MEXCO ENERGY CORP 10-Q

Item 1. Financial Statements Mexco Energy Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS June 30, March 31, 2024 2024 (Unaudited) ASSETS Current assets Cash and cash equivalents $ 2,514,715 $ 2,473,484 Accounts receivable: Oil and natural gas sales 955,899 1,001,709 Trade 9,955 9,186 Prepaid drilling 23,066 148,748 Prepaid costs and expenses 51,447 56,193 Total current assets 3,555,082 3,689,320 Property and equipment, at cost Oil and gas properties, using the full cost method 48,930,971 48,304,585 Other 121,926 121,926 Accumulated depreciation, depletion and amortization ( 34,724,533 ) ( 34,184,837 ) Property and equipment, net 14,328,364 14,241,674 Investments – cost basis 1,300,000 1,100,000 Operating lease, right-of-use asset 162,911 19,263 Other noncurrent assets 7,522 8,597 Total assets $ 19,353,879 $ 19,058,854 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable and accrued expenses $ 266,512 $ 221,603 Income tax payable 201,159 189,254 Operating lease liability, current 48,711 19,263 Total current liabilities 516,382 430,120 Long-term liabilities Operating lease liability, long-term 114,200 - Asset retirement obligations 685,274 688,808 Deferred income tax liabilities 386,276 311,661 Total long-term liabilities 1,185,750 1,000,469 Total liabilities 1,702,132 1,430,589 Commitments and contingencies - - Stockholders’ equity Preferred stock - $ 1.00 par value; 10,000,000 shares authorized; none outstanding - - Common stock - $ 0.50 par value; 40,000,000 shares authorized; 2,239,283 and 2,226,916 shares issued; and, 2,090,000 and 2,091,399 shares outstanding as of June 30, 2024 and March 31, 2024, respectively 1,119,641 1,113,458 Additional paid-in capital 8,691,753 8,567,856 Retained earnings 9,204,520 9,122,481 Treasury stock, at cost ( 149,283 and 135,517 shares, respectively) ( 1,364,167 ) ( 1,175,530 ) Total stockholders’ equity 17,651,747 17,628,265 Total liabilities and stockholders’ equity $ 19,353,879 $ 19,058,854 The accompanying notes are an integral part of the consolidated financial statements. Page 3 Mexco Energy Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months Ended June 30, (Unaudited) 2024 2023 Operating revenues: Oil sales $ 1,510,304 $ 1,429,678 Natural gas sales 177,752 285,412 Other 39,779 33,329 Total operating revenues 1,727,835 1,748,419 Operating expenses: Production 437,420 349,407 Accretion of asset retirement obligations 7,711 7,356 Depreciation, depletion and amortization 539,697 486,186 General and administrative 367,045 340,969 Total operating expenses 1,351,873 1,183,918 Operating income 375,962 564,501 Other income (expense): Interest income 22,746 23,695 Interest expense ( 1,083 ) ( 1,081 ) Net other income 21,663 22,614 Income before provision for income taxes 397,625 587,115 Income tax expense: Current 31,971 32,818 Deferred 74,615 88,683 Total income tax expense 106,586 121,501 Net income $ 291,039 $ 465,614 Income per common share: Basic: $ 0.14 $ 0.22 Diluted: $ 0.14 $ 0.21 Weighted average common shares outstanding: Basic: 2,090,786 2,136,165 Diluted: 2,135,421 2,182,800 The accompanying notes are an integral part of the consolidated financial statements. Page 4 Mexco Energy Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) Common Stock Par Value Additional Paid-In Capital Retained Earnings Treasury Stock Total Stockholders’ Equity Balance at April 1, 2024 $ 1,113,458 $ 8,567,856 $ 9,122,481 $ ( 1,175,530 ) $ 17,628,265 Net income - - 291,039 - 291,039 Dividends paid - - ( 209,000 ) - ( 209,000 ) Issuance of stock through options exercised 6,183 71,458 77,641 Purchase of stock - - - ( 188,637 ) ( 188,637 ) Stock based compensation - 52,439 - - 52,439 Balance at June 30, 2024 $ 1,119,641 $ 8,691,753 $ 9,204,520 $ ( 1,364,167 ) $ 17,651,747 Common Stock Par Value Additional Paid-In Capital Retained Earnings Treasury Stock Total Stockholders’ Equity Balance at April 1, 2023 $ 1,110,708 $ 8,321,145 $ 7,991,129 $ ( 590,495 ) $ 16,832,487 Balance $ 1,110,708 $ 8,321,145 $ 7,991,129 $ ( 590,495 ) $ 16,832,487 Net income - - 465,614 - 465,614 Dividends paid - - ( 213,600 ) - ( 213,600 ) Issuance of stock through options exercised 250 2,712 - - 2,962 Stock based compensation - 54,975 - - 54,975 Balance at June 30, 2023 $ 1,110,958 $ 8,378,832 $ 8,243,143 $ ( 590,495 ) $ 17,142,438 Balance $ 1,110,958 $ 8,378,832 $ 8,243,143 $ ( 590,495 ) $ 17,142,438 SHARE ACTIVITY Common stock shares, issued: Balance at April 1, 2024 2,226,916 Issued 12,367 Balance at June 30, 2024 2,239,283 Common stock shares, held in treasury: Balance at April 1, 2024 ( 135,517 ) Acquisitions ( 13,766 ) Balance at June 30, 2024 ( 149,283 ) Common stock shares, outstanding at June 30, 2024 2,090,000 The accompanying notes are an integral part of the consolidated financial statements. Page 5 Mexco Energy Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended June 30, (Unaudited) 2024 2023 Cash flows from operating activities: Net income $ 291,039 $ 465,614 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income tax expense 74,615 88,683 Stock-based compensation 52,439 54,975 Depreciation, depletion and amortization 539,697 486,186 Accretion of asset retirement obligations 7,711 7,356 Amortization of debt issuance costs 1,075 1,081 Changes in operating assets and liabilities Decrease in accounts receivable 45,041 469,846 Decrease in prepaid expenses 4,747 12,528 (Increase) decrease in right-of-use asset ( 143,648 ) 13,894 Increase in accounts payable and accrued expenses 61,874 32,111 Settlement of asset retirement obligations ( 11,529 ) ( 2,185 ) Increase in income taxes payable 11,905 - (Increase) decrease in operating lease liability 143,648 ( 13,894 ) Net cash provided by operating activities 1,078,614 1,616,195 Cash flows from investing activities: Additions to oil and gas properties ( 517,387 ) ( 542,840 ) Investments in limited liability companies at cost ( 200,000 ) - Proceeds from sale of oil and gas properties and equipment - 278,749 Net cash used in investing activities ( 717,387 ) ( 264,091 ) Cash flows from financing activities: Proceeds from exercise of stock options 77,641 2,962 Dividends paid ( 209,000 ) ( 213,600 ) Acquisition of treasury stock ( 188,637 ) - Debt issuance costs - ( 750 ) Net cash used in financing activities ( 319,996 ) ( 211,388 ) Net increase in cash and cash equivalents 41,231 1,140,716 Cash and cash equivalents at beginning of period 2,473,484 2,235,771 Cash and cash equivalents at end of period $ 2,514,715 $ 3,376,487 Supplemental disclosure of cash flow information: Cash paid for interest $ 9 $ - Accrued capital expenditures included in accounts payable $ 4,727 $ 4,487 Non-cash investing and financing activities: Asset retirement obligations $ 1,130 $ 1,080 The accompanying notes are an integral part of the consolidated financial statements. Page 6 Mexco Energy Corporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Nature of Operations Mexco Energy Corporation (a Colorado corporation) and its wholly owned subsidiaries, Forman Energy Corporation (a New York corporation), Southwest Texas Disposal Corporation (a Texas corporation) and TBO Oil & Gas, LLC (a Texas limited liability company) (collectively, the “Company”) are engaged in the acquisition, exploration, development and production of crude oil, natural gas, condensate and natural gas liquids (“NGLs”). Most of the Company’s oil and gas interests are centered in West Texas and Southeastern New Mexico; however, the Company owns producing properties and undeveloped acreage in fourteen states. All of Company’s oil and gas interests are operated by others. 2. Basis of Presentation and Significant Accounting Policies Principles of Consolidation . The consolidated financial statements include the accounts of Mexco Energy Corporation and its wholly owned subsidiaries. All significant intercompany balances and transactions associated with the consolidated operations have been eliminated. Estimates and Assumptions . In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”), management is required to make informed judgments, estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements and affect the reported amounts of revenues and expenses during the reporting period. In addition, significant estimates are used in determining proved oil and gas reserves. Although management believes its estimates and assumptions are reasonable, actual results may differ materially from those estimates. The estimate of the Company’s oil and natural gas reserves, which is used to compute depreciation, depletion, amortization and impairment of oil and gas properties, is the most significant of the estimates and assumptions that affect these reported results. Interim Financial Statements . In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position of the Company as of June 30, 2024, and the results of its operations and cash flows for the interim periods ended June 30, 2024 and 2023. The consolidated financial statements as of June 30, 2024 and for the three-month periods ended June 30, 2024 and 2023 are unaudited. The consolidated balance sheet as of March 31, 2024 was derived from the audited balance sheet filed in the Company’s 2024 annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”). The results of operations for the periods presented are not necessarily indicative of the results to be expected for a full year. The accounting policies followed by the Company are set forth in more detail in Note 2 of the “Notes to Consolidated Financial Statements” in the Form 10-K. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the SEC. However, the disclosures herein are adequate to make the information presented not misleading. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Form 10-K. Investments . The Company accounts for investments of less than 3% in limited liability companies at cost. The Company has no control of the limited liability companies. The cost of the investment is recorded as an asset on the consolidated balance sheets and when income from the investment is received, it is immediately recognized on the consolidated statements of operations. 3. Asset Retirement Obligations The Company’s asset retirement obligations (“ARO”) relate to the plugging of wells, the removal of facilities and equipment, and site restoration on oil and gas properties. The fair value of a liability for an ARO is recorded in the period in which it is incurred, discounted to its present value using the credit adjusted risk-free interest rate, and a corresponding amount capitalized by increasing the carrying amount of the related long-lived asset. The liability is accreted each period until the liability is settled or the well is sold, at which time the liability is removed. The related asset retirement cost is capitalized as part of the carrying amount of our oil and natural gas properties. The ARO is included on the consolidated balance sheets with the current portion being included in the accounts payable and other accrued expenses. Page 7 The following table provides a rollforward of the AROs for the first three months of fiscal 2025: Schedule of Rollforward of Asset Retirement Obligations Carrying amount of asset retirement obligations as of April 1, 2024 $ 718,808 Liabilities incurred 1,130 Liabilities settled ( 12,375 ) Accretion expense 7,711 Carrying amount of asset retirement obligations as of June 30, 2024 715,274 Less: Current portion 30,000 Non-Current asset retirement obligation $ 685,274 4. Long Term Debt On December 28, 2018, the Company entered into a loan agreement (the “Agreement”) with West Texas National Bank (“WTNB”), which originally provided for a credit facility of $ 1,000,000 with a maturity date of December 28, 2021 . The Agreement has no monthly commitment reduction and a borrowing base to be evaluated annually. On February 28, 2020, the Agreement was amended to increase the credit facility to $ 2,500,000 , extend the maturity date to March 28, 2023 and increase the borrowing base to $ 1,500,000 . On March 28, 2023, the Agreement was amended to extend the maturity date to March 28, 2026 . Under the Agreement, interest on the facility accrues at a rate equal to the prime rate as quoted in the Wall Street Journal plus one-half of one percent ( 0.5 % ) floating daily. Interest on the outstanding amount under the Agreement is payable monthly. In addition, the Company will pay an unused commitment fee in an amount equal to one-half of one percent (0.5%) times the daily average of the unadvanced amount of the commitment . The unused commitment fee is payable quarterly in arrears on the last day of each calendar quarter. As of June 30, 2024, there was $ 1,500,000 available for borrowing by the Company on the facility. No principal payments are anticipated to be required through the maturity date of the credit facility, March 28, 2026 . Upon closing the second amendment to the Agreement, the Company paid a loan origination fee of $ 9,000 plus legal and recording expenses totaling $ 12,950 , which were deferred over the life of the credit facility. Amounts borrowed under the Agreement are collateralized by the common stock of the Company’s wholly owned subsidiaries and substantially all of the Company’s oil and gas properties. The Agreement contains customary covenants for credit facilities of this type including limitations on change in control, disposition of assets, mergers and reorganizations. The Company is also obligated to meet certain financial covenants under the Agreement and requires senior debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratios (Senior Debt/EBITDA) less than or equal to 4.00 to 1.00 measured with respect to the four trailing quarters and minimum interest coverage ratios (EBITDA/Interest Expense) of 2.00 to 1.00 for each quarter. In addition, this Agreement prohibits the Company from paying cash dividends on its common stock without prior written permission of WTNB. The Company obtained written permission from WTNB prior to declaring the regular annual dividend on April 30, 2024 as discussed in Note 10. The Agreement does not permit the Company to enter into hedge agreements covering crude oil and natural gas prices without prior WTNB approval. There was no balance outstanding on the credit facility as of June 30, 2024. 5. Stock-based Compensation The Company recognized compensation expense of $ 52,439 and $ 54,975 related to vesting stock options in general and administrative expense in the Consolidated Statements of Operations for the first quarter of fiscal 2025 and 2024, respectively. The total cost related to non-vested awards not yet recognized at June 30, 2024 totals $ 433,373 , which is expected to be recognized over a weighted average of 2.12 years. During the three months ended June 30, 2024, no stock options were granted. During the three months ended June 30, 2023, the Compensation Committee of the Board of Directors approved and the Company granted 32,000 stock options exercisable at $ 12.68 per share with an estimated fair value of $ 279,360 . These options are exercisable at a price not less than the fair market value of the stock at the date of grant, have an exercise period of ten years and generally vest over four years . Page 8 Included in the following table is a summary of the grant-date fair value of stock options granted and the related assumptions used in the Binomial models for stock options granted during the three months ended June 30, 2024 and 2023. All such amounts represent the weighted average amounts. Schedule of Grant-date Fair Value of Stock Options Granted and Assumptions Used Binominal Models Three Months Ended June 30 2024 2023 Grant-date fair value - $ 8.73 Volatility factor - 56.5 % Dividend yield - - Risk-free interest rate - 3.44 % Expected term (in years) - 6.25 The following table is a summary of stock options activity for the three months ended June 30, 2024: Summary of Activity of Stock Options Number of Shares Weighted Average Exercise Price Per Share Weighted Aggregate Average Remaining Contract Life in Years Intrinsic Value Outstanding at April 1, 2024 165,750 $ 9.36 6.62 $ 103,275 Granted - - Exercised ( 12,367 ) 6.28 Forfeited or Expired ( 1,875 ) 14.83 Outstanding at June 30, 2024 151,508 $ 9.54 6.74 $ 269,604 Vested at June 30, 2024 91,133 $ 6.82 5.82 $ 409,989 Exercisable at June 30, 2024 91,133 $ 6.82 5.82 $ 409,989 During the three months ended June 30, 2024, stock options covering 12,367 shares were exercised with a total intrinsic value of $ 92,316 . The Company received proceeds of $ 77,641 from these exercises. During the three months ended June 30, 2023, stock options covering 500 shares were exercised with a total intrinsic value of $ 2,416 . The Company received proceeds of $ 2,962 from these exercises. No forfeiture rate is assumed for stock options granted to directors or employees due to the forfeiture rate history for these types of awards. During the three months ended June 30, 2024, 1,875 unvested stock options were forfeited due to the resignation of an employee. During the three months ended June 30, 2023, there were no stock options forfeited or expired. Outstanding options at June 30, 2024 expire between September 2028 and April 2033 and have exercise prices ranging from $ 3.34 to $ 18.05 . 6. Leases The Company leases approximately 4,160 rentable square feet of office space from an unaffiliated third party for our corporate office located in Midland, Texas. This includes 1,112 square feet of office space shared with and reimbursed by our majority shareholder. The lease does not include an option to renew and is a 36-month lease that was to expire in May 2021. In June 2020, in exchange for a reduction in rent for the months of June and July 2020, the Company agreed to a 2-month extension to its current lease agreement at the regular monthly rate extending its current lease expiration date to July 2021. In June 2021, the Company agreed to extend its current lease at a flat (unescalated) rate for 36 months. In June 2024, the Company agreed to extend its lease at a flat (unescalated) rate for another 36 months. The amended lease now expires on July 31, 2027 . The Company determines an arrangement is a lease at inception. Operating leases are recorded in operating lease right-of-use asset, operating lease liability, current, and operating lease liability, long-term on the consolidated balance sheets. Operating lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the Company’s lease does not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate used at adoption of the renewal was 9 %. Significant judgement is required when determining the incremental borrowing rate. Rent expense for lease payments is recognized on a straight-line basis over the lease term. Page 9 The balance sheets classification of lease assets and liabilities was as follows: Schedule of Operating Lease Assets and Liabilities June 30, 2024 Assets Operating lease right-of-use asset, beginning balance $ 19,263 Current period amortization ( 14,425 ) Lease extension 158,073 Total operating lease right-of-use asset $ 162,911 Liabilities Operating lease liability, current $ 48,711 Operating lease liability, long term 114,200 Total lease liabilities $ 162,911 Future minimum lease payments as of June 30, 2024 under non-cancellable operating leases are as follows: Schedule of Future Minimum Lease Payments Lease Obligation Fiscal Year Ended March 31, 2025 $ 45,066 Fiscal Year Ended March 31, 2026 60,320 Fiscal Year Ended March 31, 2027 60,320 Fiscal Year Ended March 31, 2028 20,107 Total lease payments $ 185,813 Less: imputed interest ( 22,902 ) Operating lease liability 162,911 Less: operating lease liability, current ( 48,711 ) Operating lease liability, long term $ 114,200 Net cash paid for our operating lease for the three months ended June 30, 2024 and 2023 was $ 10,667 . Rent expense, less sublease income of $ 3,893 is included in general and administrative expenses. 7. Income Taxes On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (“IRA 2022”). The IRA 2022, among other tax provisions, imposes a 15% corporate alternative minimum tax on corporations with book financial statement income in excess of $1.0 billion, effective for tax years beginning after December 31, 2022. The IRA 2022 also establishes a 1% excise tax on stock repurchases made by publicly traded U.S. corporations, effective for stock repurchases in excess of an annual limit of $1.0 million after December 31, 2022. The IRA 2022 did not impact the Company’s current year tax provision or the Company’s financial statements. The income tax provision consists of the following for the three months ended June 30, 2024 and 2023: Schedule of Income Tax Provision 2024 2023 Three Months Ended June 30 2024 2023 Current income tax expense: Federal $ 11,905 $ - State 20,066 32,818 Total current income tax expense 31,971 32,818 Deferred income tax expense: Federal 74,615 88,683 State - - Total deferred income tax expense 74,615 88,683 Total income tax expense: $ 106,586 $ 121,501 Federal income tax for the three months ended June 30, 2024 was $ 86,520 . Federal income tax for the three months ended June 30, 2023 was $ 88,683 . Page 10 A reconciliation of the provision for income taxes to income taxes computed using the federal statutory rate for the three months ended June 30 follows: Schedule of Reconciliation of Provision for Income Taxes 2024 2023 Income tax expense $ 106,586 $ 121,501 Effective income tax rate (1) 26.8 % 20.7 % (1) The federal statutory rate was 21 % for three months ended June 30, 2024 and 2023. Total income tax expense from continuing operations for the three months ended June 30, 2024 and 2023 differed from amounts computed by applying the U.S. federal statutory tax rate to pre-tax income primarily due to state income taxes, net of federal benefit, and the impact of permanent differences between book and taxable income. 8. Related Party Transactions Related party transactions for the Company primarily relate to shared office expenditures in addition to administrative and operating expenses paid on behalf of the principal stockholder. The total billed to and reimbursed by the stockholder for the quarters ended June 30, 2024 and 2023 was $ 4,038 and $ 9,382 , respectively. The principal stockholder pays for his share of the lease amount for the shared office space directly to the lessor. Amounts paid by the principal stockholder directly to the lessor for the three months ending June 30, 2024 and 2023 were $ 3,893 . 9. Income Per Common Share The following is a reconciliation of the number of shares used in the calculation of basic and diluted net income per share for the three-month periods ended June 30, 2024 and 2023. Schedule of Reconciliation of Basic and Diluted Net Income (loss) Per Share 2024 2023 Net income $ 291,039 $ 465,614 Shares outstanding: Weighted average common shares outstanding – basic 2,090,786 2,136,165 Effect of the assumed exercise of dilutive stock options 44,635 46,635 Weighted average common shares outstanding – dilutive 2,135,421 2,182,800 Income per common share: Basic $ 0.14 $ 0.22 Diluted $ 0.14 $ 0.21 For the three months ended June 30, 2024, 61,125 shares relating to stock options were excluded from the computation of diluted net income because their inclusion would be anti-dilutive. Anti-dilutive stock options have a weighted average exercise price of $ 15.34 at June 30, 2024. For the three months ended June 30, 2023, 63,000 shares relating to stock options were excluded from the computation of diluted net income because their inclusion would be anti-dilutive. Anti-dilutive stock options have a weighted average exercise price of $ 15.32 at June 30, 2023. Page 11 10. Stockholders’ Equity In April 2024, the Board of Directors authorized the use of up to $ 1,000,000 to repurchase shares of the Company’s common stock, par value $ 0.50 , for the treasury account. This program does not have an expiration date and may be modified, suspended or terminated at any time by the Board. Under the repurchase program, shares of common stock may be purchased from time to time through open market purchases or other transactions. The amount and timing of repurchases will be subject to the availability of stock, prevailing market conditions, the trading price of the stock, our financial performance and other conditions. Repurchases may also be made from time-to-time in connection with the settlement our share-based compensation awards. Repurchases will be funded from cash flow. On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (“IRA 2022”). The IRA 2022, among other tax provisions, establishes a 1 % excise tax on stock repurchases made by publicly traded U.S. corporations , effective for stock repurchases in excess of an annual limit of $1,000,000 after December 31, 2022 . During the three months ended June 30, 2024, the Company repurchased 13,766 shares for the treasury account at an aggregate cost of $ 188,637 , an average price of $ 13.70 per share. During the three months ended June 30, 2023, there were no shares of common stock repurchased for the treasury account. Subsequently, in July 2024, the Company repurchased 4,557 shares for the treasury at an aggregate cost of $ 53,684 . On April 30, 2024, the Board of Directors declared a regular annual dividend of $ 0.10 per common share. The Company paid the dividend of $ 209,000 on June 4, 2024 to the stockholders of record at the close of business on May 21, 2024. On April 10, 2023, the Board of Directors declared a special dividend of $ 0.10 per common share. The Company paid the special dividend of $ 213,600 on May 15, 2023 to the stockholders of record at the close of business on May 1, 2023. The Company can provide no assurance that dividends will be declared in the future or as to the amount of any future dividend. Dividends declared by the Board and stock repurchased during the period are presented in the Company’s consolidated statements of changes in stockholders’ equity as dividends paid and purchases of treasury stock, respectively. Dividends paid and stock repurchased during the period are presented as cash used in financing activities in the Company’s consolidated statements of cash flows. Stock repurchases are included as treasury stock in the consolidated balance sheets. 11. Subsequent Events The Company completed a review and analysis of all events that occurred after the consolidated balance sheet date to determine if any such events must be reported and has determined that there are no other subsequent events to be disclosed. Page 12