DIT AMCON Distributing Co

AMCON Distributing Company (�AMCON�) (AMEX:DIT), an Omaha, Nebraska based consumer products company is pleased to announce its financial results for the first and second quarter of 2006, the half year period ended March 31, 2006 and the corresponding filing of its related Quarterly Report on Forms 10-Q with the Securities and Exchange Commission. William F. Wright, AMCON�s Chairman and CEO, commented: �We continue to see the benefits of our new internal holding company structure. AMCON now has the necessary human resources in place to facilitate our objective of timely reporting of results. This, in turn, has enabled our Senior Operating Executives to focus on profitably growing their businesses. Our core enterprises remain strong and well recognized as industry leaders.� For the first half of the fiscal 2006, AMCON�s wholesale consumer products distribution business reported segment operating income before depreciation of approximately $3.5 million and the Retail Health Food Division reported segment operating income before depreciation of approximately $1.8 million. Christopher Atayan, AMCON�s Vice Chairman and Chief Corporate Officer, noted: �Our entire organization continues to work around the clock to restore the financial vitality of the enterprise. Our objective in the short to medium term is to reduce the levels of debt AMCON employs in the business which will enhance our ability to grow in the long term. The two primary elements supporting this objective are to preserve and enhance the operating earnings we generate from our core business units and the disposition of assets no longer central to our mission. We believe that by taking this approach and continuing AMCON�s tradition of superior customer service we are in a position to enhance shareholder value.� Kathleen Evans, AMCON�s president, reported �We were able to continue to carry forward positive momentum during the first half of the year in our Wholesale business. Our strategy of enhanced customer service differentiates us from our competition and makes for long lasting and mutually beneficial customer relationships. As a result, AMCON continues to be awarded new business from leaders in the convenience store industry.� Eric Hinkefent, President of AMCON�s Retail Health Food Division, said �Both our Akins�s and Chamberlin�s retail stores are performing at high levels. Customer satisfaction continues to be a primary mission of ours. This strategy enables us to generate repeat business with our customers and we benefit from attractive gross margins as well.� During the second quarter of fiscal 2006, AMCON began reporting its Trinity Springs subsidiary as a discontinued operation. The reported results for the second quarter of fiscal 2006 included consolidated revenues of approximately $197.4 million, operating income of approximately $1.2 million and income from continuing operations before taxes of approximately $0.1 million. After giving effect to the losses from discontinued operations, income taxes, and preferred dividends, the net loss available to common shareholders for the second fiscal quarter of 2006 was $0.6 million. For the first half of fiscal 2006, the reported revenues were $397.0 million and operating earnings were $1.7 million. The total net loss available to common shareholders for the first half of fiscal 2006 was $1.8 million. �It is important to note that incorporated into both our three and six month periods for fiscal 2006 were segment operating losses of approximately $0.4 million and $0.8 million, respectively, from our water bottling subsidiary, Hawaiian Natural Water Company, as well as additional net losses of approximately $0.5 million and $1.3 million from our discontinued operations at Trinity Springs, Inc. and The Beverage Group, Inc. for the three and six month periods in fiscal 2006� reported Andrew Plummer, AMCON�s Acting Chief Financial Officer. As previously reported, AMCON has been actively exploring the sale of Hawaiian Natural Water Company and has ceased operations at Trinity Springs and is engaged in settlement discussions. AMCON is a leading wholesale distributor of consumer products, including beverages, candy, tobacco, groceries, food service, frozen and chilled foods, and health and beauty care products with distribution centers in Illinois, Missouri, Nebraska, North Dakota and South Dakota. Chamberlin's Natural Foods, Inc. and Health Food Associates, Inc., both wholly-owned subsidiaries of The Healthy Edge, Inc., operate health and natural product retail stores in central Florida (6), Kansas, Missouri, Nebraska and Oklahoma (4). The retail stores operate under the names Chamberlin's Market & Cafe and Akins Natural Foods Market. Hawaiian Natural Water Company, Inc. produces and sells natural spring water under the Hawaiian Springs label in Hawaii and other foreign markets and purified bottled water on the Island of Oahu in Hawaii. The natural spring water is bottled at the source on the Big Island of Hawaii. This news release contains forward-looking statements that are subject to risks and uncertainties and which reflect management's current beliefs and estimates of future economic circumstances, industry conditions, Company performance and financial results. A number of factors could affect the future results of the Company and could cause those results to differ materially from those expressed in the Company's forward-looking statements including, without limitation, availability of sufficient cash resources to conduct its business and meet its capital expenditures needs. Moreover, past financial performance should not be considered a reliable indicator of future performance. Accordingly, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 with respect to all such forward-looking statements. Visit AMCON Distributing Company's web site at: www.amcon.com Set forth below are the full unaudited results for the three and six month periods ended March 31, 2006 and 2005: AMCON Distributing Company and Subsidiaries Condensed Consolidated Balance Sheets March 31, 2006 and September, 30 2005 � March 2006 September 2005 (Unaudited) � ASSETS Current assets: Cash $605,801� $546,273� Accounts receivable, less allowance for doubtful accounts of $1.0 million and $0.6 million, respectively 25,736,271� 28,202,857� Inventories 24,711,252� 23,977,889� Deferred income taxes 1,642,212� 1,642,212� Current assets of discontinued operations 89,747� 1,159,228� Prepaid and other current assets 4,666,230� 5,269,784� Total current assets 57,451,513� 60,798,243� � Property and equipment 14,425,882� 15,162,007� Deferred income taxes 7,130,729� 6,300,503� Noncurrent assets from discontinued operations 2,414,795� 2,475,803� Goodwill 5,848,808� 5,848,808� Other intangible assets 3,459,669� 3,464,534� Other assets 1,165,879� 1,258,899� $91,897,275� $95,308,797� LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY) Current liabilities: Accounts payable $15,713,441� $17,047,833� Accrued expenses 4,409,843� 4,990,814� Accrued wages, salaries and bonuses 1,322,565� 1,601,666� Income taxes payable -� 118,798� Current liabilities of discontinued operations 5,096,627� 4,098,412� Current portion of revolving credit facility 1,432,000� 1,432,000� Current portion of long-term debt 879,437� 936,198� Total current liabilities 28,853,913� 30,225,721� Revolving credit facility, less current portion 46,110,160� 47,730,388� Long-term debt, less current portion 7,319,558� 7,636,468� Noncurrent liabilities of discontinued operations 5,424,032� 5,648,648� � Series A cumulative, convertible preferred stock, $.01 par value 100,000 shares authorized and issued, liquidation preference $25.00 per share � 2,438,355� 2,438,355� � Series B cumulative, convertible preferred stock, $.01 par value 80,000 shares authorized and issued, liquidation preference $25.00 per share � 1,857,645� 1,857,645� � Series C cumulative, convertible preferred stock, $.01 par value 80,000 shares authorized and issued, liquidation preference $25.00 per share � 1,982,372� -� � Commitments and contingencies � Shareholders' equity (deficiency): Preferred stock, $0.01 par, 1,000,000 shares authorized, none outstanding -� -� Common stock, $.01 par value, 3,000,000 shares authorized, 527,062 shares issued 5,271� 5,271� Additional paid-in capital 6,248,476� 6,218,476� Accumulated other comprehensive income, net of tax of $0.1 million in 2006 and 2005 53,814� 101,294� Accumulated deficit (8,396,321) (6,553,469) Total shareholders' deficiency (2,088,760) (228,428) $91,897,275� $95,308,797� AMCON Distributing Company and Subsidiaries Condensed Consolidated Unaudited Statements of Operations for the three and six month periods ended March 31, 2006 and 2005 � For the three monthsended March For the six monthsended March 2006 2005 2006 2005 Sales (including excise taxes of $46.9 million and $45.4 million, and $95.1 million and $95.0 million, re-spectively) � � $197,372,151� $193,058,021� $ 397,018,642� $406,735,741� � Cost of sales 182,725,769� 179,443,803� 368,454,419� 377,862,039� Gross profit 14,646,382� 13,614,218� 28,564,223� 28,873,702� Selling, general and adminis-trative expenses 12,986,065� 12,774,757� 25,892,724� 25,784,749� Depreciation and amortization 494,867� 553,928� 985,597� 1,146,270� 13,480,932� 13,328,685� 26,878,321� 26,931,019� Operating income 1,165,450� 285,533� 1,685,902� 1,942,683� Other expense (income): Interest expense 1,112,440� 1,015,348� 2,277,969� 2,051,435� Other (income) expense, net (28,809) 43,538� (49,591) (15,852) 1,083,631� 1,058,886� 2,228,378� 2,035,583� Income (loss) from continuing operations before income taxes 81,819� (773,353) (542,476) (92,900) � Income tax expense (benefit) 65,000� (281,000) (146,000) 11,000� Minority interest -� -� -� (97,100) Income (loss) from continuing operations 16,819� (492,353) (396,476) (6,800) � Loss from discontinued operations, net of income tax benefit of $0.3 million and $0.9 million, $0.8 million and $1.5 million, respectively � � (516,631) (1,412,055) (1,290,270) (2,361,650) Net loss (499,812) (1,904,408) (1,686,746) (2,368,450) Preferred stock dividend requirements (81,239) (73,239) (156,106) (145,720) Net loss available to common shareholders $(581,051) $(1,977,647) $ (1,842,852) $(2,514,170) Basic loss per share available to common share-holders: � Continuing operations $(0.12) $(1.07) $ (1.05) $(0.29) Dis-continued operations (0.98) (2.68) (2.45) (4.48) Net basic loss per share available to common shareholders $(1.10) $(3.75) $ (3.50) $(4.77) Diluted loss per share available to common share-holders: � Continuing operations $(0.12) $(1.07) $ (1.05) $(0.29) Dis-continued operations (0.98) (2.68) (2.45) (4.48) Net diluted loss per share available to common shareholders $(1.10) $(3.75) $ (3.50) $(4.77) Weighted average shares outstanding: Basic 527,062� 527,062� 527,062� 527,062� Diluted 527,062� 527,062� 527,062� 527,062� AMCON Distributing Company and Subsidiaries Condensed Consolidated Unaudited Statements of Cash Flows for the six month periods ended March 31, 2006 and 2005 � 2006 2005 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(1,686,746) $(2,368,450) Deduct: Loss from discontinued operations, net of tax 1,290,270� 2,361,650� Loss from continuing operations (396,476) (6,800) � Adjustments to reconcile loss from continuing operations to net cash flows from operating activities: Depreciation 1,074,655� 1,147,762� Amortization 19,865� 107,432� (Gain) loss on sale of property and equipment 5,171� (5,006) Stock based compensation 30,000� -� Deferred income taxes (830,226) (1,416,076) Provision for losses on doubtful accounts 394,792� 230,447� Provision for losses on inventory obsolescence 16,313� 139,852� Minority interest -� (97,100) Changes in assets and liabilities, net of effect of acquisitions: � Accounts receivable 2,071,794� (630,591) Inventories (749,676) 5,732,428� Other current assets 556,074� (490,474) Other assets 93,020� 92,095� Accounts payable (1,334,392) (4,238,611) Accrued expenses and accrued wages, salaries and bonuses (860,072) 163,232� Income taxes payable and receivable (118,798) 205,241� Net cash flows from operating activities - continuing operations (27,956) 933,831� Net cash flows from operating activities - discontinued operations (91,164) (1,401,642) Net cash flows from operating activities (119,120) (467,811) � CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (392,349) (2,244,584) Proceeds from sales of property and equipment 48,648� 77,447� Purchase of trademark (15,000) -� Net cash flows from investing activities - continuing operations (358,701) (2,167,137) Net cash flows from investing activities - discontinued operations (2,671) (67,568) Net cash flows from investing activities (361,372) (2,234,705) � CASH FLOWS FROM FINANCING ACTIVITIES: Net (payments) borrowings on revolving credit facility (1,620,228) 11,231,412� Net proceeds from preferred stock issuance 1,982,372� 1,857,645� Proceeds from borrowings of long-term debt 109,811� 1,295,988� Dividends paid on preferred stock (156,106) (145,720) Principal payments on long-term debt and subordinated debt (483,482) (11,396,176) Debt issue costs -� (446,641) Net cash flows from financing activities - continuing operations (167,633) 2,396,508� Net cash flows from financing activities - discontinued operations 707,653� 465,237� Net cash flows from financing activities 540,020� 2,861,745� Net change in cash 59,528� 159,229� � Cash, beginning of period 546,273� 416,073� Cash, end of period $605,801� $575,302� Supplemental disclosure of cash flow information: Cash paid during the period for interest $2,130,593� $1,748,264� Cash paid (refunded) during the period for income taxes 1,024� (197,425) AMCON Distributing Company ("AMCON") (AMEX:DIT), an Omaha, Nebraska based consumer products company is pleased to announce its financial results for the first and second quarter of 2006, the half year period ended March 31, 2006 and the corresponding filing of its related Quarterly Report on Forms 10-Q with the Securities and Exchange Commission. William F. Wright, AMCON's Chairman and CEO, commented: "We continue to see the benefits of our new internal holding company structure. AMCON now has the necessary human resources in place to facilitate our objective of timely reporting of results. This, in turn, has enabled our Senior Operating Executives to focus on profitably growing their businesses. Our core enterprises remain strong and well recognized as industry leaders." For the first half of the fiscal 2006, AMCON's wholesale consumer products distribution business reported segment operating income before depreciation of approximately $3.5 million and the Retail Health Food Division reported segment operating income before depreciation of approximately $1.8 million. Christopher Atayan, AMCON's Vice Chairman and Chief Corporate Officer, noted: "Our entire organization continues to work around the clock to restore the financial vitality of the enterprise. Our objective in the short to medium term is to reduce the levels of debt AMCON employs in the business which will enhance our ability to grow in the long term. The two primary elements supporting this objective are to preserve and enhance the operating earnings we generate from our core business units and the disposition of assets no longer central to our mission. We believe that by taking this approach and continuing AMCON's tradition of superior customer service we are in a position to enhance shareholder value." Kathleen Evans, AMCON's president, reported "We were able to continue to carry forward positive momentum during the first half of the year in our Wholesale business. Our strategy of enhanced customer service differentiates us from our competition and makes for long lasting and mutually beneficial customer relationships. As a result, AMCON continues to be awarded new business from leaders in the convenience store industry." Eric Hinkefent, President of AMCON's Retail Health Food Division, said "Both our Akins's and Chamberlin's retail stores are performing at high levels. Customer satisfaction continues to be a primary mission of ours. This strategy enables us to generate repeat business with our customers and we benefit from attractive gross margins as well." During the second quarter of fiscal 2006, AMCON began reporting its Trinity Springs subsidiary as a discontinued operation. The reported results for the second quarter of fiscal 2006 included consolidated revenues of approximately $197.4 million, operating income of approximately $1.2 million and income from continuing operations before taxes of approximately $0.1 million. After giving effect to the losses from discontinued operations, income taxes, and preferred dividends, the net loss available to common shareholders for the second fiscal quarter of 2006 was $0.6 million. For the first half of fiscal 2006, the reported revenues were $397.0 million and operating earnings were $1.7 million. The total net loss available to common shareholders for the first half of fiscal 2006 was $1.8 million. "It is important to note that incorporated into both our three and six month periods for fiscal 2006 were segment operating losses of approximately $0.4 million and $0.8 million, respectively, from our water bottling subsidiary, Hawaiian Natural Water Company, as well as additional net losses of approximately $0.5 million and $1.3 million from our discontinued operations at Trinity Springs, Inc. and The Beverage Group, Inc. for the three and six month periods in fiscal 2006" reported Andrew Plummer, AMCON's Acting Chief Financial Officer. As previously reported, AMCON has been actively exploring the sale of Hawaiian Natural Water Company and has ceased operations at Trinity Springs and is engaged in settlement discussions. AMCON is a leading wholesale distributor of consumer products, including beverages, candy, tobacco, groceries, food service, frozen and chilled foods, and health and beauty care products with distribution centers in Illinois, Missouri, Nebraska, North Dakota and South Dakota. Chamberlin's Natural Foods, Inc. and Health Food Associates, Inc., both wholly-owned subsidiaries of The Healthy Edge, Inc., operate health and natural product retail stores in central Florida (6), Kansas, Missouri, Nebraska and Oklahoma (4). The retail stores operate under the names Chamberlin's Market & Cafe and Akins Natural Foods Market. Hawaiian Natural Water Company, Inc. produces and sells natural spring water under the Hawaiian Springs label in Hawaii and other foreign markets and purified bottled water on the Island of Oahu in Hawaii. The natural spring water is bottled at the source on the Big Island of Hawaii. This news release contains forward-looking statements that are subject to risks and uncertainties and which reflect management's current beliefs and estimates of future economic circumstances, industry conditions, Company performance and financial results. A number of factors could affect the future results of the Company and could cause those results to differ materially from those expressed in the Company's forward-looking statements including, without limitation, availability of sufficient cash resources to conduct its business and meet its capital expenditures needs. Moreover, past financial performance should not be considered a reliable indicator of future performance. Accordingly, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 with respect to all such forward-looking statements. Visit AMCON Distributing Company's web site at: www.amcon.com Set forth below are the full unaudited results for the three and six month periods ended March 31, 2006 and 2005: -0- *T AMCON Distributing Company and Subsidiaries Condensed Consolidated Balance Sheets March 31, 2006 and September, 30 2005 ---------------------------------------------------------------------- March 2006 September 2005 (Unaudited) ------------ -------------- ASSETS Current assets: Cash $605,801 $546,273 Accounts receivable, less allowance for doubtful accounts of $1.0 million and $0.6 million, respectively 25,736,271 28,202,857 Inventories 24,711,252 23,977,889 Deferred income taxes 1,642,212 1,642,212 Current assets of discontinued operations 89,747 1,159,228 Prepaid and other current assets 4,666,230 5,269,784 ------------ -------------- Total current assets 57,451,513 60,798,243 Property and equipment 14,425,882 15,162,007 Deferred income taxes 7,130,729 6,300,503 Noncurrent assets from discontinued operations 2,414,795 2,475,803 Goodwill 5,848,808 5,848,808 Other intangible assets 3,459,669 3,464,534 Other assets 1,165,879 1,258,899 ------------ -------------- $91,897,275 $95,308,797 ============ ============== LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY) Current liabilities: Accounts payable $15,713,441 $17,047,833 Accrued expenses 4,409,843 4,990,814 Accrued wages, salaries and bonuses 1,322,565 1,601,666 Income taxes payable - 118,798 Current liabilities of discontinued operations 5,096,627 4,098,412 Current portion of revolving credit facility 1,432,000 1,432,000 Current portion of long-term debt 879,437 936,198 ------------ -------------- Total current liabilities 28,853,913 30,225,721 ------------ -------------- Revolving credit facility, less current portion 46,110,160 47,730,388 Long-term debt, less current portion 7,319,558 7,636,468 Noncurrent liabilities of discontinued operations 5,424,032 5,648,648 Series A cumulative, convertible preferred stock, $.01 par value 100,000 shares authorized and issued, liquidation preference $25.00 per share 2,438,355 2,438,355 Series B cumulative, convertible preferred stock, $.01 par value 80,000 shares authorized and issued, liquidation preference $25.00 per share 1,857,645 1,857,645 Series C cumulative, convertible preferred stock, $.01 par value 80,000 shares authorized and issued, liquidation preference $25.00 per share 1,982,372 - Commitments and contingencies Shareholders' equity (deficiency): Preferred stock, $0.01 par, 1,000,000 shares authorized, none outstanding - - Common stock, $.01 par value, 3,000,000 shares authorized, 527,062 shares issued 5,271 5,271 Additional paid-in capital 6,248,476 6,218,476 Accumulated other comprehensive income, net of tax of $0.1 million in 2006 and 2005 53,814 101,294 Accumulated deficit (8,396,321) (6,553,469) ------------ -------------- Total shareholders' deficiency (2,088,760) (228,428) ------------ -------------- $91,897,275 $95,308,797 ============ ============== *T -0- *T AMCON Distributing Company and Subsidiaries Condensed Consolidated Unaudited Statements of Operations for the three and six month periods ended March 31, 2006 and 2005 ---------------------------------------------------------------------- For the three months For the six months ended March ended March --------------------------- --------------------------- 2006 2005 2006 2005 ------------- ------------- ------------- ------------- Sales (including excise taxes of $46.9 million and $45.4 million, and $95.1 million and $95.0 million, re- spectively) $197,372,151 $193,058,021 $397,018,642 $406,735,741 Cost of sales 182,725,769 179,443,803 368,454,419 377,862,039 ------------- ------------- ------------- ------------- Gross profit 14,646,382 13,614,218 28,564,223 28,873,702 ------------- ------------- ------------- ------------- Selling, general and adminis- trative expenses 12,986,065 12,774,757 25,892,724 25,784,749 Depreciation and amortization 494,867 553,928 985,597 1,146,270 ------------- ------------- ------------- ------------- 13,480,932 13,328,685 26,878,321 26,931,019 ------------- ------------- ------------- ------------- Operating income 1,165,450 285,533 1,685,902 1,942,683 ------------- ------------- ------------- ------------- Other expense (income): Interest expense 1,112,440 1,015,348 2,277,969 2,051,435 Other (income) expense, net (28,809) 43,538 (49,591) (15,852) ------------- ------------- ------------- ------------- 1,083,631 1,058,886 2,228,378 2,035,583 ------------- ------------- ------------- ------------- Income (loss) from continuing operations before income taxes 81,819 (773,353) (542,476) (92,900) Income tax expense (benefit) 65,000 (281,000) (146,000) 11,000 Minority interest - - - (97,100) ------------- ------------- ------------- ------------- Income (loss) from continuing operations 16,819 (492,353) (396,476) (6,800) Loss from discontinued operations, net of income tax benefit of $0.3 million and $0.9 million, $0.8 million and $1.5 million, respectively (516,631) (1,412,055) (1,290,270) (2,361,650) ------------- ------------- ------------- ------------- Net loss (499,812) (1,904,408) (1,686,746) (2,368,450) Preferred stock dividend requirements (81,239) (73,239) (156,106) (145,720) ------------- ------------- ------------- ------------- Net loss available to common shareholders $(581,051) $(1,977,647) $(1,842,852) $(2,514,170) ============= ============= ============= ============= Basic loss per share available to common share- holders: Continuing operations $(0.12) $(1.07) $(1.05) $(0.29) Dis- continued operations (0.98) (2.68) (2.45) (4.48) ------------- ------------- ------------- ------------- Net basic loss per share available to common shareholders $(1.10) $(3.75) $(3.50) $(4.77) ============= ============= ============= ============= Diluted loss per share available to common share- holders: Continuing operations $(0.12) $(1.07) $(1.05) $(0.29) Dis- continued operations (0.98) (2.68) (2.45) (4.48) ------------- ------------- ------------- ------------- Net diluted loss per share available to common shareholders $(1.10) $(3.75) $(3.50) $(4.77) ============= ============= ============= ============= Weighted average shares outstanding: Basic 527,062 527,062 527,062 527,062 Diluted 527,062 527,062 527,062 527,062 *T -0- *T AMCON Distributing Company and Subsidiaries Condensed Consolidated Unaudited Statements of Cash Flows for the six month periods ended March 31, 2006 and 2005 ---------------------------------------------------------------------- 2006 2005 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(1,686,746) $(2,368,450) Deduct: Loss from discontinued operations, net of tax 1,290,270 2,361,650 ------------ ------------ Loss from continuing operations (396,476) (6,800) Adjustments to reconcile loss from continuing operations to net cash flows from operating activities: Depreciation 1,074,655 1,147,762 Amortization 19,865 107,432 (Gain) loss on sale of property and equipment 5,171 (5,006) Stock based compensation 30,000 - Deferred income taxes (830,226) (1,416,076) Provision for losses on doubtful accounts 394,792 230,447 Provision for losses on inventory obsolescence 16,313 139,852 Minority interest - (97,100) Changes in assets and liabilities, net of effect of acquisitions: Accounts receivable 2,071,794 (630,591) Inventories (749,676) 5,732,428 Other current assets 556,074 (490,474) Other assets 93,020 92,095 Accounts payable (1,334,392) (4,238,611) Accrued expenses and accrued wages, salaries and bonuses (860,072) 163,232 Income taxes payable and receivable (118,798) 205,241 ------------ ------------ Net cash flows from operating activities - continuing operations (27,956) 933,831 Net cash flows from operating activities - discontinued operations (91,164) (1,401,642) ------------ ------------ Net cash flows from operating activities (119,120) (467,811) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (392,349) (2,244,584) Proceeds from sales of property and equipment 48,648 77,447 Purchase of trademark (15,000) - ------------ ------------ Net cash flows from investing activities - continuing operations (358,701) (2,167,137) Net cash flows from investing activities - discontinued operations (2,671) (67,568) ------------ ------------ Net cash flows from investing activities (361,372) (2,234,705) CASH FLOWS FROM FINANCING ACTIVITIES: Net (payments) borrowings on revolving credit facility (1,620,228) 11,231,412 Net proceeds from preferred stock issuance 1,982,372 1,857,645 Proceeds from borrowings of long-term debt 109,811 1,295,988 Dividends paid on preferred stock (156,106) (145,720) Principal payments on long-term debt and subordinated debt (483,482) (11,396,176) Debt issue costs - (446,641) ------------ ------------ Net cash flows from financing activities - continuing operations (167,633) 2,396,508 Net cash flows from financing activities - discontinued operations 707,653 465,237 ------------ ------------ Net cash flows from financing activities 540,020 2,861,745 ------------ ------------ Net change in cash 59,528 159,229 Cash, beginning of period 546,273 416,073 ------------ ------------ Cash, end of period $605,801 $575,302 ============ ============ Supplemental disclosure of cash flow information: Cash paid during the period for interest $2,130,593 $1,748,264 Cash paid (refunded) during the period for income taxes 1,024 (197,425) *T