(Mark
One)
|
||
|
|
|
þ
|
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the quarterly period ended September 30, 2007 |
|
|
|
o
|
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
|
For the transition period from to |
|
|
|
Illinois
|
|
36-3442829
|
(State
or other jurisdiction of incorporation or organization)
|
|
(IRS
Employer Identification No.)
|
|
|
|
PART
I — FINANCIAL INFORMATION
|
3
|
|
|
||
ITEM
1. FINANCIAL
STATEMENTS
|
4-7
|
|
ITEM
2. MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
|
21
|
|
ITEM
3. CONTROLS AND
PROCEDURES
|
25
|
|
|
||
PART
II — OTHER INFORMATION
|
25
|
|
|
||
ITEM
6. EXHIBITS AND
REPORTS ON FORM 8-K
|
25
|
|
|
||
SIGNATURE
|
26
|
Section
302 Certification
|
Section
302 Certification
|
Section
1350 Certification
|
Section
1350
Certification
|
(Unaudited) September
30, |
December
31,
|
|||||||||||
2007
|
2006
|
2006
|
||||||||||
ASSETS
|
||||||||||||
Current
assets
|
||||||||||||
Cash
and cash equivalents
|
$ |
1,624,566
|
$ |
1,242,306
|
$ |
1,547,812
|
||||||
Marketable
securities
|
6,557,841
|
8,042,189
|
8,491,363
|
|||||||||
Investment,
at cost
|
500,000
|
— | — | |||||||||
Inventories
|
4,061,189
|
2,628,508
|
2,522,196
|
|||||||||
Accounts
receivable, net of allowance for doubtful accounts of $39,460
and $45,000
at September 30, 2007 and 2006 and $80,000 at December 31,
2006
|
4,845,956
|
3,984,991
|
3,942,717
|
|||||||||
Prepaid
expenses and other current assets
|
13,051
|
46,547
|
11,983
|
|||||||||
Other
receivables
|
45,810
|
59,810
|
71,050
|
|||||||||
Deferred
income taxes
|
225,803
|
108,154
|
32,234
|
|||||||||
Refundable
income taxes
|
125,763
|
68,346
|
267,771
|
|||||||||
Total
current assets
|
17,999,979
|
16,180,851
|
16,887,126
|
|||||||||
Property
and equipment, net
|
9,176,479
|
8,574,181
|
8,580,716
|
|||||||||
Intangible
assets
|
||||||||||||
Goodwill
|
3,952,425
|
3,906,114
|
3,952,425
|
|||||||||
Other
intangible assets, net of accumulated amortization of $520,979
and
$142,010 at September 30, 2007 and 2006 and $278,710 December
31,
2006
|
3,342,517
|
3,715,628
|
3,578,928
|
|||||||||
Total
intangible assets
|
7,294,942
|
7,621,742
|
7,531,353
|
|||||||||
Total
assets
|
$ |
34,471,400
|
$ |
32,376,774
|
$ |
32,999,195
|
||||||
LIABILITIES
AND STOCKHOLDERS’
EQUITY
|
||||||||||||
Current
liabilities
|
||||||||||||
Current
maturities of notes payable
|
$ |
1,434,903
|
$ |
1,124,284
|
$ |
1,131,336
|
||||||
Accounts
payable
|
1,865,041
|
1,251,720
|
1,463,014
|
|||||||||
Accrued
expenses
|
441,068
|
270,990
|
480,101
|
|||||||||
Total
current liabilities
|
3,741,012
|
2,646,994
|
3,074,451
|
|||||||||
Notes
payable
|
4,424,266
|
6,191,521
|
5,746,718
|
|||||||||
Deferred
income taxes
|
510,000
|
346,217
|
449,619
|
|||||||||
Stockholders’
equity
|
||||||||||||
Common
stock, no par value; 20,000,000 shares authorized; 17,273,776
shares
issued; 16,825,626 shares outstanding at September 30, 2007;
17,273,776
shares issued; 16,908,144 shares outstanding at September 30,
2006; and
17,273,776 shares issued; 16,897,826 shares outstanding at December
31,
2006
|
6,509,267
|
6,509,267
|
6,509,267
|
|||||||||
Paid-in-capital
|
1,103,630
|
1,080,911
|
1,080,911
|
|||||||||
Treasury
stock, at cost
|
(2,081,915 | ) | (1,235,542 | ) | (1,334,313 | ) | ||||||
Retained
earnings
|
20,318,323
|
16,807,609
|
17,318,772
|
|||||||||
Accumulated
other comprehensive income (loss), net of taxes
|
(53,183 | ) |
29,797
|
153,770
|
||||||||
Total
stockholders’ equity
|
25,796,122
|
23,192,042
|
23,728,407
|
|||||||||
Total
liabilities and stockholders’ equity
|
$ |
34,471,400
|
$ |
32,376,774
|
$ |
32,999,195
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||||||||
Three
Months Ended
|
Nine
Months Ended
|
Year
Ended
|
||||||||||||||||||
September
30,
|
September
30,
|
December
31,
|
||||||||||||||||||
2007
|
2006
|
2007
|
2006
|
2006
|
||||||||||||||||
Sales
|
$ |
9,817,478
|
$ |
7,456,649
|
$ |
28,554,984
|
$ |
19,827,069
|
$ |
27,720,713
|
||||||||||
Cost
of goods sold
|
7,096,819
|
4,616,366
|
18,432,830
|
11,709,587
|
17,081,992
|
|||||||||||||||
Gross
profit
|
2,720,659
|
2,840,283
|
10,122,154
|
8,117,482
|
10,638,721
|
|||||||||||||||
Selling
Expenses
|
1,174,140
|
890,563
|
2,856,483
|
2,323,155 |
3,065,254
|
|||||||||||||||
General
and Administrative
|
965,476
|
830,400
|
3,121,851
|
2,338,483
|
3,343,341
|
|||||||||||||||
Total
Operating Expenses
|
2,139,616
|
1,720,963
|
5,978,334
|
4,661,638
|
6,408,595
|
|||||||||||||||
Income
from operations
|
581,043
|
1,119,320
|
4,143,820
|
3,455,844
|
4,230,126
|
|||||||||||||||
Other
income (expense):
|
||||||||||||||||||||
Interest
and dividend income
|
84,918
|
86,318
|
249,082
|
294,583
|
388,339
|
|||||||||||||||
Rental
Income
|
9,731
|
— |
27,912
|
— |
11,401
|
|||||||||||||||
Interest
expense
|
(102,197 | ) | (96,557 | ) | (321,009 | ) | (209,983 | ) | (345,525 | ) | ||||||||||
Gain
(loss) on sale of marketable securities, net
|
208,629
|
89,260
|
662,009
|
277,674
|
355,767
|
|||||||||||||||
Gain
on marketable securities classified as trading
|
578
|
(2,370 | ) |
1,529
|
691
|
791
|
||||||||||||||
Total
other income (Expense)
|
201,659
|
76,651
|
619,523
|
362,965
|
410,773
|
|||||||||||||||
Income
before provision for income taxes
|
782,702
|
1,195,971
|
4,763,343
|
3,818,809
|
4,640,899
|
|||||||||||||||
Provision
for income taxes
|
314,508
|
456,012
|
1,763,792
|
1,434,148
|
1,745,075
|
|||||||||||||||
Net
income
|
$ |
468,194
|
$ |
739,959
|
$ |
2,999,551
|
$ |
2,384,661
|
$ |
2,895,824
|
||||||||||
|
||||||||||||||||||||
Basic
and diluted earnings per common share
|
0.03
|
0.04
|
0.18
|
0.14
|
0.17
|
|||||||||||||||
|
||||||||||||||||||||
Weighted
average number of shares outstanding
|
16,824,911
|
16,860,139
|
16,865,390
|
16,855,889
|
16,829,601
|
|||||||||||||||
COMPREHENSIVE
INCOME
|
||||||||||||||||||||
Net
income
|
$ |
468,194
|
$ |
739,959
|
$ |
2,999,551
|
$ |
2,384,661
|
$ |
2,895,824
|
||||||||||
Other
comprehensive income (loss), net
of tax:
|
||||||||||||||||||||
Unrealized
gains (losses) on marketable securities (net of tax
benefits)
|
(57,187 | ) |
102,436
|
181,647 |
312,717
|
(251,021 | ) | |||||||||||||
Less
reclassification adjustment for gains (losses) included in
net income (net
of taxes)
|
(123,372 | ) | (73,184 | ) | (388,600 | ) | (183,406 | ) |
504,305
|
|||||||||||
Comprehensive
income
|
$ |
287,635
|
$ |
769,211
|
$ |
2,792,598
|
$ |
2,513,972
|
$ |
3,149,108
|
||||||||||
Common
Stock, No Par Value 20,000,000
Shares |
#
of Shares of |
Accumulated Other |
||||||||||||||||||||||||||||||||||
#
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, 2005
|
17,273,776
|
16,790,510
|
483,266
|
$ |
6,509,267
|
$ |
90,725
|
$ | (1,024,659 | ) | $ |
14,422,948
|
$ | (99,514 | ) | $ |
19,898,767
|
|||||||||||||||||||
Issuance
of treasury stock for compensation
|
—
|
4,666
|
(4,666 | ) |
—
|
13,311
|
15,855
|
—
|
—
|
29,166
|
||||||||||||||||||||||||||
Issuance
of treasury stock for acquisition of Helios
|
—
|
202,650
|
(202,650 | ) |
—
|
976,875
|
323,125
|
—
|
—
|
1,300,000
|
||||||||||||||||||||||||||
Redemption
of stock
|
—
|
(100,000 | ) |
100,000
|
—
|
—
|
(648,634 | ) |
—
|
—
|
(648,634 | ) | ||||||||||||||||||||||||
Other
comprehensive income (loss):
Unrealized
losses on securities, net of taxes and reclassification
adjustment
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
253,284
|
253,284
|
|||||||||||||||||||||||||||
Net
income for the year ended December 31, 2006
|
—
|
—
|
—
|
—
|
—
|
—
|
2,895,824
|
—
|
2,895,824
|
|||||||||||||||||||||||||||
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
|
—
|
2,800
|
(2,800 | ) |
—
|
22,719
|
5,001
|
—
|
—
|
27,720
|
||||||||||||||||||||||||||
Other
comprehensive income (loss):
Unrealized
gains on securities, net of taxes and reclassification
adjustment
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(206,953 | ) | (206,953 | ) | |||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Net
income for the nine months ended September 30,
2007
|
—
|
—
|
—
|
—
|
—
|
—
|
2,999,551
|
—
|
2,999,551
|
|||||||||||||||||||||||||||
Balances
at September 30, 2007
|
17,273,776
|
16,825,626
|
448,150
|
$ |
6,509,267
|
$ |
1,103,630
|
$ | (2,081,915 | ) | $ |
20,318,323
|
$ | (53,183 | ) | $ |
25,796,122
|
(Unaudited)
|
||||||||||||
Nine
Months Ended
|
Year
Ended
|
|||||||||||
September
30,
|
December
31,
|
|||||||||||
2007
|
2006
|
2006
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
income
|
$ |
2,999,551
|
$ |
2,384,661
|
$ |
2,895,824
|
||||||
Adjustments
to reconcile net income to net cash flows from operating
activities, net
of acquisition:
|
||||||||||||
Depreciation
and amortization
|
789,215
|
457,844
|
758,754
|
|||||||||
(Gain)Loss
on sale of marketable securities, net
|
(662,009 | ) | (277,674 | ) | (355,767 | ) | ||||||
Gain
on marketable securities classified as trading
|
(1,529 | ) | (691 | ) | (791 | ) | ||||||
Deferred
income taxes
|
12,419
|
(58,932 | ) |
33,031
|
||||||||
Treasury
stock issued for services
|
27,720
|
29,166
|
29,166
|
|||||||||
Increase
(decrease) in allowance for doubtful accounts
|
(40,540 | ) |
10,000
|
45,000
|
||||||||
(Increase)
decrease in operating assets:
|
||||||||||||
Accounts
receivable
|
(862,699 | ) | (1,197,722 | ) | (1,190,448 | ) | ||||||
Other
receivables
|
25,240
|
(3,375 | ) | (14,615 | ) | |||||||
Inventories
|
(1,538,993 | ) | (691,875 | ) | (585,563 | ) | ||||||
Refundable
income taxes
|
142,008
|
(56,784 | ) | (256,209 | ) | |||||||
Prepaid
expenses and other current assets
|
(1,068
|
) |
468
|
35,032
|
||||||||
Increase
(decrease) in operating liabilities:
|
||||||||||||
Accounts
payable
|
402,027
|
427,705
|
638,999
|
|||||||||
Accrued
expenses
|
(39,033 | ) | (84,021 | ) |
125,090
|
|||||||
Net
cash provided by operating activities
|
1,252,309
|
938,770
|
2,157,503
|
|||||||||
Cash
flows from investing activities:
|
||||||||||||
Investment
in cost method securities
|
(500,000 | ) | — | — | ||||||||
Purchases
of marketable securities
|
(4,408,170 | ) | (5,258,207 | ) | (7,509,692 | ) | ||||||
Sale
of marketable securities
|
6,652,670
|
5,193,235
|
7,285,071
|
|||||||||
Purchases
of property and equipment
|
(1,142,709 | ) | (500,118 | ) | (680,174 | ) | ||||||
Acquisition
of Helios, net of cash acquired
|
—
|
(2,514,679 | ) | (2,551,679 | ) | |||||||
Purchases
of organizational costs
|
(5,858 | ) |
—
|
—
|
||||||||
Net
cash provided by (used in) investing activities
|
595,933
|
(3,079,769 | ) | (3,456,474 | ) | |||||||
Cash
flows from financing activities:
|
||||||||||||
Proceeds
of note payable
|
300,000 | — | — | |||||||||
Purchases
of treasury stock
|
(752,603 | ) | (549,863 | ) | (648,634 | ) | ||||||
Repayment
of notes payable
|
(1,318,885 | ) | (420,913 | ) | (858,664 | ) | ||||||
Net
cash used in financing activities
|
(1,771,488 | ) | (970,776 | ) | (1,507,298 | ) | ||||||
Net
increase (decrease) in cash and cash equivalents
|
76,754
|
(3,111,775 | ) | (2,806,269 | ) | |||||||
Cash
and cash equivalents at the beginning of the period
|
1,547,812
|
4,354,081
|
4,354,081
|
|||||||||
Cash
and cash equivalents at the end of the period
|
$ |
1,624,566
|
$ |
1,242,306
|
$ |
1,547,812
|
Cash
|
$ |
11,321
|
||
Accounts
Receivable Assumed
|
279,654
|
|||
Inventories
|
219,634
|
|||
Equipment,
Building and Land
|
721,572
|
|||
Prepaid
Items
|
37,871
|
|||
Trade
Name - Intangible Asset
|
1,980,000
|
|||
Formula
- Intangible Asset
|
438,000
|
|||
Contractual
Backlog - Intangible Asset
|
12,000
|
|||
Customer
Relationships - Intangible Asset
|
985,000
|
|||
Goodwill
|
3,876,625
|
|||
Total
Assets Acquired
|
8,561,677
|
|||
Note
Payable and Accounts Payable Assumed
|
(498,677 | ) | ||
Net
Assets Acquired
|
$ |
8,063,000
|
9
months ended
|
Year
ended
|
|||||||
September
30,
2006
|
December
31,
2006
|
|||||||
Net
Sales
|
$ |
22,831,688
|
$ |
30,804,309
|
||||
Net
Income
|
$ |
2,076,051
|
$ |
2,621,228
|
||||
EPS
|
$ |
0.12
|
$ |
0.16
|
September
30,
|
December
31,
|
|||||||||||
2007
|
2006
|
2006
|
||||||||||
Amounts
insured
|
$ |
251,315
|
$ |
392,445
|
$ |
432,678
|
||||||
Uninsured
and uncollateralized amounts
|
1,992,169
|
1,101,926
|
1,412,560
|
|||||||||
Total
bank balances
|
$ |
2,243,484
|
$ |
1,494,371
|
1,845,238
|
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
|
September
30, 2007
|
September
30, 2006
|
December
31, 2006
|
||||||||||||||||||||||
Cost
|
Accumulated
Amortization
|
Cost
|
Accumulated
Amortization
|
Cost
|
Accumulated
Amortization
|
|||||||||||||||||||
Recipes
|
$ |
43,600
|
$ |
34,517
|
$ |
43,600
|
$ |
23,617
|
$ |
43,600
|
$ |
26,342
|
||||||||||||
Customer
lists and other customer related intangibles
|
305,200
|
131,163
|
305,200
|
89,743
|
305,200
|
100,098
|
||||||||||||||||||
Lease
acquisition
|
87,200
|
39,448
|
87,200
|
26,990
|
87,200
|
30,105
|
||||||||||||||||||
Goodwill
|
3,952,425
|
—
|
3,906,114
|
—
|
3,952,425
|
—
|
||||||||||||||||||
Loan
acquisition costs
|
12,496
|
2,987
|
6,638
|
1,660
|
6,638
|
1,991
|
||||||||||||||||||
Customer
relationship
|
985,000
|
95,764
|
985,000
|
—
|
985,000
|
34,924
|
||||||||||||||||||
Contractual
backlog
|
12,000
|
12,000
|
12,000
|
—
|
12,000
|
12,000
|
||||||||||||||||||
Trade
names
|
1,980,000
|
154,000
|
1,980,000
|
—
|
1,980,000
|
55,000
|
||||||||||||||||||
Formula
|
438,000
|
51,100
|
438,000
|
—
|
438,000
|
18,250
|
||||||||||||||||||
$ |
7,815,921
|
$ |
520,979
|
$ |
7,763,752
|
$ |
142,010
|
$ |
7,810,063
|
$ |
278,710
|
2007
|
$ |
322,835
|
|||
2008
|
313,585
|
||||
2009
|
310,306
|
||||
2010
|
303,040
|
||||
2011
|
300,965
|
||||
Thereafter
|
1,791,786
|
||||
$ |
3,342,517
|
September
30, 2007
|
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Loss
on
Marketable
Securities
Classified
as
Trading
|
Fair
Value
|
|||||||||||||||
Equities
|
$ |
2,323,985
|
$ |
318,165
|
$ | (168,993 | ) |
—
|
$ |
2,473,157
|
||||||||||
Mutual
Funds
|
1,146,517
|
10,889
|
(67,705 | ) |
—
|
1,089,701
|
||||||||||||||
Preferred
Securities
|
1,417,978
|
6,570
|
(84,438 | ) |
—
|
1,340,110
|
||||||||||||||
Certificates
of Deposit
|
75,000
|
—
|
(395 | ) |
—
|
74,605
|
||||||||||||||
Corporate
Bonds
|
1,580,768
|
971
|
(105,851 | ) |
—
|
1,475,888
|
||||||||||||||
Municipal
Bonds
|
4,586
|
187
|
—
|
—
|
4,773
|
|||||||||||||||
Government
agency Obligations
|
100,000
|
—
|
—
|
(393 | ) |
99,607
|
||||||||||||||
Total
|
$ |
6,648,834
|
$ |
336,782
|
$ | (427,382 | ) | $ | (393 | ) | $ |
6,557,841
|
September
30, 2006
|
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Loss
on
Marketable
Securities
Classified
as
Trading
|
Fair
Value
|
|||||||||||||||
Equities
|
$ |
2,918,943
|
$ |
249,781
|
$ | (150,197 | ) | $ |
3,018,527
|
|||||||||||
Mutual
Funds
|
288,630
|
2,447
|
(3,666 | ) |
287,411
|
|||||||||||||||
Preferred
Securities
|
1,491,741
|
5,214
|
(28,560 | ) |
1,468,395
|
|||||||||||||||
Private
Investment LP
|
600,000
|
42,660
|
—
|
642,660
|
||||||||||||||||
Certificates
of Deposit
|
225,000
|
1,305
|
(2,393 | ) |
223,912
|
|||||||||||||||
Corporate
Bonds
|
2,153,896
|
3,238
|
(70,694 | ) |
2,086,440
|
|||||||||||||||
Municipal
Bonds, maturing
within five years
|
160,757
|
1,828
|
(203 | ) |
162,382
|
|||||||||||||||
Government
agency obligations,
maturing after
five years
|
154,483
|
—
|
—
|
(2,021 | ) |
152,462
|
||||||||||||||
Total
|
$ |
7,993,450
|
$ |
306,473
|
$ | (255,713 | ) | (2,021 | ) | $ |
8,042,189
|
December
31, 2006
|
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Loss
on
Marketable
Securities
Classified
as
Trading
|
Fair
Value
|
|||||||||||||||
Equities
|
$ |
3,048,755
|
$ |
359,729
|
$ | (69,950 | ) |
—
|
$ |
3,338,534
|
||||||||||
Mutual
Funds
|
522,492
|
3,248
|
(7,675 | ) |
—
|
518,065
|
||||||||||||||
Preferred
Securities
|
1,353,568
|
6,554
|
(11,347 | ) |
—
|
1,348,775
|
||||||||||||||
Private
Investment LP
|
600,000
|
71,632
|
—
|
—
|
671,632
|
|||||||||||||||
Certificates
of Deposit
|
225,000
|
2,190
|
(2,393 | ) |
—
|
224,797
|
||||||||||||||
Corporate
Bonds
|
2,185,982
|
2,408
|
(95,075 | ) |
—
|
2,093,315
|
||||||||||||||
Municipal
Bonds
|
160,757
|
2,937
|
(303 | ) |
—
|
163,391
|
||||||||||||||
Government
agency
|
134,776
|
—
|
—
|
(1,922 | ) |
132,854
|
||||||||||||||
Total
|
$ |
8,231,330
|
$ |
448,698
|
$ | (186,743 | ) | $ | (1,922 | ) | $ |
8,491,363
|
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
|
$ |
744,341
|
$ | (138,770 | ) | $ |
222,571
|
$ | (30,223 | ) | $ |
966,912
|
$ | (168,993 | ) | |||||||||
Mutual
Funds
|
820,127
|
(67,638 | ) |
7,404
|
(67 | ) |
827,531
|
(67,705 | ) | |||||||||||||||
Preferred
Securities
|
725,815
|
(55,111 | ) |
457,725
|
(29,327 | ) |
1,183,540
|
(84,438 | ) | |||||||||||||||
Certificates
of Deposit
|
—
|
—
|
74,605
|
(395 | ) |
74,605
|
(395 | ) | ||||||||||||||||
Corporate
Bonds
|
178,530
|
(21,470 | ) |
1,240,828
|
(84,381 | ) |
1,419,358
|
(105,851 | ) | |||||||||||||||
Municipal
Bonds
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
$ |
2,468,813
|
$ |
( 282,989
|
) | $ |
2,003,133
|
$ | (144,393 | ) | $ |
4,471,946
|
$ | (427,382 | ) |
September
30,
|
December
31,
|
|||||||||||
2007
|
2006
|
2006
|
||||||||||
Finished
goods
|
$ |
1,835,452
|
$ |
988,212
|
$ |
952,484
|
||||||
Production
supplies
|
1,318,991
|
905,615
|
988,174
|
|||||||||
Raw
materials
|
906,746
|
734,681
|
581,538
|
|||||||||
Total
inventories
|
$ |
4,061,189
|
$ |
2,628,508
|
$ |
2,522,196
|
September
30,
|
December
31,
|
|||||||||||
2007
|
2006
|
2006
|
||||||||||
Land
|
$ |
969,232
|
$ |
969,232
|
$ |
969,232
|
||||||
Buildings
and improvements
|
6,813,045
|
6,715,371
|
6,713,743
|
|||||||||
Machinery
and equipment
|
8,127,460
|
6,961,853
|
7,143,537
|
|||||||||
Vehicles
|
581,458
|
534,365
|
534,365
|
|||||||||
Office
equipment
|
101,582
|
89,192
|
89,192
|
|||||||||
16,592,777
|
15,270,013
|
15,450,069
|
||||||||||
Less
accumulated depreciation
|
7,416,298
|
6,695,832
|
6,869,353
|
|||||||||
Total
property and equipment
|
$ |
9,176,479
|
$ |
8,574,181
|
$ |
8
,580,716
|
September
30,
|
December
31,
|
|||||||||||
2007
|
2006
|
2006
|
||||||||||
Accrued
payroll and payroll taxes
|
$ |
82,981
|
$ |
34,979
|
$ |
139,367
|
||||||
Accrued
property tax
|
340,717
|
202,080
|
269,435
|
|||||||||
Other
|
17,370
|
33,931
|
71,299
|
|||||||||
$ |
441,068
|
$ |
270,990
|
$ |
480,101
|
September
30,
|
December
31,
|
|||||||||||
2007
|
2006
|
2006
|
||||||||||
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.
|
$ |
448,269
|
$ |
455,079
|
$ |
453,355
|
||||||
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.
|
2,853,203
|
2,923,226
|
2,905,988
|
|||||||||
Note
payable to Amani Holding LLC, payable in quarterly installments
of
$262,500 plus interest at the floating prime rate per annum (8.25%
at
December 31, 2006) due September 1, 2010 secured by letter of
credit
|
2,257,697
|
3,937,500
|
3,518,711
|
|||||||||
Note
payable to officer, payable on demand
|
300,000
|
—
|
—
|
|||||||||
Total
notes payable
|
5,859,169
|
7,315,805
|
6,878,054
|
|||||||||
Less
current maturities
|
1,434,903
|
1,124,284
|
1,131,336
|
|||||||||
Total
long-term portion
|
$ |
4,424,266
|
$ |
6,191,521
|
$ |
5,746,718
|
For
the year ended September 30,
|
||||
2008
|
$ |
1,434,903
|
||
2009
|
1,139,904
|
|||
2010
|
2,862,795
|
|||
2011
|
421,567
|
|||
Total
|
$ |
5,859,169
|
For
the Nine Months Ended
September
30,
|
For
the
Year
Ended
December
31,
|
|||||||||||
2007
|
2006
|
2006
|
||||||||||
Current:
|
||||||||||||
Federal
|
$ |
1,465,229
|
$ |
1,203,942
|
$ |
1,390,590
|
||||||
State
and local
|
286,145
|
289,274
|
321,454
|
|||||||||
Total
current
|
1,751,374
|
1,493,216
|
1,712,044
|
|||||||||
Deferred
|
12,418
|
(59,068 | ) |
33,031
|
||||||||
Provision
for income taxes
|
$ |
1,763,792
|
$ |
1,434,148
|
$ |
1,745,075
|
For
the Nine Months Ended
September
30,
|
For
the
Year
Ended
December
31,
|
|||||||||||
2007
|
2006
|
2006
|
||||||||||
Federal
income tax expense
computed
at the statutory rate
|
$ |
1,619,535
|
$ |
1,298,395
|
$ |
1,577,226
|
||||||
State
and local tax expense, net
|
228,640
|
183,268
|
222,667
|
|||||||||
Permanent
differences
|
(84,383 | ) | (47,515 | ) | (54,818 | ) | ||||||
Provision
for income taxes
|
$ |
1,763,792
|
$ |
1,434,148
|
$ |
1,745,075
|
September
30,
|
December
31,
|
|||||||||||
2007
|
2006
|
2006
|
||||||||||
Non-current
deferred tax liabilities arising
from:
Temporary
differences -
|
||||||||||||
accumulated
depreciation and amortization
|
$ | (510,000 | ) | $ | (346,217 | ) | $ | (449,619 | ) | |||
Current
deferred tax assets (liabilities) arising from:
|
||||||||||||
Unrealized
losses (gains) on marketable securities
|
37,418
|
(20,965 | ) | (108,188 | ) | |||||||
Inventory
|
172,088
|
110,533
|
107,382
|
|||||||||
Allowance
for doubtful accounts
|
16,297
|
18,585
|
33,040
|
|||||||||
Total
current deferred tax assets (liabilities)
|
225,803
|
108,153
|
32,234
|
|||||||||
Net
deferred tax liability
|
$ | (284,197 | ) | $ | (238,064 | ) | $ | (417,385 | ) |
For
The Nine Months Ended
September
30,
|
For
The
Year
Ended
December
31,
|
|||||||||||
2007
|
2006
|
2006
|
||||||||||
Interest
|
$ |
313,215
|
$ |
209,983
|
$ |
337,768
|
||||||
Income
taxes
|
$ |
1,626,031
|
$ |
1,555,444
|
$ |
1,556,586
|
September
30,
2007
|
September
30,
2006
|
December
31,
2006
|
||||||||||||||||||||||
Carrying
Amount
|
Fair
Value
|
Carrying
Amount
|
Fair
Value
|
Carrying
Amount
|
Fair
Value
|
|||||||||||||||||||
Cash
and cash equivalents
|
$ |
1,624,566
|
$ |
1,624,566
|
$ |
1,242,306
|
$ |
1,242,306
|
$ |
1,547,812
|
$ |
1,547,812
|
||||||||||||
Marketable
securities
|
$ |
6,557,841
|
$ |
6,557,841
|
$ |
8,042,189
|
$ |
8,042,189
|
$ |
8,491,363
|
$ |
8,491,363
|
||||||||||||
Notes
payable
|
$ |
5,859,169
|
$ |
5,859,169
|
$ |
7,315,805
|
$ |
7,275,702
|
$ |
6,878,054
|
$ |
6,878,054
|
·
|
Changes
in economic conditions, commodity
prices;
|
·
|
Shortages
of and price increase for fuel, labor strikes or work stoppages,
market
acceptance of the Company’s new
products;
|
·
|
Significant
changes in the competitive
environment;
|
·
|
Changes
in laws, regulations, and tax rates;
and
|
·
|
Management’s
ability to achieve reductions in cost and employment levels,
to realize
production efficiencies and to implement capital expenditures,
all at of
the levels and times planned by
management.
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
|
3.4
|
|
Amended
and Restated By-laws (incorporated by reference to
Exhibit No. 3.5 of Lifeway’s Current Report on Form 8-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
|
|
Rule 13a-14(a)/15d-14(a)
Certification of Julie Smolyansky.
|
|
|
|
31.2
|
|
Rule 13a-14(a)/15d-14(a)
Certification of Edward P. Smolyansky.
|
|
|
|
32.1
|
|
Section 1350
Certification of Julie Smolyansky.
|
|
|
|
32.2
|
|
Section 1350
Certification of Edward P.
Smolyansky.
|
LIFEWAY
FOODS, INC.
|
|||
Date: November 14,
2007
|
By:
|
/s/ Julie Smolyansky | |
Julie Smolyansky | |||
Chief
Executive Officer, President, and Director
|
|||
|
/s/ Edward P. Smolyansky | ||
Edward P. Smolyansky | |||
Chief
Financial and Accounting Officer And
Treasurer
|
|||
Exhibit
Number
|
Description | |
|
|
|
31.1
|
|
Rule 13a-14(a)/15d-14(a)
Certification of Julie Smolyansky.
|
|
|
|
31.2
|
|
Rule 13a-14(a)/15d-14(a)
Certification of Edward P. Smolyansky.
|
|
|
|
32.1
|
|
Section 1350
Certification of Julie Smolyansky.
|
|
|
|
32.2
|
|
Section 1350
Certification of Edward P. Smolyansky.
|