R
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2011
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£
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from: __________ to __________
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Illinois
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36-3442829
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(State or other jurisdiction of
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(IRS Employer
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incorporation or organization)
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Identification No.)
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Title of Each Class
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Name of each exchange on which registered
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Common Stock, No Par Value
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Nasdaq Global Market
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Large accelerated filer ¨
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Accelerated filer ¨
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Non-accelerated filer o
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Smaller reporting company þ
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PART I
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|||
Item 1.
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Business
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2 | |
Item 2.
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Properties
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9 | |
Item 3.
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Legal Proceedings
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9 | |
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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10 | |
Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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11 | |
Item 8.
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Financial Statements and Supplementary Data
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12 | |
Item 9.
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Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
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31 | |
Item 9A.
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Controls and Procedures
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31 | |
Item 9B.
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Other Information
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31 | |
PART III
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|||
Item 10.
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Directors, Executive Officers and Corporate Governance
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32 | |
Item 11.
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Executive Compensation
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33 | |
Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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35 | |
Item 13.
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Certain Relationships and Related Transactions and Director Independence
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36 | |
Item 14.
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Principal Accountant Fees and Services
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37 | |
PART IV
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|||
Item 15.
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Exhibits, Financial Statement Schedules
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38 | |
Signatures
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40 | ||
Index of Exhibits
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41 |
Mark/Reg. No.
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Goods/Services
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Date of Registration
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Expiration of
Registration
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Comments
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ProBug Design 1,
Reg. No. 3266378
![]() |
dairy-based beverages; dairy-based food beverages; kefir; soy- based food beverage used as milk substitute
|
July 17, 2007
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July 17, 2017
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Registration is renewable at the time of expiration provided mandatory documents are filed with the USPTO between the fifth and sixth anniversaries of the registration date or the six-month grace period following the sixth anniversary date.
|
ProBug Design 2,
Reg. No. 3263130
![]() |
dairy-based beverages; dairy-based food beverages; kefir; soy- based food beverage used as milk substitute
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July 10, 2007
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July 10, 2017
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Registration is renewable at the time of expiration provided mandatory documents are filed with the USPTO between the fifth and sixth anniversaries of the registration date or the six-month grace period following the sixth anniversary date.
|
Penelope ProBug Design,
Reg. No. 3408792
![]() |
dairy-based beverages; dairy-based food beverages; kefir; soy- based food beverage used as milk substitute
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April 8, 2008
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April 8, 2018
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Registration is renewable at the time of expiration provided mandatory documents are filed with the USPTO between the fifth and sixth anniversaries of the registration date or the six-month grace period following the sixth anniversary date.
|
BA3APHBIII (a Stylized presentation of “bazarny” in Cyrillic characters),
Reg. No. 3590660
|
cultured milk products, excluding ice cream, ice milk and frozen yogurt; cheeses and cottage cheese
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March 17, 2009
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March 17, 2019
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Registration is renewable at the time of expiration provided mandatory documents are filed with the USPTO between the fifth and sixth anniversaries of the registration date or the six-month grace period following the sixth anniversary date.
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BAMBINO,
Reg. No. 2770522
|
cheeses, cottage cheeses and other dairy products, excluding ice cream, ice milk, and frozen yogurt
|
October 7, 2003
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October 7, 2013
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An Affidavit of Continued Use was timely filed between the fifth and sixth anniversaries of the registration date. Registration is renewable between the ninth and tenth anniversaries of the registration date or the six-month grace period following the registration expiration date.
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BAZARNY,
Reg. No. 3597883
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cultured milk products, excluding ice cream, ice milk and frozen yogurt; cheeses and cottage cheese
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March 31, 2009
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March 31, 2019
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Registration is renewable at the time of expiration provided mandatory documents are filed with the USPTO between the fifth and sixth anniversaries of the registration date or the six-month grace period following the sixth anniversary date.
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BIO KEFIR,
Reg. No. 3886709
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yogurt, cheeses, cottage cheeses and other milk products, excluding ice cream, ice milk and frozen yogurt
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December 7, 2010
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December 7, 2020
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Registration is renewable at the time of expiration provided mandatory documents are filed with the USPTO between the fifth and sixth anniversaries of the registration date or the six-month grace period following the sixth anniversary date.
|
CHANGING THE WORLD, ONE MOUTHFUL AT A TIME. (Stylized) ,
Reg. No. 3541999
|
fruit juices
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December 2, 2008
|
December 2, 2018
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Registration is renewable at the time of expiration provided mandatory documents are filed with the USPTO between the fifth and sixth anniversaries of the registration date or the six-month grace period following the sixth anniversary date.
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Mark/Reg. No.
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Goods/Services
|
Date of Registration
|
Expiration of
Registration
|
Comments
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FRUIT JUICE (Stylized),
Reg. No. 3413276
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fruit juices
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April 15, 2008
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April 15, 2018
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Registration is renewable at the time of expiration provided mandatory documents are filed with the USPTO between the fifth and sixth anniversaries of the registration date or the six-month grace period following the sixth anniversary date.
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Fruit Juice Logo,
Reg. No. 3432421
![]() |
fruit juices
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May 20, 2008
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May 20, 2018
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Registration is renewable at the time of expiration provided mandatory documents are filed with the USPTO between the fifth and sixth anniversaries of the registration date or the six-month grace period following the sixth anniversary date.
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GOO-BERRY PIE,
Reg. No. 3405134
|
dairy-based beverages; dairy-based food beverages; kefir; soy-based food beverages used as a milk substitute
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April 1, 2008
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April 1, 2018
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Registration is renewable at the time of expiration provided mandatory documents are filed with the USPTO between the fifth and sixth anniversaries of the registration date or the six-month grace period following the sixth anniversary date.
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HELIOS NUTRITION,
Reg. No. 2283716
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health foods, functional foods and medical foods, namely, dairy products excluding ice cream, ice milk and frozen yogurt
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October 5, 1999
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October 5, 2019
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Registration was timely renewed on April 2, 2010. Registration is renewable for ten year periods or during the six-month grace period following the registration expiration date or the six-month grace period following the sixth anniversary date.
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KOROVKA,
Reg. No. 2504027
|
dairy-based spread
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November 6, 2001
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November 6, 2021
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Registration was timely renewed on November 6, 2011. Registration is renewable for ten year periods or during the six-month grace period following the registration expiration date.
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KPECTBRHCKNN (a Stylized presentation of “krestyanskiy” in Cyrillic characters-means “peasant”) ,
Reg. No. 2187363
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cheeses, cottage cheeses and other milk products excluding ice cream, ice milk and frozen yogurt
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September 8, 1998
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September 8, 2018
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Registration was timely renewed on August 23, 2008. Registration is renewable for ten year periods or during the six-month grace period following the registration expiration date.
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KWASHENKA,
Reg. No. 2135974
|
kefir, yogurt, cheeses, cottage cheeses and other milk products, excluding ice cream, ice milk and frozen yogurt
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February 10, 1998
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February 10, 2018
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Registration was timely renewed on May 23, 2008. Registration is renewable for ten year periods or during the six-month grace period following the registration expiration date.
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LA FRUTA,
Reg. No. 2937061
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cultured milk products, excluding ice cream, ice milk and frozen yogurt
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March 29, 2005
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March 29, 2015
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An Affidavit of Continued Use was timely filed between the fifth and sixth anniversaries of the registration date. Registration is renewable between the ninth and tenth anniversaries of the registration date or the six-month grace period following the registration expiration date.
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LIFEWAY,
Reg. No. 1571136
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cheese and kefir
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December 12, 1989
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December 12, 2019
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Registration was timely renewed on December 12, 2009. Registration is renewable for ten year periods or during the six-month grace period following the registration expiration date.
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ORANGE CREAMY CRAWLER,
Reg. No. 3263128
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dairy-based beverages; dairy-based food beverages; kefir; soy- based food beverage used as milk substitute
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July 10, 2007
|
July 10, 2017
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Registration is renewable at the time of expiration provided mandatory documents are filed with the USPTO between the fifth and sixth anniversaries of the registration date or the six-month grace period following the sixth anniversary date.
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Mark/Reg. No.
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Goods/Services
|
Date of Registration
|
Expiration of
Registration
|
Comments
|
PHYTOBOOST,
Reg. No. 3982487
|
dairy-based beverages; dairy-based food beverages; kefir; soy-based food beverage used as a milk substitute
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June 21, 2011
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June 21, 2021
|
Registration is renewable at the time of expiration provided mandatory documents are filed with the USPTO between the fifth and sixth anniversaries of the registration date or the six-month grace period following the sixth anniversary date.
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PLAYGROUP PACK,
Reg. No. 3634999
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fruit juices
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June 9, 2009
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June 9, 2019
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Registration is renewable at the time of expiration provided mandatory documents are filed with the USPTO between the fifth and sixth anniversaries of the registration date or the six-month grace period following the sixth anniversary date.
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PRIDE OF MAIN STREET,
MN Reg. No. 12947
|
dairy product
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November 9, 1987
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November 9, 2017
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Only for the State of Minnesota, not in US – Registration was renewed in 2007. Registration is renewable for ten years.
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PROBUGS,
Reg. No. 3263129
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dairy-based beverages; dairy-based food beverages; kefir; soy- based food beverage used as milk substitute
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July 10, 2007
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July 10, 2017
|
Registration is renewable at the time of expiration provided mandatory documents are filed with the USPTO between the fifth and sixth anniversaries of the registration date or the six-month grace period following the sixth anniversary date.
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SOYTREAT,
Reg. No. 3530754
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soy-based food beverage intended for use as cultured milk substitute
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November 11, 2008
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November 11, 2018
|
Registration is renewable at the time of expiration provided mandatory documents are filed with the USPTO between the fifth and sixth anniversaries of the registration date or the six-month grace period following the sixth anniversary date.
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STARFRUIT,
Reg. No. 3513252
|
franchise services, namely, offering technical and business management assistance in the establishment and operation of restaurants
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October 7, 2008
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October 7, 2018
|
Registration is renewable at the time of expiration provided mandatory documents are filed with the USPTO between the fifth and sixth anniversaries of the registration date or the six-month grace period following the sixth anniversary date.
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STARFRUIT,
Reg. No. 3454746
|
restaurant services
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June 24, 2008
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June 24, 2018
|
Registration is renewable at the time of expiration provided mandatory documents are filed with the USPTO between the fifth and sixth anniversaries of the registration date or the six-month grace period following the sixth anniversary date.
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STARFRUIT (Stylized),
Reg. No. 3879939
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kefir
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November 23, 2010
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November 23, 2020
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Registration is renewable at the time of expiration provided mandatory documents are filed with the USPTO between the fifth and sixth anniversaries of the registration date or the six-month grace period following the sixth anniversary date.
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SUBLIME SLIME LIME,
Reg. No. 3263134
|
dairy-based beverages; dairy-based food beverages; kefir; soy- based food beverage used as milk substitute
|
July 10, 2007
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July 10, 2017
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Registration is renewable at the time of expiration provided mandatory documents are filed with the USPTO between the fifth and sixth anniversaries of the registration date or the six-month grace period following the sixth anniversary date.
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SWEET KISS,
Reg. No. 2135975
|
cheeses, cottage cheeses and other milk products, excluding ice cream, ice milk and frozen yogurt
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February 10, 1998
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February 10, 2018
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Registration was timely renewed on May 23, 2008. Registration is renewable for ten year periods or during the six-month grace period following the registration expiration date.
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TODDLER TASTEBUD TRAINING (Stylized),
Reg. No. 3542008
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fruit juices
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December 2, 2008
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December 2, 2018
|
Registration is renewable at the time of expiration provided mandatory documents are filed with the USPTO between the fifth and sixth anniversaries of the registration date or the six-month grace period following the sixth anniversary date.
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TRAINING WHEELS FOR HEALTHY EATING (Stylized),
Reg. No. 3412314
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fruit juices
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April 15, 2008
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April 15, 2018
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Registration is renewable at the time of expiration provided mandatory documents are filed with the USPTO between the fifth and sixth anniversaries of the registration date or the six-month grace period following the sixth anniversary date.
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Mark/Ser. No.
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Goods
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Status & Filing Date
|
Comments
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FIRST POP,
Ser. No. 77473329
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frozen confections
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Pending – Application filed May 13, 2008
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Notice of Allowance (NOA) issued June 22, 2010. A Third Extension of Time was granted December 7, 2011. Applicant must file a Statement of Use or fourth Extension Request by June 22, 2012.
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FIRST SMOOTHIE,
Ser. No. 85111072
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fruit beverages, namely, smoothies
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Pending – Application filed August 19, 2010
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Notice of Allowance (NOA) issued September 20, 2011. Applicant must file a Statement of Use or first Extension Request by March 20, 2012.
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FIRST WATER,
Ser. No. 77531563
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drinking water
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Pending – Application filed July 25, 2008
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Notice of Allowance (NOA) issued January 12, 2010. The fourth Extension of Time was granted January 9, 2012. Applicant must file a Statement of Use or fifth Extension Request by July 12, 2012.
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PRO2O,
Ser. No. 85362958
|
dairy-based beverages; dairy-based food beverages; kefir; soy-based food beverage used as a milk substitute
beverages, namely, water and fruit and vegetable juices and fruit juices flavored with tea
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Pending – Application filed July 5, 2011
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Notice of Allowance (NOA) not yet issued.
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PROLICIOUS,
Ser. No. 85362942
|
dairy-based beverages; dairy-based food beverages; kefir; soy-based food beverage used as a milk substitute
beverages, namely, water and fruit and vegetable juices and fruit juices flavored with tea
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Pending – Application filed July 5, 2011
|
Notice of Allowance (NOA) not yet issued.
|
Low Bid
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High Bid
|
||
First Qtr. 2010
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$11.34
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$12.70
|
|
Second Qtr. 2010
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$ 8.07
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$12.07
|
|
Third Qtr. 2010
|
$ 9.60
|
$11.27
|
|
Fourth Qtr. 2010
|
$ 9.31
|
$10.60
|
|
First Qtr. 2011
|
$ 8.42 |
$10.48
|
|
Second Qtr. 2011
|
$ 9.03 |
$11.24
|
|
Third Qtr. 2011
|
$ 9.45 |
$11.90
|
|
Fourth Qtr. 2011
|
$ 8.80 |
$11.20
|
|
Period
|
(a) Total
Numbers of
Shares (or Units)
Purchased
|
(b) Average Price Paid per Share (or Unit)
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(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs
|
(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
|
October 1 to October 31, 2011
|
0
|
0
|
0
|
186,754
|
||||
November 1 to November 30, 2011
|
12,500
|
9.48
|
12,500
|
174,254
|
||||
December 1 to December 31, 2011
|
4,000
|
9.78
|
4,000
|
170,254
|
||||
Total
|
16,500
|
9.63
|
16,500
|
170,254
|
December 31,
|
||||||||
2011
|
2010
|
|||||||
ASSETS
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 1,115,150 | $ | 3,229,939 | ||||
Investments
|
1,695,044 | 1,079,232 | ||||||
Certificates of deposits in financial institutions
|
300,000 | 250,000 | ||||||
Inventories
|
4,954,475 | 3,985,374 | ||||||
Accounts receivable, net of allowance for doubtful accounts and discounts
|
7,950,276 | 6,793,276 | ||||||
Prepaid expenses and other current assets
|
79,630 | 158,315 | ||||||
Other receivables
|
224,204 | 104,680 | ||||||
Deferred income taxes
|
338,690 | 328,470 | ||||||
Refundable income taxes
|
41,316
|
906,748 | ||||||
Total current assets
|
16,698,785 | 16,836,034 | ||||||
Property and equipment, net
|
15,198,822 | 15,152,713 | ||||||
Intangible assets
|
||||||||
Goodwill and other non amortizable brand assets
|
14,068,091 | 14,068,091 | ||||||
Other intangible assets, net of accumulated amortization of $3,087,940 and $2,304,107 at December 31, 2011 and 2010, respectively
|
5,218,060 | 6,001,893 | ||||||
Total intangible assets
|
19,286,151 | 20,069,984 | ||||||
Other Assets | ||||||||
Long-term accounts receivable net of current portion | 289,550 | 0 | ||||||
Total assets
|
$ | 51,473,308 | $ | 52,058,731 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities
|
||||||||
Checks written in excess of bank balances
|
$ | 592,040 | $ | 1,341,210 | ||||
Current maturities of notes payable
|
1,540,716 | 2,851,610 | ||||||
Accounts payable
|
4,386,239 | 4,183,481 | ||||||
Accrued expenses
|
553,725 | 509,459 | ||||||
Total current liabilities
|
7,072,720 | 8,885,760 | ||||||
Notes payable
|
5,539,836 | 6,122,225 | ||||||
Deferred income taxes
|
3,503,595 | 3,401,728 | ||||||
Total liabilities
|
16,116,151 | 18,409,713 | ||||||
Stockholders' equity
|
||||||||
Common stock, no par value; 20,000,000 shares authorized; 17,273,776 shares issued; 16,409,317 shares outstanding at December 31, 2011; 17,273,776 shares issued; 16,536,657 shares outstanding at December 31, 2010
|
6,509,267 | 6,509,267 | ||||||
Paid-in-capital
|
2,032,516 | 2,032,516 | ||||||
Treasury stock, at cost
|
( 7,606,974 | ) | ( 6,425,546 | ) | ||||
Retained earnings
|
34,431,296 | 31,575,875 | ||||||
Accumulated other comprehensive loss, net of taxes
|
( 8,948 | ) | ( 43,094 | ) | ||||
Total stockholders' equity
|
35,357,157 | 33,649,018 | ||||||
Total liabilities and stockholders' equity
|
$ | 51,473,308 | $ | 52,058,731 |
Years Ended
|
||||||||||||||||
December 31,
|
||||||||||||||||
2011
|
2010
|
|||||||||||||||
Gross sales
|
$ | 77,122,999 | $ | 63,543,445 | ||||||||||||
Less: discounts and allowances
|
( 7,152,590 | ) | ( 5,043,552 | ) | ||||||||||||
Net sales
|
69,970,409 | 69,970,409 | 58,499,893 | 58,499,893 | ||||||||||||
Cost of goods sold
|
45,866,632 | 36,926,973 | ||||||||||||||
Depreciation expense
|
1,552,961 | 1,393,745 | ||||||||||||||
Total cost of goods sold
|
47,419,593 | 38,320,718 | ||||||||||||||
Gross profit
|
22,550,816 | 20,179,175 | ||||||||||||||
Selling expenses
|
10,205,441 | 7,603,098 | ||||||||||||||
General and administrative
|
6,485,051 | 5,576,908 | ||||||||||||||
Amortization expense
|
783,833 | 724,537 | ||||||||||||||
Total operating expenses
|
17,474,325 | 13,904,543 | ||||||||||||||
Income from operations
|
5,076,491 | 6,274,632 | ||||||||||||||
Other income (expense):
|
||||||||||||||||
Interest and dividend income
|
70,611 | 260,552 | ||||||||||||||
Rental income
|
7,150 | 11,785 | ||||||||||||||
Interest expense
|
( 247,342 | ) | (350,997 | ) | ||||||||||||
Impairment of investments | ( 36,032 | ) |
—
|
|||||||||||||
Gain (loss) on sale of investments, net
|
( 29,256 | ) | 250,480 | |||||||||||||
Other expense
|
( 8,364 | ) |
—
|
|||||||||||||
Total other income (expense)
|
( 243,233 | ) | 171,820 | |||||||||||||
Income before provision for
|
||||||||||||||||
income taxes
|
4,833,258 | 6,446,452 | ||||||||||||||
Provision for income taxes
|
1,977,837 | 2,823,986 | ||||||||||||||
Net income
|
$ | 2,855,421 | $ | 3,622,466 | ||||||||||||
Basic and diluted earnings
|
||||||||||||||||
per common share
|
0.17 | 0.22 | ||||||||||||||
Weighted average number of
|
||||||||||||||||
shares outstanding
|
16,442,948 | 16,663,557 | ||||||||||||||
COMPREHENSIVE INCOME
|
||||||||||||||||
Net income
|
$ | 2,855,421 | $ | 3,622,466 | ||||||||||||
Other comprehensive income
|
||||||||||||||||
(loss), net of tax:
|
||||||||||||||||
Unrealized gains (losses) on
|
||||||||||||||||
investments (net of tax)
|
17,616 | 114,297 | ||||||||||||||
Less reclassification adjustment
|
||||||||||||||||
for (gains) losses included in
|
||||||||||||||||
net income (net of taxes)
|
16,530
|
( 147,032 | ) | |||||||||||||
Comprehensive income
|
$ | 2,889,567 | $ | 3,589,731 |
Common Stock, No Par Value
|
Accumulated
|
|||||||||||||||||||||||||||||||||||
20,000,000 Shares |
# of 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, 2009
|
17,273,776 | 16,778,555 | 495,221 | $ | 6,509,267 | $ | 1,965,786 | $ | (3,846,773 | ) | $ | 27,953,409 | $ | (10,359 | ) | 32,571,330 | ||||||||||||||||||||
Redemption of stock
|
— | ( 252,398 | ) | 252,398 | — | — | ( 2,666,288 | ) | — | — | ( 2,666,288 | ) | ||||||||||||||||||||||||
Issuance of treasury stock for compensation
|
— | 10,500 | ( 10,500 | ) | — | 66,730 | 87,515 | — | — | 154,245 | ||||||||||||||||||||||||||
Unrealized gains on securities, net of taxes
|
— | — | — | — | — | — | — | ( 32,735 | ) | (32,735 | ) | |||||||||||||||||||||||||
Net income for the year ended
December 31, 2010 |
— | — | — | — | — | — | 3,622,466 | — | 3,622,466 | |||||||||||||||||||||||||||
Balances at December 31, 2010
|
17,273,776 | 16,536,657 | 737,119 | $ | 6,509,267 | $ | 2,032,516 | $ | (6,425,546 | ) | $ | 31,575,875 | $ | (43,094 | ) | $ | 33,649,018 | |||||||||||||||||||
Redemption of stock
|
— | (127,340 | ) | 127,340 | — | — | (1,181,428 | ) | — | — | (1,181,428 | ) | ||||||||||||||||||||||||
Unrealized losses on securities, net of taxes
|
— | — | — | — | — | — | — | 34,146 | 34,146 | |||||||||||||||||||||||||||
Net income for the year ended December 31, 2011
|
— | — | — | — | — | — | 2,855,421 | — | 2,855,421 | |||||||||||||||||||||||||||
Balances at December 31, 2011
|
17,273,776 | 16,409,317 | 864,459 | 6,509,267 | 2,032,516 | (7,606,974 | ) | 34,431,296 | (8,948 | ) | 35,357,157 |
December 31,
|
||||||||
2011
|
2010
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$ | 2,855,421 | $ | 3,622,466 | ||||
Adjustments to reconcile net income to net
|
||||||||
cash flows from operating activities, net of acquisition:
|
||||||||
Depreciation and amortization
|
2,336,794 | 2,118,282 | ||||||
Loss (gain) on sale of investments, net
|
29,256 | ( 250,480 | ) | |||||
Loss on disposition of equipment
|
20,135 | — | ||||||
Impairment of investments
|
36,032 | — | ||||||
Deferred income taxes
|
68,217 | ( 96,918 | ) | |||||
Treasury stock issued for compensation
|
— | 154,245 | ||||||
Bad debt expense
|
48,240 | 17,754 | ||||||
(Increase) decrease in operating assets:
|
||||||||
Accounts receivable
|
( 1,494,790 | ) | ( 811,292 | ) | ||||
Other receivables
|
( 119,524 | ) | ( 54,922 | ) | ||||
Inventories
|
( 969,101 | ) | ( 682,398 | ) | ||||
Refundable income taxes
|
865,432 | 402,230 | ||||||
Prepaid expenses and other current assets
|
78,685 | ( 117,618 | ) | |||||
Increase (decrease) in operating liabilities:
|
||||||||
Accounts payable
|
202,758 | 1,419,479 | ||||||
Accrued expenses
|
84,466 | ( 104,885 | ) | |||||
Net cash provided by operating activities
|
4,042,021 | 5,615,943 | ||||||
Cash flows from investing activities:
|
||||||||
Purchases of investments
|
( 2,434,340 | ) | ( 2,161,552 | ) | ||||
Proceeds from sale of investments
|
1,810,816 | 5,669,158 | ||||||
Investments in certificates of deposits
|
( 50,000 | ) | — | |||||
Proceeds from redemption of certificates of deposit
|
— | 402,005 | ||||||
Purchases of property and equipment
|
( 1,439,133 | ) | ( 2,229,274 | ) | ||||
Acquisition of the assets of First Juice
|
— | ( 270,000 | ) | |||||
Net cash (used in) provided by investing activities
|
( 2,112,657 | ) | 1,410,337 | |||||
Cash flows from financing activities:
|
||||||||
Proceeds from note payable
|
2,000,000 | 250,000 | ||||||
Checks written in excess of bank balances
|
( 749,170 | ) | 998,234 | |||||
Purchases of treasury stock
|
( 1,181,428 | ) | ( 2,666,288 | ) | ||||
Repayment of notes payable
|
( 4,113,555 | ) | ( 3,008,694 | ) | ||||
Net cash used in financing activities
|
( 4,044,153 | ) | ( 4,426,748 | ) | ||||
Net (decrease) increase in cash and cash equivalents
|
( 2,114,789 | ) | 2,599,532 | |||||
Cash and cash equivalents at the beginning of the period
|
3,229,939 | 630,407 | ||||||
Cash and cash equivalents at the end of the period
|
$ | 1,115,150 | $ | 3,229,939 |
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
|
7-10
|
|
Lease agreement
|
7
|
|
Trade names
|
15
|
|
Formula
|
10
|
|
Customer relationships
|
12
|
|
Trade names
|
$
|
268,000
|
||
Other current assets
|
6,000
|
|||
Customer lists
|
199,000
|
|||
Fixed assets
|
35,000
|
|||
Non amortizable goodwill and brand asset
|
262,000
|
|||
Total fair value of assets acquired and liabilities assumed
|
$
|
770,000
|
December 31, 2011
|
December 31, 2010
|
|||||||||||||||
Cost
|
Accumulated
Amortization
|
Cost
|
Accumulated Amortization
|
|||||||||||||
Recipes
|
$
|
43,600
|
$
|
43,600
|
$
|
43,600
|
$
|
43,600
|
||||||||
Customer lists and other related intangibles
|
4,504,200
|
1,546,671
|
4,504,200
|
1,039,323
|
||||||||||||
Lease acquisition
|
87,200
|
87,200
|
87,200
|
79,941
|
||||||||||||
Customer relationship
|
985,000
|
444,618
|
985,000
|
362,526
|
||||||||||||
Trade names
|
2,248,000
|
728,601
|
2,248,000
|
585,267
|
||||||||||||
Formula
|
438,000
|
237,250
|
438,000
|
193,450
|
||||||||||||
$
|
8,306,000
|
$
|
3,087,940
|
$
|
8,306,000
|
$
|
2,304,107
|
2012
|
$
|
754,817
|
||
2013
|
671,254
|
|||
2014
|
657,883
|
|||
2015
|
657,883
|
|||
2016
|
657,883
|
|||
Thereafter
|
1,818,340
|
|||
$
|
5,218,060
|
December 31, 2011
|
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Fair
Value
|
||||||||||||
Equities
|
$
|
682,569
|
$
|
55,244
|
$
|
(23,211
|
) |
$
|
714,602
|
|||||||
Mutual Funds
|
64,563
|
3,275
|
(713
|
) |
67,125
|
|||||||||||
Preferred Securities
|
64,452
|
—
|
(17,702
|
) |
46,750
|
|||||||||||
Corporate Bonds
|
899,298
|
1,019
|
(33,750
|
) |
866,567
|
|||||||||||
Total
|
$
|
1,710,882
|
$
|
59,538
|
$
|
(75,376
|
) |
$
|
1,695,044
|
December 31, 2010
|
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Fair
Value
|
||||||||||||
Equities
|
$
|
225,573
|
$
|
16,173
|
$
|
( 68,974
|
)
|
$
|
172,772
|
|||||||
Mutual Funds
|
202,108
|
4,661
|
( 2,017
|
)
|
204,752
|
|||||||||||
Preferred Securities
|
228,514
|
—
|
( 18,329
|
)
|
210,185
|
|||||||||||
Corporate Bonds
|
496,451
|
843
|
( 5,771
|
)
|
491,523
|
|||||||||||
Total
|
$
|
1,152,646
|
$
|
21,677
|
$
|
( 95,091
|
)
|
$
|
1,079,232
|
Less Than 12 Months
|
12 Months or Greater
|
Total
|
||||||||||||||||||||||
December 31, 2011
|
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
||||||||||||||||||
Equities
|
$
|
176,966
|
$
|
(23,211)
|
|
—
|
|
—
|
$
|
176,966
|
$
|
(23,211)
|
||||||||||||
Mutual Funds
|
—
|
—
|
10,585
|
(713)
|
10,585
|
(713)
|
||||||||||||||||||
Preferred Securities
|
—
|
—
|
46,750
|
(17,702)
|
46,750
|
(17,702)
|
||||||||||||||||||
Corporate Bonds
|
626,292
|
(24,000)
|
90,250
|
(9,750)
|
716,542
|
(33,750)
|
||||||||||||||||||
$
|
803,258
|
$
|
(47,211)
|
$
|
147,585
|
$
|
(28,165)
|
$
|
950,843
|
$
|
(75,376)
|
Less Than 12 Months
|
12 Months or Greater
|
Total
|
||||||||||||||||||||||
December 31, 2010
|
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
||||||||||||||||||
Equities
|
$
|
48,202
|
$
|
(11,675
|
)
|
$
|
101,467
|
$
|
(57,299
|
)
|
$
|
149,669
|
$
|
(68,974
|
)
|
|||||||||
Mutual Funds
|
—
|
—
|
85,061
|
(2,017
|
)
|
85,061
|
(2,017
|
)
|
||||||||||||||||
Preferred Securities
|
—
|
—
|
210,185
|
(18,329
|
)
|
210,185
|
(18,329
|
)
|
||||||||||||||||
Corporate Bonds
|
146,710
|
(2,296
|
)
|
122,532
|
(3,475
|
)
|
269,242
|
(5,771
|
)
|
|||||||||||||||
$
|
194,912
|
$
|
(13,971
|
)
|
$
|
519,245
|
$
|
(81,120
|
)
|
$
|
714,157
|
$
|
(95,091
|
)
|
December 31,
|
||||||||||||
2011
|
|
2010
|
||||||||||
Finished goods
|
$
|
1,976,050
|
$
|
1,636,988
|
||||||||
Production supplies
|
2,042,611
|
1,527,064
|
||||||||||
Raw materials
|
935,814
|
821,322
|
||||||||||
Total inventories
|
$
|
4,954,475
|
$
|
3,985,374
|
December 31,
|
||||||||||||
2011
|
2010
|
|||||||||||
Land
|
$ | 1,178,160 | $ | 1,178,160 | ||||||||
Buildings and improvements
|
11,633,077 | 11,328,860 | ||||||||||
Machinery and equipment
|
14,697,024 | 13,713,649 | ||||||||||
Vehicles
|
1,334,628 | 976,745 | ||||||||||
Office equipment
|
383,099 | 352,135 | ||||||||||
Construction in process
|
17,410 | 96,990 | ||||||||||
29,243,398 | 27,646,539 | |||||||||||
Less accumulated depreciation
|
14,044,576 | 12,493,826 | ||||||||||
Total property and equipment
|
$ | 15,198,822 | $ | 15,152,713 |
December 31,
|
||||||||||||
2011
|
2010
|
|||||||||||
Accrued payroll and payroll taxes
|
$ | 209,395 | $ | 181,274 | ||||||||
Accrued property tax
|
323,885 | 273,876 | ||||||||||
Other
|
20,445 | 54,309 | ||||||||||
$ | 553,725 | $ | 509,459 |
December 31,
|
||||||||||||
2011
|
2010
|
|||||||||||
Note payable to Private Bank in monthly installments of $42,222, plus variable interest rate, currently at 2.7963%, with a balloon payment of $5,066,667 due February 6, 2014. Collateralized by substantially all assets of the Company.
|
$ | 5,914,445 | $ | 6,628,889 | ||||||||
Line of credit with Private Bank at variable interest rate, currently at 3.25%. The agreement has been extended with terms allowing borrowings up to $2.0 million, maturing on May 31, 2012. Collateralized by substantially all assets of the Company.
|
1,000,000 | — | ||||||||||
Line of credit with Morgan Stanley for borrowings up to $2.8 million at variable interest rate, currently at 3.00% due on demand. Collateralized by investments with a fair value of $1,212,873, and cash and CD’s totaling $449,967 at December 31, 2011.
|
— | 2,344,946 | ||||||||||
Notes payable to Ford Credit Corp. payable in monthly installments of $1,778.23 at 5.99%, due July 2015, secured by transportation equipment.
|
68,509 | — | ||||||||||
Note payable to Fletcher Jones of Chicago, Ltd LLC in monthly installments of $1,768.57 at 6.653%, due May 24, 2017, secured by transportation equipment.
|
97,598 | — | ||||||||||
Total notes payable
|
7,080,552 | 8,973,835 | ||||||||||
Less current maturities
|
1,540,716 | 2,851,610 | ||||||||||
Total long-term portion
|
$ | 5,539,836 | $ | 6,122,225 |
For the Year Ended December 31,
|
||||
2012
|
$
|
1,540,716
|
||
2013
|
541,669
|
|||
2014
|
4,938,421
|
|||
2015
|
30,787
|
|||
2016
|
19,875
|
|||
Thereafter
|
9,084
|
|||
Total
|
$
|
7,080,552
|
2012
|
$
|
181,200
|
||
2013
|
147,159
|
|||
2014
|
56,204
|
|||
2015
|
45,034
|
|||
2016
|
46,384
|
|||
Thereafter
|
159,884
|
|||
Total
|
$
|
635,865
|
For the Years Ended
December 31,
|
||||||||
2011
|
2010
|
|||||||
Current: | ||||||||
Federal
|
$ | 1,059,336 | $ | 2,269,819 | ||||
State and local
|
850,284 | 651,085 | ||||||
Total current
|
1,909,620 | 2,920,904 | ||||||
Deferred
|
68,217 | (96,918 | ) | |||||
Provision for income taxes
|
$ | 1,977,837 | $ | 2,823,986 |
For the Years Ended
December 31,
|
||||||||||||||||
2011
|
2010
|
|||||||||||||||
Amount
|
Percentage
|
Amount
|
Percentage
|
|||||||||||||
Federal income tax expense computed at the statutory rate
|
$ | 1,643,308 | 34.0% | $ | 2,180,228 | 34.0% | ||||||||||
State and local tax expense, net
|
561,187 | 11.6% | 429,716 | 6.7% | ||||||||||||
Permanent differences
|
(122,837 | ) | (2.5%) | (117,247 | ) | (1.8%) | ||||||||||
Change in tax estimate
|
(103,821 | ) | (2.2%) | 331,289 | 5.1% | |||||||||||
Provision for income taxes
|
$ | 1,977,837 | 40.9% | $ | 2,823,986 | 44.0% |
December 31,
|
||||||||
2011
|
2010
|
|||||||
Non-current deferred tax assets (liabilities) arising from:
Temporary differences -
|
||||||||
Accumulated depreciation and amortization from purchase accounting adjustments
|
$
|
(3,671,285)
|
$
|
(3,673,296)
|
||||
Capital loss carry-forwards
|
167,690
|
271,568
|
||||||
Total non-current net deferred tax liabilities
|
(3,503,595)
|
(3,401,728)
|
||||||
Current deferred tax assets arising from:
|
||||||||
Unrealized losses on investments
|
6,890
|
30,320
|
||||||
Impairment of investments
|
15,673
|
4,232
|
||||||
Inventory
|
220,408
|
168,875
|
||||||
Allowance for doubtful accounts and discounts
|
4,350
|
125,043
|
||||||
Capital loss carry-back
|
91,369
|
—
|
||||||
Total current deferred tax assets
|
338,690
|
328,470
|
||||||
Net deferred tax liability
|
$
|
(3,164,905)
|
$
|
(3,073,258)
|
For the Years Ended
|
||||||||
December 31,
|
||||||||
2011
|
2010
|
|||||||
Interest
|
$
|
232,429
|
$
|
375,347
|
||||
Income taxes
|
$
|
1,169,334
|
$
|
2,824,824
|
•
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of the assets of the company;
|
•
|
provide reasonable assurance that our transactions are recorded as necessary to permit preparation of our financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures of the company are being made only in accordance with authorizations of our management and our directors of the company; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
|
Name
|
Year
|
Salary
|
Bonus
|
Stock
Awards(a)
|
All other
Comp.
|
Total
|
|
Julie Smolyansky, CEO and President(1)
|
2011
2010
|
$585,874
$530,000
|
$75,000
$75,000
|
$0
$55,087
|
$27,126
$22,726
(5)
|
$688,000
$682,813
|
|
Edward P. Smolyansky,
CFO Chief Accounting Officer and Treasurer (2)
|
2011
2010
|
$571,318
$530,000
|
$100,000
$110,000
|
$0
$55,087
|
$29,832
$28,792
(6)
|
$701,150
$723,879
|
|
Valeriy Nikolenko, Vice President of Operations and
Secretary (4)
|
2011
2010
|
$91,800
$122,000
|
$40,000
$40,000
|
$0
$5,508
|
$18,500
$15,930
(7)
|
$150,300
$183,438
|
(a) | The amounts in this column reflect the aggregate grant date fair value for stock awards computed in accordance with FASBASC Topic 718. No stock awards were granted in 2011. | |
(1)
|
The Board appointed Julie Smolyansky as the CEO, CFO, President and Treasurer of the Company on June 10, 2002. From September 21, 1998 until such appointments, she had been Director of Sales and Marketing of the Company. Since November 2004, Ms. Smolyansky has served solely as CEO and President.
|
|
(2)
|
The Board appointed Edward Smolyansky as the CFO, Chief Accounting Officer and Treasurer of the Company in November 2004.
|
|
(3)
|
The Company approves, on an annual basis, the payment to Ludmila Smolyansky of salary and bonus as other compensation for continuing advisory services to the Company and in light of her extensive experience. Ludmila Smolyansky devotes as much time as necessary to the business of the Company.
|
|
(4)
|
The Board appointed Valeriy Nikolenko as the Vice President of Operations and Secretary of the Company in December 1993.
|
|
(5)
|
Represents (i) the Company’s portion of the matching contributions to the Company’s 401(k) plan on behalf of the following named executive officer, Julie Smolyansky: $0 for 2011; and (ii) the following amounts related to personal usage of automobiles leased by the Company, and related insurance and fuel, for 2011: $13,126 for of lease payments, $12,000 for insurance premiums and $2,000 for fuel.
|
|
(6)
|
Represents (i) the Company’s portion of the matching contributions to the Company’s 401(k) plan on behalf of the following named executive officer, Edward Smolyansky: $16,500 for 2011; and (ii) the following amounts related to personal usage of automobiles leased by the Company, and related insurance and fuel, for 2011: $7,132 for lease payments, $4,200 for insurance premiums and $2,000 for fuel.
|
|
(7)
|
Represents (i) the Company’s portion of the matching contributions to the Company’s 401(k) plan on behalf of the following named executive officer, Val Nikolenko: $5,300 for 2011; and (ii) the following amounts related to personal usage of automobiles leased by the Company, and related insurance and fuel, for 2011: $7,080 for lease payments, $4,200 for insurance premiums and $2,000 for fuel.
|
|
Equity Compensation Plan Information
|
|||
Plan category
|
(a)
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
(b)
Weighted-average exercise price of outstanding options, warrants and rights
|
(c)
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
Equity compensation plans approved by security holders
|
0
|
$0
|
940,000
|
Equity compensation plans not approved by security holders
|
0
|
$0
|
---
|
Total
|
0
|
$0
|
---
|
Name
|
Fees Earned or Paid in Cash
|
All Other
Compensation
|
Total
|
||
Ludmila Smolyansky
Pol Sikar
|
$693,440 (1)
$2,000
|
$23,060 (2)
--
|
$716,500
$2,000
|
||
Renzo Bernardi
|
$2,000
|
--
|
$2,000
|
||
Julie Oberweis
|
$0
|
--
|
$0
|
||
Eugene Katz
|
$1,000
|
--
|
$1,000
|
(1)
|
Of the Fees Paid in Cash, $693,440 represents the annual fees paid to Ms. Smolyansky for her services as a consultant to the Company. Ms. Smolyansky did not receive any additional retainer fees or other meeting attendance fees in her capacity as a director.
|
(2)
|
Represents (i) the Company’s portion of the matching contributions to the Company’s 401(k) plan on behalf of Ludmila Smolyansky: $16,860 for 2011; and (ii) $4,200 for insurance premiums and $2,000 for fuel.
|
Name and Address of Beneficial Owner(1)
|
Amount and
Nature of
Beneficial
Ownership
|
Percent
of Class(2)
|
|||||||
Ludmila Smolyansky(3,6)
|
7,430,484
|
|
45.3%
|
||||||
Julie Smolyansky(3,7)
|
544,560
|
3.3%
|
|||||||
Edward Smolyansky(3)
|
312,546
|
1.9%
|
|||||||
Pol Sikar(3)
|
3,000
|
*
|
|||||||
Renzo Bernardi(3)
|
14,900
|
*
|
|||||||
Gustavo Carlos Valle (3,4)
|
0
|
*
|
|||||||
Eugene B. Katz(3)
|
0
|
*
|
|||||||
Val Nikolenko
|
5,000
|
*
|
|||||||
All Directors and Officers of the Company as a Group (Seven persons in total)
|
8,310,490
|
50.7%
|
|||||||
Danone Foods, Inc.
|
3,454,756
|
21.1%
|
|||||||
Mario J. Gabelli(5)
|
831,805
|
5.1%
|
|||||||
(1)
|
With the exception of Gustavo Carlos Valle and Danone Foods, Inc., the address for all Directors and shareholders listed in this table is 6431 Oakton St., Morton Grove, IL 60053. The address of Gustavo Carlos Valle and Danone Foods, Inc. is 100 Hillside Avenue, White Plains, NY 10603-2861.
|
|
(2)
|
Based upon 16,391,909 shares of Common Stock outstanding as of March 9, 2011.
|
|
(3)
|
A director or officer of the Company.
|
|
(4)
|
Mr. Valle is also an officer of the Dannon Company, Inc., which is an affiliate of Danone Foods, Inc.
|
|
(5)
|
Mr. Gabelli directly or indirectly controls or acts as the chief investment officer of Gabelli funds, LLC, GAMCO Asset Management, Inc. and Teton Advisors, Inc. The 831,805 shares of the Company's common stock that Mr. Gabelli may be deemed to beneficially own, include (i) 5,500 shares held directly by Mr. Gabelli, (ii) 326 shares held by Gabelli Funds, LLC, (iii) 286,305 shares held by GAMCO Asset Management, Inc., and (iv) 213,000 shares held by Teton Advisors, Inc.
|
|
(6)
|
Includes (a) 15,000 shares held by the Smolyansky Foundation of which Ms. Smolyansky is a trustee and (b) 7,415,484 shares need by the Ludmila Smolyansky Trust 2/1/05, of which Ms. Smolyansky is the trustee.
|
|
(7)
|
Includes 5,000 shares held by Ms. Smolyansky on behalf of minor children.
|
2.1
|
Stock Purchase Agreement dated February 6, 2009 by and among Lifeway Foods, Inc., Iyla Mandel and Michael Edelson (incorporated by reference to Exhibit 2.1 of Lifeway’s Current Report on Form 8-K dated February 6, 2009 and filed February 13, 2009 (File No. 000-17363)).
|
|
3.1
|
Amended and Restated Bylaws (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)).
|
|
3.2
|
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)).
|
|
4.1
|
Revolving Note dated February 6, 2009 (incorporated by reference to Exhibit 10.2 on Lifeway’s Current Report on Form 8-K dated February 6, 2009 and filed on February 13, 2009 (File No. 000- 17363)).
|
|
4.2
|
Term Note dated February 6, 2009 (incorporated by reference to Exhibit 10.3 on Lifeway’s Current Report on Form 8-K dated February 6, 2009 and filed on February 13, 2009 (File No. 000-17363)).
|
|
10.1
|
Lifeway Foods, Inc. Consulting and Services Compensation Plan, dated June 5, 1995 (incorporated by reference to Lifeway’s Registration Statement on Form S-8, (File No. 333-93306).
|
|
10.2
|
Stock Purchase Agreement dated October 1, 1999 by and among Danone Foods, Inc., Lifeway Foods, Inc., Michael Smolyansky and certain other parties (incorporated by reference to Exhibit 10.10 of Lifeway’s Current Report on Form 8-K dated October 1, 1999, and filed October 12, 1999 (File No. 000-17363)).
|
|
10.3
|
Stockholders’ Agreement dated October 1, 1999 by and among Danone Foods, Inc., Lifeway Foods, Inc., Michael Smolyansky and certain other parties (incorporated by reference to Exhibit 10.11 of Lifeway’s Current Report on Form 8-K dated October 1, 1999, and filed October 12, 1999 (File No. 000-17363)).
|
|
10.4
|
Letter Agreement dated December 24, 1999 (amending original Stockholders’ Agreement with Danone Foods, Inc.) (incorporated by reference to Exhibit 10.12 of Lifeway’s Current Report on Form 8-K dated December 24, 1999, and filed January 12, 2000 (File No. 000-17363)).
|
|
10.5
|
Employment Agreement, dated September 12, 2002, between Lifeway Foods, Inc. and Julie Smolyansky (incorporated by reference to Exhibit 10.14 of Amendment No. 2 filed April 30, 2003 to Lifeway’s Quarterly Report on Form 10-QSB/A for the quarter ended September 30, 2002 (File No. 000-17363)).
|
|
10.6
|
Loan and Security Agreement dated February 6, 2009 by and among Lifeway Foods, Inc., Fresh Made, Inc., LFI Enterprises, Inc., Helios Nutrition Limited, Pride Main Street Dairy, LLC and Starfruit, LLC and The Private Bank and Trust Company (incorporated by reference to Exhibit 10.1 of Lifeway’s Current Report on Form 8-K dated February 6, 2009 and filed on February 13, 2009 (File No. 000- 17363)).
|
|
10.7
|
First Modification Agreement dated August 13, 2009 by and among The PrivateBank and Trust Company, Lifeway Foods, Inc., Fresh Made, Inc., Helios Nutrition Limited, Pride of Main Street Dairy, LLC and Starfruit, LLC (incorporated by reference to Exhibit 10.15 of Lifeway’s Annual Report on Form 10-K dated December 31, 2009 and filed on March 31, 2010 (File No. 000- 17363)).
|
|
10.8
|
Second Modification Agreement dated November 12, 2009 by and among The PrivateBank and Trust Company, Lifeway Foods, Inc., Fresh Made, Inc., Helios Nutrition Limited, Pride of Main Street Dairy, LLC and Starfruit, LLC (incorporated by reference to Exhibit 10.16 of Lifeway’s Annual Report on Form 10-K dated December 31, 2009 and filed on March 31, 2010 (File No. 000- 17363)).
|
10.9
|
Third Modification Agreement dated February 6, 2010 by and among The PrivateBank and Trust Company, Lifeway Foods, Inc., Fresh Made, Inc., Helios Nutrition Limited, Pride of Main Street Dairy, LLC and Starfruit, LLC (incorporated by reference to Exhibit 10.17 of Lifeway’s Annual Report on Form 10-K dated December 31, 2009 and filed on March 31, 2010 (File No. 000- 17363)).
|
10.10
|
Fourth Modification Agreement dated March 31, 2011 by and among The PrivateBank and Trust Company, Lifeway Foods, Inc., Fresh Made, Inc., Helios Nutrition Limited, Pride of Main Street Dairy, LLC and Starfruit, LLC (incorporated by reference to Exhibit 10.10 of Lifeway’s Annual Report on Form 10-K dated December 31, 2010 and filed on March 31, 2011 (File No. 000- 17363)).
|
14
|
Code of Ethics (incorporated by reference to Exhibit 14 on Lifeway’s Annual Report on Form 10-KSB for the year ended December 31, 2007 and filed on March 31, 2008 (File No. 000-17363)).
|
|
21
|
List of Subsidiaries of the Registrant
|
|
23.1
|
Consent of Independent Registered Public Accounting Firm
|
|
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
|
|
101
|
Interactive Data Files
|
LIFEWAY FOODS, INC.
|
|||
Date: March 30, 2012
|
By:
|
/s/ Julie Smolyansky
|
|
Julie Smolyansky
|
|||
Chief Executive Officer, President, and
Director
|
Date: March 30, 2012
|
By:
|
/s/ Edward P. Smolyansky
|
|
Edward P. Smolyansky
|
|||
Chief Financial and Accounting Officer
and Treasurer
|
Date: March 30, 2012
|
/s/ Julie Smolyansky
|
||
Julie Smolyansky
|
|||
Chief Executive Officer, President, and Director
|
Date: March 30, 2012
|
/s/ Ludmila Smolyansky
|
||
Ludmila Smolyansky
|
|||
Chairperson of the Board of Directors
|
Date: March 30, 2012
|
/s/ Pol Sikar
|
||
Pol Sikar
|
|||
Director
|
Date:
|
|||
Gustavo Carlos Valle
|
|||
|
Director
|
Date: March 30, 2012
|
/s/ Renzo Bernardi
|
||
Renzo Bernardi
|
|||
Director
|
Date:
|
|||
Eugene B. Katz
|
|||
Director
|
2.1
|
Stock Purchase Agreement dated February 6, 2009 by and among Lifeway Foods, Inc., Iyla Mandel and Michael Edelson (incorporated by reference to Exhibit 2.1 of Lifeway’s Current Report on Form 8-K dated February 6, 2009 and filed February 13, 2009 (File No. 000-17363)).
|
|
3.1
|
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)).
|
|
3.2
|
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)).
|
|
4.1
|
Revolving Note dated February 6, 2009 (incorporated by reference to Exhibit 10.2 on Lifeway’s Current Report on Form 8-K dated February 6, 2009 and filed on February 13, 2009 (File No. 000- 17363)).
|
|
4.2
|
Term Note dated February 6, 2009 (incorporated by reference to Exhibit 10.3 on Lifeway’s Current Report on Form 8-K dated February 6, 2009 and filed on February 13, 2009 (File No. 000-17363)).
|
|
10.1
|
Lifeway Foods, Inc. Consulting and Services Compensation Plan, dated June 5, 1995 (incorporated by reference to Lifeway’s Registration Statement on Form S-8 File No. 333-93306).
|
|
10.2
|
Stock Purchase Agreement dated October 1, 1999 by and among Danone Foods, Inc., Lifeway Foods, Inc., Michael Smolyansky and certain other parties (incorporated by reference to Exhibit 10.10 of Lifeway’s Current Report on Form 8-K dated October 1, 1999, and filed October 12, 1999 (File No. 000-17363)).
|
|
10.3
|
Stockholders’ Agreement dated October 1, 1999 by and among Danone Foods, Inc., Lifeway Foods, Inc., Michael Smolyansky and certain other parties (incorporated by reference to Exhibit 10.11 of Lifeway’s Current Report on Form 8-K dated October 1, 1999, and filed October 12, 1999 (File No. 000-17363)).
|
|
10.4
|
Letter Agreement dated December 24, 1999 (amending original Stockholders’ Agreement with Danone Foods, Inc.) (incorporated by reference to Exhibit 10.12 of Lifeway’s Current Report on Form 8-K dated December 24, 1999, and filed January 12, 2000 (File No. 000-17363)).
|
|
10.5
|
Employment Agreement, dated September 12, 2002, between Lifeway Foods, Inc. and Julie Smolyansky (incorporated by reference to Exhibit 10.14 of Amendment No. 2 filed April 30, 2003 to Lifeway’s Quarterly Report on Form 10-QSB/A for the quarter ended September 30, 2002 (File No. 000-17363)).
|
|
10.6
|
Loan and Security Agreement dated February 6, 2009 by and among Lifeway Foods, Inc., Fresh Made, Inc., LFI Enterprises, Inc., Helios Nutrition Limited, Pride Main Street Dairy, LLC and Starfruit, LLC and The Private Bank and Trust Company (incorporated by reference to Exhibit 10.1 of Lifeway’s Current Report on Form 8-K dated February 6, 2009 and filed on February 13, 2009 (File No. 000- 17363)).
|
|
10.7
|
First Modification Agreement dated August 13, 2009 by and among The PrivateBank and Trust Company, Lifeway Foods, Inc., Fresh Made, Inc., Helios Nutrition Limited, Pride of Main Street Dairy, LLC and Starfruit, LLC (incorporated by reference to Exhibit 10.15 of Lifeway’s Annual Report on Form 10-K dated December 31, 2009 and filed on March 31, 2010 (File No. 000- 17363)).
|
|
10.8
|
Second Modification Agreement dated November 12, 2009 by and among The PrivateBank and Trust Company, Lifeway Foods, Inc., Fresh Made, Inc., Helios Nutrition Limited, Pride of Main Street Dairy, LLC and Starfruit, LLC (incorporated by reference to Exhibit 10.16 of Lifeway’s Annual Report on Form 10-K dated December 31, 2009 and filed on March 31, 2010 (File No. 000- 17363)).
|
|
10.9
|
Third Modification Agreement dated February 6, 2010 by and among The PrivateBank and Trust Company, Lifeway Foods, Inc., Fresh Made, Inc., Helios Nutrition Limited, Pride of Main Street Dairy, LLC and Starfruit, LLC (incorporated by reference to Exhibit 10.17 of Lifeway’s Annual Report on Form 10-K dated December 31, 2009 and filed on March 31, 2010 (File No. 000- 17363)).
|
|
10.10
|
Fourth Modification Agreement dated March 31, 2011 by and among The PrivateBank and Trust Company, Lifeway Foods, Inc., Fresh Made, Inc., Helios Nutrition Limited, Pride of Main Street Dairy, LLC and Starfruit, LLC (incorporated by reference to Exhibit 10.10 of Lifeway’s Annual Report on Form 10-K dated December 31, 2010 and filed on March 31, 2011 (File No. 000- 17363)).
|
|
14
|
Code of Ethics (incorporated by reference to Exhibit 14 on Lifeway’s Annual Report on Form 10-KSB for the year ended December 31, 2007 and filed on March 31, 2008 (File No. 000-17363)).
|
|
21
|
List of Subsidiaries of the Registrant
|
|
23.1
|
Consent of Independent Registered Public Accounting Firm
|
|
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
|
|
101
|
Interactive Data Files
|
1.
|
I have reviewed this annual report on Form 10-K of Lifeway Foods, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter n the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
March 30, 2012
|
By:
|
/s/ Julie Smolyansky
|
||
Julie Smolyansky
Chief Executive Officer, President and Director
|
1.
|
I have reviewed this annual report on Form 10-K of Lifeway Foods, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’ s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
March 30, 2012
|
By:
|
/s/ Edward P. Smolyansky
|
||
Edward P. Smolyansky
Chief Financial and Accounting Officer and Treasurer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.
|
Date:
|
March 30, 2012
|
By:
|
/s/ Julie Smolyansky
|
||
Julie Smolyanky
Chief Executive Officer, President and Director
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.
|
Date:
|
March 30, 2012
|
By:
|
/s/ Edward P. Smolyansky
|
||
Edward P. Smolyansky
Chief Financial and Accounting Officer and Treasurer
|
Acquisitions
|
12 Months Ended | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2011
|
|||||||||||||||||||||||||||||||
Acquisitions [Abstract] | |||||||||||||||||||||||||||||||
Acquisitions | Note 3 – ACQUISITIONS
On October 14, 2010, the Company purchased certain assets of First Juice, Inc., a producer of organic fruit and vegetable juice beverages designed for children. The consideration for substantially all of the assets was an aggregate of $770,000, consisting of a $500,000 previous investment in preferred stock and an additional $270,000 cash paid in 2010. Production was moved to Lifeway facilities upon closing of the acquisition. The acquisition was consummated to expand the Company's presence in the children's market, increase distribution channels for existing Lifeway products, and increase diversification of the Company's products. There were no significant liabilities assumed. Acquisition costs for legal and professional fees have been included in General and Administrative costs and were not significant. The entire amount of goodwill resulting from the acquisition is tax deductible.
The estimated fair value of assets acquired, including the real property, and liabilities assumed consisted of the following:
Had the acquisition occurred on January 1, 2010, the impact on the gross revenue and net income of the Company would not have been significant and would have had no impact on earnings per share for the full year ended December 31, 2010. |