13. Unrestricted Net Assets

UBIUK has undistributed losses of $2,852,400 as of June 30, 2011. Under KBEL's line of credit agreement with RBS, distributions and other payments to MBC from KBEL are not permitted if retained earnings drop below $1,606,700. Condensed financial information of MBC together with its other subsidiary, Releta, is as follows:

	June 30, 2011			December 31, 2010
	(unaudited)
Assets
Cash	$	153,100		$	64,900
Accounts receivable		2,317,200			1,754,600
Inventories		1,911,400			1,756,700
Other current assets		326,700			360,300
Total current assets		4,708,400			3,936,500

Investment in UBIUK		1,225,000			1,225,000
Property and equipment		10,371,400			10,401,800
Other assets		353,200			152,700
Intercompany account balance with UBIUK		112,100			(17,900	)
Total assets	$	16,770,100		$	15,698,100

Liabilities and Stockholders' Equity
Line of credit	$	698,100		$	1,621,200
Accounts payable		1,176,600			1,265,700
Accrued liabilities		1,301,800			899,700
Current maturities of debt and capital leases		472,300			3,564,800
Current maturities of notes payable to related party		—			3,224,800
Total current liabilities		3,648,800			10,576,200

Long-term debt and capital leases		4,482,200			49,700
Notes payable to related party		3,269,900			—
Total liabilities	$	11,400,900		$	10,625,900

Stockholders' equity
Preferred stock		227,600			227,600
Common stock		15,043,300			15,043,300
Accumulated deficit		(9,901,700	)		(10,198,700	)
Total stockholders' equity		5,369,200			5,072,200
Total liabilities and stockholders' equity	$	16,770,100		$	15,698,100

Statements of Operations	Three months ended June 30				Six months ended June 30
	2011		2010		2011		2010
	(unaudited)		(unaudited)		(unaudited)		(unaudited)

Net sales	$	4,135,900	$	3,960,200	$	7,964,100	$	7,207,600
Cost of goods sold		2,998,800		2,880,000		5,786,600		5,433,900
Sales, marketing, and retail expenses		410,100		337,500		762,400		657,200
General and administrative expenses		449,500		460,200		982,400		920,900
Income from operations		277,500		282,500		432,700		195,600

Other income		36,500		35,600		70,300		74,000
Interest expense		93,300		116,800		198,900		230,000
Provision for taxes		—		—		7,100		2,600
Net income	$	220,700	$	201,300	$	297,000	$	37,000

	Six months ended June 30
	2011			2010
	(unaudited)			(unaudited)
Statements of Cash Flows
Cash flows from operating activities	$	57,900		$	(66,100	)
Purchase of property and equipment		(256,600	)		(32,200	)
Net borrowing (repayment) on line of credit		(923,100	)		418,600
Borrowing on long term debt		4,881,000			—
Repayment on long term debt		(3,517,700	)		(155,500	)
Payment on obligation under capital lease		(23,300	)		(30,800	)
Net change in payable to UBI		(130,000	)		(128,300	)
Increase in cash		88,200			5,700
Cash, beginning of period		64,900			46,700
Cash, end of period	$	153,100		$	52,400