Ichor (ICHR) - 2020 Q3 - Quarterly Report

PART I ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) The unaudited consolidated financial statements detail the company's financial position, operations, and cash flows Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in thousands) | Metric | September 25, 2020 | December 27, 2019 | | :-------------------------------- | :------------------- | :------------------ | | Total assets | $605,441 | $566,555 | | Total current assets | $326,200 | $276,947 | | Total liabilities | $350,774 | $345,139 | | Total shareholders' equity | $254,667 | $221,416 | - Total assets increased by $38.886 million (6.86%) from December 27, 2019, to September 25, 2020, primarily driven by increases in cash, accounts receivable, and inventories[9] Consolidated Statements of Operations Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | Three Months Ended Sep 25, 2020 | Three Months Ended Sep 27, 2019 | Nine Months Ended Sep 25, 2020 | Nine Months Ended Sep 27, 2019 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net sales | $227,678 | $154,456 | $669,270 | $431,482 | | Gross profit | $32,506 | $20,693 | $90,542 | $60,449 | | Operating income | $12,532 | $3,322 | $27,336 | $9,271 | | Net income | $10,548 | $923 | $20,758 | $2,777 | | Basic EPS | $0.46 | $0.04 | $0.91 | $0.12 | | Diluted EPS | $0.45 | $0.04 | $0.89 | $0.12 | - Net sales for the three months ended September 25, 2020, increased by 47.4% year-over-year, and net income surged by 1042.8% to $10.548 million[11] - For the nine months ended September 25, 2020, net sales grew by 55.1% year-over-year, and net income increased by 647.5% to $20.758 million[11] Consolidated Statements of Shareholders' Equity Shareholders' Equity Changes (in thousands) | Metric | September 25, 2020 | December 27, 2019 | | :-------------------------------- | :------------------- | :------------------ | | Total Shareholders' Equity | $254,667 | $221,416 | | Additional Paid-In Capital | $254,811 | $242,318 | | Retained Earnings | $91,432 | $70,674 | - Total shareholders' equity increased by $33.251 million from December 27, 2019, to September 25, 2020, primarily due to net income of $20.758 million and share-based compensation expense of $7.423 million[14] Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Nine Months Ended Sep 25, 2020 | Nine Months Ended Sep 27, 2019 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $(1,878) | $25,003 | | Net cash used in investing activities | $(8,291) | $(16,495) | | Net cash provided by (used in) financing activities | $28,476 | $(22,167) | | Net increase (decrease) in cash | $18,307 | $(13,659) | | Cash at end of period | $78,919 | $30,175 | - Cash at the end of the period increased significantly to $78.919 million as of September 25, 2020, from $30.175 million in the prior year, driven by financing activities[18] - Operating activities resulted in a net cash outflow of $1.878 million for the nine months ended September 25, 2020, a decrease from a $25.003 million inflow in the prior year, primarily due to changes in working capital[18][93] Note 1 – Basis of Presentation and Selected Significant Accounting Policies - The financial statements are prepared in accordance with U.S. GAAP, with certain information condensed or omitted as permitted for interim reporting[19] - The company uses a 52- or 53-week fiscal year ending on the last Friday in December; the third quarters of 2020 and 2019 were both 13 weeks[20] - Revenue is recognized when control of promised goods or services is transferred to customers, primarily for fluid delivery subsystems, weldments, and other components, generally upon delivery[22][24] - Adoption of ASU 2016-13 (Credit Losses) and ASU 2018-15 (Cloud Computing Arrangements) in Q1 2020 did not significantly impact financial statements, though $3.0 million in ERP implementation costs were capitalized[27][28] Note 2 – Inventories Inventories (in thousands) | Category | September 25, 2020 | December 27, 2019 | | :------------------------ | :------------------- | :------------------ | | Raw materials | $88,791 | $85,329 | | Work in process | $37,345 | $31,825 | | Finished goods | $23,471 | $17,700 | | Excess and obsolete adjustment | $(12,024) | $(7,817) | | Total inventories | $137,583 | $127,037 | - Total inventories increased by $10.546 million (8.3%) from December 27, 2019, to September 25, 2020, with a notable increase in the excess and obsolete adjustment[29] Note 3 – Property and Equipment and Other Noncurrent Assets Property and Equipment, Net (in thousands) | Category | September 25, 2020 | December 27, 2019 | | :-------------------------------- | :------------------- | :------------------ | | Total property and equipment, net | $44,574 | $44,541 | | Accumulated depreciation | $(35,373) | $(27,600) | | Construction-in-process | $4,828 | $3,760 | - Depreciation expense for the third quarter of 2020 was $3.0 million, up from $2.2 million in 2019; for the nine months, it was $8.0 million in 2020, up from $6.3 million in 2019[30] Capitalized Cloud Computing Implementation Costs (in thousands) | Metric | Amount | | :----------------------------------------- | :------- | | Capitalized costs as of December 27, 2019 | $0 | | Costs capitalized during the period | $3,042 | | Capitalized costs as of September 25, 2020 | $3,042 | Note 4 – Intangible Assets Definite-Lived Intangible Assets, Net (in thousands) | Category | September 25, 2020 | December 27, 2019 | | :---------------------- | :------------------- | :------------------ | | Trademarks | $1,212 | $1,940 | | Customer relationships | $31,891 | $40,365 | | Developed technology | $8,916 | $9,722 | | Total intangible assets | $42,019 | $52,027 | - Total definite-lived intangible assets, net, decreased by $10.008 million (19.2%) from December 27, 2019, to September 25, 2020, primarily due to amortization[32][34] Note 5 – Leases Lease Expense (in thousands) | Metric | Three Months Ended Sep 25, 2020 | Three Months Ended Sep 27, 2019 | Nine Months Ended Sep 25, 2020 | Nine Months Ended Sep 27, 2019 | | :------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Operating lease cost | $1,363 | $1,722 | $4,015 | $5,015 | - Operating lease costs decreased for both the three-month and nine-month periods year-over-year[34] Future Minimum Lease Payments (in thousands) | Year | Amount | | :------------------------ | :------- | | 2020, remaining | $1,409 | | 2021 | $4,929 | | 2022 | $4,149 | | 2023 | $1,179 | | 2024 | $243 | | Thereafter | $26 | | Total lease liabilities | $11,207 | - The weighted-average remaining lease term for operating leases is 2.5 years, with a weighted-average discount rate of 4.5% as of September 25, 2020[35] Note 6 – Income Taxes Income Tax Benefit and Effective Tax Rate | Metric | Three Months Ended Sep 25, 2020 | Three Months Ended Sep 27, 2019 | Nine Months Ended Sep 25, 2020 | Nine Months Ended Sep 27, 2019 | | :---------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Income tax benefit | $(310) | $(221) | $(363) | $(1,687) | | Effective income tax rate | -3.0% | -31.5% | -1.8% | -154.8% | - The CARES Act is expected to generate an additional income tax refund of approximately $1.0 million from NOL carryback provisions[38] - The effective tax rate for the three and nine months ended September 25, 2020, differs from the statutory rate due to foreign income taxes (including a Singapore tax holiday), stock option exercises, and return-to-provision adjustments[39] Note 7 – Employee Benefit Programs 401(k) Matching Contributions (in thousands) | Period | 2020 | 2019 | | :---------------------- | :----- | :----- | | Three Months Ended Sep | $500 | $400 | | Nine Months Ended Sep | $1,500 | $1,100 | - Matching contributions to the 401(k) plan increased for both the three-month and nine-month periods year-over-year[42] Note 8 – Long-Term Debt Long-Term Debt (in thousands) | Category | September 25, 2020 | December 27, 2019 | | :------------------------------------ | :------------------- | :------------------ | | Term loan | $155,312 | $161,875 | | Revolving credit facility | $49,162 | $19,162 | | Total principal amount of long-term debt | $204,474 | $181,037 | | Total long-term debt, net | $202,217 | $178,054 | | Current portion of long-term debt | $8,750 | $8,750 | - Total principal amount of long-term debt increased by $23.437 million (12.9%) from December 27, 2019, to September 25, 2020, primarily due to increased borrowings on the revolving credit facility[43] - The term loan and revolving credit facility bore interest at Eurodollar rates of 3.50% and 2.78%, respectively, as of September 25, 2020[44] Note 9 – Share‑Based Compensation Share-Based Compensation Expense (in thousands) | Period | 2020 | 2019 | | :---------------------- | :----- | :----- | | Three Months Ended Sep | $2,400 | $1,800 | | Nine Months Ended Sep | $7,400 | $4,600 | - Share-based compensation expense increased for both the three-month and nine-month periods year-over-year[47] Stock Option Activity (as of Sep 25, 2020) | Metric | Number of Stock Options | Weighted Average Exercise Price | | :-------------------------- | :---------------------- | :------------------------------ | | Outstanding | 1,479,543 (time vesting) + 65,908 (performance vesting) | $22.24 | | Exercisable | 652,976 (time vesting) + 65,908 (performance vesting) | $20.92 | Restricted Share Unit (RSU) Activity (as of Sep 25, 2020) | Metric | Number of RSUs | Weighted Average Grant Date Fair Value | | :------------------------ | :------------- | :------------------------------------- | | Unvested | 561,303 (time vesting) + 17,730 (performance vesting) | $23.84 | | Granted during period | 354,496 | $24.22 | Note 10 – Segment Information - The company operates in one operating segment, with key resources and performance assessed on a company-wide level[52] Net Sales by Geographic Area (in thousands) | Geographic Area | Three Months Ended Sep 25, 2020 | Three Months Ended Sep 27, 2019 | Nine Months Ended Sep 25, 2020 | Nine Months Ended Sep 27, 2019 | | :---------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | United States of America | $125,538 | $77,997 | $364,071 | $231,529 | | Singapore | $73,196 | $53,806 | $220,732 | $134,083 | | Europe | $18,191 | $13,225 | $51,686 | $38,115 | | Other | $10,753 | $9,428 | $32,781 | $27,755 | | Total net sales | $227,678 | $154,456 | $669,270 | $431,482 | - Sales in the U.S. and Singapore showed significant increases for both the three-month and nine-month periods year-over-year[53] Note 11 – Earnings per Share Earnings Per Share (EPS) Reconciliation | Metric | Three Months Ended Sep 25, 2020 | Three Months Ended Sep 27, 2019 | Nine Months Ended Sep 25, 2020 | Nine Months Ended Sep 27, 2019 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income | $10,548 | $923 | $20,758 | $2,777 | | Basic weighted average ordinary shares outstanding | 23,051,994 | 22,454,408 | 22,875,186 | 22,373,181 | | Diluted weighted average ordinary shares outstanding | 23,347,460 | 22,718,882 | 23,199,618 | 22,629,855 | | Basic EPS | $0.46 | $0.04 | $0.91 | $0.12 | | Diluted EPS | $0.45 | $0.04 | $0.89 | $0.12 | - Diluted EPS increased significantly from $0.04 to $0.45 for the three months ended September 25, 2020, and from $0.12 to $0.89 for the nine months ended September 25, 2020, reflecting strong net income growth[54] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses financial performance, operational results, COVID-19 impacts, and liquidity analysis Overview - Ichor Holdings, Ltd. is a leader in designing, engineering, and manufacturing critical fluid delivery subsystems for semiconductor capital equipment, including gas and chemical delivery subsystems, weldments, and precision machined components[57] - The company benefits from an industry trend where semiconductor OEMs increasingly outsource fluid delivery subsystem design and manufacturing to specialized suppliers[58] - Ichor has a global footprint with production facilities in Malaysia, Singapore, South Korea, and various U.S. states; its two largest customers are Lam Research and Applied Materials[59] COVID-19 Pandemic and Market Conditions Update - The COVID-19 pandemic has caused significant volatility and uncertainty, leading to temporary facility shutdowns and reduced factory capacity due to social distancing guidelines[63] - Increased direct costs for PPE, facility cleaning, layout changes, logistics, and labor, along with operating inefficiencies, have resulted in lower revenues and operating margins[63] - The company implemented a Business Continuity Plan (BCP) with measures such as providing PPE, temperature screening, social distancing, remote work for non-manufacturing employees, reduced business travel, and increased facility cleaning[64] Results of Operations Key Financial Performance (in thousands, except percentages) | Metric | Three Months Ended Sep 25, 2020 | Three Months Ended Sep 27, 2019 | Nine Months Ended Sep 25, 2020 | Nine Months Ended Sep 27, 2019 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net sales | $227,678 | $154,456 | $669,270 | $431,482 | | Gross profit | $32,506 | $20,693 | $90,542 | $60,449 | | Gross margin | 14.3% | 13.4% | 13.5% | 14.0% | | Operating income | $12,532 | $3,322 | $27,336 | $9,271 | | Net income | $10,548 | $923 | $20,758 | $2,777 | - Net sales increased by 47.4% for the three months and 55.1% for the nine months ended September 25, 2020, compared to the prior year, driven by increased demand in the global wafer fabrication equipment market and market share gains[69] - Gross margin improved by 90 basis points to 14.3% for the three months ended September 25, 2020, due to higher operating leverage and favorable product mix, despite increased COVID-19 related costs and facility closure expenses[71] - Operating income for the three months ended September 25, 2020, surged by 277.2% to $12.532 million, and for the nine months, it increased by 194.8% to $27.336 million[66] Net Sales Net Sales Growth (in thousands) | Period | 2020 Net Sales | 2019 Net Sales | Amount Change | % Change | | :---------------------- | :--------------- | :--------------- | :------------ | :--------- | | Three Months Ended Sep | $227,678 | $154,456 | $73,222 | 47.4% | | Nine Months Ended Sep | $669,270 | $431,482 | $237,788 | 55.1% | - U.S. sales increased by $47.5 million (60.9%) for the three months and $132.5 million (57.2%) for the nine months, while foreign sales increased by $25.7 million (47.7%) and $105.2 million (78.5%) respectively[69] Cost of Sales and Gross Profit Cost of Sales and Gross Profit (in thousands) | Metric | Three Months Ended Sep 25, 2020 | Three Months Ended Sep 27, 2019 | Nine Months Ended Sep 25, 2020 | Nine Months Ended Sep 27, 2019 | | :---------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Cost of sales | $195,172 | $133,763 | $578,728 | $371,033 | | Gross profit | $32,506 | $20,693 | $90,542 | $60,449 | | Gross margin | 14.3% | 13.4% | 13.5% | 14.0% | - Gross margin for the three months ended September 25, 2020, increased by 90 basis points to 14.3%, driven by higher operating leverage and favorable product mix, partially offset by COVID-19 related costs and Union City facility closure expenses[71] - Gross margin for the nine months ended September 25, 2020, decreased by 50 basis points to 13.5%, primarily due to increased COVID-19 related operating costs, a $1.4 million contract settlement loss, and $1.9 million in Union City facility closure costs (inventory write-off, severance, accelerated depreciation)[72] Research and Development Research and Development Expenses (in thousands) | Period | 2020 Amount | 2019 Amount | Amount Change | % Change | | :---------------------- | :------------ | :------------ | :------------ | :--------- | | Three Months Ended Sep | $3,269 | $2,987 | $282 | 9.4% | | Nine Months Ended Sep | $10,100 | $8,012 | $2,088 | 26.1% | - The increase in R&D expenses for the three months was mainly due to $0.4 million in new product development costs[73] - The increase for the nine months was primarily due to $1.8 million in employee-related expenses from increased engineering headcount, including a team acquired in Q2 2019[74] Selling, General, and Administrative Selling, General, and Administrative Expenses (in thousands) | Period | 2020 Amount | 2019 Amount | Amount Change | % Change | | :---------------------- | :------------ | :------------ | :------------ | :--------- | | Three Months Ended Sep | $13,367 | $11,048 | $2,319 | 21.0% | | Nine Months Ended Sep | $43,098 | $33,491 | $9,607 | 28.7% | - The increase for the three months was driven by $1.3 million in employee-related expenses (including $0.5 million in share-based compensation), $0.8 million in legal and professional fees, and $0.3 million in occupancy costs[75] - The increase for the nine months was primarily due to $1.8 million in executive transition costs, $5.6 million in employee-related expenses (including $2.5 million in share-based compensation), $1.7 million in legal and professional fees, and $0.9 million in occupancy costs, partially offset by a $0.7 million indemnification asset release in 2019[76] Amortization of Intangible Assets Amortization of Intangible Assets (in thousands) | Period | 2020 Amount | 2019 Amount | Amount Change | % Change | | :---------------------- | :------------ | :------------ | :------------ | :--------- | | Three Months Ended Sep | $3,338 | $3,336 | $2 | 0.1% | | Nine Months Ended Sep | $10,008 | $9,675 | $333 | 3.4% | - The increase in amortization expense for the nine months was primarily due to incremental amortization from developed technology assets purchased in Q2 2019[77] Interest Expense Interest Expense (in thousands) | Period | 2020 Amount | 2019 Amount | Amount Change | % Change | | :---------------------- | :------------ | :------------ | :------------ | :--------- | | Three Months Ended Sep | $2,052 | $2,663 | $(611) | -22.9% | | Nine Months Ended Sep | $6,728 | $8,193 | $(1,465) | -17.9% | - The decrease in interest expense for the three months was primarily due to a lower weighted average interest rate (from 4.83% to 3.37%), partially offset by a $14.4 million increase in average borrowed amount[78] - The decrease for the nine months was due to a lower weighted average interest rate (from 4.83% to 3.89%) and a $1.6 million decrease in average borrowed amount[79] Other Expense (Income), Net Other Expense (Income), Net (in thousands) | Period | 2020 Amount | 2019 Amount | Amount Change | % Change | | :---------------------- | :------------ | :------------ | :------------ | :--------- | | Three Months Ended Sep | $242 | $(43) | $285 | n/m | | Nine Months Ended Sep | $213 | $(12) | $225 | n/m | - The increase in other expense, net, was primarily due to foreign currency transactions as the U.S. dollar fell against local currencies (Singapore dollar, Malaysian ringgit, British pound, euro, and South Korean won) during Q3 2020[80] Income Tax Benefit Income Tax Benefit (in thousands) | Period | 2020 Amount | 2019 Amount | Amount Change | % Change | | :---------------------- | :------------ | :------------ | :------------ | :--------- | | Three Months Ended Sep | $(310) | $(221) | $(89) | 40.3% | | Nine Months Ended Sep | $(363) | $(1,687) | $1,324 | -78.5% | - The increase in income tax benefit for the three months was due to increased excess tax benefits from stock option exercises, partially offset by higher U.S. taxable income[81] - The decrease in income tax benefit for the nine months was primarily due to fewer tax reserve releases in 2020 compared to 2019 and increased U.S. taxable income, partially offset by increased excess tax benefits from stock option exercises[82] Non‑GAAP Results Non-GAAP Net Income and Diluted EPS (in thousands, except per share amounts) | Metric | Three Months Ended Sep 25, 2020 | Three Months Ended Sep 27, 2019 | Nine Months Ended Sep 25, 2020 | Nine Months Ended Sep 27, 2019 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | U.S. GAAP net income | $10,548 | $923 | $20,758 | $2,777 | | Non-GAAP net income | $14,581 | $6,748 | $39,208 | $17,417 | | U.S. GAAP diluted EPS | $0.45 | $0.04 | $0.89 | $0.12 | | Non-GAAP diluted EPS | $0.62 | $0.30 | $1.69 | $0.77 | - Non-GAAP adjustments include amortization of intangible assets, share-based compensation, other non-recurring expenses (ERP implementation, SOX compliance, acquisition-related, executive transition), contract settlement losses, facility shutdown costs, and related tax impacts[83][84][88] - Non-GAAP net income for the three months ended September 25, 2020, increased by 116.1% year-over-year, and for the nine months, it increased by 125.1%[84] Liquidity and Capital Resources - Cash balance increased by $18.3 million to $78.9 million as of September 25, 2020, from December 27, 2019[90] - The increase in cash was primarily due to $23.4 million in net proceeds from credit facilities and $5.0 million from share issuance under compensation plans, partially offset by $8.3 million in capital expenditures and $1.9 million cash used in operating activities[90] - Management believes current cash, revolving credit facility availability, and cash flows from operations will be sufficient to meet anticipated cash needs for at least the next 12 months, despite COVID-19 impacts[91] Cash Flow Analysis Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 25, 2020 | Nine Months Ended Sep 27, 2019 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Operating activities | $(1,878) | $25,003 | | Investing activities | $(8,291) | $(16,495) | | Financing activities | $28,476 | $(22,167) | | Net increase (decrease) in cash | $18,307 | $(13,659) | Operating Activities - Cash used in operating activities was $1.9 million for the nine months ended September 25, 2020, compared to $25.0 million provided in the prior year[92][93] - This shift was primarily due to a $48.9 million increase in net operating assets and liabilities, including a $23.7 million decrease in accounts payable, a $19.3 million increase in accounts receivable, and a $10.5 million increase in inventories[93] Investing Activities - Cash used in investing activities was $8.3 million for the nine months ended September 25, 2020, consisting entirely of capital expenditures[94] Financing Activities - Cash provided by financing activities was $28.5 million for the nine months ended September 25, 2020, primarily from $23.4 million in net proceeds from credit facilities and $5.0 million from share issuance under compensation plans[95] Critical Accounting Policies - The preparation of financial statements requires management to make estimates and assumptions that affect reported amounts, with significant estimates including inventory valuation, uncertain tax positions, fair value of stock options, and impairment analysis for intangible assets and goodwill[21][96] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company's exposure to market risks, primarily foreign currency exchange and interest rate fluctuations, is detailed Foreign Currency Exchange Risk - Substantially all sales and third-party supplier arrangements are in U.S. dollars, limiting material exchange rate fluctuations[98] - Increases in the U.S. dollar's value could negatively impact competitiveness, while decreases could lead foreign suppliers to raise prices[98] - Operating expenses denominated in foreign currencies are subject to fluctuations, but foreign currency transaction gains and losses have not been material, and no hedging transactions have been used[99] Interest Rate Risk - Total indebtedness was $204.5 million as of September 25, 2020, with $8.8 million due within 12 months[100] - The company does not engage in trading or speculative investments and has not used derivative financial instruments for interest rate risk management[101] - A hypothetical 1% interest rate change on outstanding debt would result in a $0.5 million change to interest expense for the third quarter of 2020, or $2.0 million on an annualized basis[101] ITEM 4. CONTROLS AND PROCEDURES The evaluation of disclosure controls and procedures confirms their effectiveness with no material changes reported Evaluation of Disclosure Controls and Procedures - As of September 25, 2020, the CEO and CFO concluded that the company's disclosure controls and procedures were effective, providing reasonable assurance of achieving control objectives[102] Changes in Internal Control Over Financial Reporting - There have been no changes in internal control over financial reporting during the nine months ended September 25, 2020, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[103] PART II—OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS This section confirms the absence of any material pending or threatened legal actions against the company - The company is not currently a party to any material pending or threatened litigation[104] ITEM 1A. RISK FACTORS This section refers readers to previously disclosed risk factors, noting no material changes have occurred - No material changes have occurred in the company's risk factors from those disclosed in its 2019 Annual Report and prior Quarterly Reports[105] - Past financial results are not reliable indicators of future performance, and historical trends should not be used to anticipate future results due to known and unknown risks and uncertainties[105] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section indicates that there were no unregistered sales of equity securities or use of proceeds to report - There were no unregistered sales of equity securities or use of proceeds to report[106] ITEM 3. DEFAULTS UPON SENIOR SECURITIES This section states that there were no defaults upon senior securities - There were no defaults upon senior securities[107] ITEM 4. MINE SAFETY DISCLOSURES This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[108] ITEM 5. OTHER INFORMATION This section states that there is no other information to report - There is no other information to report[109] ITEM 6. EXHIBITS This section lists the exhibits filed with the Form 10-Q, including certifications and Inline XBRL documents - Exhibits include certifications from the Principal Executive Officer (31.1*, 32.1**) and Principal Financial Officer (31.2*, 32.2**) as required by the Securities Exchange Act and Sarbanes-Oxley Act[110] - Inline XBRL documents (101.INS*, 101.SCH*, 101.CAL*, 101.DEF*, 101.LAB*, 101.PRE*) and the Cover Page Interactive Data File (104) are also filed[110] SIGNATURES SIGNATURES This section contains the signatures of the Chief Executive Officer and Chief Financial Officer, certifying the report - The report was signed on November 3, 2020, by Jeffrey S. Andreson, Chief Executive Officer, and Larry J. Sparks, Chief Financial Officer[111][113]