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Statement of Income & Expenses For Quarter Ending July 31, 2004 [ REVISED TO EXCLUDE INCOME & EXPENSES NOT RELATED TO CORE LUMEN FOODS' BUSINESS: Read Introductory "NOTE" with Comments Below ]  NOTE --->> This revised
P & L is derived from Herbologics' singular set of
financial records, used both internal management and
tax purposes for the quarter and year ending
July 31, 2004. What you see below is identical to
the original P & L for this
period, except that income unrelated to the Lumen Foods
core business has been removed as well as unrelated and
discretionary expenses that a new owner would not
encounter. To help identify what changes have been
made, revisions are made in red,
such that the original figures are still there;
however, they are not numerically included in
subsequent subtotals and totals that follow.Additionally, notes
are added wherever these revisions appear --
also marked in red, so
that management's reason for the line item exclusion
is given.Finally, this page provides
a Revised Financial Summary to help put these
revisions into perspective from a "realizable profit" point
of view. |
REVENUES Current Current Y-T-D Y-T-D Prior
(QTR + Y-T-D) Amount Percent Amount Percent Yr %
---------------------- ----------------------------------------------------
TOTAL NET SALES 185,979.49 100.00 812,467.24 100.00 100.00
COST OF SALES 36,519.25 19.64 248,287.07 30.56 26.36
----------------------------------------------------
GROSS PROFIT 149,460.24 80.36 564,180.17 69.44 73.64
OPERATING EXPENSES
-----------------------
Salaries & Wages 30,691.91 16.50 123,915.79 15.25 15.03
Employee Benefits 236.56 .13 1,519.85 0.19 0.26
Advertising: Dist. 892.42 0.11 0.24
Advertising: WWW 7,404.70 0.91 0.70
It was
customary for us to bill Herbologics for web advertising related to
other ventures, but we almost NEVER had Lumen Foods pay for advertising
related to Lumen Foods. Why? It was not effective as a medium.
Besides our other businesses, including Alpha Omega Labs
(www.herbhealers.com), and PreservX (www preservx.com,
later sold to globalpreservatives.com) showed better growth prospects.
The proof that advertising online has not worked for Lumen Foods is
that none of our current wholesalers or retailers (and combined, there
are hundreds of them) were obtained as a result of online advertising.
Accounting 4,795.00 0.59 0.19
This expensive, non-reoccurring accounting expense related to
Alpha Omega Labs and had nothing to do with Lumen Foods. Nonetheless,
we took the money from Lumen Foods because it was our only remaining
cash cow. Accounting is normally nominal for Lumen Foods
(see the Accounting line
entry, for example, for the year following this one,
ending July 31, 2005).
Bank Service Charges 705.99 .38 1,348.24 0.17 0.10 Bank / Credit Card Charges 1,284.96 0.16 0.08 Books & Publications 1,287.32 .69 1,912.94 0.24 0.19
We have always been engaged in extensive research and have used
Lumen Foods to fund our extracurricular spinoffs. Thus, books,
publications, lab fees & supplies, and research expenses
(see below) are all discretionary
and expendable for whoever purchases Lumen Foods. These
expenses are completely non-essential.
Commissions: P/L & Inside 2,791.71 1.50 10,403.73 1.28 0.36 Commissions: Brokerages 9,017.86 1.11 1.62 Delivery 26.57 0.01 1,720.42 0.21 0.42 Dues/Subscrip'ns/Memberships 545.40 0.07 0.05
Self-explanatory . . . completely non-essential and discretionary.
Depreciation 2,388.10 1.28 10,887.08 1.34 12.23
The Balance Sheet itself shows that there is very little left
to depreciate, plus most of the company's equipment is of the type
that lasts many years beyond the current allowable depreciation
conventions. (The Woodman Profitmaker 7 vertical form-and-fill
machine, for instance, was build in 1969; we've kept it up since
we purchased it used in the late 1980's and it is still going
strong with regular maintenance.)
Entertainmt/Social Funct'n 1,377.42 0.74 5,698.95 0.70 0.62
Self-explanatory: completely non-essential and discretionary.
Equipment/Vehicle Rental 4,820.97 2.59 22,467.66 2.77 1.67
The vast majority of this (as shown in the General Ledger) is for
vehicles. Discretionary.FDA / Kosher & Other Cert 875.00 0.47 14,520.52 1.79 0.47 Freight: Common Carrier 6,077.77 3.27 24,172.58 2.98 1.42 Freight: UPS 13,262.69 7.13 53,482.34 6.58 5.22 Freight: Foreign 104.04 0.01 0.01 Gas, Oil & Tires 479.96 0.26 2,472.47 0.30 0.17 Groundskeeping 685.00 0.37 1,895.00 0.23 0.21
The "Gas, Oil & Tires" relates to Vehicles (above), so it's discretionary.
The "Groundskeeping" is discretionary because it not only relates to
maintaining the front of Lumen Foods, but our other real estate
holdings, which are unoccupied.Insurance 4,822.55 2.59 18,172.37 2.24 1.27 Interest 3,775.81 2.03 25,626.91 3.15 2.33
The new owner is going to have his own "cost of money" and
"opportunity cost" to factor in separately. Our "interest relates"
during this accounting period and what follows after it going through
2006 is derived primarily from two sources: (1) the loan on the
"Wilshire Property," where Lumen Foods now operates, and (2) a loan
on the owner's personal home, wherein the proceeds to that loan
were used for the business. However, neither of these should be
considered expenses related to running the core business. All
costs of monies should be removed here, and then the new owner
should factor in his or her own cost of money, including both
the purchase price and additional funds to build the business
(which will obviously begin with building up their own accounts
receivable, since no A/R is transferred with this sale).Janitorial / Office Upkeep 6,879.41 0.85 0.33
We're keeping "Janitorial / Office Upkeep" in the color Black
and including it, but are simply going to make comment:
we believe simple office upkeep, regardless of where posted,
will run similarly for any new management.Lab Fees & Supplies 23,925.95 2.94 1.11
Completely discretionary and unrelated to the Lumen Foods
core business. Please read "Books & Publications" above.Language Services 0.01 Legal 14,399.17 7.74 196,437.64 24.18 4.67
The majority of these funds related to defending Alpha Omega
Labs and Greg Caton. Legal expenses related to running a
mature food company, such as Lumen Foods, have been historical
low and SHOULD be low for any new owner. Since we suspect
that any prospect that would buy Lumen Foods has a handle on
their OWN regular, customary, legal expenses, we will leave
it for a new owner to factor back what they feel, from their
own experience, what their normal legal costs, if any, would
amount to. Maintenance, Building 11.88 0.01 15,600.41 1.92 9.10
This involves the maintaining of buildings which are not
transferred with the sale, and are tied to the removal
of rental income (below) which also do not come with
the sale. Lumen Foods' rental operations, it should
be noted, are losing money and have been historically
subsidized by the Lumen Foods core business: the very
business that is currently for sale.Medical Exp (for Accidents) 1,184.37 0.15 0.01 Miscellaneous 9.95 0.01 485.54 0.06 0.79 Office / Computer Services 57.82 0.01 0.28 Office / Computer Supplies 661.38 0.36 6,492.85 0.80 1.88 Outside Services: General 7,080.46 3.81 39,427.32 4.85 1.84 Outside Services: Web Site 2,272.23 1.22 6,869.89 0.85 1.10
"Outside Services" was a catch-all term we used to cover non-essential
services. It doesn't simply mean a contracted outside service:
as more purposefully contracted "outside services" can readily
be seen posted to other parts of the P & L: building maintenance,
groundkeeping, repairs (which covered ALL equipment and production-related
repairs by outsiders), language services (when we needed translation
work done), sales commissions (to brokers), legal, accounting, etc.
These two areas are non-essential by design: these ledger accounts
were created for this purpose, so we're taking them out.Payroll Taxes 11,290.82 6.07 33,494.80 4.12 4.53 Postage 917.45 0.49 3,264.46 0.40 0.05 Pest Control 470.00 0.25 1,975.00 0.24 0.20 Printing & Graphics 1,336.50 0.72 4,200.86 0.52 0.76 Promotional: Internet 144.83 0.02 0.76 Promotional: Gen / Other 585.77 0.31 1,031.67 0.13 0.15 Rent 0.29 Repairs: Lumen division 654.54 0.35 14,628.35 1.80 2.11 Research Expense 300.18 0.16 527.98 0.06 0.90
Total non-discretionary and unrelated to the core operation.
Research almost always has meant expenses related to fishing
for new entrepreneurial avenues.Safety 945.67 0.12 0.06 Security 842.25 0.45 4,106.24 0.51 0.62 Shop Supplies 1,091.59 0.59 22,376.79 2.75 1.92 Taxes & Licenses 0.11 Taxes: Ad Valorem 3,934.21 0.48 0.24 Taxes: Property Taxes 8,356.78 1.03 0.68
We are including "ad valorem" sales, because a new buyer will incur
these costs if he or she stays in Lake Charles, and may well have
an equivalent form of municipal taxation in whatever target location
the business would be in. Concerning "Travel" below, we must assume
that the new owner will have similar expenses related to running
the business their way, and since "Web Site Development" is and
was always nominal (we did our own web work internally), we will
keep it in as well.
Travel 946.53 0.51 4,311.34 0.53 1.81
Telecom: Basic / LDS 3,098.67 1.67 14,523.74 1.79 1.22
Telecom: Internet 315.69 0.17 1,907.16 0.23 0.30
Telecom: Sprint / Cell 910.10 0.49 3,891.56 0.48 0.57
Tenant Expenses, Misc. 626.72 0.34 1,600.15 0.20 0.15
Utilities 5,969.54 3.21 33,756.67 4.15 3.57
Waste Disposal 430.02 0.23 7,339.54 0.90 0.39
Web Site Development 659.50 0.08 0.14
Worker's Compensation 1,814.36 0.98 6,259.34 0.77 0.54
---------- ----- ---------- ------ -----
OPERATING EXPENSES 130,341.13 70.08 828,943.93 102.03 88,89
OPERATING PROFIT 19,119.11 10.28 (264,763.76) 32.59- 15.24-
OTHER INCOME
Gain: Guth Sale 398,723.49 49.08
Damage Claims Paid 362.39 0.19 1,153.23 0.14 0.10
Miscellaneous 0.09
---------- ----- ---------- ----- -----
TOTAL OTHER INCOME 362.39 0.19 399,876.72 49.22 0.19
OTHER EXPENSE
Loss: Guth Renov / Inven 73,065.26 8.99
---------- -----
TOTAL OTHER EXPENSE 73,065.26 8.99
---------- ----- ---------- ----- -----
NET PROFIT (or loss) 19,481.50 10.48 62,047.70 7.64 15.05-
========= =========
We are redding
out the entire "Other Income" and "Other Expense" section here, because,
by their very nature, they involve activities that are unrelated to
the core business.
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