EMERALD DAIRY INC

CIK:0000815353|SEC Filings

Earnings Per Share

6 Months Ended

Jun. 30, 2011

19.	Earnings Per Share

When calculating diluted earnings per share for stock option common stock equivalents, the Earnings Per Share Topic, ASC 260, requires the Company to include the potential shares that would be outstanding if all outstanding stock options or warrants were exercised. This is offset by shares the Company could repurchase using the proceeds from these hypothetical exercises to obtain the common stock equivalent.

The following reconciles the components of the EPS computation:

For the three months ended June 30, 2011, dilutive shares include 388,000 stock options. 760,000 stock options and warrants to purchase 8,068,651 share of common stock were not included in dilutive shares as the effect would have been anti-dilutive.

For the three months ended June 30, 2010 dilutive shares include 703,200 of stock options and outstanding warrants to purchase 833,811 shares of common stock at an exercise price of $1.50. 760,000 of stock options and warrants to purchase 6,564,125 shares of common stock were not included in dilutive shares as the effect would have been anti-dilutive.

For the six months ended June 30, 2011, dilutive shares include 388,000 stock options. 760,000 stock options and warrants to purchase 8,068,651 share of common stock were not included in dilutive shares as the effect would have been anti-dilutive.

For the six months ended June 30, 2010, 1,463,200 of stock options and outstanding warrants to purchase 7,397,936 shares of common stock were not included in dilutive shares as the effect would have been anti-dilutive.

The following reconciles the components of the EPS computation:

	Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount
For the three months ended June 30, 2011:
Net income	$	1,630,711
Basic EPS income available to common shareholders	$	1,630,711		34,207,379	$	0.05
Effect of dilutive securities:

Warrants		—		-
Stock options		—		185,944
Diluted EPS income available to common shareholders	$	1,630,711		34,393,323	$	0.05

For the three months ended June 30, 2010:
Net income	$	1,283,946
Basic EPS income available to common shareholders	$	1,283,946		33,941,295	$	0.04
Effect of dilutive securities:
Warrants		—		240,036
Stock options		—		479,562
Diluted EPS income available to common shareholders	$	1,283,946		34,660,893	$	0.04

	Income			Shares		Per Share
	(Numerator)			(Denominator)		Amount
For the six months ended June 30, 2011:
Net income	$	3,608,788
Basic EPS income available to common shareholders	$	3,608,788			34,133,794	$	0.11
Effect of dilutive securities:

Warrants		—			-
Stock options		—			213,390
Diluted EPS income available to common shareholders	$	3,608,788			34,347,184	$	0.11

For the six months ended June 30, 2010:
Net loss	$	(1,012,698	)
Basic EPS income available to common shareholders	$	(1,012,698	)		33,446,310	$	(0.03	)
Effect of dilutive securities:
Warrants		—			—
Stock options		—			—
Diluted EPS income available to common shareholders	$	(1,102,698	)		33,446,310	$	(0.03	)

Condensed Consolidated Statements of Cash Flows (USD $)	6 Months Ended
Condensed Consolidated Statements of Cash Flows (USD $)	Jun. 30, 2011	Jun. 30, 2010
Cash flows from operating activities
Net Income (Loss)	$ 3,608,788	$ (1,012,698)
Adjustments to reconcile net cash provided by operating activities
Depreciation and amortization	1,073,805	283,526
Amortization of loan discount	38,116	372,050
Capitalized interest	(243,669)	(458,872)
Stock issued for services	27,245	34,657
Warrants modified for liquidated damages		5,021,669
Warrants issued for services		90,137
Warrants issued for loan costs		79,991
Incentive stock options	133,330	385,891
Net change in assets and liabilities
Trade accounts receivable	1,637,602	(188,123)
Inventory	(22,703)	(260,477)
Other current assets	(994,197)	(877,809)
Accounts payable and accrued expenses	(684,577)	576,581
Other current liabilities	208,089	(248,574)
Net cash provided by operating activities	4,781,829	3,797,949
Cash flows from investing activities
Deposit on equipment and construction		(11,543,962)
Construction in progress		(119,489)
Purchases of fixed assets and intangibles	(846,486)	(45,995)
Net cash used in investing activities	(846,486)	(11,709,446)
Cash flows from financing activities
Advances on notes payable		800,000
Advances from related parties	440,782
Repayments of notes payable		(477,464)
Exercise of warrants		296,408
Advances on sale-leaseback		5,006,340
Repayments of sale-leaseback	(479,957)
Net cash (used in)provided by financing activities	(39,175)	5,625,284
Effect of exchange rate	369,333	128,735
Net increase(decrease) in cash and cash equivalents	4,265,501	(2,157,478)
Cash and cash equivalents at beginning of period	17,131,274	13,486,429
Cash and cash equivalents at end of period	$ 21,396,775	$ 11,328,951

Condensed Consolidated Balance Sheets (USD $)	Jun. 30, 2011	Dec. 31, 2010
Current Assets
Cash and cash equivalents	$ 21,396,775	$ 17,131,274
Trade accounts receivable,net	6,755,966	8,220,622
Inventory, net	1,097,442	1,052,594
Advances to equipment supplier	0	10,154,264
Other current assets	3,748,903	2,697,946
Total current assets	32,999,086	39,256,700
Property, plant and equipment
Property, plant and equipment, net	33,902,349	23,039,183
Contruction in progress	919,841	875,934
Total Property and Equipment, Net, Total	34,822,190	23,915,117
Intangible assets, net	1,357,199	1,348,161
Assets, Total	69,178,475	64,519,978
Current Liabilities
Accounts payable and accrued expenses	6,050,565	6,596,367
Notes payable, net of debt discount of $0 and $38,116 at June 30, 2011 and December 31, 2010, respectively	6,396,411	6,358,295
Other current liabilities	758,768	539,332
Current portion of long-term lease	1,369,026	1,171,566
Loan from shareholder	662,647	217,294
Total current liabilities	15,237,417	14,882,854
Long-term lease payable	1,791,567	2,468,984
Commitments and Contingencies (Note 21)
Stockholders' Equity
Preferred stock ($0.001 par value, 10,000,000 shares authorized, none issued and outstanding at June 30, 2011 and December 31, 2010)
Common stock ($0.001 par value, 100,000,000 shares authorized, 36,151,823 and 35,976,575 issued and outstanding at June 30, 2011 and December 31, 2010, respectively)	36,152	35,977
Treasury Stock (1,944,444 shares at June 30, 2011 and December 31, 2010, respectively)	(1,944)	(1,944)
Additional paid-in capital	26,168,143	26,007,743
Retained earnings (of which $4,603,066 and $3,191,614 are restricted at June 30, 2011 and December 31, 2010, respectively, for common welfare reserves)	21,040,138	17,431,350
Accumulated other comprehensive income	4,907,002	3,695,014
Total stockholders' equity	52,149,491	47,168,140
Liabilities and Equity, Total	$ 69,178,475	$ 64,519,978