(Mark One) | |
x
|
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Illinois
|
36-3442829
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
(I.R.S. Employer
Identification No.)
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
|
|||
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
|
|||
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
|
|||
Large accelerated filer o
|
Accelerated filer x
|
Non-accelerated filer o
|
Smaller reporting company o
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
|
As of October 27, 2015, 16,304,410 shares of the registrant’s common stock, no par value, were outstanding.
|
PART I – FINANCIAL INFORMATION
|
||
Item 1.
|
Financial Statements.
|
3 |
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
16 |
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
22 |
Item 4.
|
Controls and Procedures.
|
22 |
PART II – OTHER INFORMATION
|
||
Item 1.
|
Legal Proceedings.
|
24 |
Item 1 A.
|
Risk Factors.
|
24 |
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
24 |
Item 3.
|
Defaults Upon Senior Securities.
|
24 |
Item 4.
|
Mine Safety Disclosure.
|
24 |
Item 5.
|
Other Information.
|
24 |
Item 6.
|
Exhibits.
|
24 |
Signatures.
|
25 | |
Index of Exhibits.
|
26 |
September 30,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$
|
5,010,669
|
$
|
3,260,244
|
||||
Investments, at fair value
|
2,512,537
|
2,779,140
|
||||||
Certificates of deposits in financial institutions
|
534,678
|
149,965
|
||||||
Inventories
|
6,931,773
|
5,814,219
|
||||||
Accounts receivable, net of allowance for doubtful accounts and discounts of $1,100,000 and $1,050,000 at September 30, 2015 and December 31, 2014, respectively
|
10,753,485
|
10,213,541
|
||||||
Prepaid expenses and other current assets
|
53,966
|
251,922
|
||||||
Other receivables
|
37,850
|
134,338
|
||||||
Deferred income taxes
|
612,159
|
408,340
|
||||||
Refundable income taxes
|
129,426
|
1,140,796
|
||||||
Total current assets
|
26,576,273
|
24,152,505
|
||||||
Property and equipment, net
|
21,602,426
|
21,892,395
|
||||||
Intangible assets
|
||||||||
Goodwill
|
14,068,091
|
14,068,091
|
||||||
Other intangible assets, net
|
2,523,006
|
3,059,764
|
||||||
Total intangible assets
|
16,591,097
|
17,127,855
|
||||||
Other Assets
|
||||||||
Long-term accounts receivable, net of current portion
|
294,767
|
251,683
|
||||||
Total assets
|
$
|
65,064,563
|
$
|
63,424,438
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities
|
||||||||
Current maturities of notes payable
|
$
|
840,000
|
$
|
872,285
|
||||
Accounts payable
|
5,190,593
|
5,586,755
|
||||||
Accrued expenses
|
3,104,452
|
2,066,076
|
||||||
Accrued income taxes
|
448,891
|
—
|
||||||
Total current liabilities
|
9,583,936
|
8,525,116
|
||||||
Notes payable
|
7,329,328
|
8,124,515
|
||||||
Deferred income taxes
|
1,806,539
|
2,075,095
|
||||||
Total liabilities
|
18,719,803
|
18,724,726
|
||||||
Stockholders’ equity
|
||||||||
Common stock, no par value; 40,000,000 shares authorized;
|
||||||||
17,273,776 shares issued; 16,346,017 shares outstanding
|
||||||||
at September 30, 2015 and December 31, 2014
|
6,509,267
|
6,509,267
|
||||||
Paid-in-capital
|
2,032,516
|
2,032,516
|
||||||
Treasury stock, at cost
|
(8,187,682
|
)
|
(8,187,682
|
)
|
||||
Retained earnings
|
46,189,101
|
44,543,618
|
||||||
Accumulated other comprehensive loss, net of taxes
|
(198,442)
|
(198,007
|
)
|
|||||
Total stockholders’ equity
|
46,344,760
|
44,699,712
|
||||||
Total liabilities and stockholders’ equity
|
$
|
65,064,563
|
$
|
63,424,438
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Gross sales
|
$
|
33,519,071
|
$
|
32,704,435
|
$
|
102,913,996
|
$
|
97,359,630
|
||||||||
Less: discounts and promotional allowances
|
(3,920,406)
|
(2,594,213
|
)
|
(13,872,019
|
)
|
(8,552,286
|
)
|
|||||||||
Net sales
|
29,598,665
|
30,110,222
|
89,041,977
|
88,807,344
|
||||||||||||
Cost of goods sold
|
19,929,639
|
21,697,954
|
62,778,735
|
64,812,489
|
||||||||||||
Depreciation expense
|
613,830
|
610,966
|
1,808,988
|
2,022,204
|
||||||||||||
Total cost of goods sold
|
20,543,469
|
22,308,920
|
64,587,723
|
66,834,693
|
||||||||||||
Gross profit
|
9,055,196
|
7,801,302
|
24,454,254
|
21,972,651
|
||||||||||||
Selling expenses
|
2,706,375
|
2,804,127
|
9,486,177
|
9,977,636
|
||||||||||||
General and administrative
|
4,117,811
|
2,627,566
|
10,919,862
|
7,115,393
|
||||||||||||
Amortization expense
|
178,919
|
178,919
|
536,758
|
536,758
|
||||||||||||
Total operating expenses
|
7,003,105
|
5,610,612
|
20,942,797
|
17,629,787
|
||||||||||||
Income from operations
|
2,052,091
|
2,190,690
|
3,511,457
|
4,342,864
|
||||||||||||
Other income (expense):
|
||||||||||||||||
Interest and dividend income
|
25,259
|
22,739
|
86,477
|
86,664
|
||||||||||||
Rental income
|
1,800
|
1,201
|
5,400
|
2,900
|
||||||||||||
Interest expense
|
(55,698
|
)
|
(62,084
|
)
|
(179,468
|
)
|
(194,377
|
)
|
||||||||
(Loss)/Gain on sale of investments, net
|
||||||||||||||||
reclassified from OCI
|
839
|
(22,940)
|
(21,098
|
)
|
39,190
|
|||||||||||
Gain on sale of property and equipment
|
200
|
85,077
|
243,283
|
8,592
|
||||||||||||
Other income (expense), net
|
(205,000
|
)
|
—
|
(303,796
|
)
|
1,674
|
||||||||||
Total other income (expense)
|
(232,600
|
)
|
23,993
|
(169,202
|
)
|
(55,357
|
)
|
|||||||||
Income before provision for
|
||||||||||||||||
income taxes
|
1,819,491
|
2,214,683
|
3,342,255
|
4,287,507
|
||||||||||||
Provision for income taxes
|
926,639
|
1,201,005
|
1,696,772
|
2,307,234
|
||||||||||||
Net income
|
$
|
892,852
|
$
|
1,013,678
|
$
|
1,645,483
|
$
|
1,980,273
|
||||||||
Basic and diluted earnings
|
||||||||||||||||
per common share
|
$
|
0.05
|
$
|
0.06
|
$
|
0.10
|
$
|
0.12
|
||||||||
Weighted average number of
|
||||||||||||||||
common shares outstanding
|
16,346,017
|
16,346,017
|
16,346,017
|
16,346,017
|
||||||||||||
COMPREHENSIVE INCOME
|
||||||||||||||||
Net income
|
$
|
892,852
|
$
|
1,013,678
|
$
|
1,645,483
|
$
|
1,980,273
|
||||||||
Other comprehensive income
|
||||||||||||||||
(loss), net of tax:
|
||||||||||||||||
Unrealized gains (losses) on
|
||||||||||||||||
investments (net of tax)
|
(183,170
|
)
|
(93,679
|
)
|
(247,645
|
)
|
(22,524
|
)
|
||||||||
Less reclassification adjustment
|
||||||||||||||||
for (gains) losses and other than
temporary impairments included in
|
||||||||||||||||
net income (net of taxes)
|
124,395
|
13,702
|
247,210
|
(23,408
|
)
|
|||||||||||
Comprehensive income
|
$
|
834,047
|
$
|
933,701
|
$
|
1,645,048
|
$
|
1,934,341
|
Accumulated
|
||||||||||||||||||||||||||||||||
Other
|
||||||||||||||||||||||||||||||||
Common Stock
|
Comprehensive
|
|||||||||||||||||||||||||||||||
Issued
|
In treasury
|
Paid In
|
Retained
|
Income (Loss),
|
||||||||||||||||||||||||||||
Shares
|
$
|
Shares
|
$
|
Capital
|
Earnings
|
Net of Tax
|
Total Equity
|
|||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Balances at December 31, 2013
|
17,273,776
|
$
|
6,509,267
|
(927,759
|
)
|
$
|
(8,187,682
|
)
|
$
|
2,032,516
|
$
|
42,587,214
|
$
|
7,807
|
$
|
42,949,122
|
||||||||||||||||
|
||||||||||||||||||||||||||||||||
Other comprehensive loss
|
—
|
—
|
—
|
—
|
—
|
—
|
(45,932
|
)
|
(45,932)
|
|||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Net income for the nine months ended September 30, 2014
|
—
|
—
|
—
|
—
|
—
|
1,980,273
|
—
|
1,980,273
|
||||||||||||||||||||||||
Balances at September 30, 2014
|
17,273,776
|
$
|
6,509,267
|
(927,759
|
)
|
$
|
(8,187,682
|
)
|
$
|
2,032,516
|
$
|
44,567,487
|
$
|
(38,125
|
)
|
$
|
44,883,463
|
|||||||||||||||
|
||||||||||||||||||||||||||||||||
Balances at December 31, 2014
|
17,273,776
|
$
|
6,509,267
|
(927,759
|
)
|
$
|
(8,187,682
|
)
|
$
|
2,032,516
|
$
|
44,543,618
|
$
|
(198,007
|
)
|
$
|
44,699,712
|
|||||||||||||||
Other comprehensive loss
|
—
|
—
|
—
|
—
|
—
|
—
|
(435
|
)
|
(435)
|
|||||||||||||||||||||||
Net income for the nine months ended September 30, 2015
|
—
|
—
|
—
|
—
|
—
|
1,645,483
|
—
|
1,645,483
|
||||||||||||||||||||||||
Balances at September 30, 2015
|
17,273,776
|
$
|
6,509,267
|
(927,759
|
)
|
$
|
(8,187,682
|
)
|
$
|
2,032,516
|
$
|
46,189,101
|
$
|
(198,442
|
)
|
$
|
46,344,760
|
September 30,
|
||||||||
2015
|
2014
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
1,645,483
|
$
|
1,980,273
|
||||
Adjustments to reconcile net income to net
|
||||||||
cash flows from operating activities:
|
||||||||
Depreciation and amortization
|
2,345,746
|
2,558,962
|
||||||
Loss (gain) on sale of investments, net
|
21,098
|
(39,190
|
)
|
|||||
Impairment of investments
|
384,500
|
—
|
||||||
Deferred income taxes
|
(472,375
|
)
|
(783,607
|
)
|
||||
Bad debt expense
|
250
|
76,049
|
||||||
Gain on sale of property and equipment
|
(243,083
|
)
|
(8,592
|
)
|
||||
(Increase) decrease in operating assets:
|
||||||||
Accounts receivable
|
(540,194
|
)
|
(1,548,110
|
)
|
||||
Other receivables
|
53,674
|
76,552
|
||||||
Inventories
|
(1,117,554
|
)
|
(235,849
|
)
|
||||
Refundable income taxes
|
1,011,370
|
972,522
|
||||||
Prepaid expenses and other current assets
|
197,956
|
73,379
|
||||||
Increase (decrease) in operating liabilities:
|
||||||||
Accounts payable
|
(396,162
|
)
|
595,333
|
|||||
Accrued expenses
|
1,038,376
|
(40,184
|
)
|
|||||
Accrued income taxes
|
448,891
|
—
|
||||||
Net cash provided by operating activities
|
4,377,976
|
3,677,538
|
||||||
Cash flows from investing activities:
|
||||||||
Purchases of investments
|
(1,369,285
|
)
|
(2,319,742
|
)
|
||||
Proceeds from sale of investments
|
1,229,855
|
1,736,946
|
||||||
Redemption of certificates of deposits
|
249,965
|
15,000
|
||||||
Investments in certificates of deposits
|
(634,678
|
)
|
—
|
|||||
Purchases of property and equipment
|
(1,618,716
|
)
|
(3,052,303
|
)
|
||||
Proceeds from sale of property and equipment
|
342,780
|
89,076
|
||||||
Net cash used in investing activities
|
(1,800,079
|
)
|
(3,531,023
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Repayment of notes payable
|
(827,472
|
)
|
(657,694
|
)
|
||||
Net cash used in financing activities
|
(827,472
|
)
|
(657,694
|
)
|
||||
Net (decrease) increase in cash and cash equivalents
|
1,750,425
|
(511,179
|
)
|
|||||
Cash and cash equivalents at the beginning of the period
|
3,260,244
|
3,306,608
|
||||||
Cash and cash equivalents at the end of the period
|
$
|
5,010,669
|
$
|
2,795,429
|
||||
Supplemental cash flow information
Cash paid for income taxes
|
$
|
1,120,000
|
$
|
2,131,658
|
||||
Cash paid for interest
|
$
|
177,521
|
$
|
195,275
|
As of
|
||||||||
September 30, 2015
|
December 31, 2014
|
|||||||
Recipes
|
$
|
43,600
|
$
|
43,600
|
||||
Customer lists and other customer related intangibles
|
4,529,200
|
4,529,200
|
||||||
Customer relationship
|
985,000
|
985,000
|
||||||
Trade names
|
2,248,000
|
2,248,000
|
||||||
Formula
|
438,000
|
438,000
|
||||||
Subtotal
|
8,243,800
|
8,243,800
|
||||||
Accumulated amortization
|
(5,720,794
|
)
|
(5,184,036
|
)
|
||||
Intangible assets, net
|
$
|
2,523,006
|
$
|
3,059,764
|
September 30, 2015
|
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Fair
Value
|
||||||||||||
Common stocks & ETF’s
|
$
|
1,041,953
|
$
|
12,102
|
$
|
(175,470
|
)
|
$
|
878,585
|
|||||||
Mutual Funds
|
77,109
|
—
|
(10,243
|
) |
66,866
|
|||||||||||
Preferred Securities
|
97,405
|
515
|
—
|
97,920
|
||||||||||||
Corporate Bonds
|
1,621,586
|
24
|
(152,444
|
)
|
1,469,166
|
|||||||||||
Total
|
$
|
2,838,053
|
$
|
12,641
|
$
|
(338,157
|
)
|
$
|
2,512,537
|
December 31, 2014
|
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Fair
Value
|
||||||||||||
Common stocks & ETF’s
|
$
|
530,328
|
$
|
19,608
|
$
|
(64,046
|
)
|
$
|
485,890
|
|||||||
Mutual Funds
|
445,337
|
—
|
(10,624
|
)
|
434,713
|
|||||||||||
Preferred Securities
|
180,120
|
195
|
(2,075
|
)
|
178,240
|
|||||||||||
Corporate Bonds
|
1,948,596
|
1,880
|
(270,179
|
)
|
1,680,297
|
|||||||||||
Total
|
$
|
3,104,381
|
$
|
21,683
|
$
|
(346,924
|
)
|
$
|
2,779,140
|
Less Than 12 Months
|
12 Months or Greater
|
Total
|
||||||||||||||||||||||
September 30, 2015
|
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
||||||||||||||||||
Common stocks & ETF’s
|
$
|
456,047
|
$
|
(104,176
|
)
|
$
|
276,028
|
$
|
(71,293
|
)
|
$
|
732,075
|
$
|
(175,470
|
)
|
|||||||||
Mutual Funds
|
62,744
|
(7,326
|
)
|
4,122
|
(2,918
|
)
|
66,866
|
(10,243
|
)
|
|||||||||||||||
Preferred Securities
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Corporate Bonds
|
552,809
|
(76,352
|
)
|
906,304
|
(76,092
|
)
|
1,459,113
|
(152,444
|
)
|
|||||||||||||||
$
|
1,071,600
|
$
|
(187,854
|
)
|
$
|
1,186,454
|
$
|
(150,303
|
)
|
$
|
2,258,054
|
$
|
(338,157
|
)
|
Less Than 12 Months
|
12 Months or Greater
|
Total
|
||||||||||||||||||||||
December 31, 2014
|
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
Fair Value
|
Unrealized Losses
|
||||||||||||||||||
Common stocks & ETF’s
|
$
|
162,268
|
$
|
(49,053
|
)
|
$
|
141,417
|
$
|
(14,993
|
)
|
$
|
303,685
|
$
|
(64,046
|
)
|
|||||||||
Mutual Funds
|
434,713
|
(10,624
|
)
|
—
|
—
|
434,713
|
(10,624
|
)
|
||||||||||||||||
Preferred Securities
|
80,640
|
(2,075
|
)
|
—
|
—
|
80,640
|
(2,075
|
)
|
||||||||||||||||
Corporate Bonds
|
1,056,140
|
(194,641
|
)
|
497,277
|
(75,538
|
)
|
1,553,417
|
(270,179
|
)
|
|||||||||||||||
$
|
1,733,761
|
$
|
(256,393
|
)
|
$
|
638,694
|
$
|
(90,531
|
)
|
$
|
2,372,455
|
$
|
(346,924
|
)
|
September 30,
2015
|
December 31,
2014
|
|||||||
Finished goods
|
$
|
1,966,744
|
$
|
2,373,476
|
||||
Production supplies
|
2,754,577
|
2,069,742
|
||||||
Raw materials
|
2,210,452
|
1,371,001
|
||||||
Total inventories
|
$
|
6,931,773
|
$
|
5,814,219
|
September 30,
2015
|
December 31,
2014
|
|||||||
Land
|
$
|
1,756,673
|
$
|
1,856,370
|
||||
Buildings and improvements
|
16,419,430
|
15,125,803
|
||||||
Machinery and equipment
|
22,794,894
|
20,434,910
|
||||||
Vehicles
|
1,310,527
|
1,244,560
|
||||||
Office equipment
|
709,188
|
465,801
|
||||||
Construction in process
|
64,505
|
2,408,754
|
||||||
43,055,217
|
41,536,198
|
|||||||
Less accumulated depreciation
|
21,452,791
|
19,643,803
|
||||||
Total property and equipment
|
$
|
21,602,426
|
$
|
21,892,395
|
September 30,
2015
|
December 31,
2014
|
|||||||
Accrued payroll and payroll taxes
|
$
|
945,883
|
$
|
891,763
|
||||
Accrued property tax
|
305,659
|
331,278
|
||||||
Other
|
1,852,910
|
843,035
|
||||||
$
|
3,104,452
|
$
|
2,066,076
|
September 30,
2015
|
December 31,
2014
|
|||||||
Note payable to Private Bank in monthly installments of $42,222, plus variable interest rate (currently 2.67%) with a balloon payment for the remaining balance. Collateralized by substantially all assets of the Company. Maturity date - May 31, 2018.
|
$
|
3,972,223
|
$
|
4,352,222
|
||||
Note payable to Private Bank in monthly installments of $27,778, plus variable interest rate (currently 2.67%) with a balloon payment for the remaining balance, maturing on May 31, 2019, collateralized by substantially all assets of the Company.
|
4,197,105
|
4,583,333
|
||||||
Notes payable to Ford Credit Corp. payable in monthly installments of $1,778 at 5.99%, paid in March 2015.
|
—
|
12,198
|
||||||
Note payable to Fletcher Jones of Chicago, Ltd LLC in monthly installments of $1,769 at 6.653%, paid in March 2015.
|
—
|
49,047
|
||||||
Total notes payable
|
8,169,328
|
8,996,800
|
||||||
Less current maturities
|
840,000
|
872,285
|
||||||
Total long-term portion
|
$
|
7,329,328
|
$
|
8,124,515
|
For the 12 Months Ended September 30,
|
||||
2016
|
$
|
840,000
|
||
2017
|
840,000
|
|||
2018
|
3,292,231
|
|||
2019
|
3,197,097
|
|||
Total
|
$
|
8,169,328
|
|
•
|
Quoted prices for similar assets or liabilities in active markets;
|
|
•
|
Quoted prices for identical or similar assets or liabilities in inactive markets;
|
|
•
|
Inputs other than quoted prices that are observable for the asset or liability;
|
|
•
|
Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
Assets and Liabilities at Fair Value as of September 30, 2015
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Mutual Funds
|
$
|
66,866
|
$
|
—
|
$
|
—
|
$
|
66,866
|
||||||||
Common Stocks& ETF’s
|
878,586
|
—
|
—
|
878,586
|
||||||||||||
Preferred Securities
|
—
|
97,920
|
—
|
97,920
|
||||||||||||
Corporate Bonds
|
—
|
1,204,102
|
265,063
|
1,469,165
|
||||||||||||
Assets and Liabilities at Fair Value as of December 31, 2014
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Mutual Funds
|
$
|
434,713
|
$
|
—
|
$
|
—
|
$
|
434,713
|
||||||||
Common Stocks& ETF’s
|
485,890
|
—
|
—
|
485,890
|
||||||||||||
Preferred Securities
|
—
|
178,240
|
—
|
178,240
|
||||||||||||
Corporate Bonds
|
—
|
1,680,297
|
—
|
1,680,297
|
||||||||||||
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Drinkable Kefir other than ProBugs
|
$ | 25,901,949 | $ | 26,142,269 | $ | 76,723,238 | $ | 76,793,828 | ||||||||
Pro Bugs
|
1,702,481 | 1,898,439 | 5,999,457 | 5,582,374 | ||||||||||||
Lifeway Farmer Cheese
|
1,660,377 | 1,565,652 | 5,124,754 | 4,933,441 | ||||||||||||
Frozen Kefir
|
333,858 | 503,862 | 1,194,528 | 1,497,701 | ||||||||||||
Net Sales
|
$ | 29,598,665 | $ | 30,110,222 | $ | 89,041,977 | $ | 88,807,344 | ||||||||
Three months ended
September 30,
|
Change
|
|||||||||||||||
2015
|
2014
|
$
|
%
|
|||||||||||||
Gross Sales
|
$
|
33,519,071
|
$
|
32,704,435
|
$
|
814,636
|
2.5%
|
|||||||||
Less: Discounts & promotional allowances
|
(3,920,406
|
)
|
(2,594,213
|
)
|
(1,326,193
|
)
|
51.1%
|
|||||||||
Net Sales
|
$
|
29,598,665
|
$
|
30,110,222
|
$
|
(511,557
|
)
|
-1.7%
|
||||||||
Discounts & promotional allowances %
to gross sales
|
11.7%
|
7.9%
|
Three months ended
September30,
|
Change
|
|||||||||||||||
2015
|
2014
|
$
|
%
|
|||||||||||||
Purchases, net
|
$
|
12,412,786
|
$
|
14,514,267
|
$
|
(2,101,481
|
)
|
-14.5%
|
||||||||
Testing
|
29,333
|
7,841
|
21,492
|
274.1%
|
||||||||||||
Supplies
|
497,564
|
330,409
|
167,155
|
50.6%
|
||||||||||||
Salaries production
|
2,850,876
|
2,350,648
|
500,228
|
21.3%
|
||||||||||||
Contract work
|
35,498
|
31,565
|
3,933
|
12.5%
|
||||||||||||
Freight
|
2,869,114
|
3,203,229
|
(334,115
|
)
|
-10.4%
|
|||||||||||
Delivery expense
|
96,560
|
131,495
|
(34,935
|
)
|
-26.6%
|
|||||||||||
Labor and overhead
|
1,137,908
|
1.128,500
|
9,408
|
0.8%
|
||||||||||||
Cost of Goods Sold, excluding depreciation
|
19,929,639
|
21,697,954
|
(1,768,315
|
)
|
-8.1%
|
|||||||||||
Depreciation expense
|
613,830
|
610,966
|
2,864
|
0.5%
|
||||||||||||
Cost of Goods Sold
|
$
|
20,543,469
|
$
|
22,308,920
|
$
|
(1,765,451
|
)
|
-7.9%
|
||||||||
Gross Profit % to net sales
|
30.6%
|
25.9%
|
Three months ended
September 30,
|
Change
|
|||||||||||||||
2015
|
2014
|
$
|
%
|
|||||||||||||
Salesperson commissions
|
$
|
528,559
|
$
|
358,626
|
$
|
169,933
|
47.4%
|
|||||||||
Advertising
|
1,291,405
|
637,281
|
654,124
|
102.6%
|
||||||||||||
Salaries
|
829,964
|
1,362,969
|
(533,005
|
)
|
-39.1%
|
|||||||||||
Promotions payable
|
47,837
|
44,053
|
3,784
|
8.6%
|
||||||||||||
Travel
|
8,610
|
401,198
|
(392,588
|
)
|
-97.9%
|
|||||||||||
Selling expense
|
$
|
2,706,375
|
$
|
2,804,127
|
$
|
(97,752
|
)
|
-3.5%
|
||||||||
% to net sales
|
9.1%
|
9.3%
|
Three months ended
September 30,
|
Change
|
|||||||||||||||
2015
|
2014
|
$
|
%
|
|||||||||||||
Salaries
|
$
|
2,093,638
|
$
|
968,616
|
$
|
1,125,022
|
116.1%
|
|||||||||
Rent
|
66,635
|
75,713
|
(9,078
|
)
|
-12.0%
|
|||||||||||
Equipment lease
|
2,026
|
2,576
|
(550
|
)
|
-21.4%
|
|||||||||||
Auto expense
|
30,092
|
25,430
|
4,662
|
18.3%
|
||||||||||||
Office supplies
|
30,123
|
100,577
|
(70,454
|
)
|
-70.0%
|
|||||||||||
Professional fees
|
1,516,506
|
1,009,070
|
507,436
|
50.3%
|
||||||||||||
Permits and licenses
|
—
|
21,905
|
(21,905
|
)
|
-100.0%
|
|||||||||||
Telephone expense
|
33,169
|
21,001
|
12,168
|
57.9%
|
||||||||||||
Facilities
|
130,745
|
320,029
|
(189,284
|
)
|
-59.1%
|
|||||||||||
Tax
|
20,749
|
21,948
|
(1,199
|
)
|
-5.5%
|
|||||||||||
Miscellaneous
|
194,128
|
60,701
|
133,427
|
219.8%
|
||||||||||||
General & administrative expense
|
$
|
4,117,811
|
$
|
2,627,566
|
$
|
1,490,245
|
56.7%
|
|||||||||
% to net sales
|
13.9%
|
8.7%
|
Nine months ended
September 30,
|
Change
|
|||||||||||||||
2015
|
2014
|
$
|
%
|
|||||||||||||
Gross Sales
|
$
|
102,913,996
|
$
|
97,359,630
|
$
|
5,554,366
|
5.7%
|
|||||||||
Less: Discounts & promotional allowances
|
(13,872,019
|
)
|
(8,552,286
|
)
|
(5,319,733
|
)
|
62.2%
|
|||||||||
Net Sales
|
$
|
89,041,977
|
$
|
88,807,344
|
$
|
234,633
|
0.3%
|
|||||||||
Discounts &promotional allowances % to gross sales
|
13.5%
|
8.8%
|
Nine months ended
September 30,
|
Change
|
|||||||||||||||
2015
|
2014
|
$
|
%
|
|||||||||||||
Purchases, net
|
$
|
38,109,683
|
$
|
44,703,124
|
$
|
(6,593,441
|
)
|
-14.7%
|
||||||||
Testing
|
82,210
|
29,299
|
52,911
|
180.6%
|
||||||||||||
Supplies
|
1,687,467
|
990,254
|
697,213
|
70.4%
|
||||||||||||
Salaries production
|
8,679,120
|
6,719,070
|
1,960,050
|
29.2%
|
||||||||||||
Contract work
|
106,496
|
153,224
|
(46,728
|
)
|
-30.5%
|
|||||||||||
Freight
|
9,597,724
|
8,999,827
|
597,897
|
6.6%
|
||||||||||||
Delivery expense
|
339,381
|
292,948
|
46,433
|
15.9%
|
||||||||||||
Outside services
|
4,176,654
|
2,924,743
|
1,251,911
|
42.8%
|
||||||||||||
Cost of Goods Sold, excluding
depreciation
|
62,778,735
|
64,812,489
|
(2,033,754
|
)
|
-3.1%
|
|||||||||||
Depreciation expense
|
1,808,988
|
2,022,204
|
(213,216
|
)
|
-10.5%
|
|||||||||||
Cost of Goods Sold
|
$
|
64,587,723
|
$
|
66,834,693
|
$
|
(2,246,970
|
)
|
-3.4%
|
||||||||
Gross Profit % to net sales
|
27.5%
|
24.7%
|
||||||||||||||
Nine months ended
September 30,
|
Change
|
|||||||||||||||
2015
|
2014
|
$
|
%
|
|||||||||||||
Salesperson commissions
|
$
|
1,872,777
|
$
|
1,692,421
|
$
|
180,356
|
10.7%
|
|||||||||
Advertising
|
4,033,240
|
2,462,313
|
1,570,927
|
63.8%
|
||||||||||||
Salaries
|
3,210,988
|
4,301,159
|
(1,090,171
|
)
|
-25.3%
|
|||||||||||
Promotions payable
|
138,567
|
248,486
|
(109,919
|
)
|
-44.2%
|
|||||||||||
Travel
|
230,605
|
1,273,257
|
(1,042,652
|
)
|
-81.9%
|
|||||||||||
Selling expense
|
$
|
9,486,177
|
$
|
9,977,636
|
$
|
(491,459)
|
-4.9%
|
|||||||||
% to net sales
|
10.7%
|
11.2%
|
Nine months ended
September 30,
|
Change
|
|||||||||||||||
2015
|
2014
|
$
|
%
|
|||||||||||||
Salaries
|
$
|
4,812,979
|
$
|
2,702,560
|
$
|
2,110,419
|
78.1%
|
|||||||||
Rent
|
201,369
|
226,279
|
(24,910
|
)
|
-11.0%
|
|||||||||||
Equipment lease
|
5,667
|
5,770
|
(103
|
)
|
-1.8%
|
|||||||||||
Auto expense
|
105,681
|
74,706
|
30,975
|
41.5%
|
||||||||||||
Office supplies
|
111,267
|
168,022
|
(56,755
|
)
|
-33.8%
|
|||||||||||
Professional fees
|
3,767,384
|
2,376,006
|
1,391,378
|
58.6%
|
||||||||||||
Permits and licenses
|
—
|
106,062
|
(106,062
|
)
|
-100.0%
|
|||||||||||
Telephone expense
|
114,411
|
77,893
|
36,518
|
46.9%
|
||||||||||||
Facilities
|
1,172,708
|
706,792
|
465,916
|
65.9%
|
||||||||||||
Tax
|
144,361
|
110,322
|
34,039
|
30.9%
|
||||||||||||
Miscellaneous
|
484,035
|
560,981
|
(76,946
|
)
|
-13.7%
|
|||||||||||
General & administrative expense
|
$
|
10,919,862
|
$
|
7,115,393
|
$
|
3,804,469
|
53.5%
|
|||||||||
% to net sales
|
12.3%
|
8.0%
|
●
|
Our leadership team remains committed to achieving and maintaining a strong control environment, high ethical standards and financial reporting integrity. This commitment will continue to be communicated to and reinforced with our employees.
|
●
|
We continue to foster awareness and understanding of standards and principles for accounting and financial reporting. This includes the implementation and clarification of specific accounting policies and procedures.
|
●
|
We continue to enhance the development, communication, and monitoring of processes and controls to ensure that appropriate account reconciliations and journal entry controls are performed, documented, and reviewed as part of our standardized procedures.
|
●
|
We continue to redesign our period-end closing and financial statement preparation process in order to improve both its effectiveness and efficiency.
|
●
|
The audit committee of our board of directors has increased the frequency and depth of its discussions with management regarding financial reporting and internal control matters.
|
10.1
|
Eleventh Modification to Loan and Security Agreement dated as of August 11, 2015, by and among The PrivateBank and Trust Company, Lifeway Foods, Inc., Fresh Made, Inc., Helios Nutrition Limited, Pride of Main Street Dairy, LLC, Starfruit, LLC and Lifeway Wisconsin, Inc. (incorporated by reference to Exhibit 10.22 to Lifeway’s Annual Report on Form 10-K dated December 31, 2014 and filed on August 14, 2015 (File No. 000-17363)).
|
31.1
|
Officer’s Certificate Pursuant to 15 U.S.C. 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Officer’s Certificate Pursuant to 15 U.S.C. 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101
|
Interactive Data Files.
|
LIFEWAY FOODS, INC.
|
|||
Date: November 9, 2015
|
By:
|
/s/ Julie Smolyansky
|
|
Julie Smolyansky
|
|||
Chief Executive Officer, President, and Director
|
|||
(Principal Executive Officer)
|
|||
Date: November 9, 2015
|
By:
|
/s/ Edward P. Smolyansky
|
|
Edward P. Smolyansky
|
|||
Chief Financial and Accounting Officer,
Treasurer, Chief Operating Officer and Secretary
(Principal Financial and Accounting Officer)
|
31.1
|
Officer’s Certificate Pursuant to 15 U.S.C. 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Officer’s Certificate Pursuant to 15 U.S.C. 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101
|
Interactive Data Files.
|
Date: November 9, 2015 | By: /s/ Julie Smolyansky
Julie Smolyansky
Chief Executive Officer, President and Director
(Principal Executive Officer)
|
Date: November 9, 2015 | By: /s/ Edward P. Smolyansky
Edward P. Smolyansky
Chief Financial and Accounting Officer,
Treasurer, Chief Operating Officer and Secretary
(Principal Financial and Accounting Officer)
|
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: November 9, 2015 | By: /s/ Julie Smolyansky
Julie Smolyansky
Chief Executive Officer, President and Director
(Principal Executive Officer)
|
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: November 9, 2015 | By: /s/ Edward P. Smolyansky
Edward P. Smolyansky
Chief Financial and Accounting Officer,
Treasurer, Chief Operating Officer and Secretary
(Principal Financial and Accounting Officer)
|
Commitments And Contingencies (Details Narrative) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Commitments And Contingencies Details Narrative | ||
Total expenses on leases | $ 92,852 | $ 108,426 |
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