Back to GetFilings.com
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2004
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to ________________
Commission File Number: 001-10382
VALLEY FORGE SCIENTIFIC CORP.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-2131580
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
136 Green Tree Road, Oaks, Pennsylvania 19456
(Address of principal executive offices and zip code)
Telephone: (610) 666-7500
Indicate by check mark [X] 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 an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
At August 5, 2004 there were 7,913,712 shares outstanding of the Registrant's no
par value Common Stock.
================================================================================
VALLEY FORGE SCIENTIFIC CORP.
INDEX TO FORM 10-Q
June 30, 2004
Page
Number
------
Part I - Financial Information
Item 1. Financial Statements:
Balance Sheets - June 30, 2004 and September 30, 2003 1
Statements of Operations for the three and nine months
ended June 30, 2004 and June 30, 2003 2
Statements of Cash Flows for the nine months
ended June 30, 2004 and June 30, 2003 3
Notes to Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 10
Item 4. Controls and Procedures 20
Part II - Other Information 21
(i)
VALLEY FORGE SCIENTIFIC CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
June 30, September 30,
ASSETS 2004 2003
- ------ ------------- -------------
(Unaudited) (Audited)
Current Assets:
Cash and cash equivalents $ 2,221,962 $ 2,305,556
Accounts receivable, net 770,249 376,915
Inventory 843,455 775,183
Prepaid items and other current assets 127,111 268,371
Deferred tax assets 79,993 51,431
------------- -------------
Total Current Assets 4,042,770 3,777,456
Property, Plant and Equipment, Net 144,176 156,697
Goodwill 153,616 153,616
Intangible Assets, Net 227,770 256,681
Other Assets 31,121 29,963
------------- -------------
Total Assets $ 4,599,453 $ 4,374,413
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts payable and accrued expenses $ 245,991 $ 216,457
Deferred revenue 9,660 --
Income taxes payable 40,786 --
------------- -------------
Total Current Liabilities 296,437 216,457
Deferred Tax Liability 19,446 19,950
------------- -------------
Total Liabilities 315,883 236,407
------------- -------------
Commitments and Contingencies
Stockholders' Equity:
Preferred stock -- --
Common stock (no par, 20,000,000 shares
authorized, shares issued and outstanding
at June 30, 2004 and at September 30,
2003 - 7,913,712) 3,528,530 3,528,530
Retained earnings 755,040 609,476
------------- -------------
4,283,570 4,138,006
------------- -------------
Total Liabilities and Stockholders' Equity $ 4,599,453 $ 4,374,413
============= =============
- ----------------------
See accompanying notes.
-1-
VALLEY FORGE SCIENTIFIC CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended For the Nine Months Ended
June 30, June 30,
--------------------------- ---------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Net Sales $ 1,274,389 $ 1,081,872 $ 3,606,629 $ 3,390,950
Cost of Sales 622,068 498,123 1,689,236 1,655,113
------------ ------------ ------------ ------------
Gross Profit 652,321 583,749 1,917,393 1,735,837
------------ ------------ ------------ ------------
Other Costs:
Selling, general and administrative 417,699 378,932 1,286,244 1,194,982
Research and development 114,754 151,513 355,662 361,020
Amortization 10,147 10,074 30,296 30,224
------------ ------------ ------------ ------------
Total Other Costs 542,600 540,519 1,672,202 1,586,226
------------ ------------ ------------ ------------
Income from Operations 109,721 43,230 245,191 149,611
Other Income (Expense), Net 5,868 6,803 16,906 22,615
------------ ------------ ------------ ------------
Income before Income Taxes 115,589 50,033 262,097 172,226
Provision for Income Taxes 50,583 12,680 116,533 65,141
------------ ------------ ------------ ------------
Net Income $ 65,006 $ 37,353 $ 145,564 $ 107,085
============ ============ ============ ============
Earnings per Share:
Basic earnings per common share $ 0.01 $ 0.01 $ 0.02 $ 0.01
============ ============ ============ ============
Diluted earnings per common share $ 0.01 $ 0.01 $ 0.02 $ 0.01
============ ============ ============ ============
Basic common shares outstanding 7,913,712 7,938,302 7,913,712 7,976,503
Diluted common shares outstanding 7,994,955 7,963,052 7,979,467 8,000,052
- ----------------------
See accompanying notes.
-2-
VALLEY FORGE SCIENTIFIC CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Nine Months Ended
June 30,
----------------------------
2004 2003
------------ ------------
Cash Flows from Operating Activities:
Net income $ 145,564 $ 107,085
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 52,659 47,243
Interest accrued on loans and advances to
employees (1,722) (1,748)
Provision for obsolete and slow-moving inventory 58,761 --
Changes in assets and liabilities, net of effect from:
Increase in accounts receivable, net (393,334) (219,743)
(Increase) decrease in inventory (127,033) 51,354
Increase in deferred tax assets (28,562) (11,046)
(Increase) decrease in prepaid items and other current assets 136,482 (23,147)
Increase in other assets (1,158) (30,206)
Increase (decrease) in accounts payable and accrued
expenses and income taxes payable 70,320 (137,787)
Increase in deferred revenue 9,660 --
Decrease in deferred tax liability (504) (3,245)
------------ ------------
Net cash used in operating activities (78,867) (221,240)
------------ ------------
Cash Flows from Investing Activities:
Purchase of property, plant and equipment (9,842) (34,013)
Costs related to patent application (1,385) --
Proceeds from repayment of employee loans and advances 6,500 10,000
------------ ------------
Net cash used in investing activities (4,727) (24,013)
------------ ------------
Cash Flows from Financing Activities:
Repurchase of common stock -- (173,316)
------------ ------------
Net cash used in financing activities -- (173,316)
------------ ------------
Net Decrease in Cash and Cash
Equivalents (83,594) (418,569)
Cash and Cash Equivalents, beginning of period 2,305,556 2,543,898
------------ ------------
Cash and Cash Equivalents, end of period $ 2,221,962 $ 2,125,329
============ ============
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ -- $ --
============ ============
Income taxes $ 11,700 $ 260,800
============ ============
- ----------------------
See accompanying notes.
-3-
VALLEY FORGE SCIENTIFIC CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2004
1. DESCRIPTION OF BUSINESS
Valley Forge Scientific Corp. ("VFSC") was incorporated on March 27, 1980 in the
Commonwealth of Pennsylvania and is engaged in the business of developing,
manufacturing and selling medical devices and products. On August 18, 1994, VFSC
formed a wholly-owned subsidiary, Diversified Electronics Company, Inc. ("DEC"),
a Pennsylvania corporation, in order to continue the operations of Diversified
Electronic Corporation, a company which was merged with and into VFSC on August
31, 1994. Collectively, VFSC and DEC are referred to herein as the "Company".
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Basis of Presentation
The accompanying financial statements consolidate the accounts of VFSC and its
wholly-owned subsidiary. All significant intercompany accounts and transactions
have been eliminated in consolidation. Certain amounts from prior years have
been reclassified to conform to the current year presentation.
The accompanying unaudited consolidated financial statements have been prepared
pursuant to rules and regulations of the Securities and Exchange Commission and,
therefore, do not include all information and footnote disclosures normally
included in audited financial statements. However, in the opinion of management,
all adjustments that are of a normal and recurring nature, necessary to present
fairly the results of operations, financial position and cash flows have been
made. It is suggested that these statements be read in conjunction with the
financial statements included in the Company's Annual Report on Form 10-K for
the year ended September 30, 2003.
The statements of operations for the three months and nine months ended June 30,
2004 and 2003, respectively, are not necessarily indicative of results for the
full year.
Earnings per Share
- ------------------
The Company computes earnings per share in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS 128). Basic
earnings per share is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding.
Diluted earnings per share reflects the potential dilution that could occur if
securities or other agreements to issue common stock were exercised or converted
into common stock. Diluted earnings per share is computed based upon the
weighted average number of common shares and dilutive common equivalent shares
outstanding, which include convertible debentures, stock options and warrants.
Recently Issued Accounting Standards
- ------------------------------------
In December, 2003, the Financial Accounting Standards Board ("FASB") issued a
revised Interpretation No. 46, "Consolidation of Variable Interest Entities - An
Interpretation of ARB No. 51, " which provides guidance on the identification of
and reporting for variable interest entities, including expanded criteria from
the original pronouncement, which was issued in January 2003, for consideration
in determining whether a variable interest entity should be consolidated.
Interpretation No. 46, as revised, is effective for the Company in the third
quarter of 2004. The adoption of Interpretation No. 46 had no impact on the
Company's results of operations for the quarter ended June 30, 2004 or its
financial condition at that date, nor is it expected to have a significant
impact in the future.
-4-
VALLEY FORGE SCIENTIFIC CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2004
(Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Stock-Based Compensation
- ------------------------
In December 2002, the FASB issued Statement of Financial Accounting Standards
(SFAS") No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure - an amendment of FASB Statement No. 123." SFAS No. 148 amends SFAS
No. 123, "Accounting for Stock-Based Compensation," to provide alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, SFAS No. 148
amends the disclosure requirements of SFAS No. 123 to require prominent
disclosures in both annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of the method
used on reported results. SFAS No. 148 is effective for the Company as of
January 1, 2003. The Company has not elected a voluntary change in accounting to
the fair value based method, and, accordingly, the adoption of SFAS No. 148 did
not have a significant impact on the Company's results of operations or
financial position.
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's stock options have characteristics significantly different from
those of traded options, and because changes in subjective input assumptions can
materially affect the fair value estimated, in management's opinion, the
existing models do not necessarily provide a reliable single measure of the fair
value of its stock options. In addition, option pricing models require the input
of highly subjective assumptions, including expected stock price volatility.
For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. In accordance with
SFAS 123 and 148, only stock options granted after September 30, 1995 have been
included for the Company's pro forma information as follows:
For the Three Months Ended For the Nine Months Ended
June 30, June 30,
--------------------------- ---------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Net income, as reported $ 65,006 $ 37,353 $ 145,564 $ 107,085
Less: Total compensation
expense determined
under fair value based
method, net of tax effect 9,839 3,186 54,981 38,312
------------ ------------ ------------ ------------
Pro Forma Net Income (Loss) $ 55,167 $ 34,167 $ 90,583 $ 68,773
============ ============ ============ ============
Pro Forma Income (Loss) per Share:
Basic $ 0.01 $ 0.00 $ 0.01 $ 0.01
Diluted $ 0.01 $ 0.00 $ 0.01 $ 0.01
-5-
VALLEY FORGE SCIENTIFIC CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2004
(Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition
- -------------------
The Company sells its products to U.S. based national and international
distributors and dealers which include an affiliate, Codman and Shurtleff, Inc.
("Codman"), of a major medical company. A significant part of the Company's
sales are made pursuant to a distribution agreement with Codman, the Company's
largest customer, which provides for worldwide exclusive distribution rights of
neurosurgery products during the term of this agreement. This distribution
agreement includes a minimum purchase obligation which is adjusted annually
during the term of the agreement. It also includes a price list for the
specified products, which is fixed for a period of time, after which these
prices are subject to adjustment by the Company due to changes in manufacturing
cost or technological improvements to the products. In November, 2003 this
agreement was extended for three months to March 31, 2004, with a minimum
purchase obligation during this period of $1,000,000. In March, 2004 the
agreement was further extended for three months through June 30, 2004, with a
minimum purchase obligation during that period of $1,000,000, and on June 29,
2004 it was extended again through September 30, 2004 with the same $1,000,000
minimum purchase obligation during that period. All other terms of the
distribution agreement remain in full force and effect. Product revenue is
recognized when the product has been shipped which is when title and risk of
loss has been transferred to the customer.
During the three months ended March 31, 2004, Codman elected to pay the Company
$57,920, pursuant to the distribution agreement in lieu of purchasing
approximately $116,000 of product which would have been required to meet the
minimum purchase obligation under the agreement, as extended, for the period.
The Company received the payment on April 16, 2004. The amount received is
reflected in sales for the nine months ended June 30, 2004. Had this amount not
been recorded, sales would have been $3,548,709 for the nine months ended June
30, 2004, and gross profit would have been $1,859,473 (52.4% of sales) for the
nine months ended June 30, 2004. No such payment to the Company was required in
the quarter ended June 30, 2004.
3. SUPPLEMENTAL BALANCE SHEET INFORMATION
Accounts Receivable, Net
- ------------------------
June 30, September 30,
2004 2003
------------ ------------
Accounts receivable $ 792,230 $ 378,786
Less: Allowances 21,981 1,871
------------ ------------
$ 770,249 $ 376,915
============ ============
-6-
VALLEY FORGE SCIENTIFIC CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2004
(Continued)
3. SUPPLEMENTAL BALANCE SHEET INFORMATION (Continued)
Inventory
- ---------
June 30, September 30,
2004 2003
------------ ------------
Finished goods $ 30,217 $ 88,401
Work-in-process 339,249 316,600
Materials and parts 596,027 433,459
------------ ------------
965,493 838,460
Less: Allowance for slow moving
and obsolete inventory 122,038 63,277
------------ ------------
$ 843,455 $ 775,183
============ ============
Property, Plant and Equipment, Net
- ----------------------------------
Useful Life June 30, September 30,
(Years) 2004 2003
------------ ------------ ------------
Land - $ 11,953 $ 11,953
Buildings and improvements 15 - 39 94,832 94,832
Furniture and fixtures 5 - 7 17,953 17,953
Laboratory equipment 5 - 10 378,159 370,119
Office equipment 5 183,120 181,318
Leasehold improvements 3 - 5 9,413 9,413
------------ ------------
695,430 685,588
Less: Accumulated depreciation
and amortization $ 551,254 $ 528,891
------------ ------------
$ 144,176 $ 156,697
============ ============
Goodwill and Intangible Assets
- ------------------------------
In accordance with SFAS 142, Goodwill has been reflected on the balance sheet
separate from other intangible assets which continue to be amortized. No change
in the carrying amount of goodwill was made for the quarter ended June 30, 2004.
The Company completed its annual impairment test during the quarter ended March
31, 2004, and no impairment was identified. The Company completed its
transitional impairment test during the quarter ended March 31, 2002, indicating
that goodwill was not impaired. The next annual test was performed during the
quarter ended March 31, 2003 and no impairment adjustment was required.
-7-
VALLEY FORGE SCIENTIFIC CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2004
(Continued)
3. SUPPLEMENTAL BALANCE SHEET INFORMATION (Continued)
Goodwill and Intangible Assets (Continued)
- ------------------------------
Information regarding the Company's other intangible assets is as follows:
As of June 30, 2004 As of September 30, 2003
------------------------------------------ ------------------------------------------
Gross Gross
Carrying Accumulated Carrying Accumulated
Amount Amortization Net Amount Amortization Net
------------ ------------ ------------ ------------ ------------ ------------
Patents, trademarks,
licensing agreements $ 573,002 $ 501,043 $ 71,959 $ 571,617 $ 493,365 $ 78,252
Proprietary know-how 452,354 296,543 155,811 452,354 273,925 178,429
Acquisition costs 55,969 55,969 -- 55,969 55,969 --
------------ ------------ ------------ ------------ ------------ ------------
$ 1,081,325 $ 853,555 $ 227,770 $ 1,079,940 $ 823,259 $ 256,681
============ ============ ============ ============ ============ ============
Amortization expense of intangible assets was $10,147 and $10,074 for the three
months ended June 30, 2004 and 2003, respectively, and $30,296 and $30,224 for
the nine months ended June 30, 2004 and 2003, respectively.
Annual amortization expense for intangible assets held as of June 30, 2004 is
estimated to be $40,300 for 2005, $40,300 for 2006, $40,200 for 2007, $39,700
for 2008 and $37,600 for 2009.
4. COMMITMENTS AND CONTINGENCIES
On September 19, 2002, the Company was served with a complaint that was filed in
the Superior Court of the State of Arizona, County of Maricopa, entitled Jeffrey
Turner and Cathryn Turner et al. v. Phoenix Children's Hospital, Inc., et al.,
(CV 2002-010791) in which the Company was named as one of the defendants. The
plaintiffs seek an unspecified amount of damages for alleged injuries sustained
in a surgery that took place in June 2000. The Company's product liability
insurance carrier is providing the Company's defense in this matter. This
insurance coverage has a $10,000 deductible that applies to attorney fees and
damages which have been provided for in other costs under selling, general and
administrative expense for the year ended September 30, 2002. In an answer that
was filed on November 26, 2002, the Company denied any liability. The Company
believes the claim is without merit and will vigorously defend itself in this
action.
-8-
VALLEY FORGE SCIENTIFIC CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2004
(Continued)
5. EARNINGS PER SHARE
For the Three Months Ended For the Nine Months Ended
June 30, June 30,
--------------------------- ---------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Income available to common
shareholders $ 65,006 $ 37,353 $ 145,564 $ 107,085
============ ============ ============ ============
Weighted average common
shares outstanding - basic 7,913,712 7,938,302 7,913,712 7,976,503
Net effect of dilutive shares
issuable in connection with
stock plans 81,243 24,750 65,755 23,549
------------ ------------ ------------ ------------
Weighted average common shares
outstanding - diluted 7,994,955 7,963,052 7,979,467 8,000,052
============ ============ ============ ============
Earnings per share:
Basic $ 0.01 $ 0.01 $ 0.02 $ 0.01
Diluted $ 0.01 $ 0.01 $ 0.02 $ 0.01
Options to purchase 507,250 and 477,350 shares of common stock were outstanding
on June 30, 2004 and 2003, respectively, and 426,007 and 452,600 of these shares
were not included in the computation of diluted earnings per share for the three
months ended June 30, 2004 and 2003, and 441,495 and 453,801 of these shares
were not included in the computation of diluted earnings per share for the nine
months ended June 30, 2004 and 2003, respectively, in accordance with SFAS 128,
as these potential shares are considered antidultive.
-9-
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is a discussion and analysis of Valley Forge Scientific
Corp.'s financial condition and results of operations for the three and nine
months ended June 30, 2004 and 2003. This section should be read in conjunction
with the financial statements and related notes in Item 1 of this report and
Valley Forge Scientific Corp.'s Annual Report on Form 10-K for the year ended
September 30, 2003, which has been filed with the Securities and Exchange
Commission. Unless the context requires otherwise, references to "we", "us",
"our", and "Valley Forge Scientific" refer to Valley Forge Scientific Corp.
Cautionary Note Regarding Forward Looking Statements
This Management's Discussion and Analysis of Financial Condition and
Results of Operations contains, in addition to historic information, "forward
looking" statements or statements which arguably imply or suggest certain things
about our future. Statements which express that we "believe", "anticipate",
"expect", or "plan to" as well as other statements which are not historical
fact, such as expectations for our products or products we are developing;
introduction of new products into the marketplace; acceptance of our products in
the market place; new products and alliances; any competitive advantage we may
have as a result of our installed base of electrosurgical generators in the
neurosurgery market; our belief that our products exceed industry standards or
favorably compete with other companies' new technological advancements; our
ability, along with the third parties with whom we contract, to distribute and
sell our products; and other statements that refer to Valley Forge Scientific's
estimated future results or actions are forward looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. All
forward-looking statements reflect Valley Forge Scientific's current analysis of
existing trends and information and represent Valley Forge Scientific's judgment
only as of the date of this report. Actual results may differ from current
expectations based on a number of factors affecting Valley Forge Scientific's
business, including but not limited to competitive, regulatory and market
conditions; the performance of new products and the continued acceptance of
current products; the execution of strategic initiatives and alliances; the
market penetration by third parties who distribute and sell Valley Forge
Scientific's products; Valley Forge Scientific's ability to maintain a
sufficient supply of products; product liability claims; and the uncertainties
associated with intellectual property protection for these products. In
addition, matters generally affecting the domestic and global economy can affect
Valley Forge Scientific's results. Therefore, the reader is cautioned not to
rely on these forward-looking statements. We disclaim any intent or obligation
to update these forward-looking statements. You are advised to review the
"Additional Cautionary Statements" section below for more information about
risks and uncertainties that could affect the financial results of Valley Forge
Scientific.
Overview
We design, develop, manufacture and sell medical and dental devices.
Our core business is in our bipolar electrosurgical generators and related
instrumentation, based on our DualWave(TM) technology. Our bipolar systems allow
a surgeon or dentist to cut tissue in a manner that minimizes collateral damage
-10-
to surrounding healthy tissue and to coagulate blood vessels quickly, safely and
efficiently. By substantially reducing damage to surrounding healthy tissue, the
surgeon or dentist can work safely in close proximity with nerves, blood vessels
and bone. Our bipolar system can also be used in close proximity with metal
implants. Our bipolar systems are designed to replace other surgical tools, such
as monopolar electrosurgery systems, lasers and conventional instruments, used
in soft tissue surgery.
Our DualWave(TM) technology is applicable to many surgical markets. Our
bipolar systems are currently used to perform many types of neurosurgery, spine
surgery and dental surgery. We have had worldwide exclusive distribution
agreements with Codman & Shurtleff, Inc., a subsidiary of Johnson & Johnson,
Inc., to market our neurosurgery bipolar systems since 1983. During the first
quarter of fiscal 2004, the term for our distribution agreement with Codman &
Shurtleff, Inc. was extended from December 31, 2003 to March 31, 2004. During
the second quarter of fiscal 2004 that distribution agreement was further
extended to June 30, 2004. In the third quarter of fiscal 2004 the distribution
agreement was further extended to September 30, 2004, to permit the parties time
to discuss the terms of a new distribution agreement.
Historically, we have derived a significant portion of our sales from
our neurosurgery bipolar system. Sales revenue from our Bident(R) Bipolar Tissue
Management System for dental applications commenced in the 2000 fiscal year. Our
current strategy is to increase sales of our Bident(R) Bipolar Tissue Management
System by selling it directly to customers and through independent dental
product dealers, expand the offerings of products in the field of neurosurgery
and broaden the market for our products in other clinical and surgical markets
that have a need for our products. Our strategy also includes using our
DualWave(TM) technology and sales of our bipolar generators to drive sales of
complementary disposable instruments and products and accessories.
Critical Accounting Policies and Estimates
The following "Management's Discussion and Analysis of Financial
Condition and Results of Operations", as well as disclosures included elsewhere
in this Form 10-Q, are based upon our unaudited consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States. The preparation of these financial
statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of
contingencies. On an on-going basis, we evaluate the estimates used, including
those related to product returns, bad debts, inventory valuation, impairments of
tangible and intangible assets, income taxes, warranty obligations, other
accruals, contingencies and litigation. We base our estimates on historical
experience, current conditions 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 apparent from other sources as well as identifying and
assessing our accounting treatment with respect to commitments and
contingencies. Actual results may differ from these estimates under different
assumptions or conditions. We believe the following critical accounting policies
involve more significant judgments and estimates used in the preparation of the
consolidated financial statements.
-11-
We maintain an allowance for doubtful accounts for estimated losses
resulting from the potential inability of our customers to make required
payments. If the financial condition of our customers were to deteriorate,
resulting in an impairment of their ability to make payments, additional
allowances may be required.
We provide for the estimated cost of product returns based upon
historical experience and any known conditions or circumstances. Our warranty
obligation is affected primarily by product that does not meet specifications
within the applicable warranty period and any related costs of addressing such
matters. Should actual incidences of product not meeting specifications differ
from our estimates, establishing a warranty liability may be required.
We value inventory at the lower of cost or market and write down the
value of inventory for identified obsolescence or unmarketable inventory. An
inventory reserve is maintained based upon historical data of actual inventory
written off, the age of inventory, requirements for inventory and for known
conditions and circumstances. Should actual product marketability be affected by
conditions that are different from those projected by management, revisions to
the estimated inventory reserve may be required.
Our deferred tax assets and liabilities are determined based on the
differences between the financial statement and tax based assets and liabilities
using enacted tax rates in effect for the year in which the differences are
expected to reverse. Deferred tax assets are reduced by a valuation allowance at
the time that a determination can be made that it is more likely than not that a
portion or all of the related tax assets will not be realized.
In accordance with the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123") and SFAS No. 148, "Accounting for Stock-Based Compensation - Transition
and Disclosure - An Amendment of FASB Statement No. 123" ("SFAS 148"), we have
elected to account for stock-based compensation plans in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB 25"), and related interpretations.
Results of Operations
Results of Operations for the Three and Nine Months Ended June 30, 2004
compared to the Three and Nine Months Ended June 30, 2003.
Summary
Sales of $1,274,389 for the three months ended June 30, 2004 were 18%
greater than sales of $1,081,872 for the three months ended June 30, 2003, and
sales of $3,606,629 for the nine months ended June 30, 2004 were 6% greater than
sales of $3,390,950 for the nine months ended June 30, 2003. Net income for the
three months ended June 30, 2004 was $65,006 and net income for the nine months
ended June 30, 2004 was $145,564, as compared to net income of $37,353 and
$107,085, respectively, for the comparable periods in fiscal 2003.
-12-
Revenues
Sales of $1,274,389 for the three months ended June 30, 2004 reflect an
increase in sales volume of both our dental products and neurosurgical products
as compared to the comparable periods in fiscal 2003. Sales for the three and
nine months ended June 30, 2004 also reflect sales to Stryker Corporation of
$120,000 and $135,000, respectively, for evaluation samples of a new product we
developed pursuant to a development agreement, which we did not have in the
comparable periods in fiscal 2003. In the third quarter of fiscal 2004, we
received 510(k) approval from the United States Food and Drug Administration to
market this product.
For the three months ended June 30, 2004, sales of our dental products
increased to $109,697, or 9% of our sales, as compared to sales of $48,951, or
5% of our sales, for the three months ended June 30, 2003. For the first nine
months of fiscal 2004, sales of our dental products accounted for $398,563, or
11% of our sales, as compared to $135,659, or 4% of our sales, for the
comparable period in fiscal 2003.
Sales to Codman & Shurtleff, Inc. for the three months ended June 30,
2004 accounted for $1,040,814, or 82% of our sales, as compared to $1,007,700,
or 93% of our sales, for the three months ended June 30, 2003. For the first
nine months of fiscal 2004, sales to Codman & Shurtleff, Inc. were $3,041,790,
or 84% of our sales, as compared to sales of $3,200,225, or 94% of our sales,
for the first nine months of fiscal 2003. Included in the sales to Codman &
Shurtleff, Inc. for the first nine months of fiscal 2004 is a payment of $57,920
in the second quarter of fiscal 2004 that Codman & Shurtleff, Inc. made pursuant
to a distribution agreement, in lieu of making purchases of product of
approximately $116,000, to satisfy its minimum purchase obligations under the
first three month extension of our existing distribution agreement with Codman &
Shurtleff, Inc.
In the third quarter of fiscal 2004, we entered into a third extension
of our distribution agreement with Codman & Shurtleff, Inc., in which we
extended the distribution agreement until September 30, 2004 in order to provide
more time to continue discussions on the terms of a new distribution agreement.
The third extension requires Codman & Shurtleff, Inc. to make minimum purchases
of $1,000,000 for the time period from July 1, 2004 to September 30, 2004.
In the third quarter and nine months ended June 30, 2004, we saw a
greater contribution from the sales of our dental products than in comparable
periods in fiscal 2003. We anticipate that sales levels will fluctuate from
quarter-to-quarter based on the timing of orders we receive from distributors
and direct sales. In this regard, our sales of dental products for the third
quarter of fiscal 2004 of $109,697 were less than sales of dental products for
the second quarter of fiscal 2004 of $118,817.
-13-
The table below sets forth the sales of disposable accessories and
sales of generators, irrigators and other products by medical field for the
three and nine months ended June 30, 2004 as compared to three and nine months
ended June 30, 2003. Sales of "Generators, Irrigators and Other Products" in
"Other Fields" in the table represent sales to Stryker Corporation, and sales of
"Disposable Accessories" in "Other Fields" represent sales to Boston Scientific
Corporation and direct sales to hospitals.
Sales of Products
-----------------
For the Three For the Nine
------------- ------------
Months Ended Months Ended
------------ ------------
-----------------------------------------------------------------------------------------------
June 30, 2004 June 30, 2003 June 30, 2004 June 30, 2003
------------- ------------- ------------- -------------
-----------------------------------------------------------------------------------------------
Generators, Irrigators
and Other Products
------------------
-----------------------------------------------------------------------------------------------
Neurosurgery Field $ 503,852 $ 543,349 $ 1,552,478 $ 1,611,085
-----------------------------------------------------------------------------------------------
Dental Field 85,125 48,751 341,755 129,960
-----------------------------------------------------------------------------------------------
Other Fields 120,000 -- 135,000 --
------------- ------------- ------------- -------------
-----------------------------------------------------------------------------------------------
Total: $ 708,977 $ 592,100 $ 2,029,233 $ 1,741,045
-----------------------------------------------------------------------------------------------
Disposable Accessories
----------------------
-----------------------------------------------------------------------------------------------
Neurosurgery Field $ 508,306 $ 406,532 $ 1,313,030 $ 1,385,168
-----------------------------------------------------------------------------------------------
Dental Field 24,572 200 56,809 6,907
-----------------------------------------------------------------------------------------------
Other Fields 1,963 18,980 30,218 40,252
------------- ------------- ------------- -------------
-----------------------------------------------------------------------------------------------
Total: $ 534,841 $ 425,712 $ 1,400,057 $ 1,432,327
-----------------------------------------------------------------------------------------------
Cost of Product Sales
Cost of sales was $622,068, or 49% of sales, for the three months ended
June 30, 2004, and $1,689,236, or 47% of sales, for the nine months ended June
30, 2004 as compared with $498,123, or 46% of sales, for the three months, and
$1,655,113, or 49% of sales, for the nine months, ended June 30, 2003. Gross
margin was 51% and 53%, respectively, for the three and nine months ended June
30, 2004 as compared to 54% and 51%, respectively, for the three and nine months
ended June 30, 2003.
The difference in gross margin as a percentage of sales is attributable
to an increase in sales of our dental products and changes in product mix, and
for the nine months ended June 30, 2004, the $57,920 payment by Codman &
Shurtleff, Inc. in the second quarter of fiscal 2004. We cannot be sure that
gross margins will remain at current levels or show improvement in the future
due to the distribution channels used, product mix, and fluctuation in
manufacturing production levels and overhead costs as new products are
introduced. In addition, inefficiencies in manufacturing new products and the
distribution channels utilized to sell those products may adversely impact gross
margin.
-14-
Operating Expenses
Selling, general and administrative expenses were $417,699, or 33% of
sales, for the three months, and $1,286,244, or 36% of sales, for the nine
months ended June 30, 2004, as compared to $378,932, or 35% of sales, for the
three months, and $1,194,982, or 35% of sales, for the nine months, ended June
30, 2003.
Research and development expenses for the three months ended June 30,
2004 were $114,754, or 9% of sales, and $355,662, or 10% of sales, for the nine
months ended June 30, 2004. For the three and nine months ended June 30, 2003,
research and development expenses were $151,513, or 14% of sales, and $361,020,
or 11% of sales, respectively. The reduction in research and development
expenses in the third quarter of fiscal 2004 was primarily due to the completion
of a new neurosurgical irrigator, which was introduced into the market in the
first quarter of fiscal 2004.
Other Income/Expense, net
Other income and expense, net, decreased slightly to $5,868 for the
three months ended June 30, 2004 as compared to $6,803 for the three months
ended June 30, 2003. At June 30, 2004, we had $2,221,962 in cash and cash
equivalents as compared to $2,125,329 at June 30, 2003.
Income Tax Provision
The provision for income taxes was $50,583 and $116,533, respectively,
for the three and nine months ended June 30, 2004 as compared to a provision of
$12,680 and $65,141, respectively, for the three and nine months ended June 30,
2003.
Net Income
As a result of the foregoing, our net income for the three months ended
June 30, 2004 increased to $65,006, as compared to net income of $37,353 for the
three months ended June 30, 2003 and our net income for the nine months ended
June 30, 2004 increased to $145,564 as compared to net income of $107,085 for
the nine months ended June 30, 2003. Basic and diluted earnings per share was
$.01 for both the three months ended June 30, 2004 and June 30, 2003. Basic and
diluted earnings per share was $.02 for nine months ended June 30, 2004 and was
$.01 for the nine months ended June 30, 2003. Due to our operating history and
numerous other factors, we cannot be sure that we can sustain profitability or
achieve revenue growth.
Liquidity and Capital Resources
At June 30, 2004, we had $3,746,333 in working capital compared to
$3,560,999 at September 30, 2003. The primary measures of our liquidity are
cash, cash equivalents, accounts receivable and inventory balances, as well as
our borrowing ability. The cash equivalents are highly liquid with original
maturities of ninety days or less.
-15-
Cash used for operating activities was $78,867 for the nine months
ended June 30, 2004, as compared to cash used for operating activities of
$221,240 for the nine months ended June 30, 2003. The cash used for operating
activities for the nine months ended June 30, 2004 was mainly attributable to an
increase in accounts receivable of $393,334 and an increase in inventory of
$127,033 offset by our operating profit and adjustments for non-cash items of
$109,698, a $70,320 increase in accounts payable and accrued expenses and income
taxes payable, a $136,482 increase in prepaid items and other current assets and
a $9,660 increase in deferred revenue.
During the first nine months ended June 30, 2004, inventories increased
by $127,033 to a total of $843,455 at June 30, 2004 compared to $775,183 at
September 30, 2003. At June 30, 2003, inventories were $831,478. Inventories
were maintained at these levels primarily to support anticipated future sales
activities.
In the first nine months of fiscal 2004, accounts receivable net of
allowances increased by $393,334 to a total of $770,249 at June 30, 2004 as
compared to $376,915 at September 30, 2003. At June 30, 2003, our accounts
receivable net of allowances was $557,682. The increase in accounts receivable
in the first nine months of 2004 was primarily due to timing of sales and an
increase in sales of our dental products.
During the nine months ended June 30, 2004, we purchased property,
plant and equipment of $9,842. Net property and equipment decreased to $144,176
at June 30, 2004 as compared to $156,697 at September 30, 2003.
At June 30, 2004, we had cash and cash equivalents of $2,221,962. We
plan to finance our operating and capital needs principally with cash flows from
operations and existing balances of cash and cash equivalents, which we believe
will be sufficient to fund our operations in the near future. However, should it
be necessary, we believe we could borrow adequate funds at competitive rates and
terms. Our future liquidity and capital requirements will depend on numerous
factors, including the success in commercializing our existing products,
development and commercialization of products in other clinical markets, the
ability of our suppliers to continue to meet our demands at current prices, the
status of regulatory approvals and competition.
We have a line of credit of $1,000,000 with Wachovia Bank, N.A., which
calls for interest to be charged at the bank's national commercial rate. The
credit accommodation is unsecured and requires us to have a tangible net worth
of no less than $3,000,000. Our tangible net worth at June 30, 2004 was
$4,055,800. There was no outstanding balance on this line as of June 30, 2004.
Additional Cautionary Statements
We Face Intense Competition
- ---------------------------
The markets for our current and potential products are intensely
competitive. Some surgical procedures which utilize or could utilize our
products could potentially be replaced or reduced in importance by products sold
by other companies or alternative medical procedures or new drugs or devices
-16-
which could render our products obsolete or uncompetitive in the markets which
we sell, or in the future may sell, our products.
We are Dependent Upon Sales of Our Neurosurgery System - Substantially All of
- -----------------------------------------------------------------------------
Our Business Comes From One Customer
- ------------------------------------
Codman & Shurtleff, Inc., which sells our products in the neurosurgery
market, accounted for 82% of our sales in the first nine months of fiscal 2004,
and 94% and 90% of our sales in fiscal 2003 and 2002, respectively. Any
cancellation, deferral or significant reduction in sales in the neurosurgery
market could seriously harm our business, financial condition and results of
operations. The term or our current distribution agreement with Codman &
Shurtleff, Inc. was recently extended from December 31, 2003 to March 31, 2004,
then from March 31, 2004 to June 30, 2004, and now June 30, 2004 to September
30, 2004 to allow the parties time to continue to discuss the terms of a new
distribution agreement.
Commercial Success of our Non-Neurosurgical Products is Uncertain
- -----------------------------------------------------------------
Our growth depends on the acceptance and use of our products in the
marketplace, the market penetration achieved by the companies that we utilize,
sell to, and rely on, to sell and distribute our products, and our ability to
introduce new and innovative products that meet the needs of medical
professionals. There can be no assurance that we will be able to continue to
introduce new and innovative products or that the products we introduce, or have
introduced, will be widely accepted, or continue to be accepted, in the
marketplace, or that we or the companies, which we may contract with to
distribute or sell our products, achieve market penetration. While we have
developed several applications for our DualWave(TM) technology for use outside
of neurosurgery and we believe that the products based on our technology offer
advantages over other products, we cannot assure you that these advantages will
be realized in the form of increased sales or profits.
We Have Limited Marketing and Sales Experience
- ----------------------------------------------
We currently have limited experience in marketing and selling our
products. To the extent that we have established or will enter into distribution
arrangements for the sale of our products, we are and will be dependent upon the
efforts of third parties. We have entered into a distribution agreement with
Codman & Shurtleff, Inc. to sell our products in the neurosurgery market and we
sell our Bident(R) Bipolar Tissue Management System direct to customers and
through independent dental product dealers. We cannot assure you that
distributors and dealers will commit the necessary resources to effectively
market and sell our neurosurgery and dental product lines, or that they will be
successful in selling our products. To the extent our marketing and sales
efforts are unsuccessful, our business, financial condition, results of
operations and future growth prospects may be materially adversely affected.
Our Products are Extensively Regulated Which Could Delay Product Introduction or
- --------------------------------------------------------------------------------
Halt Sales
- ----------
The process of obtaining and maintaining required regulatory approvals
is lengthy, expensive and uncertain. Although we have not experienced any
substantial regulatory delays to date, there is no assurance that delays will
-17-
not occur in the future, which could have a significant adverse effect on our
ability to introduce new products on a timely basis. Regulatory agencies
periodically inspect our manufacturing facilities to ascertain compliance with
"good manufacturing practices" and can subject approved products to additional
testing and surveillance programs. Failure to comply with applicable regulatory
requirements can, among other things, result in fines, suspensions of regulatory
approvals, product recalls, operating restrictions and criminal penalties. While
we believe that we are currently in compliance, if we fail to comply with
regulatory requirements, it could have an adverse effect on our results of
operations and financial condition.
We are Dependent on Key Suppliers
- ---------------------------------
For some of the components we use in our products we rely upon single
source suppliers or a single contract manufacturer. For example, we currently
subcontract the manufacturing of our disposable cord and tubing sets with a
single manufacturer. While we believe there are alternative sources available,
we would be required to qualify and validate a new supplier(s) or contractor(s),
which could lead to a disruption in our operations and ability to supply product
for a period of time.
We Face Uncertainty Over Reimbursement
- --------------------------------------
Failure by physicians, hospitals and other users of our products to
obtain sufficient reimbursement from health care payors for procedures in which
our products are used or adverse changes in governmental and private third-party
payors' policies toward reimbursement for such procedures would have a material
adverse effect on our business, financial condition, results of operations and
future growth prospects.
We May Be Unable to Effectively Protect Our Intellectual Property
- -----------------------------------------------------------------
Our ability to compete effectively depends in part on developing and
maintaining the proprietary aspects of our bipolar technology. We cannot assure
you that the intellectual property we have obtained, or any intellectual
property we may obtain, will provide any competitive advantages for our
products, or that we will be able to maintain a competitive advantage after the
expiration of patents. We also cannot assure you that our intellectual property
will not be successfully challenged, invalidated or circumvented in the future.
In addition, we cannot assure you that competitors, many of which have
substantial resources and have made substantial investments in competing
technologies, have not already applied for or obtained, or will not seek to
apply for and obtain, patents that will prevent, limit or interfere with our
ability to make, use and sell our products either in the United States or in
international markets. Patent applications are maintained in secrecy for a
period after filing. We may not be aware of all of the patents and patent
applications potentially adverse to our interests.
We May Become Subject to a Patent Litigation
- --------------------------------------------
The medical device industry has been characterized by extensive
litigation regarding patents and other intellectual property rights, and
companies in the medical device industry have employed intellectual property
litigation to gain a competitive advantage. We cannot assure you that we will
-18-
not become subject to patent infringement claims or litigation or interference
proceedings declared by the United States Patent and Trademark Office to
determine the priority of invention.
We May have Product Liability Claims
- ------------------------------------
Our products involve a risk of product liability claims. Although we
maintain product liability insurance at coverage levels, which we believe are
adequate, there is no assurance that, if we were to incur substantial liability
for product liability claims, insurance would provide adequate coverage against
such liability.
Our Operating Results May Fluctuate
- -----------------------------------
We have experienced operating losses at various times since our
inception. Our results of operations may fluctuate significantly from quarter to
quarter based on numerous factors including the following:
o the introduction of new product lines;
o the level of market acceptance of our products;
o achievement of research and development milestones;
o timing of the receipt of orders from, and product shipments
to, distributors and customers;
o timing of expenditures;
o changes in the distribution of our products;
o manufacturing or supply delays;
o the time needed to educate and train a distributor's sales
force;
o costs associated with product introduction;
o product returns; and
o receipt of necessary regulation approvals.
The Market Price of Our Stock May be Highly Volatile
- ----------------------------------------------------
During the fiscal year ended September 30, 2003 and the first nine
months of fiscal 2004, our common stock has traded in a range of $1.31 and $2.40
per share. The market price of our common stock could continue to fluctuate
substantially due to a variety of factors, including:
o Our ability to successfully commercialize our products;
o The execution of new agreements and material changes in our
relationships with companies with whom we contract;
o Quarterly fluctuations in results of operations;
o Announcements regarding technological innovations or new
commercial products by us or our competitiors or the results
of regulatory approval filings;
o Market reaction to trends in sales, marketing and research and
development and reaction to acquisitions;
o Sales of common stock by existing stockholders; and
o Economic and political conditions.
-19-
Item 4. CONTROLS AND PROCEDURES
- ------
We maintain disclosure controls and procedures (as defined in
Securities Exchange Act 1934 Rules 13a-15(c)) that are designed to ensure that
the information required to be disclosed in our Exchange Act reports is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms, and that such
information is accumulated and communicated to our management, including our
Chief Executive Officer/Chief Financial Officer, as appropriate, to allow timely
decisions regarding disclosure. In designing and evaluating the disclosure
controls and procedures, management recognized that any controls and procedures,
no matter how well designed and operated, can provide only reasonable assurance
of achieving the desired control objectives, and management necessarily was
required to apply its judgment in evaluating the cost benefit relationship of
possible controls and procedures.
As of the end of the quarter ended June 30, 2004, we carried out an
evaluation, under the supervision and with the participation of Valley Forge
Scientific's management, including our Chief Executive Officer/Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. Based on the foregoing, our Chief Executive
Officer/Chief Financial Officer concluded that our disclosure controls and
procedures were effective as of the end of the period covered by this quarterly
report. There have been no significant changes in our internal controls or in
other factors that have materially affected, or are reasonably likely to affect,
our internal control over financial reporting.
-20-
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------
(a) Exhibits
The following is a list of the Exhibits filed as part of this
quarterly report on Form 10Q.
Exhibit Number Exhibit Name
-------------- ------------
10.1 Third Extension of Distribution
Agreement with Codman & Shurtleff,
Inc., dated June 29, 2004
31.1 Certification of the Chief
Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley
Act of 2002
32.1 Certification of the Chief
Executive Officer Pursuant to
Section 906 of the Sarbanes-Oxley
Act of 2002
(b) Current Reports on Form 8-K
On May 11, 2004, Valley Forge Scientific Corp. filed a report
on Form 8-K regarding a press release concerning the annual
meeting of stockholders.
-21-
VALLEY FORGE SCIENTIFIC CORP.
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VALLEY FORGE SCIENTIFIC CORP.
Date: August 12, 2004 By: /s/ JERRY L. MALIS
--------------------------------
Jerry L. Malis, President and
Chief Executive Officer
(principal financial officer)
-22-
VALLEY FORGE SCIENTIFIC CORP.
For Fiscal Period Ended June 30, 2004
FORM 10-Q
EXHIBIT INDEX
Exhibit 10.1 Third Extension of Distribution Agreement
with Codman & Shurtleff, Inc. dated June 29,
2004
Exhibit 31.1 Certification of the Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
Exhibit 32.1 Certification of the Chief Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
-23-