What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2022-03-25 compared with 2021-03-29 · 16 added, 491 removed, 8 unchanged (98% of the section changed)

MARKET FOR REGISTRANT’S

COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market for Our Common Stock

Our common stock is

listed on the NYSE American under the symbol “AIRI.”

On March 19, 2021,

there were 229 stockholders of record of our common stock.

The number of record holders does not include persons who held our Common

Stock in nominee or “street name”

accounts through brokers.

Securities Authorized for Issuance Under Equity Compensation

The following table

summarizes shares of our Common Stock to be issued upon exercise of options and warrants, the weighted-average exercise price of

outstanding options and warrants and options available for future issuance pursuant to our equity compensation plans as of December

Our common stock is listed

on the NYSE American under the symbol “AIRI.”

On March 21, 2022, there were

223 stockholders of record of our common stock.

The number of record holders does not include persons who held our Common Stock in nominee

or “street name” accounts through brokers.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table summarizes

shares of our Common Stock to be issued upon exercise of options and warrants, the weighted-average exercise price of outstanding options

and warrants and options available for future issuance pursuant to our equity compensation plans as of December 31, 2021:

Plan Category

3 unchanged sentences

Recent Sales of Unregistered Equity Securities

Except as previously

reported in our periodic reports filed under the Exchange Act, we did not issue any unregistered equity securities during the fiscal

year ended December 31, 2020.

Except as previously reported

in our periodic reports filed under the Exchange Act, we did not issue any unregistered equity securities during the fiscal year ended

December 31, 2021.

Purchases of Our Equity Securities

No repurchases of our

common stock were made during the fiscal year ended December 31, 2020.

SELECTED FINANCIAL DATA

No repurchases of our common

stock were made during the fiscal year ended December 31, 2021.

Not required.

MANAGEMENT’S DISCUSSION

AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

The following discussion

of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements

for the years ended December 31, 2020 and 2019 and the notes to those statements included elsewhere in this report.

This discussion

contains forward-looking statements that involve risks and uncertainties.

You should specifically consider the various risk factors

identified in this report that could cause actual results to differ materially from those anticipated in these forward-looking

Business Overview

AIM became a public

company in 2005 and we are an aerospace company operating primarily in the defense industry.

Our Complex Machining segment manufactures

structural parts and assemblies that focus on flight safety, including landing gear, arresting gear, engine mounts, flight controls,

throttle quadrants, and other components.

Our Turbine Engine Components segment makes components and provides services for jet

engines and ground-power turbines.

Our products are currently deployed on a wide range of high-profile military and commercial

aircraft including the Sikorsky UH-60 Blackhawk, Lockheed Martin F-35 Joint Strike Fighter, Northrop Grumman E2D Hawkeye, the US

Navy F-18 and USAF F-16 fighter aircraft, Boeing 777 commercial airliners.

Our Turbine Engine segment makes components for jet

engines that are used on the USAF F-15 and F-16, the Airbus A-330 and the Boeing 777, in addition to a number of ground-power turbine

applications.

The aerospace market

is highly competitive in both the defense and commercial sectors and we face intense competition in all areas of our business.

Nearly all of our revenues are derived by producing products to customer specifications after being awarded a contract through

a competitive bidding process.

As the commercial aerospace and defense industries continue to consolidate and major contractors

seek to streamline supply chains by buying more complete sub-assemblies from fewer suppliers, we have sought to remain competitive

not only by providing cost-effective world class service but also by increasing our ability to produce more complex and complete

assemblies for our customers.

We are currently focused

on positioning our business to obtain profitability, achieve positive cash flow and we remain resolute on meeting customers’

We believe that an unyielding focus on our customers will allow us to execute on our existing backlog in a timely fashion.

In 2018 and 2019, we consolidated the operations of our Complex Machining segment in our main campus located in Bay Shore, New

In 2020, in order to take advantage of the long-term growth opportunities we see in our markets, we made significant capital

investments in new equipment.

Additionally, we expanded our operations and manufacturing cells located in our Connecticut facility

where our Turbine Engine segment is located.

We believe these investments will increase the volume and efficiency of production,

increase the size of product we can make and allow us to offer additional services to our customers.

We are pleased with the positive

responses received from our customers to date.

Our ability to operate

profitably is determined by our ability to win new contracts and renewals of existing contracts, and then fulfill these contracts

on a timely basis at costs that enable us to generate a profit based upon the agreed upon contract price.

Winning a contract generally

requires that we submit a bid containing a fixed price for the product or products covered by the contract for an agreed upon period

Thus, when submitting bids, we are required to estimate our future costs of production and, since we often rely upon subcontractors,

the prices we can obtain from our subcontractors.

While our revenues

are largely determined by the number of contracts we are awarded, the volume of product delivered and price of product under each

contract, our costs are determined by a number of factors.

The principal factors impacting our costs are the cost of materials

and supplies, labor, financing and the efficiency at which we can produce our products.

The cost of materials used in the aerospace

industry is highly volatile.

In addition, the market for the skilled labor we require to operate our plants is highly competitive.

The profit margin of the various products we sell varies based upon a number of factors, including the complexity of the product,

the intensity of the competition for such product and, in some cases, the ability to deliver replacement parts on short notice.

Thus, in assessing our performance from one period to another, a reader must understand that changes in profit margin can be the

result of shifts in the mix of products sold.

Our operations have a large percentage of fixed factory overhead.

As a result, our

profit margins are also highly variable with sales volumes as under-absorption of factory overhead decreases profits.

A very large percentage

of the products we produce are used on military as opposed to civilian aircraft.

These products can be replacements for aircraft

already in the fleet of the armed services or for the production of new aircraft.

Reductions to the Defense Department budget and

decreased usage of aircraft reduces the demand for both new production and replacement spares.

Recent increases in Defense Department

spending have increased orders for our products.

Reductions to the Defense Department budget or decreased usage of aircraft reduces

the demand for both new production and replacement spares and could adversely impact our business and our revenues.

We are focusing

greater efforts on the civilian aircraft market though we still remain dependent upon the military for an overwhelming portion

of our revenues.

On March 11, 2020,

the World Health Organization announced that infections caused by the coronavirus disease of 2019 (“COVID-19”) had

become pandemic, and on March 13, 2020, the U.S.

President announced a national emergency relating to the disease.

National, state

and local authorities have adopted various regulations and orders, including mandates on the number of people that may gather in

one location and closing non-essential businesses.

To date, we have been deemed an essential business and have not curtailed our

The measures adopted

by various governments and agencies, as well as the decision by many individuals and businesses to voluntarily shut down or self-quarantine,

had and are expected to continue to have serious adverse impacts on domestic and foreign economies of uncertain severity and duration.

The effectiveness of economic stabilization efforts adopted by governments and their willingness to adopt further measures is uncertain.

The overall economic impact of the COVID-19 pandemic has been highly negative to the general economy and has been particularly

negative on the commercial travel industry and commercial aerospace industries.

In accordance with

the Department of Defense guidance issued in March 2020 designating the Defense Industrial Base as a critical infrastructure workforce,

our facilities have continued to operate in support of essential products and services required to meet national security commitments

Government and the U.S.

military, however, facility closures or work slowdowns or temporary stoppages could occur.

Although our facilities are open, during portions of 2020 we were unable to operate at full capacity or achieve high levels of

productivity due to the implementation of enhanced safety procedures, increased employee absenteeism and intermittent closings

of other businesses that supply goods or services to us.

We implemented procedures to promote employee safety including more frequent

and enhanced cleaning of our machines and adjusted schedules and work-flows to support physical distancing.

This resulted in increased

operating costs to our business.

As we enter into fiscal

2021, operating conditions have substantially returned to normal;

however, our Company, employees, suppliers and customers, and

our global community continue to face challenges and we cannot predict how this dynamic situation will evolve or the impact it

Throughout 2020, many of our suppliers were forced to reduce staffing or temporarily close their facilities due to

COVID-19, which impacted our delivery schedules.

We cannot predict what future impacts will occur, particularly if new variants

of Covid-19 result in a substantial increase in new cases and governments elect to reimpose strict safety measures.

The future impact

of COVID-19 on our business is difficult to predict as the course of the pandemic, the effectiveness of health measures, and the

impact and continuation of ongoing economic stabilization efforts are uncertain and government assistance payments may not provide

enough funding to support current spending levels.

We did not qualify for any significant new government benefits in the recently

enacted American Rescue Plan Act of 2021 and do not expect to qualify for any significant new government benefits that might be

We follow Financial

Accounting Standards Board (“FASB”) ASC 280, “Segment Reporting”

(“ASC 280”), which establishes

standards for reporting information about operating segments in annual and interim financial statements, ASC 280 requires that

companies report financial and descriptive information about their reportable segments based on a management approach.

also establishes standards for related disclosures about products and services, geographic areas and major customers.

We currently divide

our operations into two operating segments:

Complex Machining and Turbine Engine Components.

Along with our operating subsidiaries,

we report the results of our corporate office as an independent segment.

The accounting policies

of our segments are the same as those described in the Summary of Significant Accounting Policies.

We evaluate performance based

on revenue, gross profit contribution and assets employed.

RESULTS OF OPERATIONS-CONTINUING OPERATIONS

Years ended December 31, 2020 and 2019:

For purposes of the

following discussion of our selected financial information and operating results, we have presented our financial information based

on our continuing operations unless otherwise noted.

Selected Financial Information:

Cost of sales

Operating expenses and interest and financing costs

Loss on abandonment of leases

Other income, net

Forgiveness of notes payable - SBA Loan

Provision for (benefit from) income taxes

Income (Loss) from continuing operations

$ (2,598,000 )

Balance Sheet Data:

Cash and cash equivalents

Working capital

Total stockholders’

The following sets forth the results

of operations for each of our segments individually and on a consolidated basis for the periods indicated:

Year Ended December 31,

COMPLEX MACHINING

Pre Tax Income from continuing operations

TURBINE ENGINE COMPONENTS

Pre Tax Loss from continuing operations

(Benefit from) provision for Income Taxes

Loss from Discontinued Operations, net of taxes

Net Income (Loss)

Consolidated net sales

for the year ended December 31, 2020 were $50,097,000, a decrease of $4,476,000, or 8.2%, compared with $54,573,000 for the year

ended December 31, 2019.

Net sales of our Complex Machining segment were $44,659,000, a decrease of $3,567,000, or 7.4%, from

$48,226,000 in the prior year.

Net sales in our Turbine Engine Components segment were $5,438,000, a decrease of $909,000 or 14.3%,

compared with $6,347,000 for the year ended December 31, 2019.

These decreases were directly attributable to the negative business

impacts caused by COVID-19, which significantly reduced our ability to ship finished product to end-customers.

While we were able

to continue certain production processes in our own facility, our ability to have our product further processed by subcontractors

was severely impacted.

This resulted in an increase in partially finished product remaining in Work in Process.

This situation

caused our inventory to increase.

These supply chain interruptions abated somewhat later in the year, but remain a challenge.

As indicated in the

table below, three customers represented 73.9% and 76.0% of total sales for the years ended December 31, 2020 and 2019, respectively.

Percentage of Sales

Goodrich Landing Gear Systems

Sikorsky Aircraft

* Customer was less than 10% of sales in 2019

** Customer was less than 10% of sales in 2020

As indicated in the

table below, three customers represented 80.3% and 67.8% of gross accounts receivable at December 31, 2020 and 2019, respectively.

Percentage of Receivables

Goodrich Landing Gear Systems

United States Department of Defense

Gross Profit:

Consolidated gross

profit from operations for the year ended December 31, 2020 was $6,512,000, a decrease of $2,630,000, or 28.8%, as compared to

gross profit of $9,142,000 for the year ended December 31, 2019.

Consolidated gross profit as a percentage of sales was 13.0%

and 16.8% for the years ended December 31, 2020 and 2019, respectively.

These decreases were directly attributable to the reduction

in sales caused by the negative business impact of COVID-19 and increased costs associated with implementing procedures to promote

employee safety including more frequent and enhanced cleaning of our machines and adjusted schedules and work-flow to support

physical distancing.

The reduction in sales decreased the absorption of Manufacturing Overhead costs, reducing gross profit.

Interest and Financing Costs

Our interest and financing

costs for the year ended December 31, 2020 totaled $1,491,000 in 2020, a decrease of $ 2,070,000 or 58.1% from $3,561,000 in 2019,

as a result of the refinancing of our credit facility at the end of 2019, at a significantly lower interest rate.

Impairment Charges

In connection with

the consolidation of operations into our Bayshore, New York facility, we incurred a lease impairment charge of $275,000 in 2019.

Operating Expense

Consolidated operating

expenses were $7,951,000 and $8,539,000 for fiscal 2020 and 2019, respectively, representing a decrease of $588,000 or 6.9%.

a percentage of consolidated net sales, operating expenses were 15.8% and 15.6% for fiscal 2020 and 2019, respectively.

The reduction in operating

expenses in fiscal 2020 (in dollars) as compared to fiscal 2019 primarily reflects a concerted effort to reduce operating expenses

to offset the negative business impact of COVID-19.

Cost savings achieved included lower salaries and travel expenses (by curtailing

most business travel) that were partially offset by incurring significantly higher information technology costs to support various

activities including remote working arrangements.

Because we expect consolidated

net sales in fiscal 2021 to increase as compared to fiscal 2020, we are optimistic that we can reduce operating expenses, as a

percentage of consolidated net sales from current levels.

Income (Loss) from Continuing Operations, Net of Taxes

Income from continuing

operations, net of tax for the year ended December 31, 2020 was $1,326,000, an improvement of $3,924,000 compared to a loss from

continuing operations, net of tax of $2,598,000 for the year ended December 31, 2019.

This improvement is almost entirely attributable

to income resulting from the SBA Loan forgiveness in the amount of approximately $2.4 million and a tax refund afforded to the

Company under the CARES Act in the amount of approximately $1.4 million.

Net Income (Loss)

Net income for the

year ended December 31, 2020 was $1,096,000, an improvement of $3,828,000, compared to a net loss of $2,732,000 for the year ended

December 31, 2019, for the reasons discussed above.

LIQUIDITY AND CAPITAL RESOURCES

During fiscal 2020,

we took advantage of a number of U.S.

government programs to improve our liquidity to offset the negative impact to our business

from COVID-19.

These steps include:

Received Low Interest Loans from the SBA –

In May 2020, our three operating subsidiaries (each a “Borrower”)

entered into government subsidized loans with Sterling National Bank (“SNB”) in an aggregate principal amount of $2.4

million (“SBA Loans”).

Subject to the terms of the note evidencing each loan (the “Notes”), each SBA Loan

bears interest at a fixed rate of one percent (1%) per annum, with the first six months of interest deferred, has an initial term

of two years, and is unsecured and guaranteed by the SBA.

At least 60% of the proceeds of each Loan must be used for payroll and

payroll-related costs, in accordance with the applicable provisions of the Federal statute authorizing the loan program administered

by the SBA and the rules promulgated thereunder (the “Loan Program”).

Applied for and Received Forgiveness of

the SBA Loans –

In accordance with U.S.

government regulations we have applied to SNB for forgiveness of each Loan

in full and SNB has approved the applications and submitted them to the SBA.

In December 2020 we received final approval from

the SBA that our SBA Loans which approximated $2,414,000 plus accrued interest had been forgiven.

Deferred Certain Tax Payments –

In accordance with Section 2302 of the CARES Act, we elected to defer the deposit and payment of the employer’s portion

of Social Security taxes.

These deferred amounts must be repaid 50% on December 31, 2021 with the remaining 50% on December

As of December 31, 2020, we deferred $627,000, which is included in Deferred payroll tax liability –

Act on the accompanying Consolidated Balance Sheet.

Received a Net Operating Loss Refund

Pursuant to the CARES Act, we filed a net operating loss carryback claim for $1,416,000, which was received during

the second quarter of this year.

Also, the U.S.

of Defense has, to date, taken steps to increase the rate for certain progress payments from 80 percent to 90 percent for costs

incurred and worked performed on certain contracts.

In addition to taking

advantage of the aforementioned U.S.

government programs, we took additional significant steps to improve our liquidity, including:

Entered into a Lower Cost Financing Facility

On December 31, 2019, we entered into a new loan facility (“SNB Facility”) with Sterling National

Bank, (“SNB”) which expires on December 30, 2022.

The SNB Facility provides for a $16,000,000 revolving loan (“SNB

revolving line of credit”) and a term loan (“SNB term loan”).

Proceeds from the SNB Facility repaid our

outstanding PNC Facility with PNC Bank N.A.

(“PNC”).

The formula to determine the

amounts of revolving advances permitted to be borrowed under the SNB revolving line of credit is based on a percentage of eligible

receivables and inventory (as defined in the SNB Facility).

Prior to the increase in the

SNB term loan described below, the SNB term loan provided for monthly principal installments in the amount of $45,238, payable

on the first business day of each month, beginning on February 1, 2020, with a final payment of any unpaid balance of principal

and interest payable on December 30, 2022.

In addition, for so long as the SNB term loan remains outstanding, if Excess Cash Flow

(as defined) is a positive number for any fiscal year, beginning with the year ending December 31, 2020, we shall pay to SNB an

amount equal to the lesser of (i) twenty-five percent (25%) of the Excess Cash Flow for such Fiscal Year and (ii) the outstanding

principal balance of the term loan.

Such payment shall be made to SNB and applied to the outstanding principal balance of the term

loan, on or prior to the April 15 immediately following such Fiscal Year.

The terms of the SNB Facility

require that, among other things, we maintain a specified Fixed Charge Coverage Ratio of 1.25 to 1.00 at the end of each Fiscal

Quarter beginning with the Fiscal Quarter ending March 31, 2020.

In addition, we are limited in the amount of Capital Expenditures

In accordance with the SNB Facility by September 30, 2020, we were required to cause the holders of certain subordinated

convertible notes to either (i) extend the maturity date of such notes to a date more than six months after December 31, 2022,

or (ii) convert the notes into common stock of the Company.

As of December 31, 2020, we were in compliance with all loan covenants.

The SNB Facility also restricts the amount of dividends we may pay to our stockholders.

Substantially all of our assets are pledged

as collateral under the SNB Facility.

Increased Term Loan to modernize equipment

- On November 6, 2020, we entered into the First Amendment to Loan and Security Agreement, increasing the Term Loan to

This allowed us to finance the acquisition of the new equipment at what we believe to be a reasonable interest

The repayment terms of the term

loan were amended to provide monthly principal installments in the amount of $67,679 beginning on December 1, 2020, with a final

payment of any unpaid balance of principal and interest payable on December 30, 2022.

We have paid an amendment fee of $20,000.

As of December 31, 2020, our

debt to SNB in the amount of $21,207,000 consisted of the SNB revolving line of credit note in the amount of $15,649,000 and the

SNB term loan in the amount of $5,558,000.

Because we believe

our fiscal 2021 sales will be higher than the amount achieved in fiscal 2020, we believe our liquidity in 2021 will improve.

Nevertheless,

our liquidity may be adversely impacted by various risks and uncertainties, including, but not limited to future effects of the

COVID-19 pandemic and other risks detailed in Part1, Item 1A of this Annual Report.

Changes in our cash

flow during fiscal 2020 and 2019 are discussed further below.

The following table

summarizes our net cash flow from operating, investing and financing activities for the periods indicated (in thousands):

Cash (used in) provided by

Operating activities

Investing activities

Financing activities

Net increase (decrease) in cash and cash equivalents

The above cash flows

include the cash flows from our continuing and discontinued operations.

Cash Used In Operating Activities

Cash used in operating

activities reflects our net income (loss) adjusted for certain non-cash items and changes to working capital items.

For the year ended

December 31, 2020, net income of $1,096,000 and $1,990,000 of non-cash items, consisting primarily of employees and directors stock

based compensation of $519,000, amortization of right-of-use assets of $482,000, depreciation of property and equipment of $2,570,000

and amortization of debt discount on convertible notes payable of $233,000, were partially offset by the forgiveness of notes payable

SBA Loan and non-cash other income recognized in the amounts of $2,414,000 and $402,000, respectively.

Operating assets

and liabilities used cash in the net amount of $4,611,000, consisting primarily of the net increases in accounts receivable and

inventory of $1,045,000 and $3,474,000, and net decreases in operating lease liabilities and deferred revenue in the amounts of

$673,000 and $94,000, which were partially offset primarily by increases in accounts payable and accrued expenses in the amounts

of $275,000 and by decreases in prepaid expenses and other current assets and deposits and other assets in the amounts of $274,000

and $168,000, respectively.

For the year ended

December 31, 2019, our net loss of $2,732,000 was offset by $5,217,000 of non-cash items, consisting primarily of employees and

directors stock based compensation of $622,000, amortization of right-of-use assets of $470,000, depreciation of property and equipment

of $3,002,000 and amortization of debt discount on convertible notes payable of $510,000.

Operating assets and liabilities used

cash in the net amount of $3,373,000, consisting primarily of the net increases in deposits and other assets, accounts receivable

and prepaid expenses and other current assets of $713,000, $1,647,000 and $33,000, and net decrease in operating lease liabilities

and accounts payable and accrued expenses in the amounts of $601,000 and $970,000, partially offset primarily by an increase in

deferred revenue and a decrease in inventory of $130,000 and $405,000.

Cash Used in Investing Activities

Cash used in investing

activities consists of cash used for capital expenditures for property and equipment.

For the year ended

December 31, 2020, cash used in investing activities was $3,797,000.

Primarily this was for the purchase of state of the art machinery

installed at our Bay Shore facility.

For the year ended

December 31, 2019, cash used in investing activities was $764,000.

This was for the purchase of property and equipment.

Cash Provided By Financing Activities

Cash provided by financing

activities consists of the borrowings and repayments under our credit facilities with our senior lender, increases in and repayments

of finance lease obligations and other notes payable, and the proceeds from the sale of our equity.

For the year ended

December 31, 2020, cash provided by financing activities was $6,533,000.

This was comprised primarily of net proceeds from SNB

of $5,443,000, SBA loan proceeds of $2,414,000 and proceeds from issuances of stock of $984,000, offset primarily by repayments

of $1,000,000 on our related party notes payable, $100,000 of our third party notes payable, $579,000 on our SNB term loan, $18,000

on our financed lease obligations and $385,000 on our financed asset note payable and payment of stock issuances costs of $145,000.

For the year ended

December 31, 2019, cash provided by financing activities was $934,000.

This was comprised primarily of net proceeds from the SNB

refinancing of $16,343,000 and proceeds of related party note issuances of $1,500,000 and proceeds from our sale of future proceeds

from disposition of a subsidiary of $800,000 offset by repayments of $1,572,000 on our PNC term loan, $14,043,000 on our PNC revolving

loan, $1,764,000 on our financed lease obligations, $186,000 on our financed asset note payable, $28,000 on our related party notes

payable, and payment of financing and stock issuances costs of $113,000.

CONTRACTUAL OBLIGATIONS

The following table sets forth our future contractual

obligations as of December 31, 2020 (in thousands):

Payment due by period

Debt and Finance Leases

Operating Leases

OFF-BALANCE SHEET ARRANGEMENTS

We did not have any

off-balance sheet arrangements as of December 31, 2020.

Critical Accounting Policies and Estimates

A critical accounting

policy is one that is both important to the portrayal of a company’s financial condition and results of operations and requires

management’s most difficult, subjective or complex judgements, often as a result of the need to make estimates about the

effect of matters that are inherently uncertain.

Our consolidated financial statements are presented in accordance

with accounting principles generally accepted in the United States of America (“U.S.

GAAP”).

All applicable U.S.

accounting standards effective as of December 31, 2020 have been taken into consideration in preparing the consolidated financial

The preparation of consolidated financial statements requires estimates and assumptions that affect the reported amounts

of assets, liabilities, revenues, expenses and related disclosures.

Some of those estimates are subjective and complex, and consequently,

actual results could differ from those estimates.

The following accounting policies and estimates have been highlighted as significant

because changes to certain judgements and assumptions inherent in these policies could affect our consolidated financial statements:

● Going Concern

● Inventory Valuation

● Revenue Recognition

● Income Taxes

● Stock-Based Compensation

Recently Issued Accounting Pronouncements

In August 2020, the

FASB issued ASU No.

2020-06, Debt –

Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging

Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06), which is intended to address issues identified

as a result of the complexity associated with applying GAAP for certain financial instruments with characteristics of liabilities

For convertible instruments, ASU 2020-06 reduces the number of accounting models for convertible debt instruments and

convertible preferred stock, and enhances information transparency by making targeted improvements to the disclosures for convertible

instruments and earnings-per-share guidance on the basis of feedback from financial statement users.

ASU 2020-06 is effective for

fiscal years, and interim periods in those fiscal years, beginning after December 15, 2021.

Early adoption is permitted, but no

earlier than fiscal years beginning after December 15, 2020, including interim periods with those fiscal years.

The Company is

evaluating the effect of adopting this new accounting guidance on its financial statements.

In December 2019, the

FASB issued ASU No.

2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes”

(“ASU 2019-12”),

which is intended to simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to

the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

This guidance

is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption

The Company is currently evaluating the impact of this standard on its consolidated financial statements and related

2016, the FASB issued ASU No.

2016-13, Financial Instruments-Credit Losses (Topic 326) (“ASU 2016-13”), which

significantly changes how entities will account for credit losses for most financial assets and certain other instruments that

are not measured at fair value through net income.

ASU 2016-13 replaces the existing incurred loss model with an expected credit

loss model that requires entities to estimate an expected lifetime credit loss on most financial assets and certain other instruments.

Under ASU 2016-13 credit impairment is recognized as an allowance for credit losses, rather than as a direct write-down of the

amortized cost basis of a financial asset.

The impairment allowance is a valuation account deducted from the amortized cost basis

of financial assets to present the net amount expected to be collected on the financial asset.

Once the new pronouncement is adopted

by the Company, the allowance for credit losses must be adjusted for management’s current estimate at each reporting date.

The new guidance provides no threshold for recognition of impairment allowance.

Therefore, entities must also measure expected

credit losses on assets that have a low risk of loss.

For instance, trade receivables that are either current or not yet due may

not require an allowance reserve under currently generally accepted accounting principles, but under the new standard, the Company

will have to estimate an allowance for expected credit losses on trade receivables under ASU 2016-13.

ASU 2016-13 is effective

for annual periods, including interim periods within those annual periods, beginning after December 15, 2022 for smaller reporting

Early adoption is permitted.

The Company is currently assessing the impact ASU 2016-13 will have on its consolidated

financial statements.

The Company does not

believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material

effect on the accompanying consolidated financial statements.

QUANTITATIVE AND

QUALITATIVE DISCLOSURE ABOUT MARTKET RISK .

No disclosure is required

in response to this Item.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Consolidated Financial Statements

The financial statements

required by this item begin on page F-1 hereof.

CHANGES IN AND DISAGREEMENTS

WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity