UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 (Mark One)

For the quarterly period ended December 31, 2014

OR

Commission File Number 000-17861  

UNILENS VISION INC.

(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code: (727) 544-2531 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    þ  Yes    ¨ No  

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

As of February 13, 2015 there were 1,750,832 outstanding shares of common stock.

UNILENS VISION INC.

FORM 10-Q

For the Quarterly Period Ended December 31, 2014

Unilens Vision Inc.

December 31, 2014 (Unaudited) and June 30, 2014

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

For Three and Six Months Ended December 31, 2014 and 2013

 (Unaudited) 

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

For Six Months Ended December 31, 2014 and 2013

(Unaudited)

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

(Unaudited)

Note 1 — Basis of Presentation and Consolidation

Basis of Presentation

Unilens Vision Inc. operates through our wholly-owned subsidiary, Unilens Corp. USA, located in Largo, Florida. The accompanying condensed consolidated financial statements (the “Financial Statements”) for the interim periods ended December 31, 2014 and 2013 (the “Interim Period”) are i) prepared on the basis of accounting principles generally accepted in the United States, ii) conform in all material respects with accounting principles generally accepted in Canada, and iii) are unaudited, but in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the financial position, operations, and changes in financial results of the Interim Period.  The Financial Statements are not necessarily indicative of the results to be expected for the full year.  The Financial Statements do not contain the detail or footnote disclosure concerning accounting policies and other matters which would be included in full year financial statements, and therefore should be read in conjunction with our audited financial statements for the year ended June 30, 2014. Additional information concerning us is contained in the Management Discussion and Analysis included in this quarterly report. 

Basis of Consolidation

These consolidated financial statements include the accounts of Unilens Vision Inc. and its wholly-owned subsidiary, Unilens Corp. USA and its wholly-owned subsidiary, Unilens Vision Sciences Inc. All significant intercompany transactions and balances have been eliminated in consolidation. 

Note 2 — Stock-Based Compensation, Stock Options and Stock

Stock-based payments are recorded using the fair value method of accounting for stock options. There was no   stock compensation expense attributable to stock options charged against income for the fiscal quarters ended December 31, 2014 and 2013, since no options were granted during such periods and all options outstanding at the beginning of such periods were fully vested.

Stock Option Plan and Stock Options

We have adopted a stock option plan (the “Stock Option Plan”).  The purpose of the Stock Option Plan is to advance the interests of the Company by providing directors, officers, employees and consultants with a financial incentive for the continued improvement in the performance of the Company and encouragement for them to remain with the Company.  The term of any option granted under the Stock Option Plan may not exceed 10 years.  The exercise price of each option must equal or exceed the market price of our stock as calculated on the date of grant. The maximum number of our common shares reserved for issuance under the Stock Option Plan cannot exceed 10% percent of our issued and outstanding common shares.  Options, in general, vest immediately except options granted to consultants performing investor relations activities vest at a minimum over a period of at least 12 months, 25% at the end of each three-month period.  No more than 5% of our issued and outstanding capital stock may be granted to any one individual in any twelve-month period and no more than 2% of our issued and outstanding capital stock may be granted to any one consultant in any twelve-month period.  

At the annual general meeting held on March 25, 2010, the stockholders approved the Unilens’ Incentive Stock Option Plan. The initial maximum number of shares reserved for option grants under the Stock Option Plan is 236,935.

The following table describes the number and the exercise price of options that have been granted, exercised, or cancelled under the Stock Option Plan approved on March 25, 2010 during the six month period ended December 31, 2014:

Unilens Vision Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
December 31, 2014

 (Unaudited) 

As of December 31, 2014 we have 140,000 options outstanding and an additional 96,935 options available for future grants under the existing Incentive Stock Option Plan.

There was no cash proceeds, related to options exercised during the six months ended December 31, 2014, as no options were exercised.

We use the Black-Scholes pricing model to estimate the fair value of stock-based awards. The expected volatilities are based on the historical volatility of our stock price. Historical data is used to estimate option exercises and employee terminations within the valuation model. The expected term of options granted is based on historical exercise patterns of employees and represents the period of time that options granted are expected to be outstanding. The risk-free interest rate for periods within the contractual life of the option is based on the U S Treasury yield curve in effect at the time of the grant. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

As of December 31, 2014 the aggregate intrinsic value of options outstanding and options exercisable was $296,800 based on the closing price of our common shares on December 31, 2014 of $6.95.

Note 3 — Income per Common Share

Basic income per common share is calculated by dividing the income for the period by the weighted-average number of common shares outstanding during the period.

Diluted income per common share is calculated using the treasury stock method.  Under the treasury stock method, the weighted average number of common shares outstanding used for the calculation of diluted income per share assumes, that the proceeds to be received on the exercise of dilutive stock options and warrants are used to repurchase common shares at the average market price during the period.

Unilens Vision Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
December 31, 2014

(Unaudited)

Note 4 — Inventories 

Note 5 — Supplemental Disclosure with Respect to Cash Flows

Unilens Vision Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
December 31, 2014

(Unaudited)

Note 6 — Revenue Information

All of our assets and operations are located in the United States in one business segment. Our revenues are derived from royalty income received from our exclusive agreement with Bausch + Lomb Incorporated (“Bausch + Lomb”), for the use of our patented multifocal designs and technology, and from sales from our specialty optical lens business, which manufactures and distributes optical products that use our proprietary design and manufacturing technology. Sales from our specialty optical lens business come from the following lens categories, for the three and six months ended December 31, 2014 and 2013:

(1) Certain sales from our specialty optical lens business have been reclassified to the current year reporting lens categories.

Note 7 — Term Loan and Line of Credit

On May 23, 2012, the Company closed on a new $3,500,000 5-year term loan facility and a $1,500,000 line of credit with Hancock Bank, which replaced the term loan facility and line of credit entered into with Regions Bank, for the January 20, 2010, Company common stock repurchase of 2,188,861 shares from its then largest stockholder for $3.15 per share.

On October 4, 2013, the Company funded a 618,522 common stock share repurchase through a $3,300,000 expansion and modification of the existing term loan and line of credit provided by Hancock Bank. The term loan facility is amortized over a longer seven-year period, and the line of credit is reduced to a maximum of $750,000. Both the term loan and line of credit bear interest at a floating rate of 30-day LIBOR plus 3.5%.

Additional costs related to the expansion of the Hancock Bank term loan facility and line of credit, were $55,535, this, along with remaining unamortized loan costs are being amortized over the life of the amended 7-year term loan facility. The minimum existing monthly principal payments under the Hancock Bank term loan facility are $68,075, plus accrued interest. In addition to monthly principal payments, there is an Excess Earnings Recapture Covenant which could require principal term loan principal prepayments by an amount equal to fifty percent of excess cash flow after taxes and dividends based on a Debt Service Coverage Ratio of 1.50 to 1.00.

Monthly interest only payments are due under the Hancock Bank line of credit, with the maximum borrowings at any time not to exceed the lesser of (i) $750,000 or (ii) a sum equal to 85% of Eligible royalty receivables, plus 75% of Eligible Accounts Receivables plus 50% of Eligible Raw Material and Finished Goods Inventory. The maximum borrowing amount under this line of credit facility at December 31, 2014 was $750,000. The line of credit is renewed annually and matures on February 1, 2017.

The term loan and the line of credit are secured by a security interest in favor of Hancock Bank in our inventory, accounts receivable, general intangibles, cash and principal United States patent. Under the term loan facility and the line of credit, the Company is required to meet customary covenants regarding, among other things, tangible net worth, debt service coverage ratio, dividend distributions and the requirement of lender consent for significant transactions such as mergers, acquisitions, dispositions and other financings.

On October 29^th 2014, the Company closed on a $300,000 5-year term loan with Hancock Bank. The proceeds will were used to finance a new piece of manufacturing equipment. Costs related to the term loan were $1,223. The term loan bears interest at a fixed rate of 4.25%, and the minimum monthly principal payment is $5,567 plus accrued interest. The term loan is secured by a security interest in favor of Hancock Bank on the new manufacturing equipment.

The following management discussion and analysis (“MDA”) provides information on the activities of Unilens Vision Inc. and should be read in conjunction with our quarterly condensed consolidated financial statements and notes thereto for the three and six months ended December 31, 2014 (the “Financial Statements”), as well as our Annual Report on Form 10-K for the fiscal year June 30, 2014, filed with the Securities and Exchange Commission.  The Financial Statements have been prepared in United States dollars and in conformity with United States generally accepted accounting principles (“US GAAP”). Unless otherwise indicated, all dollar amounts disclosed in this MDA are expressed in United States Dollars.

Operating results are not necessarily indicative of results that may occur in future periods. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in the forward-looking statements as a result of many factors including, but not limited to, those set forth under “Cautionary Statement About Forward-Looking Statements” and “Risk Factors” in Item 1A. included in our Annual Report on Form 10-K. All forward-looking statements included in this document are based on the information available to us on the date of this document and we assume no obligation to update any forward-looking statements contained in this Quarterly Report on Form 10-Q.

Overview

We license, manufacture, distribute and market specialty optical contact lens products using proprietary design and manufacturing technology. Our products are sold solely to eye care professionals, primarily in the United States, through in house and outside sales representatives and a network of distributors. Our lens products are marketed as a family of specialty vision correction products that can serve the majority of the population’s vision correction needs. Our specialty optical lens business is divided into four categories: (i) disposable lenses; (ii) custom soft lenses; (iii) gas permeable lenses; and (iv) replacement and other lenses. During both the three and six month periods ended December 31, 2014 the Company’s C-Vue disposable products accounted for approximately 51% of sales.

Sales of our specialty optical lens products accounted  for the largest percentage of our total revenues, constituting approximately 69%  and 71% while royalty income derived from our exclusive license of our patented multifocal design to Bausch + Lomb was approximately 31% and 29% during the three and six months ended December 31, 2014.

The aging of the U.S. population indicates that specialty contact lenses will continue to be the fastest growing segment of the contact lens market. Specialty contact lenses include multifocal, toric, toric multifocal, and cosmetic lenses. We believe that our specialty disposable and custom soft lenses will grow over time due to such market demographics favoring specialty lenses and our patented multifocal technology.

We believe such market demographics will continue to drive our revenue and earnings. In February 2013, we announced the launch of our than new silicone hydrogel disposable C-Vue® HydraVUE™ Multifocal contact lens for monthly replacement. The new product continues to incorporate our highly developed, world-class, patented multifocal design technology in a silicone hydrogel material, which offers the benefit of higher oxygen transmissibility for better eye health. In June 2014, we announced our latest silicone hydrogel C-Vue® ADDvantage™ Multifocal for Presbyopia for monthly replacement. This new product incorporates our highly advanced, next-generation multifocal contact lens design technology, which allows for ease of fit by providing a consistent near ADD power across all power profiles, ultimately resulting in clear vision for presbyopes at all distances. The lens is also thinner and more rounded at the edges for added comfort.  We expect sales from the C-Vue ADDvantage multifocal will steadily increase during the current fiscal year and beyond. In January 2011, we launched our C-VUE Advanced® HydraVUE™ line of silicone hydrogel custom contact lenses for monthly replacement. These lenses are completely customizable and feature a risk-free trial program.  Sales of this lens have grown steadily during the 2012 thru 2014 fiscal years.

A significant portion of our net income is derived from our exclusive license with Bausch + Lomb and such royalty income is a major component of our profitability. In April 2013, we announced that we had extended our license agreement with Bausch + Lomb. The amended agreement continues to cover the exclusive worldwide license for our multifocal technology and in addition grants Bausch + Lomb an exclusive worldwide license for our new multifocal technology.  Under the terms of the arrangement, existing royalty rates will remain in effect and will apply for both technologies. In October 2013, Bausch + Lomb introduced the PureVision® 2 for Presbyopia in the U.S., after its earlier introduction in certain European markets.  The new addition to the PureVision portfolio incorporates Bausch + Lomb’s own innovative lens technology, using certain licensed elements of our next generation technology. We expect that this new contact lens offering by Bausch + Lomb will help grow our future royalty income. Bausch + Lomb currently sell the Soflens Multi-Focal, the PureVision Multi-Focal, the PureVision 2 Multi-Focal and the Biotrue® ONEday for Presbyopia under our license agreement. However, there can be no assurance, that such royalty income from Bausch + Lomb will grow or that Bausch + Lomb will continue to sell products in the future utilizing our technology.

The contact lens market is highly competitive.  We compete with industry leaders, such as Vistakon, Inc. a unit of Johnson and Johnson Vision Care, Inc., Bausch + Lomb, a unit of Valeant Pharmaceuticals International Inc., Alcon Laboratories, Inc., a division of Novartis AG, and Cooper Vision, Inc. a unit of Cooper Vision Companies, Inc.  Our ability to compete successfully is dependent in part on eye care professionals’ perceptions of product quality, product development, technical innovation, and price. 

We have a supply agreement with one supplier for the manufacture of our molded C-Vue multifocal lens. This agreement was amended in February 2013 to include silicone hydrogel multifocal lenses. Together these lenses account for a significant portion of our sales (approximately 44% and during both the 2015 first quarter and six months). The agreement is renewable from year to year and is terminable pursuant to customary termination clauses. Although to date the supplier has met our requirements, there can be no assurance that it will continue to meet its obligations under our agreement or as to any renewal of our supply agreement.

Second Quarter Highlights

·         Sales for the second quarter of fiscal 2015 were $1.6 million, 9.2% higher when compared to the second quarter of fiscal 2014. Disposal lens sales were up 7.8%, while the custom soft lens sales category increased 17.8%.

·         Royalty revenue improved over last year and for the fifth quarter in a row, showing a 17.0% increase compared to the second quarter of fiscal 2014, resulting in a total revenue increase of 11.5% to $2.2 million.

·         Operating expenses increased 17.7% compared to the second quarter of fiscal 2014, primarily due to increases in sales and marketing expenses associated with the transition to an outside sales-based organization and increases in administration expenses. 

·         Interest expense was down 8.9% compared to the second quarter of fiscal 2014, as we cycle against higher debt levels from the stock repurchase in early October 2013.

·         Operating income increased 11.6% compared to the second quarter of fiscal 2014.

·         Earnings per share were $0.14 compared to $0.12 in the second quarter of fiscal 2014 on 1% higher shares from the effect of dilutive options.

·         Paid our 33^nd consecutive quarterly dividend, at $0.045 per share in November 2014. On February 2, 2015 we declared our 34^th consecutive quarterly dividend, at an annual rate of $0.18 per share or $0.045 per share quarterly, a dividend yield of 2.4% based on the January month end closing price of $7.46.

Results of Operations

The following table sets forth, for the periods indicated, certain data derived from our Condensed Consolidated Statements of Income and Changes in Accumulated Deficit and certain of such data expressed as a percentage of total revenues:

The following table sets forth, for the periods indicated, certain data derived from our Condensed Consolidated Statements of Income and Changes in Accumulated Deficit and certain of such data expressed as a percentage of sales:

Second Quarter

During the three months ended December 31, 2014 (the “Current Quarter”) we earned income before tax of $370,249 compared to income before tax of $318,649 for the three months ended December 31, 2013 (the “Prior Quarter”).  The increase in income before tax during the Current Quarter of $51,600 was primarily from, (i) an increase in gross margin of $71,752, primarily from higher margin sales during the quarter  (ii) excluding cost of sales, an increase in expenses of $128,124 as described below, (iii) an decrease in other items primarily interest expense, and other income of $8,258 and (iv) an increase in royalty income from Bausch + Lomb of $99,714 to $686,374 in the Current Quarter as compared to $586,660 in the Prior Quarter, the fifth consecutive quarterly increase compared to last year.

After recording income tax expense of $119,946, we had net income of $250,303 or $0.14 per diluted share for the Current Quarter. In comparison, in the Prior Quarter we had net income of $207,419 or $0.12 per diluted share after recording income tax expense of $111,230. The number of diluted shares for the Current Quarter was 1,795,620, 1% more shares compared to 1,777,724 in the Prior Quarter due to the effect of dilutive options.

Sales during the Current Quarter were $1,561,269 an increase of $131,227, as compared to sales of $1,430,042 during the Prior Quarter. The disposable lens category increased by 7.8% as sales of our newest silicone hydrogel C-Vue® ADDvantage™ Multifocal for Presbyopia, which we launched in June 2014 along with our silicone hydrogel disposable C-Vue® HydraVUE™ Multifocal lens launched in March 2013 continued to stabilize and grow the category, offsetting the decrease in sales of our older C-Vue disposable multifocal lenses, which continue to be affected by competition from newer competitor product offerings and promotional programs. We believe sales of our new C-Vue ADDvantage Multifocal lens will continue to increase sales in this category. Our custom soft lens category increased by 17.8%, primarily due to increased demand for our C-Vue Advanced^® HydraVUE™ line of silicone hydrogel custom contact lenses for monthly replacement. Our  gas permeable lens category showed a small increase of 2.5% but is expected to continue to decline with the overall decline in gas permeable fits in the contact lens industry. The replacement and other lens category decreased as expected by 22.8% due to the expected decline in product lines that are nearing the end of their life cycle. 

Gross margin was up 1.6% at 37.3% in the Current Quarter compared to 35.7% in the Prior Quarter due to manufacturing improvements implemented just over a year ago, product mix and a one-time manufacturing repair cost in the Prior Quarter.

During the Current Quarter, as compared to the Prior Quarter, expenses increased 17.7% or $128,124. As a percentage of sales, expenses increased 4.0%, to 54.6% compared to 50.6% in the Prior Quarter. Administrative expenses increased $18,223, primarily from expenses associated with our OTCQX marketplace listing and investor relations activities. Sales and marketing expenses increased $110,774 including approximately $35,000 of one-time restructuring expenses primarily due to a realignment of our sales organization from inside telesales to primarily an outside sales based organisation, as well as from higher trade show and travel expenses supporting the recent launch of our C-Vue ADDvantage^TM Multifocal . Research and development expenses were down slightly during the Current Quarter, as compared to the Prior Quarter.

We record income tax and income taxes payable at the statutory rates. During the Current Quarter and the Prior Quarter we recorded income tax expense of $119,946 and $111,230, respectively. The effective tax rate for the Current Quarter and Prior Quarter was 32.4% and 34.9%, respectively

Six Months

During the six months ended December 31, 2014 (the “Current Year”) we earned income before tax of $773,402 compared to income before tax of $628,257 for the six months ended December 31, 2013 (the “Prior Year”).  The increase in income before tax during the Current Year of $145,145 was primarily from (i) an increase in gross margin of $107,169 is primarily from higher margin sales in the Current Year and from the effects of a one-time manufacturing repair cost during the second quarter of the Prior Year (ii) excluding cost of sales, an increase in expenses of $169,022 as described below, and (iii) an increase in other items primarily interest expense, and other income of 19,356 and (iv) an increase in royalty income from Bausch + Lomb of $226,354 to $1,292,628 in the Current Year as compared to $1,066,274 in the Prior Year.

After recording income tax expense of $253,041, we had net income of $520,361 or $0.29 per diluted share for the Current Year. In comparison, in the Prior Year we had net income of $421,980 or $0.20 per diluted share after recording income tax expense of $206,277. The number of diluted shares for the Current Year was 1,792,979, 14% less shares when compared to 2,073,539 in the Prior Year, which had only one quarter of lower shares after the 618,522 common stock repurchase in October 2013.

During the Current Year, as compared to the Prior Year, expenses increased 11.4% or $169,022. Administrative expenses increased $36,250, primarily from expenses associated with our OTCQX marketplace listing, investor relations activities and some increases in payroll and related expenses and outside consulting fees. Sales and marketing expenses increased $133,403 primarily due to costs related to our restructuring to an outside sales based organization, costs related to participation at additional trade shows, the launch of our new C-Vue ADDvantage™  Multifocal during the first quarter and from increases in payroll and related expenses, in part due to additional personnel. Research and development expenses decreased slightly during the Current Year, as compared to the Prior Year.

We record income tax and income taxes payable at the statutory rates. During the Current Year and the Prior Year we recorded income tax expense of $253,041 and $206,277, respectively. The effective tax rate for the Current Year and Prior Year was 32.7% and 32.8%, respectively.

Liquidity and Capital Resources

Cash and cash equivalents were $71,700 at December 31, 2014 compared to $ 98,790 at June 30, 2014.  The following is a summary of the change in our cash and cash equivalents:

As of December 31, 2014, we had working capital of $130,702 representing a decrease of $122,479 from our working capital at June 30, 2014. The decrease in working capital was primarily due to the decrease in cash and the increase in our line of credit borrowings primarily used to support increases in inventory and other receivables and decreases in accounts payable, accrued expenses and deferred income.

During the six months ended December 31, 2014, we generated $260,442 positive cash from operations representing a decrease of $203,756 from $464,198 generated during the Prior Year. The decrease was primarily from changes in income taxes payable and deferred income taxes.

Investing activities for the Current Year were for the purchase of capital additions. Cash used for these capital additions was $337,522, an increase of $255,359 from $82,163 cash capital additions in the Prior Year. Total capital additions in the Current Year, are primarily for the purchase of new machinery equipment. Total capital additions in the Prior Year, including non-cash additions of $42,335 are for manufacturing equipment, the web site shopping cart project and capitalized process improvement and leasehold improvements.

Financing activities during the Current Year consisted of the addition of a $300,000, 4.25% fixed rate 5-year term loan used to purchase new manufacturing equipment,  principal repayments of $417,435 on the term loan facilities and $325,000 of borrowings on the line of credit primarily to support the purchase of additional promotional cabinets, inventory, income tax payments and the timing of accounts payable, compared to term loan repayments of $311,150 on the term loan facility, and line of credit repayments of $36 in the Prior Year. In addition, financing activities in the Current Year and Prior Year include payments of $157,575 and 185,409, respectively for dividends to our stockholders. Dividends in the Current Year were lower because of fewer shares outstanding due to the common stock repurchase a little over a year ago. There was $275,000 of cash income taxes paid during the Current Year and $209,000 paid in the Prior Year. In addition, an income tax refund was received during the second quarter of last year for $214,963.

Critical Accounting Policies & Estimates

This Management’s Discussion and Analysis is based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make certain estimates and apply judgment. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the consolidated financial statements are prepared. On a regular basis, we review our accounting policies and how they are applied and disclosed in our consolidated financial statements.  While we believe the historical experience, current trends and other factors considered, support the preparation of our consolidated financial statements in conformity with generally accepted accounting principles, actual results could differ from our estimates, and such differences could be material.

There have been no changes to our critical accounting policies during the first six months of fiscal 2015.

For a further discussion of the judgments we make in applying our accounting policies, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our 2014 Form 10-K.

Our market risks in the normal course of business are related to changes in interest rates, which at December 31, 2014 are similar to those disclosed in the 2014 Annual Report on Form 10-K.

In accordance with Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934 (the “Exchange Act”), our management, under the supervision of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(f) under the Exchange Act) as of the end of the period covered by this Quarterly Report.  Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2014.

There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act) that occurred during the period covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

None

There have been no material changes to the risk factors set forth under Part I, Item 1A of our 2014 Annual Report on Form 10-K.

None

None

None

None 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.