from 10q:
SIX MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2001
Revenues for the first six months of 2002 were $4,800,000, representing an
increase of $2,144,000 (81%) from the $2,656,000 reported for the six month
period ending June 30, 2001. This increase resulted from the introductory sales
of Medifast Plus(R) for Diabetics, an increase in teleweb sales directly to
Lifestyles(R) program patients, and sales to pharmacists via R & S Distributors.
Cost of sales for the first half of 2002 increased by $432,000 (36%) from 2001.
Gross profit for the first half of 2002 increased by $1,712,000 (118%) from 2001
due to sales of higher margin products, such as Medifast Plus(R) for Diabetics.
Selling, general and administrative expenses for the first half of 2002 of
$2,189,000 increased by $1,256,000 (135%) over the same period of 2001. This was
a result of increased advertising, customer service improvements, expansion
costs, and infrastructure. Despite the increase, the Company maintained overall
better cost controls.
The net profit from operations for the first six months of 2002 was $979,000,
which is $456,000 (87%) greater than the same period last year. The operating
profit is attributable primarily to an Internet-focused sales and marketing
strategy and higher margin new product sales. Increased sales via Medifast
Direct and the Internet to medical practitioners and their patients
significantly improved margins to 65%. The income before provision for income
taxes for the six month period was $788,000, which is $355,000 more than the
$433,000 profit for the first half of 2001. Management significantly improved
the balance sheet and the Company's profitability by paying off its short term
debt, its Series "A" Preferred stockholders, and restructuring the long term
debt on more favorable terms. Interest expense was $54,000 during the six month
period ending June 30, 2002 as compared to $120,000 for the same period in 2001.
Current interest expense was stabilized, increasing cash flow and thereby
reducing the need to increase borrowing. The Company has deferred patent
development costs of $94,000, which includes the Johns Hopkins Clinical Study
and development costs of the patent pending "Medifast Plus(R) for Diabetics"
product line.
THREE MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2001
Second quarter revenues for 2002 of $3,028,000 increased by $1,696,000 (127%)
from $1,332,000 for the three month period ended June 30, 2001. Cost of sales
for the period was $973,000, an increase of $332,000 (52%) from $641,000 during
the same period of 2001. Gross profits of $2,055,000 for the second quarter of
2002 increased by $1,364,000 (197%) from $691,000 in the second quarter of 2001.
During the quarter the Company experienced a profit from operations of $677,000
compared to a profit
7
of $189,000 for the second quarter of 2001. The income before provision for
income taxes for the second quarter of 2002 was $526,000 compared to a net
profit of $159,000 in the second quarter of 2001. A provision for income tax
benefit of $148,000 was recognized in the second quarter of 2002 due to the
reduction in the valuation allowance against benefits to be realized from net
operating loss carry forwards. This benefit arose because the Company's
operating results exceeded those previously estimated.
Three Months Ended June 30, Six Months Ended June 30,
------------------------- -------------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
(Unaudited) (Unaudited)
Revenue ................................................ $3,028,000 $1,332,000 $4,800,000 $2,656,000
Cost of sales .......................................... 973,000 641,000 1,632,000 1,200,000
---------- ---------- ---------- ----------
Gross Profit ........................................... 2,055,000 691,000 3,168,000 1,456,000
Selling, general, and administration ................... 1,378,000 502,000 2,189,000 933,000
---------- ---------- ---------- ----------
Income from operations ................................. 677,000 189,000 979,000 523,000
---------- ---------- ---------- ----------
Other income/(expenses)
Interest expense ................................... (13,000) (58,000) (54,000) (120,000)
Other income (expense) ............................. (138,000) 28,000 (137,000) 30,000
---------- ---------- ---------- ----------
Income before provision for income taxes ............... 526,000 159,000 788,000 433,000
Provision for income tax benefit ................... 148,000 0 148,000 0
---------- ---------- ---------- ----------
Net income ............................................. 674,000 159,000 936,000 433,000
Less: Stock dividend on preferred stock ................ (21,000) (21,000) (45,000) (43,000)
Accretion of preferred stock ..................... 0 (5,000) 0 (10,000)
---------- ---------- ---------- ----------
Net income attributable to common shareholders ......... $ 653,000 $ 133,000 $ 891,000 $ 380,000
========== ========== ========== ==========
Basic earnings per share ............................... $.10 $.02 $.14 $.06
Diluted earnings per share ............................. $.08 $.02 $.11 $.05
Weighted average shares outstanding -
Basic .............................................. 6,619,121 6,524,531 6,591,977 6,524,531
Diluted ............................................ 8,390,970 8,350,366 8,401,717 8,364,318 |
