(Mark
One)
|
x
|
QUARTERLY REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
o
|
TRANSITION REPORT UNDER SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Illinois
|
36-3442829
|
(State
or Other Jurisdiction of Incorporation
or
Organization)
|
(I.R.S.
Employer Identification No.)
|
Indicate
by check mark whether the registrant (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the past 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No o
|
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer or a smaller reporting
company. See definition of “large accelerated filer”, “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act. (Check one):
|
Large accelerated filer
o Accelerated
filer o Non-accelerated
filer o
Smaller reporting company x
|
Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes o No x
|
APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed
all documents and reports required to be filed by Sections 12, 13 or 15(d)
of the Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. Yes o No o
|
As
of August 1, 2008, the issuer had 16,732,101 shares of common
stock, no par value, outstanding.
|
PART
I —
|
FINANCIAL
INFORMATION
|
Page(s)
|
|
ITEM
1.
|
FINANCIAL
STATEMENTS
|
4 -
7
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
8 -
19
|
||
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
20
|
|
ITEM
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
22
|
|
ITEM
4T.
|
CONTROLS
AND PROCEDURES
|
22
|
|
PART
II —
|
OTHER
INFORMATION
|
||
ITEM
1.
|
LEGAL
PROCEEDINGS
|
22
|
|
ITEM
1A.
|
RISK
FACTORS
|
23
|
|
ITEM
2.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
23
|
|
ITEM
3.
|
DEFAULTS
UPON SENIOR SECURITIES
|
23
|
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
23
|
|
ITEM
5.
|
OTHER
INFORMATION
|
24
|
|
ITEM
6.
|
EXHIBITS
|
24
|
|
SIGNATURES
|
25
|
||
EXHIBIT
INDEX
|
26
|
(Unaudited)
|
||||||||||||
June
30
|
December
31,
|
|||||||||||
2008
|
2007
|
2007
|
||||||||||
ASSETS
|
||||||||||||
Current
assets
|
||||||||||||
Cash
and cash equivalents
|
$ | 342,039 | $ | 1,014,433 | $ | 595,885 | ||||||
Marketable
securities
|
6,472,027 | 8,424,517 | 6,989,474 | |||||||||
Inventories
|
3,851,725 | 3,510,597 | 3,506,554 | |||||||||
Accounts
receivable, net of allowance for doubtful accounts of $35,011 and
$39,460 at June 30, 2008 and 2007 and $39,460 at December 31,
2007
|
4,626,287 | 4,602,313 | 4,209,662 | |||||||||
Prepaid
expenses and other current assets
|
12,582 | 13,206 | 21,253 | |||||||||
Other
receivables
|
49,571 | 40,295 | 43,111 | |||||||||
Deferred
income taxes
|
602,227 | 73,168 | 311,960 | |||||||||
Refundable
income taxes
|
— | — | 240,880 | |||||||||
Total
current assets
|
15,956,458 | 17,678,529 | 15,918,779 | |||||||||
Property
and equipment, net
|
10,769,676 | 8,819,215 | 9,678,948 | |||||||||
Intangible
assets
|
||||||||||||
Goodwill
|
5,414,858 | 3,952,425 | 5,414,858 | |||||||||
Other
intangible assets, net of accumulated amortization of $761,699 and
$439,982 at June 30, 2008 and 2007 and $601,976 at December
31, 2007
|
3,095,939 | 3,423,514 | 3,255,662 | |||||||||
Total
intangible assets
|
8,510,797 | 7,375,939 | 8,670,520 | |||||||||
Other
assets
|
500,000 | — | 500,000 | |||||||||
Total
assets
|
$ | 35,736,931 | $ | 33,873,683 | $ | 34,268,247 | ||||||
LIABILITIES AND
STOCKHOLDERS’ EQUITY
|
||||||||||||
Current
liabilities
|
||||||||||||
Current
maturities of notes payable
|
$ | 1,130,612 | $ | 1,130,316 | $ | 1,136,126 | ||||||
Accounts
payable
|
1,873,644 | 1,527,164 | 1,594,330 | |||||||||
Accrued
expenses
|
548,706 | 386,749 | 414,039 | |||||||||
Margin
payable
|
407,479 | — | — | |||||||||
Accrued
income taxes
|
395,093 | 31,802 | — | |||||||||
Total
current liabilities
|
4,355,534 | 3,076,031 | 3,144,495 | |||||||||
Notes
payable
|
3,517,841 | 4,843,282 | 4,096,797 | |||||||||
Deferred
income taxes
|
1,647,550 | 466,673 | 1,712,795 | |||||||||
Stockholders’
equity
|
||||||||||||
Common
stock, no par value; 20,000,000 shares authorized; 17,273,776 shares
issued; 16,740,407 shares outstanding at June 30, 2008; 17,273,776 shares
issued; 16,889,237 shares outstanding at June 30, 2007; and 17,273,776
shares issues; 16,897,726 shares outstanding at December 31,
2007
|
6,509,267 | 6,509,267 | 6,509,267 | |||||||||
Paid-in-capital
|
1,149,068 | 1,086,591 | 1,120,669 | |||||||||
Treasury
stock, at cost
|
(3,110,637 | ) | (2,085,666 | ) | (2,078,165 | ) | ||||||
Retained
earnings
|
22,271,730 | 19,850,129 | 20,471,432 | |||||||||
Accumulated
other comprehensive income (loss), net of taxes
|
(603,422 | ) | 127,376 | (209,043 | ) | |||||||
Total
stockholders’ equity
|
26,216,006 | 25,487,697 | 25,814,160 | |||||||||
Total
liabilities and stockholders’ equity
|
$ | 35,736,931 | $ | 33,873,683 | $ | 34,768,247 |
(Unaudited)
|
(Unaudited)
|
|||||||||||||||||||
Three
Months Ended
|
Six
Months Ended
|
Year
Ended
|
||||||||||||||||||
June
30,
|
June
30,
|
December
31,
|
||||||||||||||||||
2008
|
2007
|
2008
|
2007
|
2007
|
||||||||||||||||
Sales
|
$ | 11,523,393 | $ | 9,715,262 | $ | 22,645,631 | $ | 18,737,506 | $ | 38,729,156 | ||||||||||
Cost
of goods sold
|
7,455,696 | 5,699,883 | 14,897,779 | 10,984,414 | 25,582,981 | |||||||||||||||
Depreciation
expense
|
195,128 | 186,303 | 384,552 | 351,597 | 726,647 | |||||||||||||||
Total
cost of goods sold
|
7,650,824 | 5,886,186 | 15,282,331 | 11,336,011 | 26,309,628 | |||||||||||||||
Gross
profit
|
3,872,569 | 3,829,076 | 7,363,300 | 7,401,495 | 12,419,528 | |||||||||||||||
Selling
Expenses
|
1,154,126 | 912,262 | 2,213,292 | 1,682,343 | 3,744,388 | |||||||||||||||
General
and Administrative
|
1,092,420 | 1,074,530 | 2,077,466 | 1,995,103 | 3,914,825 | |||||||||||||||
Amortization
expense
|
79,862 | 80,997 | 159,723 | 161,272 | 323,266 | |||||||||||||||
Total
Operating Expenses
|
2,326,408 | 2,067,789 | 4,450,481 | 3,838,718 | 7,982,479 | |||||||||||||||
Income
from operations
|
1,546,161 | 1,761,287 | 2,912,819 | 3,562,777 | 4,437,049 | |||||||||||||||
Other
income (expense):
|
||||||||||||||||||||
Interest
and dividend income
|
62,862 | 98,365 | 165,995 | 164,164 | 350,286 | |||||||||||||||
Rental
Income
|
11,647 | 9,581 | 23,294 | 18,181 | 48,305 | |||||||||||||||
Interest
expense
|
(68,969 | ) | (109,283 | ) | (154,924 | ) | (218,812 | ) | (410,180 | ) | ||||||||||
Gain
(loss) on sale of marketable securities, net
|
(87,174 | ) | 439,586 | (36,145 | ) | 454,331 | 539,739 | |||||||||||||
Total
other income (Expense)
|
(81,634 | ) | 438,249 | (1,780 | ) | 417,864 | 528,150 | |||||||||||||
Income
before provision for income taxes
|
1,464,527 | 2,199,536 | 2,911,039 | 3,980,641 | 4,965,199 | |||||||||||||||
Provision
for income taxes
|
552,809 | 803,510 | 1,110,715 | 1,449,284 | 1,812,539 | |||||||||||||||
Net
income
|
$ | 911,718 | $ | 1,396,026 | $ | 1,800,324 | $ | 2,531,357 | $ | 3,152,660 | ||||||||||
Basic
and diluted earnings per common share
|
0.05 | 0.08 | 0.11 | 0.15 | 0.19 | |||||||||||||||
Weighted
average number of shares outstanding
|
16,765,094 | 16,875,905 | 16,789,727 | 16,885,586 | 16,855,611 | |||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Net
income
|
$ | 911,718 | $ | 1,396,026 | $ | 1,800,324 | $ | 2,531,357 | $ | 3,152,660 | ||||||||||
Other
comprehensive income (loss), net of tax:
|
||||||||||||||||||||
Unrealized
gains (losses) on marketable securities (net of tax
benefits)
|
(233,221 | ) | 144,485 | (415,596 | ) | 238,834 | (47,091 | ) | ||||||||||||
Less
reclassification adjustment for (gains) losses included in net
income (net of taxes)
|
51,171 | (258,037 | ) | 21,217 | (265,228 | ) | (315,721 | ) | ||||||||||||
Comprehensive
income
|
$ | 729,668 | $ | 1,282,475 | $ | 1,405,945 | $ | 2,504,963 | $ | 2,789,848 |
Common
Stock,
|
||||||||||||||||||||||||||||||||||||
No
Par Value
|
#
of
|
Accumulated
|
||||||||||||||||||||||||||||||||||
20,000,000
Shares
|
Shares
|
Other
|
||||||||||||||||||||||||||||||||||
Authorized
|
of
|
Comprehensive
|
||||||||||||||||||||||||||||||||||
#
of Shares
|
#
of Shares
|
Treasury
|
Common
|
Paid
In
|
Treasury
|
Retained
|
Income
(Loss),
|
|||||||||||||||||||||||||||||
Issued
|
Outstanding
|
Stock
|
Stock
|
Capital
|
Stock
|
Earnings
|
Net
of Tax
|
Total
|
||||||||||||||||||||||||||||
Balances
at December 31, 2006
|
17,273,776 | 16,897,826 | 375,950 | 6,509,267 | 1,080,911 | (1,334,313 | ) | 17,318,772 | 153,770 | 23,728,407 | ||||||||||||||||||||||||||
Redemption
of stock
|
— | (75,000 | ) | 75,000 | — | — | (752,603 | ) | — | — | (752,603 | ) | ||||||||||||||||||||||||
Issuance
of treasury stock for compensation
|
— | 4,900 | (4,900 | ) | — | 39,758 | 8,751 | — | — | 48,509 | ||||||||||||||||||||||||||
Other
comprehensive income (loss):
|
||||||||||||||||||||||||||||||||||||
Unrealized
losses on securities, net of taxes and reclassification
adjustment
|
— | — | — | — | — | — | — | (362,813 | ) | (362,813 | ) | |||||||||||||||||||||||||
Net
income for the year ended December 31, 2007
|
— | — | — | — | — | — | 3,152,660 | — | 3,152,660 | |||||||||||||||||||||||||||
Balances
at December 31, 2007
|
17,273,776 | 16,827,726 | 446,050 | 6,509,267 | 1,120,669 | (2,078,165 | ) | 20,471,432 | (209,043 | ) | 25,814,160 | |||||||||||||||||||||||||
Redemption
of stock
|
— | (90,819 | ) | 90,819 | — | — | (1,038,723 | ) | — | — | (1,038,723 | ) | ||||||||||||||||||||||||
Issuance
of treasury stock for compensation
|
— | 3,500 | (3,500 | ) | — | 28,399 | 6,251 | — | — | 34,650 | ||||||||||||||||||||||||||
Other
comprehensive income (loss):
|
||||||||||||||||||||||||||||||||||||
Unrealized
gains on securities, net of taxes and reclassification
adjustment
|
— | — | — | — | — | — | — | (394,379 | ) | (394,379 | ) | |||||||||||||||||||||||||
Net
income for the six months ended June 30, 2008
|
— | — | — | — | — | — | 1,800,324 | — | 1,800,324 | |||||||||||||||||||||||||||
Balances
at June 30, 2008
|
17,273,776 | 16,740,407 | 533,369 | $ | 6,509,267 | $ | 1,149,068 | $ | (3,110,637 | ) | $ | 22,271,756 | $ | (603,422 | ) | $ | 26,216,032 |
(Unaudited)
|
||||||||||||
Six
Months Ended
|
||||||||||||
June
30,
|
December
31,
|
|||||||||||
2008
|
2007
|
2007
|
||||||||||
Cash flows from
operating activities:
|
||||||||||||
Net
income
|
$ | 1,800,324 | $ | 2,531,357 | $ | 3,152,660 | ||||||
Adjustments
to reconcile net income to net cash flows from operating
activities, net of acquisition:
|
||||||||||||
Depreciation
and amortization
|
544,275 | 512,869 | 1,049,913 | |||||||||
(Gain)Loss
on sale of marketable securities, net
|
36,145 | (454,331 | ) | (539,739 | ) | |||||||
Deferred
income taxes
|
(78,035 | ) | (5,303 | ) | (223,717 | ) | ||||||
Treasury
stock issued for compensation
|
34,650 | 6,930 | 48,509 | |||||||||
Increase
(decrease) in allowance for doubtful accounts
|
(4,449 | ) | (40,540 | ) | (40,540 | ) | ||||||
(Increase)
decrease in operating assets:
|
||||||||||||
Accounts
receivable
|
(412,176 | ) | (619,056 | ) | (226,405 | ) | ||||||
Other
receivables
|
(6,460 | ) | 30,755 | 27,939 | ||||||||
Inventories
|
(345,171 | ) | (988,401 | ) | (984,358 | ) | ||||||
Refundable
income taxes
|
240,880 | 267,771 | 26,891 | |||||||||
Prepaid
expenses and other current assets
|
8,950 | (1,224 | ) | (9,270 | ) | |||||||
Increase
(decrease) in operating liabilities:
|
||||||||||||
Accounts
payable
|
279,314 | 64,150 | 131,316 | |||||||||
Accrued
expenses
|
134,667 | (93,352 | ) | (66,062 | ) | |||||||
Accrued
income taxes
|
395,093 | 31,802 | ||||||||||
Net
cash provided by operating activities
|
2,628,007 | 1,243,427 | 2,347,137 | |||||||||
Cash flows from
investing activities:
|
||||||||||||
Investment
in cost method securities
|
— | — | (500,000 | ) | ||||||||
Purchases
of marketable securities
|
(3,490,650 | ) | (3,274,563 | ) | (5,744,697 | ) | ||||||
Sale
of marketable securities
|
3,299,791 | 3,750,770 | 7,168,246 | |||||||||
Increase
in margin payable
|
407,479 | — | — | |||||||||
Purchases
of property and equipment
|
(1,475,280 | ) | (590,096 | ) | (1,824,879 | ) | ||||||
Purchases
of organizational costs
|
— | (5,858 | ) | — | ||||||||
Net
cash used in investing activities
|
(1,258,660 | ) | (119,747 | ) | (901,330 | ) | ||||||
Cash flows from
financing activities:
|
||||||||||||
Proceeds
of note payable
|
— | — | 300,000 | |||||||||
Purchases
of treasury stock, net
|
(1,038,723 | ) | (752,603 | ) | (752,603 | ) | ||||||
Repayment
of notes payable
|
(584,470 | ) | (904,456 | ) | (1,945,131 | ) | ||||||
Net
cash used in financing activities
|
(1,623,193 | ) | (1,657,059 | ) | (2,397,734 | ) | ||||||
Net
decrease in cash and cash equivalents
|
(253,846 | ) | (533,379 | ) | (951,927 | ) | ||||||
Cash
and cash equivalents at the beginning of the period
|
595,885 | 1,547,812 | 1,547,812 | |||||||||
Cash
and cash equivalents at the end of the period
|
$ | 342,039 | $ | 1,014,433 | $ | 595,885 |
June
30,
|
December
31,
|
|||||||||||
2008
|
2007
|
2007
|
||||||||||
Amounts
insured
|
$ | 251,589 | $ | 240,374 | $ | 576,563 | ||||||
Uninsured
and uncollateralized amounts
|
889,463 | 1,185,137 | 523,295 | |||||||||
Total
bank balances
|
$ | 1,141,052 | $ | 1,425,511 | $ | 1,099,858 |
Category
|
Years
|
|
Buildings
and improvements
|
31
and 39
|
|
Machinery
and equipment
|
5 –
12
|
|
Office
equipment
|
5 –
7
|
|
Vehicles
|
5
|
Category
|
Years
|
|
Recipes
|
4
|
|
Customer
lists and other customer
related intangibles
|
15
|
|
Lease
agreement
|
7
|
|
Trade
names
|
15
|
|
Formula
|
10
|
|
Customer
relationships
|
12
|
June
30, 2008
|
June
30, 2007
|
December
31, 2007
|
||||||||||||||||||||||
Cost
|
Accumulated
Amortization
|
Cost
|
Accumulated
Amortization
|
Cost
|
Accumulated
Amortization
|
|||||||||||||||||||
Recipes
|
$ | 43,600 | $ | 40,420 | $ | 43,600 | $ | 31,792 | $ | 43,600 | $ | 37,242 | ||||||||||||
Customer
lists and other customer related intangibles
|
305,200 | 162,228 | 305,200 | 120,809 | 305,200 | 141,518 | ||||||||||||||||||
Lease
acquisition
|
87,200 | 48,790 | 87,200 | 36,333 | 87,200 | 42,562 | ||||||||||||||||||
Other
|
6,638 | 3,984 | 12,496 | 2,655 | 6,638 | 3,319 | ||||||||||||||||||
Customer
relationship
|
985,000 | 157,327 | 985,000 | 75,243 | 985,000 | 116,285 | ||||||||||||||||||
Contractual
backlog
|
12,000 | 12,000 | 12,000 | 12,000 | 12,000 | 12,000 | ||||||||||||||||||
Trade
names
|
1,980,000 | 253,000 | 1,980,000 | 121,000 | 1,980,000 | 187,000 | ||||||||||||||||||
Formula
|
438,000 | 83,950 | 438,000 | 40,150 | 438,000 | 62,050 | ||||||||||||||||||
$ | 3,857,638 | $ | 761,699 | $ | 3,863,496 | $ | 439,982 | $ | 3,857,638 | $ | 601,976 |
2009
|
$ |
316,267
|
||
2010
|
312,424
|
|||
2011
|
296,812
|
|||
2012
|
290,583
|
|||
2013
|
290,583
|
|||
Thereafter
|
1,589,270
|
|||
$ |
3,095,939
|
June 30,
2008
|
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Fair
Value
|
||||||||||||
Equities
|
$ | 3,190,184 | $ | 58,147 | $ | (569,316 | ) | $ | 2,679,015 | |||||||
Mutual
Funds
|
827,737 | 4,371 | (138,044 | ) | 694,064 | |||||||||||
Preferred
Securities
|
1,657,944 | 4,395 | (304,967 | ) | 1,357,372 | |||||||||||
Corporate
Bonds
|
1,288,708 | 387 | (73,012 | ) | 1,216,083 | |||||||||||
Municipal
Bonds
|
4,586 | 352 | — | 4,938 | ||||||||||||
Government
agency Obligations
|
530,845 | — | (10,290 | ) | 520,555 | |||||||||||
Total
|
$ | 7,500,004 | $ | 67,652 | $ | (1,095,629 | ) | $ | 6,472,027 |
June 30,
2007
|
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Fair
Value
|
||||||||||||
Equities
|
$ | 3,256,941 | $ | 353,339 | $ | (64,034 | ) | $ | 3,546,246 | |||||||
Mutual
Funds
|
669,255 | 1,369 | (27,125 | ) | 643,499 | |||||||||||
Preferred
Securities
|
1,571,498 | 55 | (51,152 | ) | 1,520,401 | |||||||||||
Private
Investment LP
|
600,000 | 126,598 | — | 726,598 | ||||||||||||
Certificates
of Deposit
|
75,000 | — | (1,242 | ) | 73,758 | |||||||||||
Corporate
Bonds
|
1,886,329 | 1,298 | (121,258 | ) | 1,766,369 | |||||||||||
Municipal
Bonds
|
24,591 | 127 | (980 | ) | 23,738 | |||||||||||
Government
agency
|
124,879 | — | (971 | ) | 123,908 | |||||||||||
Total
|
$ | 8,208,493 | $ | 482,786 | $ | (266,762 | ) | $ | 8,424,517 |
December 31,
2007
|
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Fair
Value
|
||||||||||||
Equities
|
$ | 3,037,507 | $ | 331,776 | $ | (309,014 | ) | $ | 3,060,269 | |||||||
Mutual
Funds
|
946,357 | 4,978 | (104,529 | ) | 846,806 | |||||||||||
Preferred
Securities
|
1,776,750 | 40,020 | (241,726 | ) | 1,575,044 | |||||||||||
Corporate
Bonds
|
1,480,433 | 1,556 | (79,433 | ) | 1,402,556 | |||||||||||
Municipal
Bonds
|
4,586 | 253 | — | 4,839 | ||||||||||||
Government
agency Obligations
|
100,000 | — | (40 | ) | 99,960 | |||||||||||
Total
|
$ | 7,345,633 | $ | 378,583 | $ | (734,742 | ) | $ | 6,989,474 |
Less
Than 12 Months
|
12
Months or Greater
|
Total
|
||||||||||||||||||||||
Description
of Securities
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
||||||||||||||||||
Equities
|
$ | 1,871,145 | $ | (345,239 | ) | $ | 332,711 | $ | (224,077 | ) | $ | 2,203,856 | $ | (569,316 | ) | |||||||||
Mutual
Funds
|
320,706 | (67,332 | ) | 274,291 | (70,711 | ) | 594,997 | (138,043 | ) | |||||||||||||||
Preferred
Securities
|
389,072 | (46,185 | ) | 875,900 | (258,782 | ) | 1,264,972 | (304,967 | ) | |||||||||||||||
Corporate
Bonds
|
527,880 | (15,806 | ) | 671,766 | (57,207 | ) | 1,199,646 | (73,013 | ) | |||||||||||||||
Government
Agency Obligations
|
520,555 | (10,290 | ) | — | — | 520,555 | (10,290 | ) | ||||||||||||||||
$ | 3,629,358 | $ | (484,852 | ) | $ | 2,154,668 | $ | (610,777 | ) | $ | 5,784,026 | $ | (1,095,629 | ) |
June
30,
|
December
31,
|
|||||||||||
2008
|
2007
|
2007
|
||||||||||
Finished
goods
|
$ | 1,276,812 | $ | 1,495,651 | $ | 1,296,985 | ||||||
Production
supplies
|
1,476,944 | 1,265,816 | 1,383,384 | |||||||||
Raw
materials
|
1,097,969 | 749,130 | 826,185 | |||||||||
Total
inventories
|
$ | 3,851,725 | $ | 3,510,597 | $ | 3,506,554 |
June
30,
|
December
31
|
|||||||||||
2008
|
2007
|
2007
|
||||||||||
Land
|
$ | 969,232 | $ | 969,232 | $ | 969,232 | ||||||
Buildings
and improvements
|
7,054,840 | 6,726,538 | 6,743,647 | |||||||||
Machinery
and equipment
|
8,199,914 | 7,665,098 | 8,159,199 | |||||||||
Vehicles
|
581,458 | 581,458 | 581,458 | |||||||||
Office
equipment
|
116,203 | 97,839 | 101,583 | |||||||||
Construction
in process
|
1,828,582 | — | 719,830 | |||||||||
18,750,229 | 16,040,165 | 17,274,949 | ||||||||||
Less
accumulated depreciation
|
7,980,553 | 7,220,950 | 7,596,001 | |||||||||
Total
property and equipment
|
$ | 10,769,676 | $ | 8,819,215 | $ | 9,678,948 |
June
30,
|
December
31,
|
|||||||||||
2008
|
2007
|
2007
|
||||||||||
Accrued
payroll and payroll taxes
|
$ | 243,876 | $ | 52,695 | $ | 58,395 | ||||||
Accrued
property tax
|
293,712 | 273,359 | 285,279 | |||||||||
Other
|
11,118 | 60,695 | 70,365 | |||||||||
$ | 548,706 | $ | 386,749 | $ | 414,039 |
June
30,
|
December
31,
|
|||||||||||
2008
|
2007
|
2007
|
||||||||||
Mortgage
note payable to a bank, payable in monthly installments of $3,273
including interest at 7%, with a balloon payment of $416,825 due September
25, 2011. Collateralized by real estate.
|
$ | 443,275 | $ | 449,870 | $ | 446,450 | ||||||
Mortgage
note payable to a bank, payable in monthly installments of $19,513
including interest at 5.6%, with a balloon payment of $2,652,143 due July
14, 2010. Collateralized by real estate.
|
2,798,264 | 2,870,749 | 2,834,970 | |||||||||
Note
payable to Amani Holding LLC, payable in quarterly installments of
$262,500 plus interest at the floating prime rate per annum (7.25% at
December 31, 2007) due September 1, 2010 secured by letter of
credit
|
1,406,914 | 2,652,979 | 1,951,503 | |||||||||
Total
notes payable
|
4,648,453 | 5,973,598 | 5,232,923 | |||||||||
Less
current maturities
|
1,130,612 | 1,130,316 | 1,136,126 | |||||||||
Total
long-term portion
|
$ | 3,571,841 | $ | 4,843,282 | $ | 4,096,797 |
For
the Year Ended June 30,
|
|||||
2009
|
$ | 1,130,612 | |||
2010
|
437,207 | ||||
2011
|
2,661,919 | ||||
2012
|
418,715 | ||||
Total
|
$ | 4,648,453 |
For
the
|
||||||||||||
For
the Six Months Ended
|
Year
Ended
|
|||||||||||
June
30,
|
December
31,
|
|||||||||||
2008
|
2007
|
2007
|
||||||||||
Current:
|
||||||||||||
Federal
|
$ | 969,123 | $ | 1,198,853 | $ | 1,699,408 | ||||||
State
and local
|
219,627 | 255,734 | 336,848 | |||||||||
Total
current
|
1,188,750 | 1,454,587 | 2,036,256 | |||||||||
Deferred
|
(78,035 | ) | (5,303 | ) | (223,717 | ) | ||||||
Provision
for income taxes
|
$ | 1,110,715 | $ | 1,449,284 | $ | 1,812,539 |
For
the
|
||||||||||||
For
the Six Months Ended
|
Year
Ended
|
|||||||||||
June
30,
|
December
31,
|
|||||||||||
2008
|
2007
|
2007
|
||||||||||
Federal
income tax expense computed
at the statutory rate
|
$ | 989,753 | $ | 1,353,416 | $ | 1,688,168 | ||||||
State
and local tax expense, net
|
139,730 | 191,071 | 238,330 | |||||||||
Permanent
differences
|
(18,768 | ) | (95,203 | ) | (113,969 | ) | ||||||
Provision
for income taxes
|
$ | 1,110,715 | $ | 1,449,284 | $ | 1,812,529 |
June
30,
|
December
|
|||||||||||
2008
|
2007
|
2007
|
||||||||||
Non-current
deferred tax liabilities arising
from:
Temporary
differences -
|
||||||||||||
accumulated
depreciation and amortization
|
$ | (1,647,550 | ) | $ | (466,673 | ) | $ | (1,712,795 | ) | |||
Current
deferred tax assets (liabilities) arising from:
|
||||||||||||
Unrealized
losses (gains) on marketable securities
|
424,555 | (89,619 | ) | 147,077 | ||||||||
Inventory
|
163,212 | 146,489 | 148,586 | |||||||||
Allowance
for doubtful accounts
|
14,460 | 16,298 | 16,297 | |||||||||
Total
current deferred tax assets (liabilities)
|
602,227 | 73,168 | 311,960 | |||||||||
Net
deferred tax liability
|
$ | (1,045,323 | ) | $ | (393,505 | ) | $ | (1,400,835 | ) |
For
the
|
||||||||||||
For
the Years Ended
|
Year
Ended
|
|||||||||||
June
30,
|
December
31,
|
|||||||||||
2008
|
2007
|
2007
|
||||||||||
Interest
|
$ | 154,924 | $ | 110,903 | $ | 430,098 | ||||||
Income
taxes
|
$ | 552,777 | $ | 1,176,031 | $ | 2,026,031 |
Quoted
Prices in Active Markets for Identical Assets (Level 1)
|
Significant
Other Observable Inputs
(Level
2)
|
Significant
Unobservable
Inputs
(Level
3)
|
Balance
at
June
30, 2008
|
|||||||||||||
Assets
|
||||||||||||||||
Investment
securities- available - for - sale
|
$ | 6,472,027 | $ | — | $ | — | $ | 6,472,027 |
(a)
|
Not
applicable.
|
(b)
|
Not
applicable.
|
(c)
|
Purchases
of Equity Securities
|
Period
|
Total
Number of Shares
Purchased
|
Average Price Paid per Share |
Total
Number of Shares Purchased as Part of Publicly Announced Plans or
Programs
|
Maximum
Number of Shares that May Yet Be Purchased Under the Plans or
Programs
|
||||||||||||
Month
#1 April 1, 2008 – April 30, 2008
|
21,745
|
$ |
12.80
|
21,745
|
41,255
|
|||||||||||
Month
#2 May 1, 2008 – May 31, 2008
|
24,418
|
12.47
|
24,418
|
16,837
|
||||||||||||
Month
#3 June 1, 2008 – June 30, 2008
|
7,656
|
12.12
|
7,656
|
9,181
|
||||||||||||
Total
|
53,819
|
$ |
12.55
|
53,819
|
9,181
|
Proposal 1 |
For
|
Withhold
|
|||
Election of Directors | |||||
Director | |||||
Ludmila
Smolyansky
|
16,104,479
|
520,882
|
|||
96.87%
|
3.13%
|
||||
Julie
Smolyansky
|
16,106,079
|
519,282
|
|||
96.88%
|
3.12%
|
||||
Pol
Sikar
|
16,597,264
|
28,097
|
|||
99.83%
|
0.17%
|
||||
Renzo
Bernardi
|
16,597,544
|
27,817
|
|||
99.83%
|
0.17%
|
||||
Juan
Carlos Dalto
|
16,594,044
|
31,317
|
|||
99.81%
|
0.19%
|
||||
Julie
Oberweis
|
16,592,833
|
32,528
|
|||
99.80%
|
0.20%
|
Proposal 2 |
For
|
Against
|
Abstain
|
|||
Auditor Ratification | ||||||
Plante and
Moran
|
13,121,360
|
37,391
|
3,466,610
|
|||
Total Votes Represented by Proxy |
16,625,361
|
|||||
Percentage of the Outstanding Votable Shares |
99.19%
|
|||||
Outstanding Votable Shares |
16,761,863
|
Exhibit
|
||
Number
|
Description
of Document
|
|
3.4
|
Amended
and Restated By-laws (incorporated by reference to
Exhibit No. 3.5 of Lifeway’s Current Report on
Form 8-K dated and filed on December 10, 2002). (File
No. 000-17363)
|
|
3.5
|
Articles
of Incorporation, as amended and currently in effect (incorporated by
reference to Exhibit 3.5 of Lifeway’s Quarterly Report on
Form 10-QSB for the quarter ended June 30, 2000 and filed on
August 8, 2000). (File No. 000-17363)
|
|
31.1
|
Officer’s
Certificate Pursuant to 15 U.S.C. 7241, as Adopted Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
|
|
31.2
|
Officer’s
Certificate Pursuant to 15 U.S.C. 7241, 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, as 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, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
99.1 | Press Release dated August 14, 2008. "Lifeway Foods Reports Record 2nd Quarter and First Half 2008 Results." |
Date:
|
August
14, 2008
|
By:
|
/s/
Julie Smolyansky
|
||
Julie
Smolyansky
Chief
Executive Officer, President and Director
|
|||||
Date:
|
August
14 , 2008
|
By:
|
/s/
Edward P. Smolyansky
|
||
Edward
P. Smolyansky
Chief
Financial and Accounting Officer and Treasurer
|
|||||
Exhibit
Number
|
Description of Document
|
|
31.1
|
Officer’s
Certificate Pursuant to 15 U.S.C. 7241, as Adopted Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
|
|
31.2
|
Officer’s
Certificate Pursuant to 15 U.S.C. 7241, 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, as 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, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
99.1
|
Press Release dated August 14, 2008. "Lifeway Foods Reports Record 2nd Quarter and First Half 2008 Results." |