UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended March 31, 2005 Commission File No. 0-23016 Medifast, Inc. (Exact name of small business issuer in its charter) <TABLE> <CAPTION> <S> <C> Delaware 13-3714405 - -------------------------------------------------------------- ------------------------------------ (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 11445 Cronhill Drive, Owings Mills, MD 21117 -------------------------------------- ---------- (Address of principal offices) (Zip Code) </TABLE> Registrant's telephone number, including Area Code: (410) 581-8042 ---------------------- Indicate by check mark whether the Registrant (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. Yes _X_ No ___ NUMBER OF SHARES OUTSTANDING OF REGISTRANT'S COMMON STOCK, AS OF MARCH 31, 2005: 12,173,456 SHARES
Index PART I FINANCIAL INFORMATION: <TABLE> <CAPTION> <S> <C> Condensed Consolidated Balance Sheets - March 31, 2005 (unaudited) and December 31, 2004 (audited).................... 3 Condensed Consolidated Statements of Income - Three Months Ended March 31, 2005 and 2004 (unaudited)........................ 4 Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2005 and 2004 (unaudited)........................ 5 Notes to Condensed Consolidated Financial Statements.............................. 6 Management Discussion and Analysis of Financial Condition and Results of Operations..................................................... 10 PART II Signature Page.................................................................... 13 Index to Exhibits..................................................................14 31.1 31.2 32.1 </TABLE> MEDIFAST, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS <TABLE> <CAPTION> March 31, 2005 December 31, 2004 (Unaudited) (Audited) ASSETS <S> <C> <C> CURRENT ASSETS: Cash $ 916,000 $ 612,000 Accounts receivable-net of allowance for doubtful accounts of $100,000 1,159,000 1,063,000 and $87,000, respectively Inventory 4,462,000 4,251,000 Investment securities 2,635,000 2,626,000 Deferred compensation 321,000 321,000 Prepaid expenses and other current assets 1,293,000 1,079,000 Deferred tax asset 24,000 19,000 ------------------ -------------------- TOTAL CURRENT ASSETS 10,810,000 9,971,000 Property, plant and equipment - net 8,981,000 8,698,000 Trademarks and intangibles - net 6,937,000 7,138,000 Deferred tax asset, net of current portion 121,000 91,000 Other assets 70,000 70,000 ------------------ -------------------- TOTAL ASSETS $ 26,919,000 $ 25,968,000 ================== ==================== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 1,136,000 $ 940,000 Income taxes payable 357,000 674,000 Dividends payable 65,000 65,000 Line of credit 660,000 369,000 Current maturities of long-term debt 555,000 458,000 ------------------ -------------------- TOTAL CURRENT LIABILITIES 2,773,000 2,506,000 Long-term debt, net of current portion 4,398,000 4,256,000 ------------------ -------------------- TOTAL LIABILITIES 7,171,000 6,762,000 ------------------ -------------------- STOCKHOLDERS' EQUITY: Series B Convertible Preferred Stock; par value $1.00; 600,000 shares authorized; -0- and 300,614 shares issued and outstanding - 301,000 Series C Convertible Preferred Stock; stated value $1.00; 1,015,000 shares authorized; 200,000 shares issued and outstanding 200,000 200,000 Common stock; par value $.001 per share; 15,000,000 authorized; 12,173,456 and 11,001,070 shares issued and outstanding, respectively 12,000 11,000 Additional paid-in capital 21,229,000 20,556,000 Accumulated comprehensive loss (96,000) (39,000) Accumulated deficit (1,061,000) (1,287,000) ------------------ -------------------- 20,284,000 19,742,000 Less cost of 78,160 shares of common stock in treasury (536,000) (536,000) ------------------ -------------------- TOTAL STOCKHOLDERS' EQUITY 19,748,000 19,206,000 ------------------ -------------------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 26,919,000 $ 25,968,000 ================== ==================== </TABLE> See accompanying notes to condensed consolidated financial statements. 3
MEDIFAST, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME <TABLE> <CAPTION> THREE MONTHS ENDED MARCH 31, 2005 2004 (Unaudited) (Unaudited) <S> <C> <C> Revenue $ 8,326,000 $ 6,817,000 Cost of sales 2,073,000 1,350,000 ---------------------- ---------------------- GROSS PROFIT 6,253,000 5,467,000 Selling, general, and administration 5,341,000 4,548,000 ---------------------- ---------------------- INCOME FROM OPERATIONS 912,000 919,000 Other income/(expense) Interest expense (65,000) (23,000) Interest income 28,000 - Other expense (21,000) (2,000) ---------------------- ---------------------- INCOME BEFORE PROVISION FOR INCOME TAXES 854,000 894,000 Provision for income tax (expense) (347,000) (247,000) ---------------------- ---------------------- NET INCOME $ 507,000 $ 647,000 ====================== ====================== Basic earnings per share $ 0.04 $ 0.06 Diluted earnings per share $ 0.04 $ 0.05 Weighted average shares outstanding - Basic 11,916,241 10,610,391 Diluted 12,729,459 12,157,860 </TABLE> See accompanying notes to condensed consolidated financial statements. 4
MEDIFAST, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS <TABLE> <CAPTION> Three Months Ended March 31, 2005 2004 (Unaudited) (Unaudited) <S> <C> <C> Cash flows from operating activities: Net income $ 507,000 $ 647,000 Adjustments to reconcile net income to net cash provided by (used in) operating activities from continuing operations: Depreciation and amortization 438,000 303,000 Realized loss on investment securities 22,000 - Common stock Issuanced for services 103,000 47,000 Net change in other comprehensive (loss) income (57,000) 5,000 Deferred income taxes (35,000) 246,000 Provision for bad debts 13,000 - Changes in assets and liabilities: (Increase) in accounts receivable (109,000) (147,000) (Increase) in inventory (211,000) (1,095,000) (Increase) in prepaid expenses & other current assets (214,000) (331,000) (Increase) in other assets - (48,000) Increase (decrease) in accounts payable and accrued expenses 197,000 (214,000) (Decrease) in income taxes payable (317,000) - ---------------- --------------- Net cash provided by (used in) operating activities 337,000 (587,000) ---------------- --------------- Cash Flow from Investing Activities: Sale (purchase) of investment securities, net (32,000) 9,000 Purchase of property and equipment (486,000) (82,000) Purchase of intangible assets (34,000) (121,000) ---------------- --------------- Net cash (used in) investing activities (552,000) (194,000) ---------------- --------------- Cash Flow from Financing Activities: Issuance of common stock, options and warrants 1,000 6,000 Increase in credit line, net 660,000 31,000 Principal repayments of long-term debt (131,000) (241,000) Dividends paid on preferred stock (11,000) - ---------------- --------------- Net cash provided by (used in) financing activities 519,000 (204,000) ---------------- --------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 304,000 (985,000) Cash and cash equivalents - beginning of the period 612,000 2,524,000 ---------------- --------------- Cash and cash equivalents - end of period $ 916,000 $ 1,539,000 ================ =============== Supplemental disclosure of cash flow information: Interest paid $ 65,000 $ 23,000 ================ =============== Income taxes $ 660,000 $ - ================ =============== Supplemental disclosure of non cash activity: Conversion of preferred stock B and C to common stock $ 300,000 $ 50,000 ================ =============== Common stock issued for services $ 103,000 $ 47,000 ================ =============== Preferred B and C stock dividends converted to common stock $ 269,000 $ - ================ =============== Line of credit converted to long-term debt $ 369,000 $ - ================ =============== </TABLE> See accompanying notes to condensed consolidated financial statements. 5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS GENERAL 1. Basis of Presentation The condensed consolidated financial statements have been prepared by Medifast, Inc. (the Company), and are unaudited, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. Although the management of the Company believes that the disclosures contained herein are adequate to make the information presented not misleading, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's annual report on Form 10-KSB for the year ended December 31, 2004. The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for interim periods are not necessarily indicative of the results to be expected for the entire year. 2. Presentation of Financial Statements The Company's condensed consolidated financial statements include the accounts of Medifast, Inc. and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. 3. Inventories Inventories consist principally of finished packaged foods, packaging and raw materials held in either the Company's manufacturing facility or distribution warehouse. Inventories are valued with cost determined using the first-in, first-out (FIFO) method. 4. Goodwill and Other Intangible Assets In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement No. 142 "Goodwill and Other Intangible Assets". This statement addresses financial accounting and reporting for acquired goodwill and other intangible assets and supercedes APB Opinion No. 17, "Intangible Assets". It addresses how intangible assets that are acquired individually or with a group of other assets (but not those acquired in a business combination) should be accounted for in financial statements upon their acquisition. This Statement also addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements. The Company, in its acquisitions, recognized $893,850 of goodwill. The Company performs its annual impairment test for goodwill at year-end. As of March 31, 2005, the Company has determined that there is no impairment of its goodwill. In addition, the Company has acquired other intangible assets, which include: customer lists, non-compete agreements, trademarks and patents. The non-compete agreements are being amortized over the legal life of the agreements ranging between 3 to 7 years. The customer lists are being amortized over a period ranging between 5 to 10 years based on management's best estimate of the expected benefits to be consumed or otherwise used up. Trademarks and patents 6
are regularly reviewed to determine whether the facts and circumstances exist to indicate that the useful life is shorter than originally estimated or the carrying amount of the assets may not be recoverable. The Company assesses the recoverability of its trademarks and patents by comparing the projected discounted net cash flows associated with the related asset, over their remaining lives, in comparison to their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. <TABLE> <CAPTION> AS OF MARCH 31, 2005 AS OF DECEMBER 31, 2004 -------------------------------------------- ------------------------------------------- GROSS CARRYING ACCUMULATED GROSS CARRYING ACCUMULATED AMOUNT AMORTIZATION AMOUNT AMORTIZATION --------------------- ------------------- ---------------------- ------------------ <S> <C> <C> <C> <C> Customer lists $ 4,355,000 $ 555,000 $ 4,355,000 $ 394,000 Non-compete agreements 840,000 320,000 840,000 248,000 Trademarks and patents 1,735,000 12,000 1,703,000 12,000 Goodwill 894,000 - 894,000 --------------------- ------------------- ---------------------- ------------------ Total $ 7,824,000 $ 887,000 $ 7,792,000 $ 654,000 ===================== =================== ====================== ================== </TABLE> AMORTIZATION EXPENSE FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004 WAS AS FOLLOWS: <TABLE> <CAPTION> 2005 2004 --------------------- ------------------- <S> <C> <C> Customer lists $ 161,000 91,000 Non-compete agreements 72,000 46,000 Trademarks and patents - - --------------------- ------------------- Total Trademarks and Intangibles $ 233,000 $ 137,000 ===================== =================== </TABLE> 5. Fixed Assets Fixed assets are stated at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the related assets, which are generally three to seven years. Leasehold improvements and equipment under capital leases are amortized on a straight-line basis over the lesser of the estimated useful life of the asset or the related lease terms. Expenditures for repairs and maintenance are charged to expense as incurred, while major renewals and improvements are capitalized. 6. Income Per Common Share Basic income per share is calculated by dividing net income by the weighted average number of outstanding common shares during the year. Basic income per share excludes any dilutive effects of options, warrants and other stock-based compensation. 7
7. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. 8. Stock-Based Compensation The Company has adopted Statement of Financial Accounting Standards No. 123, "Accounting for Stock Based Compensation" ("SFAS 123"). The provisions of SFAS 123 allow companies to either expense the estimated value of stock options or to continue to follow the intrinsic value method set forth in Accounting Principles Bulletin Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), but disclose the pro-forma effects on net income (loss) had the fair value of the options been expensed. The Company has elected to continue to apply APB 25 in accounting for its employee stock option incentive plans. Under APB 25, where the exercise price of the Company's employee stock options equals the market price of the underlying stock on the date of grant, no compensation is recognized. If compensation expense for the Company's stock-based compensation plans had been determined consistent with SFAS 123, the Company's net income per share including pro forma results would have been the amounts indicated below: Three Months ended March 31 <TABLE> <CAPTION> 2005 2004 ---- ---- <S> <C> <C> Net Income: As reported $507,000 $647,000 Total stock based director compensation expense determined under fair value based method for all awards, net of related tax effects (247,000) (169,725) -------- -------- Pro forma $260,000 $477,275 ======== ======== Net Income per share: As reported: Basic $.04 $.06 Diluted .04 .05 Pro forma: Basic .02 .05 Diluted .02 .04 </TABLE> 9. Recent Accounting Pronouncements ShareBased Payments In December 2004, the FASB issued Financial Accounting Standards No. 123 (revised 2004) (FAS 123R), "Share-Based Payment, " FAS 123R replaces FAS No. 123, "Accounting for Stock-Based Compenasation", and supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees." FAS 123R requires compensation expense, measured as the fair value at the grant date, related to share-based payment transactions to be recognized in the financial statements over the period that an employee provides service in exchange for the award. The Company intends to adopt FAS 123R using the "modified prospective" transition method as defined in FAS 123R. Under the modified prospective method, companies are required to 1) record compensation cost prospectively for the unvested portion, as of the date of adoption, of previously issued and outstanding awards over the remaining vesting period of such awards. FAS 123R is effective January 1, 2006. The Company is evaluating the impact of FAS 123R on its' results and financial position. 8
Inventory Costs In November 2004, the FASB issued Financial Accounting Standards No. 151 (FAS 151), "Inventory Costs - an amendment of ARB No. 43, Chapter 4". FAS 151 clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs and spoilage. In addition, FAS 151 requires companies to base the allocation of fixed production overhead to the costs of conversion on the normal capacity of production facilities. FAS 151 is effective for the Company in 2006. The Company does not expect FAS 151 to have a material impact on its results or financial statements. 10. Revenue Recognition Revenue is recognized for product sales upon shipment and passing of risk to the customer and when estimates of discounts, rebates, promotional adjustments, price adjustments, returns, and other potential adjustments are reasonably determinable, collection is reasonably assured and the Company has no further performance obligations. These estimates are presented in the financial statements as reductions to net revenues and accounts receivable. Estimated sales returns, allowances and discounts are provided for. Outbound shipping charges to customers and outbound shipping-related costs are netted and included in "cost of sales." Returns - Consistent with industry practice, the Company maintains a return policy that allows its customers to return product within a specified period (30 days). Because the period of payment generally approximates the period revenue was originally recognized, refunds are recorded as a reduction of revenue when paid. The Company's estimate for returns is based upon its historical experience with actual returns. While such experience has allowed for reasonable estimation in the past, history may not always be an accurate indicator of future returns. The Company continually monitors its estimates for returns and makes adjustments when it believes that actual product returns may differ from the established accruals. 9
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Except for the historical information contained herein, this Report on Form 10-Q contains certain forward-looking statements that involve substantial risks and uncertainties. When used in this Report, the words "anticipate," "believe," "estimate," "expect" and similar expressions, as they relate to Medifast, Inc. or its management, are intended to identify such forward-looking statements. The Company's actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Accordingly, there is no assurance that the results in the forward-looking statements will be achieved. GENERAL THREE MONTHS ENDED MARCH 31, 2005 AND MARCH 31, 2004 Revenues for the first three months of 2005 were $8,326,000, representing an increase of $1,509,000 (22%) from the $6,817,000 reported for the three-month period ending March 31, 2004. The growth in revenue was a result of the success of an effective advertising campaign. The campaign consisted of print, TV, internet and radio advertising that continued to increase throughout the quarter and as a result the Company believes consumer awareness in the Medifast brand was increased. The Take Shape For Life division continues to experience increased sales partially attributed to the introduction of the "Blueprint for Success" training program. The program educates the TSFL Health Advisors on how to effectively grow the TSFL business. The Company believes the program has helped to increase revenues and add new customers and Health Advisors. Cost of sales for the first quarter of 2005 increased by $723,000 (54%) from 2004. Gross profit for the first quarter of 2005 increased by $786,000 (14%) from the first quarter of 2004. Selling, general and administrative expenses for the first quarter of 2005 were $5,341,000, which increased by $793,000 (17%) as compared to the same period in 2004, due to increased commissions from increased revenues as well as overall corporate infrastructure improvements. SG&A also increased due to initial expenses related to the opening of the corporate owned Hi-Energy Weight Control Clinics in Dallas, Texas without significant revenues to offset start-up expenses. Income from Operations was $912,000, a decrease of $7,000 or (1%). The Company had fully diluted earnings per share of $0.04 in the first quarter of 2005, versus $0.05 in 2004. The decrease was primarily due to the dilution of 1,172,386 shares, related to the conversion of the remaining Series "B" preferred stock. Stockholder equity increased to $19,748,000, which is an increase of $542,000 (3%) compared to the period ending December 31, 2004. 10
SEASONALITY The Company's weight management products and programs are subject to seasonality. Traditionally the holiday season in November/December of each year is considered poor for diet control products and services. January and February generally show increases in sales, as these months are considered the commencement of the "diet season." The Company will not experience the same degree of seasonality in 2005 because of the introduction of its full line of products that are designed to provide nutritional solutions for people with diabetes, arthritis, coronary health, and menopause. LIQUIDITY AND CAPITAL RESOURCES The Company had stockholders' equity of $19,748,000 and working capital of $8,037,000 on March 31, 2005 compared with $17,782,000 and $9,933,000 at March 31, 2004, respectively. The $1,966,000 net increase in stockholder's equity is due to profits from operations. The $1,896,000 net decrease in working capital is due to infrastructure improvements and a decrease in the deferred tax asset as a result of profits. INFLATION To date, inflation has not had a material effect on the Company's business. ITEM 5. OTHER INFORMATION Litigation: On December 16, 2003 John Donavin, on behalf of the General Public, filed suit, against Jason Pharmaceuticals, Inc. in the Superior Court of the State of California, City and County of San Francisco. The suit alleges that Medifast bars contain Vitamin D3 or Vitamin D in violation of Federal laws and regulations, and asks for equitable relief and damages. The Company's general counsel believes that the Company's formulation used in its "meal replacement" bars for over 20 years has been and is in conformity with current and past FDA regulations. The Company believes that the plaintiff's claim lacks merit and may even be considered frivolous. The suit has been stayed upon appeal to the FDA to clarify its regulations. In addition, current federal regulations applicable to local class action suits may prove beneficial to the Company in this case. Despite the Company's claims and litigation in the state of Maryland, A former consultant continues to claim that he transferred his personal Medifast stock to a third party organization in 2000, in an attempt to keep these assets out of his bankrupt estate and therefore outside the jurisdiction of the Bankruptcy Court. The Company contests, and will vigorously defend, all such claims made by him. The Trustee in Bankruptcy for the former consultant's bankruptcy estate has determined that he had no authority to transfer these shares from his estate, and has concluded that the attempted transfer was therefore invalid. The Trustee has demanded that he produce the shares, and plans to file a petition with the Bankruptcy Court requesting that the Court order him to do so. These assets will be made a part of the bankrupt estate and will be used to pay creditors. 11
Other: In the first quarter, Michael S. McDevitt was appointed President of Medifast, Inc. and CEO of the Operating Subsidiaries. Mr. McDevitt joined Medifast in 2002 as the Controller and was promoted to Vice President of Finance in January 2004. Prior to joining Medifast, Mr. McDevitt worked as a Financial Analyst for The Blackstone Group, an investment and advisory firm based in New York, NY. In the first quarter, Brendan N. Connors, CPA was appointed Vice President of Finance of Medifast, Inc. Prior to joining Medifast, Mr. Connors worked as a Senior Accountant at Wolf & Company, P.C., a certified public accounting and consulting firm in Boston, MA. The joint venture between the Company and XL Health was terminated by the Company early in the first quarter. The Company determined that the poor medical condition of many of XL Health's patients rendered them ill-suited to participate in the Medifast diabetic program. As a result, the Company terminated the joint venture, and received 66,667 warrants to purchase common stock in XL Health as compensation for the guarantee made by the Company on behalf of XL Health during the early stages of the joint venture. In January, the Johns Hopkins Bloomberg School of Public Health concluded an 86-week study of Type II Diabetics using Medifast Plus for Diabetics compared to an American Diabetic Association (ADA) recommended diet. Preliminary results of the study, which were released after the initial 34 weeks showed that those study volunteers on Medifast Plus for Diabetics lost twice as much weight and were twice as compliant as compared to those following the basic nutrition recommendations from the ADA. The final study results are scheduled to be presented at the American Diabetes Association Annual Sessions on June 10, 2005 in San Diego, CA. Earnings Per Share: The Company follows the provisions of Statement of Financial Accounting Standards No. 128, "Earnings Per Share." The calculation of basic and diluted earnings per share ("EPS") is reflected on the accompanying Consolidated Statement of Operations. Issuance of Common Stock: Due to the conversion of all remaining shares of Series "B" preferred stock, dividends paid on Series "C" preferred stock and the exercising of warrants the Company issued 1,172,386 shares of common stock throughout the first quarter of 2005. Of these shares issued, 1,122,386 were from the conversion of Series "B" convertible preferred stock. Code of Ethics: In September 2002, the Company implemented a Code of Ethics by which directors, officers and employees commit and undertake to personal and corporate growth, dedicate themselves to excellence, integrity and responsiveness to the marketplace, and work together to enhance the value of the Company for the shareholders, vendors, and customers. Trading Policy: In March 2003, the Company implemented a Trading Policy whereby if a director, officer or employee has material non-public information relating to the Company, neither that person nor any related person may buy or sell securities of the Company or engage in any other action to take advantage of, or pass on to others, that information. Additionally, insiders may purchase or sell MED securities if such purchase or sale is made within 30 days after an earnings or special announcement to include the 10-K, 10-Q and 8-K in order to insure that investors have available the same information necessary to make investment decisions as insiders. Internal Control Policy: As of March 31, 2005, the Company's management, with the participation of the Chief Executive Officer and the President, performed an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based 12
on that evaluation, the Chief Executive Officer and the President have concluded that the design and operation of these disclosure controls and procedures were effective as of the end of the period covered by this report. In connection with this evaluation, no change in the Company's internal control over financial reporting was identified that occurred during the period covered by this report that has materially affected, or is reasonably likely to affect the Company's internal control over financial reporting. Forward Looking Statements: Some of the information presented in this quarterly report constitutes forward-looking statements within the meaning of the private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about management's expectations for fiscal year 2003 and beyond, are forward-looking statements and involve various risks and uncertainties. Although the Company believes that its expectations are based on reasonable assumptions within the bounds of its knowledge, there can be no assurance that actual results will not differ materially from the Company's expectations. The Company cautions investors not to place undue reliance on forward-looking statements which speak only to management's experience on this date. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. Medifast Inc. (Registrant) /s/ Bradley T. MacDonald ---------------------------- Bradley T. MacDonald Chairman & CEO 13
Index to Exhibits Exhibit Number Description of Exhibit - ------ ---------------------- 31.1 Certification of Chief Executive Officer pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief Financial Officer pursuant to Item 601(b)(31) of Regulations S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 14