - In the first halves of fiscal years 2022 and 2021, we
used
During the first half of fiscal 2021, we borrowed
Net Increase in Cash and Cash Equivalents - In the first half of fiscal 2022, our cash balance increased by$2,059,000 as compared to$312,000 in the first half of 2021. In the first half of fiscal 2022, our operating activities generated$1,197,000 of cash and our marketable securities generated$1,009,000 of cash. In addition, we used$147,000 for the purchase or manufacture of equipment, furnishings and leasehold improvements. Critical Accounting Policies The discussion and analysis of the Company's financial condition and results of operations are based upon the unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted inthe 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 these and other accounting policies see Note 2 to the Company's consolidated financial statements included in Form 10-K for the year endedFebruary 28, 2021 .
Accounting for Income Taxes
The Company accounts for income taxes under the asset and liability method.
Under this method, deferred income taxes are recognized for the tax consequences
of "temporary differences" by applying enacted statutory tax rates applicable to
future years to differences between the financial statement carrying amounts and
the tax basis of existing assets and liabilities. If it is more likely than not
that some portion or all of a deferred tax asset will not be realized, a
valuation allowance is recognized. We use a recognition threshold and a
measurement attribute for financial statement recognition and measurement tax
positions taken or expected to be taken in a return. For those benefits to be
recognized, a tax position must be more likely than not to be sustained upon
examination by taxing authorities.
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Stock-Based Compensation
The computation of the expense associated with stock-based compensation requires
the use of a valuation model. ASC 718 is a complex accounting standard, the
application of which requires significant judgment and the use of estimates,
particularly surrounding Black-Scholes assumptions such as stock price
volatility, expected option lives, and expected option forfeiture rates, to
value equity-based compensation. The Company currently uses a Black-Scholes
option pricing model to calculate the fair value of its stock options. The
Company primarily uses historical data to determine the assumptions to be used
in the Black-Scholes model and has no reason to believe that future data is
likely to differ materially from historical data. However, changes in the
assumptions to reflect future stock price volatility and future stock award
exercise experience could result in a change in the assumptions used to value
awards in the future and may result in a material change to the fair value
calculation of stock-based awards. ASC 718 requires the recognition of the fair
value of stock compensation in net income. Although every effort is made to
ensure the accuracy of our estimates and assumptions, significant unanticipated
changes in those estimates, interpretations and assumptions may result in
recording stock option expense that may materially impact our financial
statements for each respective reporting period.
Impact of New Accounting Pronouncements
Accounting pronouncements issued but not yet effective have been deemed to be not applicable or the adoption of such accounting pronouncements is not expected to have a material impact on the financial statements of the Company.
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