Steven Madden, Ltd 10-Q for FY2021 Q2

Steven Madden, Ltd. (SHOO)

10-Q 2021-08-03 For: 2021-06-30

Added on April 04, 2026

About this 10-Q

Steven Madden, Ltd filed this 10-Q on August 3, 2021, covering the quarter ended June 30, 2021 (FY2021 Q2).

Headline figures

Quarter ended June 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $397.89M; up 178.6% from $142.81M a year earlier
Net income: $37.34M; compared with a net loss of $17.14M a year earlier
Diluted EPS: $0.45; compared with -$0.21 a year earlier

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Delaware						13-3588231
(State or other jurisdiction of						(I.R.S. Employer Identification No.)
incorporation or organization)


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $.0001 per share	SHOO	The NASDAQ Stock Market LLC


PART I – FINANCIAL INFORMATION

ITEM 1.	Condensed Consolidated Financial Statements (Unaudited):

	Condensed Consolidated Balance Sheets	1

	Condensed Consolidated Statements of Income/(Loss)	2

	Condensed Consolidated Statements of Comprehensive Income /(Loss)	3

	Condensed Consolidated Statements of Changes in Stockholder' Equity	4

	Condensed Consolidated Statements of Cash Flows	6

	Notes to Condensed Consolidated Financial Statements - Unaudited	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	33

ITEM 4.	Controls and Procedures	33

PART II – OTHER INFORMATION

ITEM 1.	Legal Proceedings	34

ITEM 1A.	Risk Factors	34

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

ITEM 6.	Exhibits	36

	Signatures	37


	June 30, 2021		December 31, 2020		June 30, 2020
	(unaudited)				(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	262,144	$	247,864	$	318,101
Short-term investments	40,513		39,302		38,837
Accounts receivable, net of allowances of $10,586, $8,943 and $9,937	24,598		25,044		20,183
Factor accounts receivable	254,545		252,671		123,496
Inventories	125,525		101,420		103,282
Prepaid expenses and other current assets	20,549		17,415		18,444
Income tax receivable and prepaid taxes	15,906		14,525		13,578

Total current assets	743,780		698,241		635,921

Note receivable – related party	987		1,180		1,369
Property and equipment, net	38,213		43,268		49,594
Operating lease right-of-use asset	97,222		101,379		120,489
Deposits and other	4,574		4,822		2,917

Deferred taxes	5,415		5,415		6,360
Goodwill – net	168,426		168,265		166,333
Intangibles – net	114,526		115,191		149,409
Total Assets	$	1,173,143	$	1,137,761	$	1,132,392
LIABILITIES
Current liabilities:
Accounts payable	$	91,822	$	73,904	$	42,474
Accrued expenses	139,717		118,083		113,744
Advances from factor	—		—		42,662
Operating leases - current portion	33,561		34,257		36,890
Income taxes payable	1,477		5,799		—
Contingent considerations – current portion	3,660		—		—
Accrued incentive compensation	8,921		3,873		2,122
Total current liabilities	279,158		235,916		237,892
Contingent considerations - long term portion	4,381		207		1,829

Operating leases - long-term portion	92,179		98,592		114,630
Deferred taxes	2,921		2,562		3,128
Other liabilities	11,982		10,115		7,793
Total Liabilities	390,621		347,392		365,272
Commitments, contingencies and other (Note Q)
STOCKHOLDERS’ EQUITY
Preferred stock – $.0001 par value, 5,000 shares authorized; none issued; Series A Junior Participating preferred stock – $.0001 par value, 60 shares authorized; none issued	—		—		—
Common stock – $.0001 par value, 245,000 shares authorized,133,817, 133,247 and 133,173 shares issued, 82,156, 82,616 and 83,035 shares outstanding	8		8		6
Additional paid-in capital	481,646		478,463		466,384
Retained earnings	1,312,827		1,279,550		1,263,910
Accumulated other comprehensive loss	(25,081)		(29,164)		(39,850)
Treasury stock – 51,661, 50,631 and 50,138 shares at cost	(995,065)		(952,271)		(935,366)
Total Steven Madden, Ltd. stockholders’ equity	774,335		776,586		755,084
Noncontrolling interest	8,187		13,783		12,036
Total stockholders’ equity	782,522		790,369		767,120
Total Liabilities and Stockholders’ Equity	$	1,173,143	$	1,137,761	$	1,132,392


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net sales	$	394,797	$	141,363	$	753,698	$	497,047
Commission and licensing fee income	3,097		1,449		5,221		4,933
Total revenue	397,894		142,812		758,919		501,980
Cost of sales (exclusive of depreciation and amortization)	227,839		86,924		449,760		312,628
Gross profit	170,055		55,888		309,159		189,352
Operating expenses	121,860		78,412		232,308		199,785
Impairment of fixed assets and lease right-of-use assets	477		1,178		1,089		29,999
Impairment of intangibles	—		—		—		9,518
Income/(loss) from operations	47,718		(23,702)		75,762		(49,950)
Interest and other (expense)/ income – net	(777)		357		(814)		1,403
Income/(loss) before provision (benefit) for income taxes	46,941		(23,345)		74,948		(48,547)
Provision/(benefit) for income taxes (Note M)	9,600		(6,201)		15,276		(13,602)
Net income/(loss)	37,341		(17,144)		59,672		(34,945)
Less: net income/(loss) attributable to noncontrolling interest	489		(558)		1,623		(908)
Net income/(loss) attributable to Steven Madden, Ltd.	$	36,852	$	(16,586)	$	58,049	$	(34,037)


Basic net income/(loss) per share	$	0.47	$	(0.21)	$	0.74	$	(0.43)

Diluted net income/(loss) per share	$	0.45	$	(0.21)	$	0.71	$	(0.43)

Basic weighted average common shares outstanding	78,899		78,517		78,968		78,696
Effect of dilutive securities – options/restricted stock	3,162		—		3,013		—
Diluted weighted average common shares outstanding	82,061		78,517		81,981		78,696

Cash dividends declared per common share	$	0.15	$	—	$	0.30	$	0.15


	Three Months Ended June 30, 2021						Six Months Ended June 30, 2021
	Pre-tax amounts		Tax benefit		After-tax amounts		Pre-tax amounts		Tax (expense)		After-tax amounts
Net income					$	37,341					$	59,672
Other comprehensive income:
Foreign currency translation adjustment	$	3,887	$	—	3,887		$	3,585	$	—	3,585
(Loss)/gain on cash flow hedging derivatives	(23)		6		(17)		815		(209)		606

Total other comprehensive income	$	3,864	$	6	3,870		$	4,400	$	(209)	4,191

Comprehensive income					41,211						63,863
Less: comprehensive income attributable to noncontrolling interests					911						1,731
Comprehensive income attributable to Steven Madden, Ltd.					$	40,300					$	62,132

	Three Months Ended June 30, 2020						Six Months Ended June 30, 2020
	Pre-tax amounts		Tax benefit		After-tax amounts		Pre-tax amounts		Tax (expense)		After-tax amounts
Net loss					$	(17,144)					$	(34,945)
Other comprehensive income/(loss):
Foreign currency translation adjustment	$	5,770	$	—	5,770		$	(9,880)	$	—	(9,880)
(Loss)/gain on cash flow hedging derivatives	(797)		240		(557)		879		(249)		630

Total other comprehensive income/(loss)	$	4,973	$	240	5,213		$	(9,001)	$	(249)	(9,250)

Comprehensive loss					(11,931)						(44,195)
Less: comprehensive (loss) attributable to noncontrolling interests					(740)						(748)
Comprehensive loss attributable to Steven Madden, Ltd.					$	(11,191)					$	(43,447)


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss)		Treasury Stock			Non-Controlling Interest		Total Stockholders' Equity
	Shares	Amount								Shares	Amount
Balance - March 31, 2021	82,692	$	8	$	485,556	$	1,288,322	$	(28,529)	50,785	$	(957,829)	$	13,240	$	800,768
Share repurchases and net settlement of awards under stock plan	(876)	—		—		—		—		876	(37,236)		—		(37,236)
Exercise of stock options	230	—		5,269		—		—		—	—		—		5,269

Issuance of restricted stock, net of forfeitures	110	—		—		—		—		—	—		—		—
Stock-based compensation	—	—		5,480		—		—		—	—		—		5,480
Foreign currency translation adjustment	—	—		—		—		3,465		—	—		422		3,887

Cash flow hedge (net of tax benefit of $6)	—	—		—		—		(17)		—	—		—		(17)
Dividends on common stock ($0.15 per share)	—	—		—		(12,347)		—		—	—		—		(12,347)
Distributions to noncontrolling interests, net	—	—		—		—		—		—	—		(1,496)		(1,496)

Acquisition of incremental ownership of joint ventures	—	—		(14,659)		—		—		—	—		(4,468)		(19,127)
Net income	—	—		—		36,852		—		—	—		489		37,341
Balance - June 30, 2021	82,156	$	8	$	481,646	$	1,312,827	$	(25,081)	51,661	$	(995,065)	$	8,187	$	782,522

	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss)		Treasury Stock			Non-Controlling Interest		Total Stockholders' Equity
	Shares	Amount								Shares	Amount
Balance - December 31, 2020	82,616	$	8	$	478,463	$	1,279,550	$	(29,164)	50,631	$	(952,271)	$	13,783	$	790,369
Share repurchases and net settlement of awards under stock plan	(1,030)	—		—		—		—		1,030	(42,794)		—		(42,794)
Exercise of stock options	295	—		6,823		—		—		—	—		—		6,823

Issuance of restricted stock, net of forfeitures	275	—		—		—		—		—	—		—		—
Stock-based compensation	—	—		11,019		—		—		—	—		—		11,019
Foreign currency translation adjustment	—	—		—		—		3,477		—	—		108		3,585

Cash flow hedge (net of tax expense of $209)	—	—		—		—		606		—	—		—		606
Dividends on common stock ($0.30 per share)	—	—		—		(24,772)		—		—	—		—		(24,772)
Distributions to noncontrolling interests, net	—	—		—		—		—		—	—		(2,859)		(2,859)

Acquisition of incremental ownership of joint ventures	—	—		(14,659)		—		—		—	—		(4,468)		(19,127)
Net income	—	—		—		58,049		—		—	—		1,623		59,672
Balance - June 30, 2021	82,156	$	8	$	481,646	$	1,312,827	$	(25,081)	51,661	$	(995,065)	$	8,187	$	782,522


			June 30, 2021
			Fair Value Measurements
	Fair value		Level 1		Level 2		Level 3
Assets:



Forward contracts	140		—		140		—
Total assets	$	140	$	—	$	140	$	—
Liabilities:
Contingent consideration	$	8,041	$	—	$	—	$	8,041
Forward contracts	325		—		325		—
Total liabilities	$	8,366	$	—	$	325	$	8,041


			December 31, 2020
			Fair Value Measurements
	Fair value		Level 1		Level 2		Level 3



Liabilities:
Contingent consideration	$	207	$	—	$	—	$	207
Forward contracts	997		—		997		—
Total liabilities	$	1,204	$	—	$	997	$	207


	Balance at January 1,		Payments	Acquisitions	Adjustments (1)	Balance at June 30,
2021
Liabilities:
Contingent consideration (2)	$	207	—	—	7,834	$	8,041

	Balance at January 1,		Payments	Acquisitions	Adjustments (3)	Balance at December 31,
2020
Liabilities:
Contingent consideration	$	9,124	—	—	(8,917)	$	207


	Classification on the Balance Sheet	June 30, 2021			December 31, 2020
Assets
Noncurrent (1)(2)	Operating lease right-of-use asset	$	97,222		$	101,379

Liabilities
Current	Operating leases - current portion	$	33,561		$	34,257
Noncurrent	Operating leases - long-term portion	92,179			98,592
Total operating lease liabilities		$	125,740		$	132,849

Weighted-average remaining lease term		4.8 years			5.0 years
Weighted-average discount rate		4.2		%	4.3		%


2021 (remaining six months)	$	20,459
2022	33,738
2023	25,351
2024	19,715
2025	16,024
Thereafter	23,551
Total minimum lease payments	138,838
Less: interest	13,098
Present value of lease liabilities	$	125,740


Common stock authorized			11,000,000
Stock-based awards, including restricted stock and stock options granted, net of expired or cancelled awards			(3,014,210)
Common stock available for grant of stock-based awards as of June 30, 2021			7,985,790


	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2021	2,674,000	$	26.80
Granted	28,000	37.77
Exercised	(295,000)	23.15

Outstanding at June 30, 2021	2,407,000	$	27.37	3.0 years	$	—
Exercisable at June 30, 2021	2,054,000	$	27.17	2.9 years	$	—


	Wholesale						Net Carrying Amount
	Footwear		Accessories/ Apparel		Retail
Balance at January 1, 2021	$	91,097	$	62,688	$	14,480	$	168,265


Translation and other	115		—		46		161
Balance at June 30, 2021	$	91,212	$	62,688	$	14,526	$	168,426


	Six Months Ended June 30,
	2021			2020
	Number of Shares	Weighted Average Fair Value at Grant Date		Number of Shares	Weighted Average Fair Value at Grant Date
Outstanding at January 1,	3,651,000	$	20.81	4,427,000	$	19.84
Granted	297,000	38.65		402,000	33.63
Vested	(296,000)	27.93		(311,000)	27.72
Forfeited	(22,000)	35.82		(35,000)	26.40
Outstanding at June 30,	3,630,000	$	21.60	4,483,000	$	20.48


	Estimated Lives	Cost Basis		Accumulated Amortization		Currency Translation		Net Carrying Amount
Trade names	1–10 years	$	9,025	$	8,897	$	—	$	128
Customer relationships	10–20 years	38,680		22,216		(1,468)		14,996




		47,705		31,113		(1,468)		15,124
Re-acquired right	indefinite	35,200		—		(7,036)		28,164
Trademarks	indefinite	70,953		—		285		71,238
		$	153,858	$	31,113	$	(8,219)	$	114,526


As of and for the three months ended,	Wholesale Footwear		Wholesale Accessories/Apparel		Total Wholesale		Retail		First Cost		Licensing		Corporate (1)		Consolidated
June 30, 2021
Total revenue	$	198,113	$	64,011	$	262,124	$	132,673	$	334	$	2,763	$	—	$	397,894
Gross profit	65,396		14,775		80,171		86,787		334		2,763		—		170,055
Income from operations	$	44,157	$	(5,357)	$	38,800	$	25,800	$	432	$	2,686	$	(20,000)	$	47,718
Segment assets	$	321,096	$	421,299	$	742,395	$	244,162	$	69,223	$	76,047	$	41,316	$	1,173,143
Capital expenditures	$	181	$	15	$	196	$	98	$	—	$	—	$	889	$	1,183
June 30, 2020
Total revenue	$	77,966	$	22,018	$	99,984	$	41,379	$	252	$	1,197	$	—	$	142,812
Gross profit	21,744		4,806		26,550		27,889		252		1,197		—		55,888
Income/(loss) from operations	$	(1,226)	$	(1,328)	$	(2,554)	$	(6,649)	$	(95)	$	520	$	(14,924)	$	(23,702)
Segment assets	$	299,351	$	430,193	$	729,544	$	236,141	$	65,351	$	67,791	$	33,565	$	1,132,392
Capital expenditures	$	148	$	12	$	160	$	252	$	—	$	—	$	607	$	1,019

As of and for the six months ended,	Wholesale Footwear		Wholesale Accessories/Apparel		Total Wholesale		Retail		First Cost		Licensing		Corporate (1)		Consolidated
June 30, 2021
Total revenue	$	414,891	$	138,633	$	553,524	$	200,174	$	917	$	4,304	$	—	$	758,919
Gross profit	139,120		35,167		174,287		129,651		917		4,304		—		309,159
Income from operations	$	88,534	$	2,158	$	90,692	$	21,093	$	882	$	3,835	$	(40,740)	$	75,762
Segment assets	$	321,096	$	421,299	$	742,395	$	244,162	$	69,223	$	76,047	$	41,316	$	1,173,143
Capital expenditures	$	463	$	725	$	1,188	$	281	$	—	$	—	$	1,313	$	2,782
June 30, 2020
Total revenue	$	313,035	$	89,690	$	402,725	$	94,322	$	1,502	$	3,431	$	—	$	501,980
Gross profit	101,528		23,318		124,846		59,573		1,502		3,431		—		189,352
Income/(loss) from operations	$	39,827	$	(7,807)	$	32,020	$	(49,652)	$	369	$	1,468	$	(34,155)	$	(49,950)
Segment assets	$	299,351	$	430,193	$	729,544	$	236,141	$	65,351	$	67,791	$	33,565	$	1,132,392
Capital expenditures	$	453	$	79	$	532	$	966	$	—	$	—	$	2,822	$	4,320
(1) Revised to present unallocated corporate expenses separately for all periods presented. Corporate does not constitute as a reportable segment and includes costs not directly attributable to the segments that are primarily related to costs associated with corporate executives, corporate finance, corporate social responsibility, legal, human resources, information technology, cyber security and other shared costs.


	Payment due by period
Contractual Obligations	Total		Remainder of 2021		2022-2023		2024-2025		2026 and after
Operating lease obligations	$	138,838	$	20,459	$	59,089	$	35,739	$	23,551
Purchase obligations	42,810		42,810		—		—		—

Future minimum royalty and advertising payments	17,813		4,125		13,688		—		—
Transition tax	14,847		1,563		4,493		8,791		—
Total	$	214,308	$	68,957	$	77,270	$	44,530	$	23,551


2021 (remaining six months)	$	981
2022	1,730
2023	1,730
2024	1,730
2025	1,730
Thereafter	7,223
Total	$	15,124



		Three Months Ended June 30,				Six Months Ended June 30,
Forward Contracts:	Location of Gain or Loss Recognized in Net Income on Derivative	Gain/(Loss) Recognized in Accumulated OCI		Gain/(Loss) Reclassified into Income From Accumulated OCI		Gain/(Loss) Recognized in Accumulated OCI		Gain/(Loss) Reclassified into Income From Accumulated OCI
2021	Cost of Sales (exclusive of depreciation and amortization)	$	(17)	$	(214)	$	606	$	(711)
2020	Cost of Sales (exclusive of depreciation and amortization)	(557)		30		630		206


	2021				2020
CONSOLIDATED:
Net sales	$	394,797	99.2	%	$	141,363	99.0	%
Commission and licensing income	3,097		0.8	%	1,449		1.0	%
Total revenue	397,894		100.0	%	142,812		100.0	%
Cost of sales (exclusive of depreciation and amortization)	227,839		57.3	%	86,924		60.9	%
Gross profit	170,055		42.7	%	55,888		39.1	%
Operating expenses	121,860		30.6	%	78,412		54.9	%
Impairment of fixed assets and lease right-of-use assets	477		0.1	%	1,178		0.8	%

Income/(loss) from operations	47,718		12.0	%	(23,702)		(16.6	%)
Interest and other (expense)/ income – net	(777)		(0.2)	%	357		0.2	%
Income/(loss) before provision (benefit) for income taxes	46,941		11.8	%	(23,345)		(16.3	%)
Net income/(loss) attributable to Steven Madden, Ltd.	$	36,852	9.3	%	$	(16,586)	(11.6	%)

BY SEGMENT:
WHOLESALE FOOTWEAR SEGMENT:
Total Revenue	$	198,113	100.0	%	$	77,966	100.0	%
Cost of sales (exclusive of depreciation and amortization)	132,717		67.0	%	56,222		72.1	%
Gross profit	65,396		33.0	%	21,744		27.9	%
Operating expenses	21,239		10.7	%	22,970		29.5	%

Income/(loss) from operations	$	44,157	22.3	%	$	(1,226)	(1.6	%)

WHOLESALE ACCESSORIES/APPAREL SEGMENT:
Total Revenue	$	64,011	100.0	%	$	22,018	100.0	%
Cost of sales (exclusive of depreciation and amortization)	49,236		76.9	%	17,212		78.2	%
Gross profit	14,775		23.1	%	4,806		21.8	%
Operating expenses	19,655		30.7	%	6,134		27.9	%
Impairment of fixed assets and lease right-of-use assets	477		0.7	%	—		—	%

(Loss) from operations	$	(5,357)	(8.4)	%	$	(1,328)	(6.0	%)

RETAIL SEGMENT:
Total Revenue	$	132,673	100.0	%	$	41,379	100.0	%
Cost of sales (exclusive of depreciation and amortization)	45,886		34.6	%	13,490		32.6	%
Gross profit	86,787		65.4	%	27,889		67.4	%
Operating expenses	60,987		46.0	%	33,360		80.6	%
Impairment of fixed assets and lease right-of-use assets	—		—	%	1,178		2.8	%

Income/(loss) from operations	$	25,800	19.4	%	$	(6,649)	(16.1	%)
Number of stores	216				225

FIRST COST SEGMENT:
Commission income	$	334	100.0	%	$	252	100.0	%
Gross profit	334		100.0	%	252		100.0	%
Operating (benefit)/ expenses	(98)		(29.3)	%	347		137.7	%
Income/(loss) from operations	$	432	129.3	%	$	(95)	(37.7	%)

LICENSING SEGMENT:
Licensing income	$	2,763	100.0	%	$	1,197	100.0	%
Gross profit	2,763		100.0	%	1,197		100.0	%
Operating expenses	77		2.8	%	677		56.6	%
Income from operations	$	2,686	97.2	%	$	520	43.4	%

Corporate:
Operating expenses	$	(20,000)	—	%	(14,924)		—	%
Loss from operations	$	(20,000)	—	%	$	(14,924)	—	%


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share (1)		Maximum Dollar Amount of Shares that May Yet Be Purchased Under the Plans or Programs
4/1/2021 - 4/30/2021	13,628	$	37.66	$	109,554
5/1/2021 - 5/31/2021	358,137	41.21		95,058
6/1/2021 - 6/30/2021	504,476	43.54		80,912
Total	876,241	$	42.50


31.1			Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 †
31.2			Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 †
32.1			Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 †*
32.2			Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 †*
101			The following materials from Steven Madden, Ltd.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income/(Loss), (iii) the Condensed Consolidated Statements of Comprehensive Income/(Loss), (iv) the Condensed Consolidated Statements of Changes in Stockholders' Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text*
104			Cover Page Interactive Data File, formatted in Inline Extensible Business Reporting Language (iXBRL).*



†			Filed herewith
*			This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any filing, except to the extent the Company specifically incorporates it by reference.


STEVEN MADDEN, LTD.

/s/ EDWARD R. ROSENFELD
Edward R. Rosenfeld
Chairman and Chief Executive Officer

/s/ ZINE MAZOUZI
Zine Mazouzi
Chief Financial Officer