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x QUARTERLY REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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OR
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□ TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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FOR
THE TRANSITION PERIOD FROM________________ TO
______________
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OKLAHOMA
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73-1351610
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(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification No.)
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1221
E. Houston
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Broken
Arrow, Oklahoma 74012
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(Address
of principal executive office)
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(918)
251-9121
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(Registrant's
telephone number, including area
code)
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Indicate
by check mark whether the issuer (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.
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Yes
x No o
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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 definition of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule12b-2 of the
Exchange Act.
Large accelerated
filer o Accelerated
filero
Non-accelerated
filer o Smaller
reporting companyx
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Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12-2 of the Exchange Act).
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Yes
o No x
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Shares
outstanding of the issuer's $.01 par value common stock as of January 31,
2009 were
10,294,115.
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PART
I. FINANCIAL INFORMATION
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Page
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Item
1.
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Financial
Statements.
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Consolidated
Balance Sheets
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December
31, 2008 (unaudited) and September 30, 2008 (audited)
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Consolidated
Statements of Income and Comprehensive Income (unaudited)
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Three Months Ended December 31,
2008 and 2007
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Consolidated Statements of Cash Flows
(unaudited)
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Three Months Ended December 31,
2008 and 2007
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Notes
to Unaudited Consolidated Financial Statements
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Item
2.
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Management's
Discussion and Analysis of Financial Condition and Results of
Operations.
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Item
4T.
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Controls and
Procedures.
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PART
II - OTHER INFORMATION
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Item
2.
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Unregistered
Sales of Equity Securities and Use of Proceeds
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Item
6.
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Exhibits.
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SIGNATURES
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December 31,
2008
(unaudited)
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September 30,
2008
(audited)
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|||||||
Assets
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Current
assets:
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Cash and cash
equivalents
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$ | 43,148 | $ | 15,211 | ||||
Accounts receivable, net of
allowance of $316,000 and
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5,410,363 | 6,704,162 | ||||||
$253,000,
respectively
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Income tax refund
receivable
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- | 83,735 | ||||||
Inventories, net of allowance for
excess and obsolete
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33,201,921 | 33,678,418 | ||||||
inventory of $2,221,000 and
$1,958,000, respectively
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Deferred income
taxes
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1,405,000 | 1,069,000 | ||||||
Prepaid expenses
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73,907 | 108,560 | ||||||
Total
current assets
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40,134,339 | 41,659,086 | ||||||
Property
and equipment, at cost:
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Land and buildings
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7,187,402 | 7,181,143 | ||||||
Machinery and
equipment
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3,268,621 | 3,267,868 | ||||||
Leasehold
improvements
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205,797 | 205,797 | ||||||
10,661,820 | 10,654,808 | |||||||
Less
accumulated depreciation and amortization
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(2,830,122 | ) | (2,728,633 | ) | ||||
Net
property and equipment
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7,831,698 | 7,926,175 | ||||||
Other
assets:
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Deferred income
taxes
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893,000 | 625,000 | ||||||
Goodwill
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1,560,183 | 1,560,183 | ||||||
Other assets
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28,585 | 29,112 | ||||||
Total
other assets
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2,481,768 | 2,214,295 | ||||||
Total
assets
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$ | 50,447,805 | $ | 51,799,556 |
December 31,
2008
(unaudited)
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September 30,
2008
(audited)
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Liabilities
and Shareholders’ Equity
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Current
liabilities:
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Accounts payable
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$ | 2,792,165 | $ | 3,267,006 | ||||
Accrued expenses
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1,308,763 | 1,146,672 | ||||||
Bank revolving line of
credit
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1,085,770 | 2,789,252 | ||||||
Notes payable – current
portion
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1,863,767 | 1,860,163 | ||||||
Total
current liabilities
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7,050,465 | 9,063,093 | ||||||
Notes
payable
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15,390,699 | 15,860,245 | ||||||
Other
liabilities
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1,381,799 | 299,944 | ||||||
Shareholders’
equity:
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Common stock, $.01 par value;
30,000,000 shares authorized;10,294,115 shares issued
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102,941 | 102,941 | ||||||
Paid in capital
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(6,259,678 | ) | (6,272,897 | ) | ||||
Retained earnings
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33,942,484 | 32,988,338 | ||||||
Accumulated other comprehensive
income:
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Unrealized loss on interest rate
swap, net of tax
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(863,799 | ) | (187,944 | ) | ||||
26,921,948 | 26,630,438 | |||||||
Less: Treasury stock, 163,764 and
21,100 shares, respectively,
at
cost
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(297,106 | ) | (54,164 | ) | ||||
Total
shareholders’ equity
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26,624,842 | 26,576,274 | ||||||
Total
liabilities and shareholders’ equity
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$ | 50,447,805 | $ | 51,799,556 |
Three
Months Ended December 31,
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2008
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2007
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Sales:
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Net new sales
income
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$ | 8,217,355 | $ | 8,652,761 | ||||
Net refurbished sales
income
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3,103,851 | 4,810,963 | ||||||
Net service income
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1,478,800 | 1,275,644 | ||||||
Total
net sales
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12,800,006 | 14,739,368 | ||||||
Cost
of sales
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8,966,220 | 9,991,547 | ||||||
Gross
profit
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3,833,786 | 4,747,821 | ||||||
Operating,
selling, general and administrative expenses
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2,041,927 | 2,051,435 | ||||||
Income
from operations
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1,791,859 | 2,696,386 | ||||||
Interest
expense
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264,713 | 146,275 | ||||||
Income
before income taxes
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1,527,146 | 2,550,111 | ||||||
Provision
for income taxes
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573,000 | 957,000 | ||||||
Net
income
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954,146 | 1,593,111 | ||||||
Other
comprehensive income:
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Unrealized loss on interest rate
swap, net of
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tax benefit of $406,000 and
$90,000, respectively
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(675,855 | ) | (146,344 | ) | ||||
Comprehensive
income
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$ | 278,291 | $ | 1,446,767 | ||||
Net
income
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954,146 | 1,593,111 | ||||||
Preferred
stock dividends
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- | 133,480 | ||||||
Net
income attributable to common shareholders
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$ | 954,146 | $ | 1,459,631 | ||||
Earnings
per share:
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Basic
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$ | 0.09 | $ | 0.14 | ||||
Diluted
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$ | 0.09 | $ | 0.14 | ||||
Shares
used in per share calculation:
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Basic
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10,219,027 | 10,250,656 | ||||||
Diluted
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10,221,026 | 10,295,359 |
Three Months Ended December
31,
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2008
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2007
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Operating
Activities
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Net
income
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$ | 954,146 | $ | 1,593,111 | ||||
Adjustments
to reconcile net income to net cash
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provided by operating
activities:
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Depreciation and
amortization
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101,489 | 88,078 | ||||||
Provision for losses on accounts
receivable
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68,350 | 43,000 | ||||||
Provision for excess and obsolete
inventories
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263,000 | 91,000 | ||||||
Deferred income tax
benefit
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(198,000 | ) | (78,000 | ) | ||||
Share based compensation
expense
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13,219 | 1,627 | ||||||
Changes in assets and
liabilities:
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Accounts
receivables
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1,309,184 | 662,105 | ||||||
Inventories
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213,497 | (2,530,680 | ) | |||||
Prepaid expenses
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34,653 | 26,964 | ||||||
Other assets
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527 | 35,253 | ||||||
Accounts payable
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(474,841 | ) | 738,075 | |||||
Accrued expenses
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162,091 | 543,594 | ||||||
Net
cash provided by operating activities
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2,447,315 | 1,214,127 | ||||||
Investing
Activities
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Additions
to machinery and equipment
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(753 | ) | (17,406 | ) | ||||
Additions
of land and buildings
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(6,259 | ) | (520,554 | ) | ||||
Net
cash used in investing activities
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(7,012 | ) | (537,960 | ) | ||||
Financing
Activities
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Net
change under bank revolving line of credit
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(1,703,482 | ) | 103,092 | |||||
Proceeds
on notes payable
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- | 12,000,000 | ||||||
Repurchase
of preferred stock
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- | (12,000,000 | ) | |||||
Payments
on notes payable
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(465,942 | ) | (156,719 | ) | ||||
Purchase
of treasury stock
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(242,942 | ) | - | |||||
Proceeds
from stock options exercised
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- | 1,500 | ||||||
Payments
of preferred dividends
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- | (343,480 | ) | |||||
Net
cash used in financing activities
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(2,412,366 | ) | (395,607 | ) | ||||
Net
increase in cash
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27,937 | 280,560 | ||||||
Cash
and cash equivalents at beginning of period
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15,211 | 60,993 | ||||||
Cash
and cash equivalents at end of period
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$ | 43,148 | $ | 341,553 | ||||
Supplemental
cash flow information:
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Cash paid for
interest
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$ | 256,725 | $ | 37,705 | ||||
Cash paid for income
taxes
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$ | 197,000 | $ | 18,800 | ||||
2008
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2007
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Net
income
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$ | 954,146 | $ | 1,593,111 | ||||
Dividends
on preferred stock
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- | 133,480 | ||||||
Net
income attributable to
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common
stockholders
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$ | 954,146 | $ | 1,459,631 | ||||
Basic
weighted average shares
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10,219,027 | 10,250,656 | ||||||
Effect
of dilutive securities:
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Stock options
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1,999 | 44,703 | ||||||
Diluted
weighted average shares
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10,221,026 | 10,295,359 | ||||||
Earnings
per common share:
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Basic
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$ | 0.09 | $ | 0.14 | ||||
Diluted
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$ | 0.09 | $ | 0.14 |
Shares
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Wtd. Avg.
Ex. Price
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Outstanding
at September 30, 2008
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210,850 | $ | 3.67 | |||||
Granted
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- | - | ||||||
Exercised
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- | - | ||||||
Canceled
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- | - | ||||||
Outstanding
at December 31, 2008
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210,850 | $ | 3.67 | |||||
Exercisable
at December 31, 2008
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105,850 | $ | 4.21 |
2008
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Average
expected life (years)
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6.25 | |||
Average
expected volatility factor
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30% | |||
Average
risk-free interest rate
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3.1% | |||
Average
expected dividend yield
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- |
2008
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Fiscal
year 2006 grant
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$ | 766 | ||
Fiscal
year 2008 grant
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12,453 | |||
Total
compensation expense
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$ | 13,219 |
Period
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Total
Number of Shares Purchased
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Average
Price Paid per Share
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Total
Number of Shares Purchased as Part of Publicly Announced Plan
(1)
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Maximum
Dollar Value of Shares That May Yet Be Purchased Under the Plan
(1)
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October
1 – 31 2008
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6,806 | $ | 1.94 | 6,806 | $ | 932,655 | ||||||||||
November
1 – 30 2008
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56,071 | $ | 1.83 | 56,071 | $ | 830,242 | ||||||||||
December
1 – 30 2008
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79,787 | $ | 1.60 | 79,787 | $ | 702,894 | ||||||||||
Total
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142,664 | $ | 1.70 | 142,664 |
1.
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The
Company has one program, which was announced in 2000 after approval by our
Board of Directors, to repurchase up to $1.0 million of outstanding shares
of our common stock from time to time in the open market at prevailing
market prices or in privately negotiated transactions. The
repurchased shares of common stock will be held in treasury and used for
general corporate purposes including possible use in our employee stock
plans or for acquisitions. This program has no expiration
date.
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Exhibit
No.
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Description
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31.1
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Certification
of Chief Executive Officer under Section 302 of the Sarbanes Oxley Act of
2002.
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31.2
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Certification
of Chief Financial Officer under Section 302 of the Sarbanes Oxley Act of
2002.
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32.1
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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.
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32.2
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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.
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Exhibit
No.
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Description
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31.1
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Certification
of Chief Executive Officer under Section 302 of the Sarbanes Oxley Act of
2002.
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31.2
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Certification
of Chief Financial Officer under Section 302 of the Sarbanes Oxley Act of
2002.
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32.1
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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.
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32.2
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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.
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