UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 2006
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ____________ to ____________
Commission file number 0-21749
MOONEY AEROSPACE GROUP, LTD.
(Exact name of small business issuer as specified in its charter)
Delaware 95-4257380
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
165 Al Mooney Road North, Kerrville, Texas 78028
(Address of principal executive offices)
(830) 896-6000
(Issuer's telephone number)
N/A
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 shell company (as defined in
Rule 12-b-2 of the Exchange Act).
Yes |_| No |X|
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes |X| No |_|
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 10,631,071 shares of common stock as
of August 18, 2006
Transitional Small Business Disclosure Format (check one): Yes |_| No |X|
MOONEY AEROSPACE GROUP, LTD. AND SUBSIDIARY
Index
Page
Number
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 2006 (unaudited)
and December 31, 2005 (audited) (restated) 3
Consolidated Statements of Operations for the Three Months and
Six Months ended June 30, 2006 and 2005 (unaudited) 4
Consolidated Statements of Cash Flows for the
Six Months ended June 30, 2006 and 2005 (unaudited) 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis or Plan of Operations 7
Item 3. Controls and Procedures 15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 16
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 19
SIGNATURES 20
EXHIBIT INDEX 21
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Mooney Aerospace Group, Ltd. and Subsidiary
Consolidated Balance Sheets
Restated
June 30, 2006 Dec. 31, 2005
------------- -------------
(unaudited) (audited)
ASSETS
Current Assets:
Cash and cash equivalents $ 364,000 $ 637,000
Accounts receivable 448,000 393,000
Other receivables -- 636,000
Inventory 14,060,000 13,910,000
Prepaid expenses and other current assets 1,514,000 1,794,000
------------- -------------
Total current assets 16,386,000 17,370,000
------------- -------------
Property and Equipment - at cost, net of accumulated
depreciation and amortization 4,516,000 4,529,000
Trade Name 1,802,000 1,802,000
Other Assets 238,000 243,000
------------- -------------
6,556,000 6,574,000
------------- -------------
$ 22,942,000 $ 23,944,000
============= =============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Accounts payable $ 3,219,000 $ 1,289,000
Accrued taxes and expenses 3,789,000 3,713,000
Accrued interest and penalties 6,560,000 4,873,000
Notes payable, current portion 6,019,000 6,407,000
Note payable, revolver 6,250,000 6,250,000
Loans from stockholders 11,784,000 9,684,000
Secured debentures 19,534,000 19,534,000
------------- -------------
Total current liabilities 57,155,000 51,750,000
------------- -------------
Notes Payable 7,844,000 7,879,000
Environmental Cleanup Liability -- 265,000
Stockholders' Deficiency
Common stock, $0.0001 par value; 50,000,000 shares
authorized; shares issued and outstanding 10,631,071 1,000 1,000
Additional paid-in capital 117,771,000 117,771,000
Accumulated deficit (159,829,000) (153,722,000)
------------- -------------
(42,057,000) (35,950,000)
------------- -------------
$ 22,942,000 $ 23,944,000
============= =============
The accompanying notes are an integral part of these
consolidated financial statements.
3
Mooney Aerospace Group, Ltd. and Subsidiary
Consolidated Statements of Operations
Three Months and Six Months Ended June 30, 2006 and 2005
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- ---------------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
unaudited unaudited unaudited unaudited
Net Sales $11,100,000 $11,141,000 $21,433,000 $20,526,000
Cost of Sales 9,297,000 12,090,000 18,660,000 20,125,000
----------- ----------- ----------- -----------
Gross Profit 1,803,000 (949,000) 2,773,000 401,000
----------- ----------- ----------- -----------
Operating Expenses:
Research and development expenses 324,000 344,000 645,000 636,000
Selling and support expenses 1,102,000 1,053,000 2,007,000 2,327,000
General and administrative expenses 2,152,000 1,776,000 4,275,000 3,264,000
----------- ----------- ----------- -----------
3,578,000 3,173,000 6,927,000 6,227,000
----------- ----------- ----------- -----------
Loss from Operations (1,775,000) (4,122,000) (4,154,000) (5,826,000)
----------- ----------- ----------- -----------
Other Income (Expense):
Other income (expense), net 15,000 10,000 21,000 24,000
Amortization of debt issue costs (2,000) -- (5,000) --
Interest expense (1,037,000) (973,000) (1,969,000) (2,020,000)
Gain on sale of fixed asset -- (2,000) -- --
----------- ----------- ----------- -----------
(1,024,000) (965,000) (1,953,000) (1,996,000)
----------- ----------- ----------- -----------
Loss Before Provision for Income Taxes (2,799,000) (5,087,000) (6,107,000) (7,822,000)
Provision for Income Taxes -- -- -- --
----------- ----------- ----------- -----------
Net Loss $(2,799,000) $(5,087,000) $(6,107,000) $(7,822,000)
=========== =========== =========== ===========
Net Loss Per Share - Basic and Diluted $ (0.26) $ (0.48) $ (0.57) $ (0.76)
=========== =========== =========== ===========
Weighted Average Shares Outstanding
Basic 10,631,071 10,515,071 10,631,071 10,292,105
=========== =========== =========== ===========
Diluted 10,631,071 10,515,071 10,631,071 10,292,105
=========== =========== =========== ===========
The accompanying notes are an integral part of these
consolidated financial statements.
4
Mooney Aerospace Group, Ltd. and Subsidiary
Consolidated Statements of Cash Flows
Six Months Ended June 30, 2006 and 2005
2006 2005
----------- -----------
unaudited unaudited
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss $(6,107,000) $(7,822,000)
Adjustment to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization expense 651,000 438,000
Amortization of debt issue costs 5,000 --
Changes in operating assets and liabilities:
Accounts and other receivables 581,000 1,205,000
Inventory (150,000) 2,278,000
Prepaid expenses and other current assets 280,000 --
Other assets -- 139,000
Accounts payable 1,930,000 (1,114,000)
Accrued taxes and expenses 76,000 (508,000)
Accrued interest and penalties 1,687,000 1,793,000
Environmental cleanup liability (265,000) --
----------- -----------
Net cash used in operating activities (1,312,000) (3,591,000)
----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property and equipment (638,000) (490,000)
----------- -----------
Net cash used in investing activities (638,000) (490,000)
----------- -----------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable -- 4,261,000
Proceeds from stockholder loans 2,100,000 --
Payments on notes payable (423,000) --
----------- -----------
Net cash provided by financing activities 1,677,000 4,261,000
----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (273,000) 180,000
CASH AND CASH EQUIVALENTS, Beginning of year 637,000 59,000
----------- -----------
CASH AND CASH EQUIVALENTS, End of period $ 364,000 $ 239,000
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ 282,000 $ 227,000
=========== ===========
Income taxes paid $ -- $ --
=========== ===========
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
There were no non-cash investing or financing activities during the six months
ended June 30, 2006. During the six months ended June, 2005, holders of the
Company's convertible debentures converted $1,148,390 of convertible debentures
into 517,298 shares of common stock at $2.22 per share.
The accompanying notes are an integral part of these
consolidated financial statements.
5
Mooney Aerospace Group, LTD
Notes to the Consolidated Financial Statements
NOTE 1 - Basis of Presentation
The unaudited consolidated financial statements have been prepared by Mooney
Aerospace Group, Ltd. (together with its wholly-owned subsidiary Mooney Airplane
Company, Inc., the "Company"), pursuant to the rules and regulations of the
Securities and Exchange Commission "SEC". The information furnished herein
reflects all adjustments (consisting of normal recurring accruals and
adjustments) that are, in the opinion of management, necessary to fairly present
the operating results for the respective periods. Certain information and
footnote disclosures, normally in annual financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America, have been omitted pursuant to such rules and regulations. These
financial statements should be read in conjunction with the audited financial
statements and footnotes for the year ended December 31, 2005 included in the
Company's Annual Report on Form 10-KSB. The results of the six months ended June
30, 2006 are not necessarily indicative of the results to be expected for the
full year ending December 31, 2006.
NOTE 2 - Restatement of Financial Statements
Subsequent to the issuance of our consolidated financial statements for the year
ended December 31, 2004 we determined that we had incorrectly accounted for the
transfer of Mooney Airplane Company ("MAC") to Allen Holding & Finance Ltd.
("Allen") in May 2004 and the re-acquisition of MAC from Allen in December 2004.
We also discovered an error had been made in the calculation of the gain from
forgiveness of debt that we reported in our statement of operations for the year
ended December 31, 2004. The correction of these errors resulted in a
restatement of additional paid-in capital and retained earnings shown on our
Consolidated Balance Sheet at December 31, 2005 as follows:
Dec. 31, 2005
-------------
Additional paid-in capital prior to restatement $ 131,035,000
Transfer and re-acquisition of MAC (8,114,000)
Correction of gain from forgiveness of debt (5,150,000)
-------------
Additional paid-in capital - Restated $ 117,771,000
=============
Accumulated deficit prior to restatement $(166,986,000)
Transfer and re-acquisition of MAC 8,114,000
Correction of gain from forgiveness of debt 5,150,000
-------------
Accumulated deficit - Restated $(153,722,000)
=============
NOTE 3 - Stockholder Loans
During the first six months of 2006, one of our stockholders, in a series of
transactions, loaned us $2,100,000. The loans bear interest at 17.5% and are
convertible, in whole or in part, at the option of the holder, anytime after
October 5, 2006 into the Company's common stock at conversion prices ranging
from $0.30 to $0.40 per share. During 2005, our stockholders, in a series of
transactions, loaned us $9,684,000. The terms of the 2005 loans are in the
process of being determined and may include an option to convert some or all of
the stockholder loans into equity. No interest has been recorded on the 2005
loans. Therefore, any interest payable will increase our net loss and our
stockholders' deficit.
6
Item 2. Management's Discussion and Analysis or Plan of Operation
The following discussion and analysis should be read in conjunction with our
consolidated financial statements and related footnotes for the year ended
December 31, 2005 included in our Annual Report on Form 10-KSB. The discussion
of results, causes and trends should not be construed to imply any conclusion
that such results or trends will necessarily continue in the future.
Unless otherwise noted or required by the context, references to "we", "our",
"us" or the "Company" mean Mooney Aerospace Group Ltd. together with its
wholly-owned subsidiary, Mooney Airplane Company, Inc.
Forward Looking Statements
This Quarterly Report on Form 10-QSB and the documents incorporated herein by
reference contain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. This Act provides a "safe harbor" for
forward looking statements to encourage companies to provide prospective forward
looking information about themselves so long as they identify these statements
as forward looking and provide meaningful cautionary statements identifying
important factors that could cause actual results to differ from the projected
results. All statements other than statements of historical fact made in this
Quarterly Report on Form 10-QSB are forward looking. In particular, the
statements herein regarding industry prospects and future results of operations
or financial position are forward-looking statements. Forward-looking statements
reflect management's current expectations and are inherently uncertain. Our
actual results may differ significantly from management's expectations.
During 2006 we intend to focus our efforts on the following:
o Restructuring and strengthening our balance sheet in order to reduce
or eliminate our working capital deficit;
o Expanding our marketing efforts for the anticipated launch of our
new model;
o Reduction of manufacturing costs;
o Product development
Critical Accounting Policies
Our consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America. When
we prepare these consolidated financial statements, we are required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the consolidated financial statements and the reported amounts of revenues
and expenses during the reporting period. On an on-going basis, we evaluate our
estimates and judgments, including those related to investments, long-lived
assets, deferred tax assets, other liabilities and revenue recognition. We base
our estimates and judgments on historical experience and on various other
factors that we believe to be reasonable under the circumstances, the results of
which form the basis for our judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions.
Revenue Recognition - As a routine matter aircraft are paid for on delivery
date. We recognize revenue on substantially all aircraft sales and parts and
service sales when each of the following four criteria is met: 1) a contract or
sales arrangement exists; 2) products have been shipped or services have been
rendered; 3) the price of the products or services is fixed or determinable; and
4) collectibility is reasonably assured.
7
Inventory Obsolescence - We provide an inventory excess and obsolescence
allowance for any portion of any inventory item valued at cost that has not been
used for three years. This allowance has been decreasing over time as sales
volumes have increased and we anticipate that trend to continue.
Valuation of Inventory - Inventory consists of raw materials, work in process
and finished goods and is stated at the lower of cost or market value.
For further information regarding the significant accounting policies that we
use in preparing our consolidated financial statements see our December 31, 2005
consolidated financial statements contained in our Form 10-KSB for 2005.
Results of Operations
Comparison of the three and six months ended June 30, 2006 to the three and six
months ended June 30 2005
Net Sales
We derive revenues from sales of aircraft, parts and service. Net sales were
$11,100,000 during the three months ended June 30, 2006 compared with net sales
of $11,141,000 during the three months ended June 30, 2005. During the first six
months of 2006, our net sales increased by $907,000, or 4.4%, to $21,433,000
from $20,526,000 during the first six months of 2005. We delivered 22 planes
during the three months ended June 30, 2006 compared with 23 planes delivered
during the three months ended June 30, 2005. During the first six months of 2006
we delivered 42 planes compared with 43 planes delivered during the first six
months of 2005. The increase in net sales during the first six months of 2006
compared with the first six months of 2005 was primarily attributable to
improved product sales mix, lower sales discounts, higher average sales prices
and higher service revenues.
Gross Profit
Gross profit improved by $2,752,000 to $1,803,000, or 16.2% of sales, during the
three months ended June 30, 2006 from a loss of $949,000, or 8.5% of sales,
during the comparable period in 2005.
During the first six months of 2006, gross profit increased by $2,372,000 to
$2,773,000, or 12.9% of sales, from $401,000, or 2.0% of sales in the first six
months of 2005. Gross margin for the three and six month periods ended June 30,
2005 was adversely impacted by an adjustment of $250,000 to increase the
Company's inventory obsolescence reserve.
Research and Development
Research and development expenses were $324,000, or 2.9% of sales, for the three
months ended June 30, 2006 compared with $344,000, or 3.0% of sales, for the
three months ended June 30, 2005.
For the six months ended June 30, 2006, research and development expenses were
$645,000, or 3.0% of sales, compared with $636,000, or 3.1% of sales, for the
six months ended June 30, 2005.
Selling and Support
Selling and support expenses increased by $49,000, or 4.7%, from $1,053,000 for
the three months ended June 30, 2005 to $1,102,000 for the three months ended
June 20, 2006. During the first six months of 2006, selling and support expenses
decreased by $320,000, or 13.8%, to $2,007,000 from $2,327,000 during the first
six months of 2005.
8
Selling and support expenses were 9.9% of net sales during the three months
ended June 30, 2006 and 9.5% of net sales during the three months ended June 30,
2005. For the six months, selling and support expenses were 9.4% of net sales in
2006 compared with 11.3% of net sales in 2005. The decrease in selling and
support for the six months ended June 30, 2006 compared with 2005 was primarily
attributable to lower marketing and trade show expenses.
General and Administrative Expenses
General and administrative expenses increased by $376,000, or 21.2%, during the
three months ended June 30, 2006 to $2,152,000 in 2006 from $1,776,000 in 2005.
General and administrative expenses were 19.4% of net sales during the three
months ended June 30, 2006 compared with 15.9% of net sales for the comparable
period in 2005.
For the six months, general and administrative expenses increased by $1,011,000,
or 31.0%, to $4,275,000 in 2006 from $3,264,000 in 2005. General and
administrative expenses were 19.9% of net sales during the six months ended June
30, 2006 compared with 15.9% of net sales for the comparable period in 2005. The
increase in general and administrative expenses for both the three month and six
month periods is primarily attributable to legal and financial advisory services
incurred in connection with the restructuring of our balance sheet.
Interest Expense
Interest expense increased by $64,000, or 6.6%, during the three months ended
June 30, 2006 to $1,037,000 from $973,000 during the comparable period in 2005.
Interest expense was 9.3% of net sales during the three months ended June 30,
2006 compared with 8.7% of net sales for the comparable period in 2005.
For the six months, interest expense decreased by $51,000, or 2.5%, to
$1,969,000 in 2006 from $2,020,000 in 2005. Interest expense was 9.2% of net
sales during the six months ended June 30, 2006 compared with 9.8% of net sales
for the comparable period in 2005.
Net Loss
The Company's net loss for the three months ended June 30, 2006 decreased by
$2,288,000, or 45.0%, from $5,087,000 in 2005 to $2,799,000 in 2006. The
decrease in the net loss was primarily attributable to the improvement in gross
profit.
The Company's net loss for the six months ended June 30, 2006 decreased by
$1,715,000, or 21.9%, from $7,822,000 in 2005 to $6,107,000 in 2006. The
decrease in the net loss was primarily attributable to the improvement in gross
profit and lower selling and support expenses partially offset by higher general
and administrative expenses.
Liquidity and Capital Resources:
Net cash used in operating activities decreased to $1,312,000 in the first six
months of 2006 from $3,591,000 in the first six months of 2005. The improvement
was primarily due to a lower investment in working capital and a smaller net
loss in the first six months of 2006 compared to the first six months of 2005.
During the first six months of 2006, the Company used $638,000 of cash in
investing activities for the purchase of property and equipment compared with
$490,000 in the first six months of 2005.
Net cash provided by financing activities decreased to $1,677,000 in the first
six months of 2006 compared with $4,261,000 in the first six months of 2005. The
net cash provided by financing activities in 2006 was primarily attributable to
additional stockholder loans offset by payments on a loan incurred in connection
with the financing of insurance premiums. During the first six months of 2006,
one of our stockholders, in a series of transactions, loaned us $2,100,000. The
loans bear interest at 17.5% and are convertible, in whole or in part, at the
option of the holder, anytime after October 5, 2006 into the Company's common
stock at conversion prices ranging from $0.30 to $0.40 per share. During 2005,
our stockholders, in a series of transactions, loaned us $9,684,000. The terms
of the 2005 loans are in the process of being determined and may include an
option to convert some or all of the stockholder loans into equity. No interest
has been recorded on the 2005 loans. Therefore, any interest payable will
increase our net loss and our stockholders' deficit.
9
Our balance sheet is highly leveraged. As of June 30, 2006, we had approximately
$51.4 million of indebtedness and were in default of indebtedness totaling $39.6
million. To date, our lenders have not demanded payment. We are negotiating with
our lenders to cure the defaults by restructuring the terms of these loans.
However, there can be no assurance that we will be able to reach an agreement
with our lenders to cure the defaults. A demand for payment by our lenders would
likely result in insolvency and an inability to continue operations. Our high
level of debt may make it extremely difficult or impossible to obtain additional
financing for working capital, capital expenditures and other purposes.
We have substantial liquidity needs in the operation of our business. Because
substantially all of our assets are encumbered and some of our existing debt
agreements contain restrictions against additional borrowing, the options
available to us for additional financing are limited. We will need to obtain
additional financing to continue the production of new aircraft and spare parts
and to develop the business in general. Failure to obtain such additional
financing would have a material adverse effect on our business and prospects and
could require that we severely limit or cease our operations. Additional
financing may not be available on acceptable terms or at all.
Risk Factors
We have a substantial amount of debt and are in default of several of our debt
agreements; a demand for payment by our lenders would likely result in
insolvency.
The Company is highly leveraged. As of June 30, 2006, we had approximately $51.4
million of indebtedness and as of the date of the filing of this Form 10-QSB,
the Company is in default of approximately $39.6 million of indebtedness. To
date, the lenders have not demanded payment. We are negotiating with them to
cure the defaults by restructuring the terms of these loans. However; there can
be no assurance that we will be able to reach an agreement with our lenders to
cure the defaults. A demand for payment by our lenders would likely result in
insolvency and an inability to continue operations. Our high level of debt may
make it extremely difficult or impossible to obtain additional financing for
working capital, capital expenditures and other purposes. We also believe that
the Company is more highly leveraged than its competitors thereby placing it at
a competitive disadvantage. Our high degree of leverage makes us more vulnerable
to a downturn in our business or the economy generally.
Risk of low-price stocks, including limitations on market liquidity.
The Securities and Exchange Commission classifies our Common Stock as a "penny
stock". This classification severely and adversely affects the market liquidity
for our Common Stock. Commission regulations define a "penny stock" to be any
non-NASDAQ equity security that has a market price of less than $5.00 per share
or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require delivery prior to any transaction in a penny stock a disclosure
schedule prepared by the Commission relating to the penny stock market.
Disclosure is required to be made about commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements are required to disclose recent price
information for the penny stock held in the account and information on the
limited market in penny stocks.
As a "penny stock" shares of our common stock are subject to Rule 15g-9 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which
imposes additional sales practice requirements on broker-dealers which sell such
securities to persons other than established customers and "accredited
investors" (generally, individuals with a net worth in excess of $1,000,000 or
annual incomes exceeding $200,000, or $300,000 together with their spouses). For
transactions covered by this rule, a broker-dealer must make a special
suitability determination for the purchaser and have received the purchaser's
prior written consent to the transaction. Consequently, the rule may adversely
affect the ability of broker-dealers to sell our securities and may adversely
affect the ability of holders of our securities to sell such securities in the
secondary market.
10
We have accumulated a substantial deficit; we have a history of losses and
continued lack of profitability could lead to a cessation of operations.
To date, we have incurred significant losses. At June 30, 2006, we had an
accumulated deficit of approximately $159,829,000. We incurred net losses of
$13,553,000 in 2005, and $6,107,000 in the first six months of 2006. Losses
prior to 2004 resulted principally from significant costs associated with the
development of the Jetcruzer 500 and the acquisition of Mooney. We expect to
incur further losses in the future due to significant costs associated with
manufacturing our aircraft, maintaining the necessary regulatory approvals, and
marketing and selling our aircraft. There can be no assurance that sales of our
aircraft will generate sufficient revenues to fund our continuing operations,
that we will generate positive cash flow from our operations, or that we will
attain or thereafter sustain profitability in any future period. If we do not
begin to generate profits, we may be forced to cease or curtail our operations.
We will need additional financing; failure to obtain financing could lead to a
cessation or curtailment of our operations.
We have substantial liquidity needs in the operation of our business. Because
substantially all of our assets are encumbered and some of our existing debt
agreements contain restrictions against additional borrowing, the options
available to us for additional financing are limited. We will need to obtain
additional financing to continue the production of new aircraft and spare parts
and to develop the business in general. Failure to obtain such additional
financing would have a material adverse effect on our business and prospects and
could require that we severely limit or cease our operations. Additional
financing may not be available on acceptable terms or at all.
During the twelve months ended December 31, 2005 and the six months ended June
30, 2006, our stockholders loaned us $9,684,000 (the "2005 Stockholder Loans")
and $2,100,000 (the "2006 Stockholder Loans"), respectively. The terms of the
2006 Stockholder Loans were determined subsequent to June 30, 2006. The 2006
Stockholder Loans bear interest at the rate of 17.5% per annum and are
convertible in whole or in part, at the option of the lender, into shares of the
Company's common stock at any time on or after October 5, 2006, at a price
ranging from $0.30 to $0.40 per share. The terms of the 2005 Stockholder Loans
are in the process of being determined and may include an option to convert some
or all of the stockholder loans into equity. No interest has been recorded on
these loans. Therefore, any interest payable will increase our net loss and our
stockholders' deficit.
Regulatory uncertainty could result in additional costs or liabilities.
Our aircraft and our operations are also subject to the risk of modification,
suspension or revocation of any FAA certificate. A modification, suspension, or
revocation could occur if, in the FAA's judgment, compliance with airworthiness
or safety standards by us was in doubt. If the FAA suspended or revoked our type
or production certificate for an aircraft model, sales of that model would be
adversely affected or terminated. If, in the FAA's judgment, an unsafe condition
developed or was discovered after one or more of our aircraft had entered
service, the FAA could issue an Airworthiness Directive, which could result in a
requirement that we develop appropriate design changes at our expense. Foreign
authorities could impose similar obligations upon us as to aircraft within their
jurisdiction. Any or all of these occurrences could expose us to substantial
additional costs and liabilities.
11
Limited product line; fluctuations in sales of aircraft may result in periodic
material reductions in revenue and profitability.
If there is a downturn in the market for general aviation aircraft due to
economic, political or other reasons, we would not be able to rely on sales of
other products to offset the downturn. It is possible that sales of business
aircraft could decline in the future for reasons beyond our control.
Furthermore, if a potential purchaser is experiencing an economic downturn or is
for any other reason seeking to limit its capital expenditures, the high unit
selling price of a new aircraft may result in such potential purchaser deferring
its purchase or electing to purchase a pre-owned aircraft or a lower priced
aircraft. Further, since we intend to rely on the sale of a relatively small
number of high unit selling price aircraft to provide substantially all of its
revenue, small decreases in the number of aircraft delivered in any year may
have a material negative effect on the results of operations for that year. In
addition, small changes in the number and timing of deliveries of, and receipt
of payments on, new aircraft may have a material effect on our liquidity.
We face numerous competitors, many of whom have greater resources; competition
may improve or develop competitive products.
Our aircraft compete with other aircraft that have comparable characteristics
and capabilities. Many of our competitors, including Cirrus Design (Cirrus),
Columbia Corporation (Columbia), Textron Lycoming (Cessna Aircraft Company),
Raytheon Aircraft Company (Beechcraft) and New Piper Aircraft Corporation are
substantially larger in size and have greater financial, technical, marketing,
and other resources than we do. Certain of our actual and potential competitors
have greater financial and other resources that may allow them to modify
existing aircraft or develop alternative new aircraft that could compete with
our aircraft. Our ability to compete effectively may be adversely affected by
the ability of these competitors to devote greater resources to the sale and
marketing of their products than are available to us. Future technological
advances may result in competitive aircraft with improved characteristics and
capabilities that could adversely affect our business. Our aircraft may also
compete with used aircraft that become available in the resale market at prices
sufficiently lower to offset deficits in performance, if any, as compared to our
aircraft.
Reliance on single source suppliers; problems with supplies could reduce revenue
or increase costs.
We are dependent on certain suppliers of products in order to manufacture our
aircraft. Should our ability to obtain the requisite components be limited for
any lengthy period of time or the cost of the components increase, our ability
to produce and sell aircraft could be materially and adversely affected.
Securing acceptable pricing and terms from suppliers of the bankrupt MACorp has
been difficult because of financial difficulties caused by bankruptcy and damage
to the reputation of MACorp as a customer. In addition, the possible failure of
suppliers or subcontractors to meet our performance specifications, quality
standards or delivery standards or schedules could have a material adverse
effect on our operations. Moreover, our ability to significantly increase our
production rate could be limited by the ability or willingness of key suppliers
to increase their delivery rates; and, over time, the prices to obtain materials
and components may change and a number of suppliers may need to be replaced. Our
inability to obtain supplies to manufacture our products would have a material
adverse effect on our business prospects, operations and financial condition.
Insurance and product liability exposure increased premiums and damage awards
could increase costs.
Because the failure of an aircraft manufactured by us or any other mishap
involving such an aircraft may result in physical injury or death to the
occupants of the aircraft or others, we could be subject to lawsuits involving
product liability claims, which lawsuits may involve claims for substantial
sums. Although we have obtained product liability insurance, such insurance is
expensive and subject to various coverage exclusions and may not be obtainable
by us in the future on acceptable terms or at all. Further, should we become
involved in product liability litigation, the expenses and damages awarded could
be large, and the scope of any coverage may be inadequate. Moreover, in light of
our current financial situation, any judgment against us in excess of any
available insurance could have a material adverse effect on our available
working capital and could cause us to have to cease operations or seek
protection under federal bankruptcy laws, or otherwise. Increased insurance
costs and/or liability costs could require an increase in the price of our
aircraft and therefore could have a negative impact on sales.
12
Fluctuations in quarterly operating results may be caused by large unit prices.
We expect to derive a substantial portion of our revenues from the sale of a
relatively small number of aircraft. As a result, a small reduction in the
number of aircraft shipped in a quarter due to, for example, unanticipated
shipment re-scheduling or cancellations, supplier delays in the delivery of
component parts or unexpected manufacturing difficulties could have a material
and adverse effect on our financial position and results of operations for that
quarter.
Risks of international operations, including changes in tariffs and duties and
currency exchange losses, may increase costs.
We also intend to market and sell our aircraft to foreign customers.
Accordingly, we will be subject to all of the risks inherent in international
operations, including work stoppages, transportation delays and interruptions,
political instability or conflict between countries in which we may do business,
foreign currency fluctuations, economic disruptions, differences in
airworthiness and certification standards imposed by foreign authorities, the
imposition of tariffs and import and export controls, changes in governmental
policies (including United States trade policy) and other factors, including
other foreign laws and regulations, which could have an adverse effect on our
business. With respect to international sales that are denominated in U.S.
dollars, an increase in the value of the U.S. dollar relative to foreign
currencies can increase the effective price of, and reduce demand for, our
products relative to competitive products priced in the local currency. These
international trade factors may, under certain circumstances, materially and
adversely impact demand for our products or our ability to sell aircraft in
particular countries or deliver products in a timely manner or at a competitive
price, which in turn may have an adverse impact on our relationships with its
customers. In addition, foreign certification or equivalent approval is required
prior to importing an aircraft into a foreign country, and we may not receive
such certification or equivalent approval in any country. Our success will
depend in part upon our ability to obtain and maintain foreign certifications or
equivalent approvals and manage international marketing, sales and service
operations.
Dependence on key personnel; failure to hire or retain personnel could result in
a reduction of revenues and earnings.
The results of our operations will depend in large part on the skills and
efforts of our executive team and our skilled factory workers. Our future
success will depend to a significant extent on our ability to hire certain other
key employees and additional skilled factory workers on a timely basis.
Competition for highly skilled business, product development, technical and
other personnel is intense, and there can be no assurance that we will be
successful in recruiting new personnel or in retaining our existing personnel.
We will experience increased costs in order to retain and attract skilled
employees. Our failure to attract additional qualified employees on a timely
basis or to retain the services of key personnel would have a material adverse
effect on our operating results and financial condition.
Planned growth may be limited by constraints on human and financial resources.
We significantly expanded our operations in 2005 which placed a significant
strain on our limited personnel, financial and other resources. We continue to
develop the manufacturing capabilities of our Mooney subsidiary and to
manufacture Mooney aircraft. Our efforts to conduct manufacturing activities may
not be successful, and we may not be able to satisfy commercial scale production
requirements on a timely and cost-effective basis. We may not be able to find
qualified personnel or be able to manage this larger organization successfully.
We may also seek to acquire additional aircraft product lines that will place
additional demands on our limited resources.
13
Limitation on officers' and directors' liabilities under Delaware law may reduce
damages available for breach of duty by directors.
Pursuant to our certificate of incorporation, and as authorized under applicable
Delaware law, our directors and officers are not liable for monetary damages for
breach of fiduciary duty, except (i) in connection with a breach of the duty of
loyalty, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for dividend
payments or stock repurchases illegal under Delaware law or (iv) for any
transaction in which a director has derived an improper personal benefit. These
provisions may limit the ability of our stockholders to obtain damages from our
directors, either directly or on a derivative basis, for breach of fiduciary
duty.
Possibility of dilution arising from shares available for future sale may result
in lower stock prices.
Future sales of common stock by existing stockholders pursuant to Rule 144 under
the Securities Act of 1933, as amended (the "Securities Act"), or otherwise,
could have an adverse effect on the price of our securities. As of June 30,
2006, Mooney had 10,631,071 outstanding shares of Common Stock, plus loans
issued under various agreements convertible into shares of common stock. Sales
of common stock, or the possibility of such sales, in the public market may
adversely affect the market price of the securities offered hereby. During the
first seven months of 2006, one of our stockholders, in a series of
transactions, loaned us $3,700,000, which loans (together with accruing
interest) are convertible, in whole or in part, at the option of the holder,
anytime on or after October 5, 2006 into common stock at conversion prices
ranging from $0.30 to $0.40 per share. These loans were made by a single lender,
Alpha Capital Anstalt ("Alpha Capital"). In connection with a recent filing by
Alpha Capital, and three other stockholders owning 6,217,373 shares of common
stock, these four parties indicated a desire to effect a "going private"
transaction for Mooney. During 2005, our stockholders, in a series of
transactions, loaned us $9,684,000. The terms of these loans are in the process
of being determined and may include an option to convert some or all of the
stockholder loans into equity.
Our common stock trades on the OTC Bulletin Board, which may result in reduced
volume of trading and increased volatility in the market price of our common
stock.
Our common stock trades on the OTC Bulletin Board an exchange operated by
NASDAQ. Consequently, the liquidity of our securities is less than if it was
listed on an exchange, not only by the number of securities which can be bought
and sold, but also through delays in the timing of the market transactions,
reductions in the number and quality of security analysts' and the news media's
coverage of us, and volatility in the market price of our common stock
No dividends.
We have paid no dividends to our stockholders since our inception and do not
plan to pay dividends in the foreseeable future. We intend to reinvest earnings,
if any, in the development and expansion of our business.
Volatility of stock market.
The stock market from time to time experiences significant price and volume
fluctuations, some of which are unrelated to the operating performance of
particular companies. We believe that a number of factors can cause the price of
our common stock to fluctuate, perhaps substantially. These factors include,
among others:
o Announcements of financial results and other developments relating
to our business;
o Changes in the general state of the economy; and
o Changes in market analyst estimates and recommendations for our
common stock.
14
Item 3. Controls and Procedures
As required by SEC rules, we have evaluated the effectiveness of the design and
operation of the Company's disclosure controls and procedures at the end of the
period covered by this report. This evaluation was carried out under the
supervision and with the participation of its management, including the
principal executive officer and principal financial officer. Based on this
evaluation, the Company has concluded that the design and operation of our
disclosure controls and procedures are not effective. This determination was
made due to the following factors:
o the number of employees of the Company has increased from 168 at the
start of the 2003 fiscal year to 378 at the end of June 2006, and
o the corporate ERP system was replaced in 2005.
It is therefore the belief of the management of the Company that the internal
controls need to be reevaluated and updated to meet its current needs. However,
there is no evidence that any material misstatements occurred as a result of the
need to update its internal controls. The specific weakness found involved the
segregation of duties within the Company's finance department. Accordingly, the
Company began reorganizing the functions of the finance department during 2005
and will continue this process during 2006. In addition, the Company has
retained outside consultants with expertise in internal controls to assist with
the update and implementation of control procedures.
Disclosure controls and procedures are our controls and other procedures that
are designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the SEC's rules
and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed by us in the reports that we file under the Exchange Act is
accumulated and communicated to our management, including principal executive
officer and principal financial officer, as appropriate, to allow timely
decisions regarding required disclosure.
There was no change in the Company's internal control over financial reporting
during the second quarter that has materially affected the Company's internal
controls over financial reporting.
15
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
The company has the following legal matters pending.
On March 28, 2005, Milisa K. Riser, M.D., Administrator of the Estate of
Franklin M. Rizer, M.D. filed a complaint in the Court of Common Pleas of
Trumbull County in Warren, Ohio against Mooney Aerospace Group Limited, its
wholly-owned subsidiary, Mooney Airplane Company, Inc. and others. The plaintiff
has asserted claims of strict liability, negligence and breach of warranty and
is seeking recovery of alleged actual and punitive damages in connection with an
airplane crash in which Mr. Rizer died. The case is in the early stages of
discovery and while the Company believes that it has meritorious defenses, no
assurance can be given of a favorable outcome. In the event of an unfavorable
outcome, some of the damages may not be covered by insurance. If insurance
coverage is limited or not available or if the damages significantly exceed the
amount of insurance that is available, an unfavorable outcome would have a
material adverse effect on the Company's operating results and financial
condition.
A lawsuit is pending in the Circuit Court of Clinton County, Michigan; Chad
Collins and Colleen Denise Collins, Plaintiffs, v. Mooney Aircraft Corporation,
Mooney Airplane Company, Inc., et al., involving a breach of warranty and bodily
injury claim for an aircraft purchased in 2001, prior to the Mooney Airplane
Company Inc. asset purchase. Management believes that the likelihood of an
adverse judgment is remote.
Two consolidated lawsuits are pending in the Civil District court of the Parish
of New Orleans, LA.; Lester A. Bautista, et al., Plaintiffs, v. Mooney Airplane
Company, Inc. The case involves an aircraft purchased in 1992, prior to Mooney
Airplane Company, Inc.'s asset purchase. Management believes that the likelihood
of an adverse judgment is remote.
Two lawsuits are pending (i) in the U.S. District Court of the Southern District
of New York; Alfreda Smith Ovesen, Personal representative of Svend A. Ovesen
and Crucian International, Inc. v. Mitsubishi Heavy Industry Ltd. Et al., and
(ii) Alfreda Smith Ovesen, Personal representative of Svend A. Ovesen and
Crucian International, Inc. v. Mitsubishi Heavy Industry Ltd. involving an MU-2
purchased in 1972. The likelihood of an adverse judgment is remote.
A lawsuit entitled Advance Aerodynamics & Structures, Inc. et al., v. AVAQ
Group, Inc. and Paul S. Dopp was filed in the Western District of Texas, San
Antonio Division. The action alleges affirmative claims for declaratory relief
made by the company and two of its present or former officers against defendants
for alleged claims arising out of the acquisition of the assets of Mooney
Aircraft Corporation. Judgment was rendered denying all claims. Paul Dopp
subsequently filed pleadings in the Mooney Aircraft Corporation chapter 7
bankruptcy case in San Antonio alleging fraud by former management during the
bankruptcy proceedings. The court in a letter dated August 26, 2004, referred
the allegations of Mr. Dopp to the appropriate governmental agencies for
investigation. To date, there has been no communications regarding this matter
to Mooney by the governmental agencies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the twelve months ended December 31, 2005, our stockholders loaned us
$9,684,000 (the "2005 Stockholder Loans"). On August 9, 2006, the Company
entered into a definitive agreement with Alpha Capital Anstalt (the "Lender")
whereby the Company issued an unsecured promissory note to the Lender in the
principal amount of $600,000 (the "August Note"). The August Note was due and
payable on August 15, 2006. The Company was unable to repay the August Note on
the due date. As a result, the interest rate on the August Note increased from
the stated rate of 17.5% to 19.9% per annum and the August Note became
convertible, at the option of the Lender, into the Company's common stock at a
conversion price of $0.275 per share. In addition to the August Note, the Lender
previously provided other loans (the "Prior Notes") to the Company in a series
of transactions from January 2006 through July 2006, the principal of which
loans total $3,700,000 (including loans totaling $2,100,000 through June 30,
2006). The Prior Notes bear interest at 17.5% per annum and are convertible into
the Company's common stock, in whole or in part, at the option of the holder, at
any time on or after October 5, 2006, at a price ranging from $0.30 to $0.40 per
share. The Prior Notes are due and payable two years from the date of issuance
and are unsecured. Each of the August Note and the Prior Notes were issued
pursuant to an exemption under Section 4(2) of the Securities Act of 1933, as
amended, to a single accredited investor. The August Note has no registration
rights. The Prior Notes contain future registration rights. The terms of the
2005 Stockholder Loans are in the process of being determined and may include an
option to convert some or all of the loans into equity. No interest has been
recorded on the 2005 Stockholder Loans. Therefore, any interest payable will
increase our net loss and our stockholders' deficit.
16
Item 3. Defaults Upon Senior Securities
As of the date of the filing of this Form 10-QSB, the Company is in default of
approximately $39.6 million of indebtedness as follows:
(a) Under the terms of its debt agreement with Business Loan Express
("BLX") the Company is required to maintain a minimum current ratio
of at least 1.25 to 1. In addition, the Company's debt to equity
ratio cannot exceed 7 to 1. Although the Company is current on
payments of principal and interest, it is in default of the current
and debt to equity ratios. At June 30, 2006, outstanding principal
and accrued interest on the BLX note were $4.8 million and $0.1
million, respectively.
(b) At June 30, 2006, the Company was in default on the payment of a
$1.0 million non-interest bearing note payable to Libra Finance. The
note was due February 7, 2005.
(c) The Company was also in default on the payment of principal and
interest on the note payable to Guarantee & Finance that was due
April 5, 2005. At June 30, 2006, outstanding principal and accrued
interest on the Guaranty & Finance note were $1.0 million and $0.2
million, respectively.
(d) On March 7, 2005, the holders of the Company's 17.5% notes payable
called the notes for payment. The Company was unable to pay the
principal and interest then due. At June 30, 2006, principal and
accrued interest on the 17.5% notes were $4.0 million and $1.0
million, respectively.
(e) The Company is in default on the payment of principal and interest
on its secured debentures. At June 30, 2006, principal and accrued
interest on the secured debentures were $19.5 million and $3.4
million, respectively.
(f) As a result of cross default provisions, the Company was in default
of its 8% notes payable and revolving credit agreements. At June 30,
2006, outstanding principal and accrued interest under these
agreements totaled $9.3 million and $1.8 million, respectively.
(g) On August 9, 2006, the Company entered into a definitive agreement
with Alpha Capital Anstalt (the "Lender") whereby the Company issued
an unsecured promissory note to the Lender in the principal amount
of $600,000 (the "August Note"). The August Note was due and payable
on August 15, 2006. The Company was unable to repay the August Note
and the Company is now in default.
The Company is negotiating with its lenders to cure the defaults by
restructuring the terms of these loans.
Item 4. Submission of Matters to a Vote of Security Holders
None
17
Item 5. Other Information
1. Possible "Going Private" Transaction. On August 7, 2006, four investors
purporting to hold 7,185,385 shares of common stock and debt convertible into
5,727,373 shares of common stock filed a Form 13-D with the Securities and
Exchange Commission ("SEC"). These four investors, Alpha Capital
Aktiengesellschaft, Allen Holding & Finance, Ltd., Esquire Trade & Finance Inc.
and Tusk Investments Ltd. stated in the filing as follows:
"The filing persons, some of whom hold debt of the Issuer, have agreed to
cooperate in an effort to attempt to cause the Issuer to be privatized and
its indebtedness to be recapitalized. To effectuate such privatization and
recapitalization, the filing persons intend to conduct negotiations with
holders of the Issuer's outstanding indebtedness, some of whom are also
stockholders of the Issuer. If such negotiations are successful, the
filing persons expect that holders of more than 90% of the Issuer's
outstanding common stock would agree to exchange their common stock of the
Issuer for stock in a newly formed entity which would merge with and into
the Issuer, thereby effectuating the privatization. In connection with the
merger, if and when completed, the reporting persons expect that the
parties to the privatization would also agree to recapitalize their
indebtedness of the Issuer."
2. Unresolved Staff Comments. On May 12, 2005, the Company received a
comment letter from the staff of the Division of Corporation Finance of the
Securities and Exchange Commission in connection with its review of our Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2004. In July 2005
we responded to the staff's comments and filed an amended Form 10-KSB for the
fiscal year ended December 31, 2004.
On October 26, 2005, we received a second letter from the SEC informing us that
they had reviewed our Quarterly Report on Form 10-QSB for the period ended June
30, 2005 and our responses to their May 12, 2005 letter and had additional
comments. In December 2005 we responded to the comments included in the SEC's
second letter. On March 23, 2006 we received a third letter from the SEC
notifying us that they had reviewed our responses to their previous letter as
well as our Quarterly Report on Form 10-QSB for the period ended September 30,
2005. We responded to the SEC's third letter on May 23, 2006.
On June 13, 2006 we received a fourth letter from the SEC informing us that the
SEC's staff had reviewed our responses to their previous letter and had
additional comments regarding our 2004 financial statements.
The substance of the staff's unresolved comments is summarized as follows:
o In May 2004 we transferred our ownership interest in Mooney Airplane
Company ("MAC") to Allen Holding & Finance Ltd. ("AHF"). In December
2004 we re-acquired MAC from AHF. The staff asked us to provide them
with additional information regarding our accounting for the
transfer and re-acquisition of MAC.
o The staff asked for additional details regarding the 9,997,773
shares of common stock issued in connection with our emergence from
bankruptcy in December 2004 and the re-acquisition of MAC. The staff
has also asked for additional information regarding the $1,033,000
gain that resulted from liabilities that were discharged when we
emerged from bankruptcy.
The SEC requested that we restate the 2004 financial statements included in our
Form 10-KSB for the year ended December 31, 2005 with respect to the preceding
matters. We have restated our statement of operations for the year ended
December 31, 2004 and our balance sheets at December 31, 2004 and 2005 as a
result of the two matters discussed above and have submitted these and other
changes we propose to make to our 2005 Form 10-KSB to the SEC staff and are
awaiting their response. As a result of the restatement of our balance sheet at
December 31, 2005, additional paid-in capital decreased by $13,264,000 and our
accumulated deficit decreased by $13,264,000. There was no change in total
stockholders' deficiency.
18
We expect to file shortly a Form 10-KSB/A addressing these outstanding matters.
Based upon discussions with the SEC, we believe that the Form10-KSB/A to be
filed will address all remaining outstanding concerns expressed by the SEC in
these prior comment letters.
Item 6. Exhibits and Reports on Form 8-K.
The Exhibits listed in the Exhibit Index immediately preceding such Exhibits are
filed with or incorporated by reference in this report.
19
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MOONEY AEROSPACE GROUP, LTD.
Date: August 21, 2006 By: /s/ Gretchen L. Jahn
-------------------------------------
Gretchen L. Jahn
President and Chief Executive Officer
Date: August 21, 2006 By: /s/ Barry Hodkin
-------------------------------------
Barry Hodkin
Chief Financial Officer, Secretary and
Treasurer
20
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
31.1 Certification of the Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
31.2 Certification of the Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
32.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
32.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
21