DELAWARE
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13-3714405
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Incorporation
State
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Tax
Identification number
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11445
CRONHILL DRIVE, OWINGS MILLS, MD
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21117
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Principal
Office Address
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Large
accelerated filer o
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Accelerated
filer x
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Non-accelerated
filer o
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Page
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PART
I
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Item
1.
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Business
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3
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Item
1A.
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Risk
Factors
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9
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Item
1B.
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Unresolved
Staff Comments
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10
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Item
2.
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Properties
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11
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Item
3.
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Legal
Proceedings
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11
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Item
4.
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Submission
of Matters to a Vote of Security Holders
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11
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||
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PART
II
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Item
5.
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Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
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11
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Item
6.
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Selected
Financial Data
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12
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Item
7.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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12
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Item
7A
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Quantitative
and Qualitative Disclosures about Market Risk
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19
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Item
8.
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Financial
Statements and Supplementary Data
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19
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Item
9.
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Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
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19
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Item
9A.
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Controls
and Procedures
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19
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Item
9A.
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Controls
and Procedures
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21
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PART
III
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Item
10.
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Directors,
Executive Officers and Corporate Governance
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22
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Item
11.
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Executive
Compensation
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26
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Item
12.
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
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36
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Item
13.
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Certain
Relationships and Related Transactions, and Director
Independence
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37
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Item
14.
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Principal
Accounting Fees and Services
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37
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||
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PART
IV
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Item
15.
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Exhibits,
Financial Statement Schedules
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43
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Name
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|
Age
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|
Position
|
Bradley
T. MacDonald
|
|
59
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|
Chief
Executive Officer and Chairman of the Board of
Directors
|
Michael
S. McDevitt
|
|
28
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President
and Chief Financial Officer
|
|
Leo
Williams
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|
59
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Executive
Vice President
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Margaret
MacDonald
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29
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Senior
Vice President of Operations
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Brendan
N. Connors
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29
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Vice
President of Finance
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2006
|
|||||||
Low
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High
|
||||||
Quarter
ended March 31, 2006
|
5.40
|
9.23
|
|||||
Quarter
ended June 30, 2006
|
8.75
|
20.90
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|||||
Quarter
ended September 30, 2006
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8.21
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19.49
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|||||
Quarter
ended December 31, 2006
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8.41
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14.52
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2005
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|||||||
Low
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High
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||||||
Quarter
ended March 31, 2005
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2.67
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3.62
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|||||
Quarter
ended June 30, 2005
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2.82
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3.30
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|||||
3.01
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7.08
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||||||
Quarter
ended December 31, 2005
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3.83
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5.70
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2006
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2005
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2004
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2003
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2002
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||||||||||||
Revenue
|
74,086,000
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40,129,000
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27,340,000
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25,379,000
|
12,345,000
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|||||||||||
Operating
income
|
7,381,000
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3,549,000
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3,004,000
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3,598,000
|
1,752,000
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|||||||||||
Income
from continuing operations
|
7,463,000
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3,405,000
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2,906,000
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3,558,000
|
1,698,000
|
|||||||||||
EPS -
basic
|
0.41
|
0.17
|
0.16
|
0.25
|
0.36
|
|||||||||||
EPS -
diluted
|
0.38
|
0.17
|
0.14
|
0.22
|
0.30
|
|||||||||||
Total
assets
|
36,677,000
|
30,120,000
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25,968,000
|
24,230,000
|
9,888,000
|
|||||||||||
current
portion of long-term debt and revolving credit facilities
|
1,804,000
|
1,194,000
|
827,000
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819,000
|
395,000
|
|||||||||||
Total
long-term debt
|
3,509,000
|
3,977,000
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4,256,000
|
4,564,000
|
2,701,000
|
|||||||||||
Weighted
average shares outstanding
|
||||||||||||||||
Basic
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12,699,066
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12,258,734
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10,832,360
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9,305,731
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6,722,505
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|||||||||||
Diluted
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13,482,894
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12,780,959
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12,413,424
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10,952,367
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8,737,292
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|||||||||||
Net
Sales by Segment as of December 31,
|
|||||||||||||||||||
2006
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2005
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2004
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|||||||||||||||||
Segments
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Sales
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%
of Total
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Sales
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%
of Total
|
|
Sales
|
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%
of Total
|
||||||||
Medifast
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71,049,000
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96
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%
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37,980,000
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95
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%
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25,686,000
|
94
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%
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||||||||||
All
Other
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3,147,000
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4
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%
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2,311,000
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6
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%
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1,654,000
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6
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%
|
||||||||||
Eliminations
|
(110,000
|
)
|
0
|
%
|
(162,000
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)
|
0
|
%
|
-
|
||||||||||
Total
Sales
|
74,086,000
|
100
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%
|
40,129,000
|
100
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%
|
27,340,000
|
100
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%
|
Net
Profit by Segment as of December 31,
|
|||||||||||||||||||
2006
|
2005
|
2004
|
|||||||||||||||||
Segments
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Profit
|
|
%
of Total
|
|
Profit
|
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%
of Total
|
|
Profit
|
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%
of Total
|
||||||||
Medifast
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6,652,000
|
129
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%
|
4,632,000
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193
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%
|
3,463,000
|
200
|
%
|
||||||||||
All
Other
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(1,386,000
|
)
|
-27
|
%
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(2,067,000
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)
|
-86
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%
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(1,734,000
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)
|
-100
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%
|
|||||||
Eliminations
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(110,000
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)
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-2
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%
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(162,000
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)
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-7
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%
|
-
|
||||||||||
Total
Sales
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5,156,000
|
100
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%
|
2,403,000
|
100
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%
|
1,729,000
|
100
|
%
|
Payments
due by period
|
||||||||||||||||||||||
2007
|
2008
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2009
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2010
|
|
2011
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|
Thereafter
|
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Total
|
|||||||||||
Contractual
Obligations
|
||||||||||||||||||||||
Total
Debt
|
548,000
|
404,000
|
386,000
|
386,000
|
386,000
|
1,947,000
|
4,057,000
|
|||||||||||||||
Operating
Leases
|
253,000
|
221,000
|
215,000
|
110,000
|
70,000
|
-
|
869,000
|
|||||||||||||||
Copier
Equipment Service Contracts
|
509,000
|
509,000
|
467,000
|
|
|
1,485,000
|
||||||||||||||||
Total
contractual obligations
|
1,310,000
|
1,134,000
|
1,068,000
|
496,000
|
456,000
|
1,947,000
|
6,411,000
|
Name
and Experience
|
|
Director
Since
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|
|||
Joseph
D. Calderone,
age 58, is the Associate Director of Campus Ministry at Villanova
University. He formerly spent over eight years with the Loyola University
Medical Center as the hospital Chaplain and taught multiple courses
including Introduction to the Practice of Medicine and Business Ethics.
Rev. Calderone recently retired as a Captain in the US Navy Reserves.
He
served as the Wing Chaplain for the 4th Marine Aircraft Wing.
|
2003
|
|
||||
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|||
Charles
P. Connolly, age 58, is
currently an independent director focusing on bank relationships,
debt
refinancing, merger and acquisition strategy and executive compensation
design. Mr. Connolly spent 29 years at First Union Corp. that merged
with
Wachovia Bank in 2001. He retired in 2001 as the President and CEO
of
First Union Corp. Mr. Connolly serves on the Boards of numerous non-profit
organizations. He holds an MBA from the University of Chicago and
AB from
Villanova University.
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2006
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|
|||
Bradley
T. MacDonald, age
59, is the Chairman of the Board of Medifast, Inc. Mr.
MacDonald has been Chairman of the Board of Medifast, Inc. since
January
1998 and was also Chief Executive officer until March of 2007. He
was the principal architect of the turnaround of Medifast and formulated
the “Direct to Consumer” business models that are the primary drivers of
Revenue to this day. He also was the co-founder of Take Shape for
Life and
acquired the Clinic operations in 2002. During his time as CEO, he
managed
the company to 29 consecutive quarters of profits and improved
shareholders equity from negative $4 million to over $27 million
in less
than seven years. He also increased the Company’s market cap from less
than $1 million to over $100 million and listed the company on the
NYSE.
In 2006, Mr. MacDonald received the prestigious and audited Ernst
and
Young award of “Entrepreneur of the Year” for the state of Maryland in the
consumer products category. Also, he helped lead the Company to
national recognition in Forbes Magazine ranking Medifast 28th
of
the top 200 small companies in America. Mr.
MacDonald was previously employed by the Company as its Chief Executive
Officer from September 1996 to August 1997. From 1991 through 1994,
Colonel MacDonald returned to active duty to be Deputy Director and
Chief
Financial Officer of the Retail, Food, Hospitality and Recreation
Businesses for the United States Marine Corps. Prior thereto, Mr.
MacDonald served as Chief Operating Officer of the Bonneau Sunglass
Company, President of Pennsylvania Optical Co., Chairman and CEO
of
MacDonald and Associates, which had major financial interests in
a retail
drug, consumer candy, and pilot sunglass companies. Mr. MacDonald
was national president of the Marine Corps Reserve Officers Association
and retired from the United States Marine Corps Reserve as a Colonel
in
1997, after 27 years of service. He has been appointed to the
Defense Advisory Board for Employer Support of the Guard and Reserve
(ESGR) Mr.
MacDonald serves on the Board of Directors of the Wireless Accessories
Group (AMEX: XWG). He also serves on the Board of Directors of the
Marine
Corps Reserve Toys for Tots Foundation and is on the Board of Trustees
of
Villa Julie College of Stevenson, Maryland and the Institute of Notre
Dame, the oldest Catholic girl’s urban high school in Maryland, located in
Baltimore. Mr. MacDonald is the father of Margaret MacDonald who
performs
the role of President and Chief Operating Officer at Medifast, Inc.
Mr.
Michael C. MacDonald is the brother of Mr. Bradley T.
MacDonald.
|
1996
|
|
||||
Michael
C. MacDonald, age 53,
is president of global accounts and marketing operations for Xerox
Corporation, Stamford, Conn. He was named to this position in October
2004
and was appointed a corporate senior vice president in July 2000.
Mac
Donald is responsible for directing the company’s largest global accounts,
improving the customer experience, corporate marketing, xerox.com,
advertising, worldwide public relations and marketing communications.
Most
recently, Mac Donald was president, North American Solutions Group
responsible for all products, services and solutions sold by Xerox
direct
sales force in the United States and Canada. Prior to that, he served
as
the group’s senior vice president of marketing and chief of staff. Mac
Donald is on the board of directors of the Rochester Institute of
Technology, PAETEC, and the Jimmy V Foundation. He is also a board
member
of the CMO Council North American Advisory Board. Mr. MacDonald completed
executive business and management programs at Columbia University
in 1992
and the International Senior Management Program at Harvard University
in
1998
|
|
1998
|
|
|||
Dennis
M. McCarthy,
age
62, practiced law for 21 years as a civil litigator in tort and contract
cases. He was the founding member and managing partner of a Columbus,
Ohio
based law firm. Additionally, he served active duty in the U.S. Marine
Corps for 23 years and served 18 years in reserve service. Mr. McCarthy
retired from the Marine Corps in 2005 in the grade of Lieutenant
General
after four years in command of all Marine Reserve forces. Mr. McCarthy
is
currently the Executive Director of the Reserve Officers Association,
a
congressionally chartered association devoted to national defense.
In
addition to Medifast, he is a member of the Board of Directors of
Rivada
Networks.
|
2006
|
|
Michael
J. McDevitt, age
58, is a retired FBI Special Agent with over 29 years of government
service with the United States Marine Corps and the FBI. He had attained
Senior Executive status within the FBI's Investigative Technology
Branch
and is currently providing consulting services, focusing on physical
threat and risk assessments and conducting specialized training for
law
enforcement and US Government entities. Mr. McDevitt is the father
of
Michael S. McDevitt who performs the role of Chief Executive Officer
and
Chief Financial Officer at Medifast, Inc. Mr. McDevitt is the father
of
Michael S. McDevitt who performs the role of Chief Executive and
Chief
Financial Officer at Medifast, Inc.
|
2002
|
|
|
Donald
F. Reilly, OSA,
age
59, holds a Doctorate in Ministry (Counseling) from New York Theological
and an M.A. from Washington Theological Union as well as a B.A. from
Villanova University. Reverend Don Reilly was ordained a priest in
1974.
His assignments included Associate Pastor, Pastor at St. Denis, Havertown,
Pennsylvania, Professor at Villanova University, Personnel Director
of the
Augustinian Province of St. Thomas of Villanova, Provincial Counselor,
Founder of SILOAM Ministries where he ministers and counsels HIV/AIDS
patients and caregivers. He is currently on the Board of Directors
of
Villanova University, and is Board Member of Prayer Power. Fr. Reilly
was
recently re-elected Provincial of the Augustinian Order at Villanova,
PA.
He oversees more than 220 Augustinian Friars and their service to
the
Church, teaching at universities and high schools, ministering to
parishes, serving as chaplain in the Armed Forces and hospitals,
ministering to AIDS victims, and serving missions in Japan and South
America.
|
|
1998
|
|
Mary
T. Travis,
age 56, is currently employed with Sunset Mortgage Company, L.P.
in
Pennsylvania as the Senior Vice President of wholesale operations
and was
formerly the Vice President of operations for the Financial Mortgage
Corporation. Mrs. Travis is an expert in mortgage banking with over
36
years of diversified experience. She is an approved instructor of
the
Mortgage Bankers Association Accredited School of Mortgage Banking.
Mrs.
Travis was also formally a delegate and 2nd Vice President of the
Mortgage
Bankers Association of Greater Philadelphia and the Board of Governors
of
the State of Pennsylvania.
|
2002
|
|
Ÿ |
have
the sole authority and responsibility to hire, evaluate and, where
appropriate, replace the independent auditors;
|
Ÿ |
meet
and review with management and the independent auditors the interim
financial statements and the Company’s disclosures under Management’s
Discussion and Analysis of Financial Condition and Results of Operations
prior to the filing of the Company’s Quarterly Reports on Form 10-Q;
|
Ÿ |
meet
and review with management and the independent auditors the financial
statements to be included in the Company’s Annual Report on Form 10-K
(or the annual report to shareowners) including (i) their judgment
about the quality, not just acceptability, of the Company’s accounting
principles, including significant financial reporting issues and
judgments
made in connection with the preparation of the financial statements;
(ii) the clarity of the disclosures in the financial statements; and
(iii) the Company’s disclosures under Management’s Discussion and
Analysis of Financial Condition and Results of Operations, including
critical accounting policies;
|
Ÿ |
review
and discuss with management, the internal auditors and the independent
auditors the Company’s policies with respect to risk assessment and risk
management;
|
Ÿ |
review
and discuss with management, the internal auditors and the independent
auditors the Company’s internal controls, the results of the internal
audit program, and the Company’s disclosure controls and procedures, and
quarterly assessment of such controls and procedures;
|
Ÿ |
establish
procedures for handling complaints regarding accounting, internal
accounting controls and auditing matters, including procedures for
confidential, anonymous submission of concerns by employees regarding
accounting and auditing matters; and
|
Ÿ |
review
and discuss with management, the internal auditors and the independent
auditors the overall adequacy and effectiveness of the Company’s legal,
regulatory and ethical compliance programs.
|
|
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•
|
to
recommend to our Board of Directors proposed nominees for election
to the
Board of Directors both at annual general meetings and to fill vacancies
that occur between general meetings; and
|
|
|
|
|
•
|
to
make recommendations to the Board of Directors regarding the Company’s
corporate governance matters and
practices.
|
Ÿ |
measure
the Chief Executive Officer’s performance against his goals and objectives
pursuant to the Company plans;
|
Ÿ |
determine
the compensation of the Chief Executive Officer after considering
the
evaluation by the Board of Directors of his performance;
|
Ÿ |
review
and approve compensation of elected officers and all senior executives
based on their evaluations, taking into account the evaluation by
the
Chief Executive Officer;
|
Ÿ |
review
and approve any employment agreements, severance arrangements, retirement
arrangements, change in control agreements/provisions, and any special
or
supplemental benefits for each elected officer and senior executive
of the
Company;
|
Ÿ |
approve,
modify or amend all non-equity plans designed and intended to provide
compensation primarily for elected officers and senior executives
of the
Company;
|
Ÿ |
make
recommendations to the Board regarding adoption of equity plans;
and
|
Ÿ |
modify
or amend all equity plans.
|
|
•
|
|
Performance
against corporate, individual and organizational objectives for the
fiscal
year;
|
|
•
|
|
Importance
of particular skill sets and professional abilities to the achievement
of
long-term strategic goals; and
|
|
•
|
|
Contribution
as a leader, corporate representative and member of the senior management
team.
|
|
|
Salary
|
|
Stock
Awards
|
|
Option
Awards
|
|
Bonus
|
|
Nonqualified
Deferred Compensation Contributions
|
|
All Other
|
|
Total
|
|||||||||||
Name
and Pricipal Position
|
Year
|
|
|
($)
|
|
|
($)(1)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)
|
|
|
($)(3)
|
|
|
($)
|
|
||
Bradley
T. MacDonald
|
2006
|
$
|
225,000
|
-
|
-
|
-
|
$
|
100,000
|
$
|
6,600
|
$
|
331,600
|
|||||||||||||
Chairman,
Chief Executive Officer
|
|||||||||||||||||||||||||
Michael
S. McDevitt
|
2006
|
99,000
|
289,000
|
-
|
27,500
|
3,800
|
419,300
|
||||||||||||||||||
President,
Chief Financial Officer
|
|||||||||||||||||||||||||
Leo
Williams
|
2006
|
125,000
|
-
|
-
|
25,000
|
3,800
|
153,800
|
||||||||||||||||||
Executive
Vice President
|
|||||||||||||||||||||||||
Margaret
MacDonald
|
2006
|
81,000
|
237,000
|
-
|
4,000
|
2,400
|
324,400
|
||||||||||||||||||
Executive
VP of Operations
|
|||||||||||||||||||||||||
Brendan
N. Connors
|
2006
|
80,000
|
47,000
|
-
|
4,000
|
1,400
|
132,400
|
||||||||||||||||||
VP
of Finance
|
(1)
|
|
Amounts
are calculated based on provisions of SFAS, No 123R, “Share Based
Payments.” See note 1
of
the consolidated financial statements of the Company’s Annual Report on
Form 10-K for the year ended December 31, 2006 regarding
assumptions underlying valuation of equity awards.
|
(2)
|
|
Bonus
amounts determined as more specifically discussed above under
“—Compensation Discussion and Analysis”
|
(3)
|
The
amounts represent the Company’s matching contributions under the 401(K)
plan.
|
|
Option Awards
|
|
Stock Awards
|
|
|||||||||||||||||||||
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
|
|
Number of Securities
Underlying
Unexercised
Options (#)
|
|
Option
Exercise
|
|
Option
Expiration
|
|
Number Shares
or Units of
Stock That
Have Not
Vested
|
|
Market
Value of
Shares or
Units of
Stock that
have not
Vested
|
|
Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units
or Other
rights
|
|
Equity Incentive
Plan Awards: Market or
Payout Value of Unearned Shares, Units or Other rights That Have Not Vested |
|
||||||||
|
|
Exercisable
|
|
Un-Exercisable
|
|
Price ($)
|
|
Date
|
|
Vested(#)
(1)
|
|
($)
(2)
|
|
(#)
|
|
($)
|
|||||||||
Bradley
T. MacDonald
|
-
|
100,000
|
$
|
6.25
|
2/8/2011
|
-
|
-
|
-
|
-
|
||||||||||||||||
Chief
Executive Officer
|
|
||||||||||||||||||||||||
Michael
S. McDevitt
|
100,000
|
-
|
2.87
|
3/31/2010
|
226,666
|
2,849,191
|
-
|
-
|
|||||||||||||||||
President,
Chief Financial Officer
|
|||||||||||||||||||||||||
Leo
Williams
|
6,666
|
3,333
|
3.83
|
10/28/2010
|
-
|
-
|
-
|
-
|
|||||||||||||||||
Executive
Vice President
|
|
||||||||||||||||||||||||
Margaret
MacDonald
|
-
|
-
|
-
|
-
|
185,000
|
2,325,450
|
-
|
-
|
|||||||||||||||||
Executive
VP of Operations
|
|||||||||||||||||||||||||
Brendan
N. Connors
|
23,334
|
2.87
|
3/31/2010
|
37,000
|
465,090
|
-
|
-
|
||||||||||||||||||
VP
of Finance
|
(1)
|
The
restricted stock grants vest over five and six years of service as
described below under “Narrative
Disclosure to Summary Compensation Table and Grants of Plan-Based
Awards”
|
(2)
|
The
market value of shares of stock that have not vested is based on
the
closing price of our common stock on December 29, 2006, or $12.57
per
share.
|
Option
Awards
|
Stock
Awards
|
||||||||||||
|
Number
of
Shares Acquired
on Exercise
|
Value
Realized
on
Exercise
|
Number
of
Shares
Acquired
on
Vesting
|
Value
Realized
on
Vesting
|
|||||||||
Name
|
(#)
|
($)(1)
|
(#)
|
($)(2)
|
|||||||||
Bradley
T. MacDonald
|
26,667
|
$
|
172,002
|
-
|
-
|
||||||||
Chief
Executive Officer
|
-
|
-
|
-
|
-
|
|||||||||
Michael
S. McDevitt
|
7,696
|
149,553
|
15,000
|
81,000
|
|||||||||
President,
Chief Financial Officer
|
-
|
-
|
33,333
|
208,331
|
|||||||||
Leo
Williams
|
-
|
-
|
-
|
-
|
|||||||||
Executive
Vice President
|
|||||||||||||
Margaret
MacDonald
|
16,667
|
126,669
|
15,000
|
81,000
|
|||||||||
Executive
VP of Operations
|
-
|
-
|
25,000
|
156,250
|
|||||||||
Brendan
N. Connors
|
10,176
|
183,473
|
3,000
|
16,200
|
|||||||||
VP
of Finance
|
-
|
-
|
5,000
|
31,250
|
(1) |
Represents
the difference between the exercise price and the fair market value
of the
common stock on the date of exercise, multiplied by the number of
options
exercised.
|
(2) |
Represents
the number of restricted shares vested, and the number of shares
vested
multiplied by the fair market value of the common stock on the vesting
date.
|
Plan
category
|
Number
of
securities to be
issued
upon
exercise
of
outstanding
options, warrants
and
rights
|
Weighted
average exercise
price
of
outstanding
options,
warrants
and
rights
|
Number
of
securities
remaining available
for
future issuance
under
equity
compensation
plans
(excluding
securities
reflected
in
column (a))
|
|||||||
|
(a)
|
(b)
|
(c)
|
|||||||
Equity
compensation plans approved by security holders
|
524,079
(1
|
)
|
$
|
6.12
|
928,421
|
|||||
Equity
compensation plans not approved by security
holders
|
-
|
-
|
-
|
(1) |
Consists
of 321,579 shares of common stock issuable upon the exercise of
outstanding options and 202,500 shares of common stock issuable upon
the
exercise of outstanding warrants.
|
Executive
Contributions in Last FY
|
Company
Contributions in Last FY
|
Aggregate
Earnings in Last
FY
|
Aggregate
Withdrawals/
Distributions
|
Aggregate
Balance at Last
FYE
|
||||||||||||
($)
|
($)(1)
|
($)
|
($)
|
($)
|
||||||||||||
Bradley
T. MacDonald
|
$
|
100,000
|
$
|
80,120
|
-
|
$
|
933,921
|
|||||||||
Chairman,
Chief Executive Officer
|
||||||||||||||||
Michael
S. McDevitt
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
President,
Chief Financial Officer
|
||||||||||||||||
Leo
Williams
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
Executive
Vice President
|
||||||||||||||||
Margaret
MacDonald
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
Executive
VP of Operations
|
||||||||||||||||
Brendan
N. Connors
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
VP
of Finance
|
(1) |
All
amounts are reported in compensation on the “2006 Summary Compensation
Table”
|
Bradley
T. MacDonald
|
$
|
337,500
|
||
Michael
S. McDevitt
|
$
|
148,500
|
||
$
|
121,500
|
|||
Brendan
N. Connors
|
$
|
120,000
|
Name
|
Fees
Earned
or
Paid
in Cash
($)
|
Stock
Awards
($)(1)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan Compensation $)
|
Change in Pension
Value and Nonqualified Deferred Compensation Earnings
($)
|
All
other Compensation $)
|
Total ($)
|
|||||||||||||||
Joseph
D. Calderone, OSA
|
-
|
$
|
9,375
|
-
|
-
|
-
|
-
|
$
|
9,375
|
|||||||||||||
Charles
P. Connolly
|
-
|
3,206
|
-
|
-
|
-
|
-
|
3,206
|
|||||||||||||||
George
Lavin, Jr., Esq.
|
-
|
9,375
|
-
|
-
|
-
|
-
|
9,375
|
|||||||||||||||
Michael
C. MacDonald
|
-
|
9,375
|
-
|
-
|
-
|
-
|
9,375
|
|||||||||||||||
Dennis
M. McCarthy
|
-
|
3,206
|
-
|
-
|
-
|
-
|
3,206
|
|||||||||||||||
Michael
J. McDevitt
|
-
|
9,375
|
-
|
-
|
-
|
-
|
9,375
|
|||||||||||||||
Rev.
Donald F. Reilly, OSA
|
-
|
12,500
|
-
|
-
|
-
|
-
|
12,500
|
|||||||||||||||
Mary
T. Travis
|
-
|
12,500
|
-
|
-
|
-
|
-
|
12,500
|
(1)
|
|
Amounts
are calculated based on provisions of Statement of Financial Accounting
Standards, or SFAS, No 123R, “Share Based Payments.” See note 1
of the consolidated financial statement of the Company’s Annual Report on
Form 10-K for the year ended December 31, 2006 regarding
assumptions underlying valuation of equity
awards.
|
Option
Awards
|
Stock
Awards
|
||||||||||||||||||
Name
|
Number
of Securities Underlying Unexercised Options (#)
|
Number
of Securities Underlying
Unexercised Options (#)
|
Option
Exercise
|
Option
Expiration
|
Number
Shares
or
Units
of
Stock
That
Have
Not
Vested
|
Market Value
of Shares or
Units of
Stock that
have
not
Vested
|
|||||||||||||
Exercisable
|
Un-Exercisable
|
Price
($)
|
Date
|
Vested (#)
|
($)
|
||||||||||||||
Joseph
D. Calderone
|
2,500
|
-
|
$
|
4.80
|
4/4/2008
|
-
|
-
|
||||||||||||
Charles
P. Connolly
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||
George
Lavin
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||
Michael
C. MacDonald
|
2,500
|
-
|
4.80
|
4/4/2008
|
-
|
-
|
|||||||||||||
Dennis
M. McCarthy
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||
Michael
J. McDevitt
|
2,500
|
-
|
4.80
|
4/4/2008
|
-
|
-
|
|||||||||||||
Rev.
Donald F. Reilly, OSA
|
2,500
|
-
|
4.80
|
4/4/2008
|
-
|
-
|
|||||||||||||
Mary
T. Travis
|
2,500
|
-
|
4.80
|
4/4/2008
|
-
|
-
|
Name
and Address of
5%
Beneficial Owner
|
Shares
Beneficially
Owned (1)
|
Percent of
Outstanding
Common Stock
|
|||||
Bjurman,
Barry & Associates (2)
10100
Santa Monica Blvd. Suite 1200
Los
Angeles, CA 90067
|
739,538
|
5.4
|
%
|
Name
of Beneficial Owner
|
Shares Beneficially
Owned (1)(3))
|
Shares
Acquirable
Within 60 days
(4)
|
Percent
of
Outstanding
Common Stock (%)
|
|||||||
Bradley
T. MacDonald (5)
|
829,550
|
-
|
6.09
|
%
|
||||||
Michael
S. McDevitt
|
264,118
|
-
|
1.94
|
%
|
||||||
Margaret
MacDonald
|
139,900
|
-
|
1.03
|
%
|
||||||
Donald
F. Reilly
|
58,350
|
-
|
*
|
|||||||
Michael
C. MacDonald
|
56,119
|
-
|
*
|
|||||||
Brendan
Connors
|
51,509
|
-
|
*
|
|||||||
Mary
Travis
|
20,200
|
-
|
*
|
|||||||
Michael
J. McDevitt
|
17,400
|
-
|
*
|
|||||||
Joseph
D. Calderone, OSA
|
9,200
|
-
|
*
|
|||||||
Leo
Williams
|
8,436
|
-
|
*
|
|||||||
Charles
P. Connolly
|
6,575
|
-
|
*
|
|||||||
George
Lavin, Jr., Esq.
|
3,200
|
-
|
*
|
|||||||
Dennis
M. McCarthy, Esq.
|
1,575
|
-
|
*
|
|||||||
All
directors, nominees for directors and executive officers as a group
(13
persons)
|
1,466,132
|
10.76
|
%
|
*
|
less
than 1%.
|
(1)
|
Beneficial
ownership is determined in accordance with the rules of the Securities
and
Exchange Commission. Under those rules and for purposes of the table
above
(a) if a person has decision making power over either the voting or
the disposition of any shares, that person is generally deemed to
be a
beneficial owner of those shares; (b) if two or more persons have
decision making power over either the voting or the disposition of
any
shares, they will be deemed to share beneficial ownership of those
shares,
in which case the same shares will be included in share ownership
totals
for each of those persons; and (c) if a person held options to
purchase shares that were exercisable on, or became exercisable within
60
days of, April 24, 2007, that person will be deemed to be the beneficial
owner of those shares and those shares (but not shares that are subject
to
options held by any other stockholder) will be deemed to be outstanding
for purposes of computing the percentage of the outstanding shares
that
are beneficially owned by that person. Information supplied by officers
and directors.
|
(2)
|
This
information is based on Schedule 13G filed with the SEC on December
27,
2006.
|
(3)
|
The
shares set forth as beneficially owned by our executive officers
and
directors do not include the following outstanding options because
they
are not exercisable within 60 days of April 24, 2007: Mr. Bradley T.
MacDonald (80,000); and Mr. Leo Williams (3,333);
|
(4)
|
Unless
otherwise noted, reflects the number of shares that could be purchased
by
exercise of options available at April 24, 2007, or within 60 days
thereafter under our stock option plans.
|
(5)
|
The
shares set forth as beneficially owned by Mr. Bradley T. MacDonald
include 396,402 shares owned by his wife Shirley MacDonald, and 46,447
shares owned by the MacDonald Family Trust. His daughter, Margaret
MacDonald, beneficially owns 139,900 shares which added to Bradley
T.
MacDonald’s 829,500 beneficially owned shares results in 969,450 shares
owned by the MacDonald family.
|
|
2005
|
|
2006
|
||||
Audit
Fees(1)
|
$
|
90,000
|
$
|
179,000
|
|||
Tax
fees(2)
|
10,000
|
21,000
|
|||||
All
other fees
|
-
|
-
|
|||||
Total
|
$
|
100,000
|
$
|
200,000
|
|
|
|
(1)
|
|
Audit
fees consist of fees for professional services rendered for the audit
of
the Company’s consolidated financial statements included in the Company’s
Annual Report on Form 10-K, including the audit of internal controls
required by Section 404 of the Sarbanes-Oxley Act of 2002, and the
review of financial statements included in the Company’s Quarterly Reports
on Form 10-Q, and for services that are normally provided by the
auditor
in connection with statutory and regulatory filings or
engagements.
|
|
|
|
(2)
|
|
Tax
fees were billed for tax compliance
services
|
Ÿ |
registration
statements under the Securities Act of 1933 (for example, comfort
letters
or consents);
|
Ÿ |
due
diligence work for potential acquisitions or dispositions;
|
Ÿ |
attest
services not required by statute or regulation;
|
Ÿ |
adoption
of new accounting pronouncements or auditing and disclosure requirements
and accounting or regulatory consultations;
|
Ÿ |
internal
control reviews and assistance with internal control reporting
requirements;
|
Ÿ |
review
of information systems security and controls;
|
Ÿ |
tax
compliance, tax planning and related tax services, excluding any
tax
service prohibited by regulatory or other oversight authorities;
expatriate and other individual tax services;
and
|
Ÿ |
assistance
and consultation on questions raised by regulatory agencies.
|
(a) |
1.
|
Financial
Statements
|
|
2.
|
Financial
Statement Schedules
|
|
3.
|
Exhibits
|
Report
of Independent Registered Public Accounting Firm
|
44
|
Consolidated
Balance Sheets
|
45
|
Consolidated
Statements of Operations
|
46
|
Consolidated
Statements of Stockholders’ Equity
|
47
|
Consolidated
Statements of Cash Flows
|
49
|
Notes
to Consolidated Financial Statements
|
51
|
(Restated)
|
|
(Restated)
|
|
||||
|
|
2006
|
|
2005
|
|||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
1,085,000
|
$
|
1,484,000
|
|||
Accounts
receivable-net of allowance for doubtful accounts of
$100,000
|
448,000
|
984,000
|
|||||
Inventory
|
8,255,000
|
5,475,000
|
|||||
Investment
securities
|
1,540,000
|
2,700,000
|
|||||
Deferred
compensation
|
673,000
|
525,000
|
|||||
Prepaid
expenses and other current assets
|
2,599,000
|
3,273,000
|
|||||
Note
receivable - current
|
174,000
|
-
|
|||||
Current
portion of deferred tax asset
|
90,000
|
-
|
|||||
Total
current assets
|
14,864,000
|
14,441,000
|
|||||
Property,
plant and equipment - net
|
14,020,000
|
9,535,000
|
|||||
Trademarks
and intangibles - net
|
5,874,000
|
5,984,000
|
|||||
Deferred
tax asset, net of current portion
|
517,000
|
100,000
|
|||||
Note
receivable, net of current assets
|
1,355,000
|
-
|
|||||
Other
assets
|
47,000
|
60,000
|
|||||
TOTAL
ASSETS
|
$
|
36,677,000
|
$
|
30,120,000
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable and accrued expenses
|
$
|
2,913,000
|
$
|
2,263,000
|
|||
Income
taxes payable
|
535,000
|
899,000
|
|||||
Line
of credit
|
1,256,000
|
633,000
|
|||||
Current
maturities of long-term debt
|
548,000
|
561,000
|
|||||
Deferred
tax liability - current
|
-
|
90,000
|
|||||
Total
current liabilities
|
5,252,000
|
4,446,000
|
|||||
Other
liabilities and deferred credits
|
|||||||
Long-term
debt, net of current portion
|
3,509,000
|
3,977,000
|
|||||
Total
liabilities
|
8,761,000
|
8,423,000
|
|||||
Stockholders'
Equity:
|
|||||||
Preferred
stock, $.001 par value (1,500,000 authorized, no shares issued and
outstanding) Common stock; par value $.001 per share; 20,000,000
shares
authorized; 13,631,898 and 12,782,791 shares issued and
outstanding
|
14,000
|
13,000
|
|||||
Additional
paid-in capital
|
26,629,000
|
21,759,000
|
|||||
Accumulated
other comprehensive income
|
334,000
|
282,000
|
|||||
Retained
earnings
|
5,981,000
|
825,000
|
|||||
32,958,000
|
22,879,000
|
||||||
Less:
cost of 249,184 and 210,902 shares of common stock in
treasury
|
(1,686,000
|
)
|
(1,075,000
|
)
|
|||
Less:
Unearned compensation
|
(3,356,000
|
)
|
(107,000
|
)
|
|||
Total
stockholders' equity
|
27,916,000
|
21,697,000
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
36,677,000
|
$
|
30,120,000
|
Years
Ended December 31,
|
|
|||||||||
|
|
(Restated)
|
|
(Restated)
|
|
|
|
|||
|
|
2006
|
|
2005
|
|
2004
|
||||
Revenue
|
$
|
74,086,000
|
$
|
40,129,000
|
$
|
27,340,000
|
||||
Cost
of sales
|
(18,237,000
|
)
|
(10,161,000
|
)
|
(6,746,000
|
)
|
||||
Gross
profit
|
55,849,000
|
29,968,000
|
20,594,000
|
|||||||
Selling,
general, and administration
|
(48,468,000
|
)
|
(26,419,000
|
)
|
(17,590,000
|
)
|
||||
Income
from operations
|
7,381,000
|
3,549,000
|
3,004,000
|
|||||||
Other
income (expense):
|
||||||||||
Interest
expense
|