UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED
June 30, 2008
Commission File No. 001-13458
SCOTT'S LIQUID GOLD-INC.
4880 Havana Street
Denver, CO 80239
Phone: 303-373-4860
Colorado 84-0920811
State of Incorporation I.R.S. Employer
Identification No.
Check whether the registrant: (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the past
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 [ ]
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 the definitions of "large accelerated filer,"
"accelerated filer" and "smaller reporting company" in Rule 12b-2 of the
Exchange Act.
Large accelerated filer [ ]
Accelerated filer [ ]
Non-accelerated filer [ ](Do not check if a smaller reporting
company)
Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act. Yes [ ] No [X]
As of June 30, 2008, the Registrant had 10,625,000 of its $0.10 par
value common stock outstanding.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SCOTT'S LIQUID GOLD-INC. & SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
Three Months Ended Six Months Ended
------------------------- -------------------------
June 30, June 30,
2008 2007 2008 2007
----------- ----------- ----------- -----------
Net sales $ 4,043,700 $ 4,304,200 $ 8,137,500 $ 8,166,000
Operating costs
and expenses:
Cost of sales 2,508,700 2,340,600 4,710,600 4,687,100
Advertising 97,000 88,800 208,200 201,100
Selling 1,320,800 1,379,000 2,661,100 2,634,400
General and
administrative 729,800 768,800 1,529,800 1,582,900
----------- ----------- ----------- -----------
4,656,300 4,577,200 9,109,700 9,105,500
----------- ----------- ----------- -----------
Loss from operations (612,600) (273,000) (972,200) (939,500)
Interest income 5,900 19,600 14,400 43,800
Interest expense (102,100) (104,200) (205,200) (208,100)
----------- ----------- ----------- -----------
(708,800) (357,600) (1,163,000) (1,103,800)
Income tax expense
(benefit) - - - -
----------- ----------- ----------- -----------
Net loss $ (708,800) $ (357,600) $(1,163,000) $(1,103,800)
=========== =========== =========== ===========
Net loss per common
share (Note 3):
Basic and
Diluted $ (0.07) $ (0.03) $ (0.11) $ (0.10)
=========== =========== =========== ===========
Weighted average
shares outstanding:
Basic and
Diluted 10,613,500 10,533,000 10,598,100 10,533,000
=========== =========== =========== ===========
SCOTT'S LIQUID GOLD-INC. & SUBSIDIARIES
Consolidated Balance Sheets
June 30, December 31,
2008 2007
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,004,200 $ 1,483,300
Investment securities 50,000 50,400
Trade receivables, net of allowance
for doubtful accounts of $62,800
and $62,000, respectively 948,800 1,004,900
Other receivables 21,700 32,500
Inventories, net 2,941,900 3,054,500
Prepaid expenses 171,800 238,100
----------- -----------
Total current assets 5,138,400 5,863,700
Property, plant and equipment, net 12,320,800 12,624,000
Other assets 53,200 55,400
----------- -----------
TOTAL ASSETS $17,512,400 $18,543,100
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,699,500 $ 1,560,300
Accrued payroll and benefits 1,016,800 866,200
Other accrued expenses 279,400 390,500
Current maturities of long-term debt 266,700 204,900
----------- -----------
Total current liabilities 3,262,400 3,021,900
Long-term debt, net of current maturities 4,509,500 4,671,600
----------- -----------
7,771,900 7,693,500
Commitments and contingencies
Shareholders' equity:
Common stock; $.10 par value, authorized
50,000,000 shares; issued and
outstanding 10,625,000 shares,
and 10,575,000 shares respectively 1,062,500 1,057,500
Capital in excess of par 5,139,400 5,090,100
Accumulated comprehensive income - 400
Retained earnings 3,538,600 4,701,600
----------- -----------
Shareholders' equity 9,740,500 10,849,600
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $17,512,400 $18,543,100
=========== ===========
SCOTT'S LIQUID GOLD-INC. & SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended
June 30,
--------------------------
2008 2007
----------- -----------
Cash flows from operating activities:
Net loss $(1,163,000) $(1,103,800)
----------- -----------
Adjustments to reconcile net loss to
net cash provided (used) by operating
activities:
Depreciation and amortization 314,200 323,200
Stock issued to ESOP 12,900 -
Stock options granted 32,200 16,000
Changes in assets and liabilities:
Trade and other receivables, net 66,900 (100,600)
Inventories 112,600 (302,100)
Prepaid expenses and other assets 66,300 (92,200)
Accounts payable and
accrued expenses 178,700 417,200
----------- -----------
Total adjustments to net loss 783,800 261,500
----------- -----------
Net Cash Used by
Operating Activities (379,200) (842,300)
----------- -----------
Cash flows from investing activities:
Purchase of property, plant & equipment (8,800) (31,000)
----------- -----------
Net Cash Used by Investing
Activities (8,800) (31,000)
----------- -----------
Cash flows from financing activities:
Principal payments on long-term borrowings (100,300) (94,500)
Proceeds from exercise of stock options 9,200 -
----------- -----------
Net Cash Used by
Financing Activities (91,100) (94,500)
----------- -----------
Net Decrease in Cash and
Cash Equivalents (479,100) (967,800)
Cash and Cash Equivalents,
beginning of period 1,483,300 2,804,100
----------- -----------
Cash and Cash Equivalents,
end of period $ 1,004,200 $ 1,836,300
=========== ===========
Supplemental disclosures:
Cash paid during period for:
Interest $ 207,300 $ 209,300
=========== ===========
Income taxes $ - $ 900
=========== ===========
SCOTT'S LIQUID GOLD-INC. & SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
Note 1. Summary of Significant Accounting Policies
(a) Company Background
Scott's Liquid Gold-Inc. (a Colorado corporation) was incorporated
on February 15, 1954. Scott's Liquid Gold-Inc. and its wholly owned
subsidiaries (collectively, "we" or "our") manufacture and market quality
household and skin care products, and we fill, package and market our
Mold Control 500 product. We act as the distributor in the United States
for beauty care products contained in individual sachets and manufactured
by Montagne Jeunesse. In 2006 and 2007, we began the distribution of
products from COSMEX International (Davinci & Moosehead men's grooming
products), and in 2007 from Baylis & Harding (bath, body and hair care
products). Our business is comprised of two segments -- household
products and skin care products.
In order to improve our liquidity, we are pursuing the
following steps: additional financing, the sale of all or a portion
of our real estate which we continue to have listed with a real estate
firm, efforts to improve revenues, and a reduction in our fixed
operating expense.
(b) Principles of Consolidation
Our consolidated financial statements include our accounts and
those of our subsidiaries. All intercompany accounts and transactions
have been eliminated.
(c) Use of 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, the disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Significant estimates
include, but are not limited to, realizability of deferred tax assets,
reserves for slow moving and obsolete inventory, customer returns, coupon
redemptions and allowances, and bad debts.
(d) Cash Equivalents
We consider all highly liquid investments with an original maturity
of three months or less at the date of acquisition to be cash equivalents.
(e) Investments in Marketable Securities
We account for investments in marketable securities in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 115
"Accounting for Certain Investments in Debt and Equity Securities", which
requires that we classify investments in marketable securities according
to management's intended use of such investments. We invest our excess
cash and have established guidelines relative to diversification and
maturities in an effort to maintain safety and liquidity. These
guidelines are periodically reviewed and modified to take advantage of
trends in yields and interest rates. We consider all investments as
available for use in our current operations and, therefore, classify
them as short-term, available-for-sale investments. Available-for-sale
investments are stated at fair value, with unrealized gains and
losses, if any, reported net of tax, as a separate component of
shareholders' equity and comprehensive income (loss). The cost of the
securities sold is based on the specific identification method.
Investments in corporate and government securities as of June 30, 2008,
are scheduled to mature within one year.
(f) Inventories
Inventories consist of raw materials and finished goods and are
stated at the lower of cost (first-in, first-out method) or market.
We record a reserve for slow moving and obsolete products and raw
materials. We estimate reserves for slow moving and obsolete products
and raw materials based upon historical and anticipated sales.
Inventories were comprised of the following at:
June 30, 2008 December 31, 2007
-------------- -----------------
Finished goods $ 2,003,700 $ 2,178,000
Raw materials 1,331,900 1,284,200
Inventory reserve
for obsolescence (393,700) (407,700)
----------- -----------
$ 2,941,900 $ 3,054,500
=========== ===========
(g) Property, Plant and Equipment
Property, plant and equipment are recorded at historical cost.
Depreciation is provided using the straight-line method over estimated
useful lives of the assets ranging from three to forty-five years.
Building structures and building improvements are estimated to have
useful lives of 35 to 45 years and 3 to 20 years, respectively.
Production equipment and production support equipment are estimated to
have useful lives of 15 to 20 years and 3 to 10 years, respectively.
Office furniture and office machines are estimated to have useful lives
of 10 to 20 and 3 to 5 years, respectively. Carpeting, drapes and
company vehicles are estimated to have useful lives of 5 to 10 years.
Maintenance and repairs are expensed as incurred. Improvements that
extend the useful lives of the assets or provide improved efficiency are
capitalized.
(h) Financial Instruments
Financial instruments which potentially subject us to
concentrations of credit risk include cash and cash equivalents,
investments in marketable securities, and trade receivables. We maintain
our cash balances in the form of bank demand deposits with financial
institutions that management believes are creditworthy. As of the
balance sheet date and periodically throughout the year, the Company has
maintained balances in various operating accounts in excess of federally
insured limits. We establish an allowance for doubtful accounts based
upon factors surrounding the credit risk of specific customers, historical
trends and other information. We have no significant financial
instruments with off-balance sheet risk of accounting loss, such as
foreign exchange contracts, option contracts or other foreign currency
hedging arrangements.
The recorded amounts for cash and cash equivalents, receivables,
other current assets, and accounts payable and accrued expenses
approximate fair value due to the short-term nature of these financial
instruments. The fair value of investments in marketable securities is
based upon quoted market value. Our long-term debt bears interest at a
fixed rate that adjusts annually on the anniversary date to a then prime
rate. The carrying value of long-term debt approximates fair value as
of June 30, 2008 and December 31, 2007.
(i) Long-Lived Assets
We account for long-lived assets in accordance with the provisions
of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets." This Statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to future
net cash flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceeds the fair
value of the assets. Assets to be disposed of are reported at the lower
of the carrying amount or fair value less costs to sell.
(j) Income Taxes
We account for income taxes in accordance with the provisions of
SFAS No. 109, "Accounting for Income Taxes", which requires the
recognition of deferred tax assets and liabilities for the expected
future tax consequences attributable to differences between the
financial statement carrying amounts of assets and liabilities and their
respective income tax bases. A valuation allowance is provided when it
is more likely than not that some portion or all of a deferred tax
asset will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during
the period in which related temporary differences become deductible.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled.
(k) Revenue Recognition
Revenue is recognized when an arrangement exists to sell our
product, we have delivered such product in accordance with that
arrangement, the sales price is determinable, and collectibility is
probable. Reserves for estimated market development support, pricing
allowances and returns are provided in the period of sale as a reduction
of revenue. Reserves for returns and allowances are recorded as a
reduction of revenue, and are maintained at a level that management
believes is appropriate to account for amounts applicable to existing
sales. Reserves for coupons and certain other promotional activities
are recorded as a reduction of revenue at the later of the date at which
the related revenue is recognized or the date at which the sales
incentive is offered. At June 30, 2008 and December 31, 2007
approximately $650,000 and $695,700, respectively, had been reserved as
a reduction of accounts receivable, and approximately $23,000 and
$27,000, respectively, had been reserved as current liabilities. Co-op
advertising, marketing funds, slotting fees and coupons are deducted
from gross sales and totaled $774,700 and $1,321,200 in the six months
ended June 30, 2008 and 2007, respectively.
(l) Advertising Costs
Advertising costs are expensed as incurred.
(m) Stock-based Compensation
At June 30, 2008, we had three stock-based employee compensation
plans. During the first quarter of fiscal 2006, we adopted the
provisions of, and account for stock-based compensation in accordance
with, the Financial Accounting Standards Board's ("FASB") Statement of
Financial Accounting Standards No. 123-revised 2004 ("SFAS 123R"),
"Share-Based Payment" which replaced Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" and
supersedes APB Opinion No. 25, "Accounting for Stock Issued to
Employees." Under the fair value recognition provisions of this
statement, stock-based compensation cost is measured at the grant
date based on the fair value of the award and is recognized as
expense on a straight-line basis over the requisite service period,
which is the vesting period. We elected the modified-prospective
method, under which prior periods are not revised for comparative
purposes. The valuation provisions of SFAS 123R apply to new grants
and to grants that were outstanding as of the effective date and are
subsequently modified.
Prior to January 1, 2006, we accounted for the plans described
above under the recognition and measurement principles of APB Opinion
No. 25, Accounting for Stock Issued to Employees, and related
Interpretations. No stock-based employee compensation cost is reflected
in net income prior to January 1, 2006, as all options granted under
those plans had an exercise price not less than the market value of the
underlying common stock on the date of grant.
During the first six months of 2008, we granted 139,000 options
for shares of our common stock to employees at an average exercise
price of $0.55 per share. The options which vest ratably over
forty-eight months, or upon a change in control, and which expire after
five years, were granted at or above the market value as of the date
of grant.
The weighted average fair market value of the options granted in
the first half of 2008 was estimated on the date of grant using a
Black-Scholes option pricing model with the following assumptions.
Three and Six Months Ended
June 30, 2008
--------------------------
Expected life of options 4.5 years
Average risk-free interest rate 3.0%
Average expected volatility of stock 69%
Expected dividend rate None
Compensation cost related to stock options recognized in operating
results (included in general and administrative expenses) under
SFAS 123R was $32,200 in the six months ended June 30, 2008.
Approximately $197,800 of total unrecognized compensation costs related
to non-vested stock options is expected to be recognized over the next
forty-four months. In accordance with SFAS 123R, there was no tax
benefit from recording the non-cash expense as relates to the options
granted to employees as these were qualified stock options which are
not normally tax deductible. With respect to the non-cash expense
associated with the options granted to the non-employee directors,
no tax benefit was recognized due to the existence of as yet
unutilized net operating losses. At such time as these operating
losses have been utilized and a tax benefit is realized from the
issuance of non-qualified stock options, a corresponding tax benefit
may be recognized.
(n) Comprehensive Income
We follow SFAS No. 130, "Reporting Comprehensive Income" which
establishes standards for reporting and displaying comprehensive income
and its components. Comprehensive income includes all changes in equity
during a period from non-owner sources.
The following table is a reconciliation of our net loss to our
total comprehensive loss:
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
2008 2007 2008 2007
----------- ----------- ----------- -----------
Net loss $ (708,800) $ (357,600) $(1,163,000) $(1,103,800)
Unrealized loss
on investment
securities (500) (500) (400) (600)
----------- ----------- ----------- -----------
Comprehensive
loss $ (709,300) $ (358,100) $(1,163,400) $(1,104,400)
=========== =========== =========== ===========
(o) Operating Costs and Expenses Classification
Cost of sales includes costs associated with manufacturing and
distribution including labor, materials, freight-in, purchasing and
receiving, quality control, internal transfer costs, repairs,
maintenance and other indirect costs, as well as warehousing and
distribution costs. We classify shipping and handling costs comprised
primarily of freight-out and nominal outside warehousing costs as a
component of selling expense on the accompanying Consolidated Statement
of Operations. Shipping and handling costs totaled $798,200 and
$730,400, for the six months ended June 30, 2008 and 2007, respectively.
Selling expenses consist primarily of shipping and handling costs,
wages and benefits for sales and sales support personnel, travel,
brokerage commissions, promotional costs, as well as other indirect
costs.
General and administrative expenses consist primarily of wages
and benefits associated with management and administrative support
departments, business insurance costs, professional fees, office
facility related expenses, and other general support costs.
(p) Recently Issued Accounting Pronouncements
In December 2007, the FASB issued Statement of Financial
Accounting Standards No. 141R, "Business Combinations" ("SFAS No.
141R"). This statement replaces SFAS 141 and defines the acquirer in
a business combination as the entity that obtains control of one or more
businesses in a business combination and establishes the acquisition
date as the date that the acquirer achieves control. SFAS No. 141R
requires an acquirer to recognize the assets acquired, the liabilities
assumed, and any noncontrolling interest in the acquiree at the
acquisition date, measured at their fair values as of that date.
SFAS No. 141R also requires the acquirer to recognize contingent
consideration at the acquisition date, measured at its fair value at
that date. This statement is effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15,
2008. Earlier adoption is prohibited. The adoption of this statement
is not expected to have a material effect on the Company's financial
statements.
In December 2007, the FASB issued Statement of Financial
Accounting Standards No. 160, "Noncontrolling Interests in Consolidated
Financial Statements - an Amendment of APB No. 51" ("SFAS No. 160").
This statement amends ARB 51 to establish accounting and reporting
standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. This statement is effective for fiscal
years, and interim periods within those fiscal years, beginning on or
after December 15, 2008. Earlier adoption is prohibited. The adoption
of this statement is not expected to have a material effect on the
Company's future reported financial position or results of operations.
In February 2007, the FASB issued Statement of Financial
Accounting Standards No. 159, "The Fair Value Option for Financial
Assets and Financial Liabilities - Including an Amendment of SFAS No.
115" ("SFAS No. 159"). This statement permits entities to choose to
measure certain financial instruments and liabilities at fair value.
Most of the provisions of SFAS No. 159 apply only to entities that
elect the fair value option. However, the amendment to SFAS No. 115
"Accounting for Certain Investments in Debt and Equity Securities"
applies to all entities with available-for-sale and trading securities.
SFAS No. 159 is effective as of the beginning of an entity's first
fiscal year that begins after November 15, 2007. The adoption of this
statement did not have a material effect on the Company's financial
statements.
In September 2006, the FASB issued Statement of Financial
Accounting Standards No. 157, "Fair Value Measurements" ("SFAS No. 157").
This Statement defines fair value as used in numerous accounting
pronouncements, establishes a framework for measuring fair value in
generally accepted accounting principles ("GAAP") and expands
disclosure related to the use of fair value measures in financial
statements. SFAS No. 157 does not expand the use of fair value measures
in financial statements, but standardizes its definition and guidance
in GAAP. The Standard emphasizes that fair value is a market-based
measurement and not an entity-specific measurement based on an exchange
transaction in which the entity sells an asset or transfers a liability
(exit price). SFAS No. 157 establishes a fair value hierarchy from
observable market data as the highest level to fair value based on an
entity's own fair value assumptions as the lowest level. SFAS No. 157
is effective in fiscal years beginning after November 15, 2007. Adoption
of this statement did not have a material impact on our results of
operations or financial position.
Note 2. Basis of Preparation of Financial Statements
We have prepared these unaudited interim consolidated financial
statements in accordance with the rules and regulations of the
Securities and Exchange Commission. Such rules and regulations allow
the omission of certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles as long as the statements are not
misleading. In the opinion of management, all adjustments necessary
for a fair presentation of these interim statements have been included
and are of a normal recurring nature. These interim financial
statements should be read in conjunction with our financial statements
included in our 2007 Annual Report on Form 10-KSB.
Note 3. Earnings Per Share
Per share data was determined by using the weighted average
number of common shares outstanding. Potentially dilutive securities,
including stock options, are considered only for diluted earnings per
share, unless considered anti-dilutive. The potentially dilutive
securities, which are comprised of outstanding stock options of
1,927,150 and 1,904,650 at June 30, 2008 and 2007, were excluded from
the computation of weighted average shares outstanding due to their
anti-dilutive effect.
A reconciliation of the weighted average number of common shares
outstanding for the three and six months ended June 30, 2008 and 2007,
respectively, follows:
2008 2007
------------------------------------- ----------
Total Three and
Three Months Six Months Shares Six Months
------------ ----------- ---------- ----------
Common shares
outstanding
beginning of period 10,595,000 10,575,000 10,575,000 10,533,000
Stock issued to ESOP 18,500 9,300 30,000 -
Stock option exercises - 13,800 20,000
---------- ---------- ---------- ---------
Weighted average
number of common
shares outstanding 10,613,500 10,598,100 10,625,000 10,533,000
Dilutive effect of
common share
equivalents - - - -
---------- ---------- ---------- ----------
Diluted weighted
average number of
common shares
outstanding 10,613,500 10,598,100 10,625,000 10,533,000
========== ========== ========== ==========
At June 30, 2008, there were authorized 50,000,000 shares of our
$.10 par value common stock and 20,000,000 shares of preferred stock
issuable in one or more series. None of the preferred stock was issued
or outstanding at June 30, 2008.
Note 4. Segment Information
We operate in two different segments: household products and skin
care products. Our products are sold nationally and internationally
(primarily Canada), directly and through independent brokers, to mass
merchandisers, drug stores, supermarkets, wholesale distributors and
other retail outlets. Management has chosen to organize our business
around these segments based on differences in the products sold. The
household products segment includes "Scott's Liquid Gold" for wood, a
wood cleaner which preserves as it cleans, Mold Control 500, a mold
remediation product, and "Touch of Scent," a room air freshener. The
skin care segment includes "Alpha Hydrox," alpha hydroxy acid cleansers
and lotions, a retinol product, and "Diabetic Skin Care", a healing
cream and moisturizer developed to address skin conditions of
diabetics. We also distribute skin care and other sachets of Montagne
Jeunesse, Davinci and Moosehead men's grooming products, and bath,
body and hair care products from Baylis & Harding.
The following provides information on our segments for the three
and six months ended June 30:
Three Months ended June 30,
-----------------------------------------------------
2008 2007
------------------------- --------------------------
Household Skin Care Household Skin Care
Products Products Products Products
----------- ----------- ----------- -----------
Net sales to
external
customers $ 1,967,400 $ 2,076,300 $ 1,936,200 $ 2,368,000
=========== =========== =========== ===========
Income(loss)
before profit
sharing,
bonuses and
income taxes $ (206,600) $ (502,200) $ 28,200 $ (385,800)
=========== =========== =========== ===========
Identifiable
assets $ 3,168,200 $ 5,113,500 $ 3,483,000 $ 5,737,800
=========== =========== =========== ===========
Six Months ended June 30,
-----------------------------------------------------
2008 2007
------------------------- --------------------------
Household Skin Care Household Skin Care
Products Products Products Products
----------- ----------- ----------- -----------
Net sales to
external
customers $ 3,699,700 $ 4,437,800 $ 4,241,700 $ 3,924,300
=========== =========== =========== ===========
Income(loss)
before profit
sharing,
bonuses and
income taxes $ (430,700) $ (732,300) $ 88,500 $(1,192,300)
=========== =========== =========== ===========
Identifiable
assets $ 3,168,200 $ 5,113,500 $ 3,483,000 $ 5,737,800
=========== =========== =========== ===========
The following is a reconciliation of segment information to
consolidated information for the three and six months ended June 30:
Three Months ended June 30, Six Months ended June 30,
--------------------------- -------------------------
2008 2007 2008 2007
----------- ----------- ----------- -----------
Net sales to
external
customers $ 4,043,700 $ 4,304,200 $ 8,137,500 $ 8,166,000
=========== =========== =========== ===========
Loss before
profit sharing,
bonuses and
income taxes $ (708,800) $ (357,600) $(1,163,000) $(1,103,800)
=========== ============ =========== ===========
Identifiable
assets $ 8,281,700 $ 9,220,800 $ 8,281,700 $ 9,220,800
Corporate
assets 9,230,700 10,340,300 9,230,700 10,340,300
----------- ------------ ----------- -----------
Consolidated
total assets $17,512,400 $19,561,100 $17,512,400 $19,561,100
=========== =========== =========== ===========
Corporate assets noted above are comprised primarily of our cash
and investments, and property and equipment not directly associated with
the manufacturing, warehousing, shipping and receiving activities.
Item 2. Management's Discussion and Analysis or Plan of Operation
Results of Operations
During the first half of 2008, we experienced a decrease in sales
of our Scott's Liquid Gold household chemical products, while
experiencing an increase in sales of our Montagne Jeunesse and other
distributed skin care products and an increase in sales of our Alpha
Hydrox skin care products. Our net loss for the first half of 2008 was
$1,163,000 versus a loss of $1,103,800 in the first half of 2007. The
increase in our loss for the first half of 2008 compared to the first
half of 2007 results primarily from an increase in our cost of sales
expenses.
Summary of Results as a Percentage of Net Sales
Year Ended Six Months Ended
December 31, June 30,
------------ -------------------
2007 2008 2007
------------ ------- --------
Net sales
Scott's Liquid Gold
household products 44.9% 45.5% 51.9%
Neoteric Cosmetics 55.1% 54.5% 48.1%
------ ------ ------
Total Net Sales 100.0% 100.0% 100.0%
Cost of Sales 56.5% 57.9% 57.4%
------ ------ ------
Gross profit 43.5% 42.1% 42.6%
Other revenue 0.4% 0.2% 0.5%
------ ------ ------
43.9% 42.3% 43.1%
------ ------ ------
Operating expenses 48.9% 54.1% 54.1%
Interest 2.3% 2.5% 2.5%
------ ------ ------
51.2% 56.6% 56.6%
------ ------ ------
Loss before income taxes (7.3%) (14.3%) (13.5%)
====== ======= ======
Our gross margins may not be comparable to those of other
entities, because some entities include all of the costs related to
their distribution network in cost of sales and others, like us,
exclude a portion of them (freight out to customers and nominal outside
warehouse costs) from gross margin, including them instead in the
selling expense line item. See Note 1(o), Operating Costs and Expenses
Classification, to the unaudited Consolidated Financial Statements in
this Report.
Comparative Net Sales
Six Months Ended June 30,
-----------------------------------------
Percentage
Increase
2008 2007 (Decrease)
----------- ----------- ----------
Scott's Liquid Gold and
other household products $ 3,345,800 $ 3,654,900 (8.5%)
Touch of Scent 353,900 586,800 (39.7%)
----------- ----------- ------
Total household
chemical products 3,699,700 4,241,700 (12.8%)
----------- ----------- ------
Alpha Hydrox and
other skin care 1,912,900 1,541,400 24.1%
Montagne Jeunesse and other
distributed skin care 2,524,900 2,382,900 6.0%
----------- ----------- ------
Total skin care
products 4,437,800 3,924,300 13.1%
----------- ----------- ------
Total Net Sales $ 8,137,500 $ 8,166,000 (0.3%)
=========== =========== ======
Six Months Ended June 30, 2008
Compared to Six Months Ended June 30, 2007
Consolidated net sales for the first half of the current year
were $8,137,500 versus $8,166,000 for the first six months of 2007, a
decrease of $28,500. Average selling prices for the first half of 2008
were up by $538,700. Average selling prices of household products were
up by $177,500, while average selling prices of skin care products were
up by $361,200. This increase in selling prices was primarily due to a
decrease in coupon usage in 2008 versus 2007 and previously announced
price increases for our products. Co-op advertising, marketing funds,
slotting fees, and coupons paid to retailers are deducted from gross
sales, and totaled $774,700 in the first half of 2008 versus $1,321,200
in the same period in 2007, a decrease of $546,500 or 41.4%. This
decrease consisted of a decrease in coupon expense of $435,800 (included
in the 2007 coupon expense was a one-time charge from a retailer of
$314,000), a decrease in co-op marketing funds of $131,500, and an
increase in slotting fee expenses of $20,800. In the first three months
of 2008 we announced price increases for the majority of our product
lines.
From time to time, our customers return product to us. For our
household chemicals products, we permit returns only for a limited time,
and generally only if there is a manufacturing defect. With regard to
our skin care products, returns are more frequent under an unwritten
industry standard that permits returns for a variety of reasons. In
the event a skin care customer requests a return of product, the Company
will consider the request, and may grant such request in order to
maintain or enhance relationships with customers, even in the absence
of an enforceable right of the customer to do so. Some retailers have
not returned products to us. Return price credit (used in exchanges
typically, or rarely, refunded in cash), when authorized, is based on
the original sale price plus a handling charge of the retailer that
ranges from 8-10%. The handling charge covers costs associated with
the return and shipping of the product. Additions to our reserves for
estimated returns are subtracted from gross sales.
From January 1, 2006 through June 30, 2008, our product returns
(as a percentage of gross revenue) have averaged as follows: household
products 0.2%, Montagne Jeunesse products 3.0%, and our Alpha Hydrox and
other skin care products 6.1%. The level of returns as a percentage of
gross revenue for the household products and Montagne Jeunesse products
have remained fairly constant as a percentage of sales over that period
while the Alpha Hydrox and other skin care products return levels have
fluctuated. More recently, as our sales of the skin care products have
declined we have seen a decrease in returns as a percentage of gross
revenues. The products returned in the six months ended June 30, 2008
(indicated as a percentage of gross revenues) were: household
products 0.1%, Montagne Jeunesse products 1.6%, and our Alpha Hydrox
and other skin care products 0.7%. We are not aware of any industry
trends, competitive product introductions or advertising campaigns at
this time which would cause returns as a percentage of gross sales
to be materially different for the current fiscal year than for the
above averages. Furthermore, the Company's management is not currently
aware of any changes in customer relationships that we believe would
adversely impact anticipated returns. However, we review our reserve
for returns quarterly and we regularly face the risk that the existing
conditions related to product returns will change.
During the first half of 2008, net sales of skin care products
accounted for 54.5% of consolidated net sales compared to 48.1% for the
same period of 2007. Net sales of these products for that period were
$4,437,800 in 2008 compared to $3,924,300 in 2007, an increase of
$513,500 or 13.1%. Our increase in net sales of Alpha Hydrox and other
skin care was due primarily to the decrease in promotions to retailers,
which are deducted from gross sales, in 2008 versus 2007. During 2007
we introduced four value-priced items to the Alpha Hydrox line of
products. These items contributed to the increase in net sales in the
first half of 2008, although it is too early to tell about consumer
acceptance of these additions. This increase was offset by a decrease
in our sales of our Alpha Hydrox products introduced in 2005 and the
massage oils introduced in 2007. (The first half 2007 sales of the
massage oils included initial pipeline sales to retailers.) We have
continued to experience a drop in unit sales of our more recently
introduced Alpha Hydrox products and our earlier-established alpha
hydroxy acid-based products due primarily to maturing in the market
for alpha hydroxy acid-based skin care products, intense competition
from producers of similar or alternative products, many of which are
considerably larger than Neoteric Cosmetics, Inc. and reduced
distribution of these products at retail stores in current and prior
periods. For the first half of 2008, the sales of our Alpha Hydrox
products accounted for 22.1% of net sales of skin care products and
11.4% of total net sales, compared to 22.7% of net sales of skin care
products and 11.3% of total net sales in 2007.
For 2008, net sales of Montagne Jeunesse and other distributed
skin care products were $2,524,900 in the first half of 2008 versus
$2,382,900 for the comparable period of 2007, an increase of $142,000
or 6.0%. This sales increase was due primarily to the sales of
Moosehead men's grooming products and bath, body and hair care products
of Baylis & Harding, which were not sold during the first half of 2007
or only had nominal sales during that period, offset by a decrease in
Montagne Jeunesse skin care sales in the first half of 2008 versus the
first half of 2007. The first half of 2007 includes this product's
placement in additional stores.
Sales of household products for the first half of this year
accounted for 45.5% of consolidated net sales compared to 51.9% for
the same period in 2007. These products are comprised of Scott's Liquid
Gold wood care products (Scott's Liquid Gold for wood, a wood wash and
wood wipes), mold remediation products and Touch of Scent. During the
six months ended June 30, 2008 sales of household products were
$3,699,700 as compared to $4,241,700 for the same period in 2007, a
decrease of $542,000, or 12.8%. Sales of Scott's Liquid Gold wood care
products decreased by $91,400 in 2008 versus 2007. We believe this
reduction to be a result of a decrease in media advertising of our
products in the last two years. Mold Control 500 sales, which are
shown in the sales for Scott's Liquid Gold and other household products,
were $254,300 for the first half of 2008 versus $472,000 in the same
period of 2007. Sales of "Touch of Scent" were down by $232,900 or
39.7%, primarily due to a decrease in distribution in past quarters.
As sales of a consumer product decline, there is the risk that
retailers will stop carrying the product. The loss of any significant
customer for any skin care products, "Scott's Liquid Gold" wood care or
mold remediation products could have a significant adverse impact on our
revenues and operating results. We believe that our future success is
highly dependent on favorable acceptance in the marketplace of Montagne
Jeunesse products, of our new Alpha Hydrox products introduced in 2005
and 2007 and of our "Scott's Liquid Gold" wood care and mold remediation
products.
We also believe that the introduction of successful new products,
including line extensions of existing products such as the wood wash and
our new mold remediation product, using the name "Scott's Liquid Gold",
are important in our efforts to maintain or grow our revenue. Late in
the fourth quarter of 2007, we introduced new items within the
Moosehead men's grooming products and bath, body and hair care products
of Baylis & Harding. We regularly review possible additional products
to sell through distribution agreements or to manufacture ourselves.
To the extent that we manufacture a new product rather than purchase it
from external parties, we are also benefited by the use of existing
capacity in our facilities. We are using our facilities to fill and
package the mold control products. The actual introduction of
additional products, the timing of any additional introductions and
any revenues realized from new products is uncertain.
On a consolidated basis, cost of goods sold was $4,710,600 during
the first half of 2008 compared to $4,687,100 for the same period of
2007, an increase of $23,500 or 0.5%, on a sales decrease of 0.3%.
As a percentage of consolidated net sales, cost of goods sold was 57.9%
in 2008 versus 57.4% in 2007, an increase of about 0.5%. This was
essentially due to increased costs of steel cans and petroleum-based
raw materials and lower plant utilization, offset by a decrease in
sales promotion expenses, which are deducted from gross sales and thus
affected our margins particularly in the skin care line of products.
Operating Expenses, Interest Expense and Other Income
Six Months ended June 30,
---------------------------------------
Percentage
Increase
2008 2007 (Decrease)
----------- ----------- ----------
Operating Expenses
Advertising $ 208,200 $ 201,100 3.5%
Selling 2,661,100 2,634,400 1.0%
General & Administrative 1,529,800 1,582,900 (3.4%)
----------- ----------- ------
Total operating
expenses $ 4,399,100 $ 4,418,400 (0.4%)
=========== =========== ======
Interest Income $ 14,400 $ 43,800 (67.1%)
Interest Expense $ 205,200 $ 208,100 (1.4%)
Operating expenses, comprised primarily of advertising, selling
and general and administrative expenses, decreased $19,300 in the first
half of 2008, when compared to the first half of 2007. The various
components of operating expenses are discussed below.
Advertising expenses for the first six months of 2008 were $208,200
compared to $201,100 for the comparable period of 2007, an increase of
$7,100 or 3.5%.
Selling expenses for the first half of 2008 were $2,661,000
compared to $2,634,400 for the comparable six months of 2007, an increase
of $26,700 or 1.0%. That increase was comprised of an increase in
salaries, fringe benefits and related travel expense of $62,900 primarily
because of an increase in personnel in 2008 versus 2007, an increase in
freight and brokerage expenses of $34,400, offset by a decrease in
royalty fee expenses of $62,500 and a net decrease in other selling
expenses of $8,100.
General and administrative expenses for the first six months of
2008 were $1,529,800 compared to $1,582,900 for the comparable period
of 2007, a decrease of $53,100 or 3.4%. That decrease was primarily
attributable to a decrease in professional fees.
Interest expense for the first half of 2008 was $205,200 versus
$208,100 for the comparable period of 2007. Interest expense decreased
because of decreased borrowing levels. Interest income for the six
months ended June 30, 2008 was $14,400 compared to $43,800 for the same
period of 2007, which consists of interest earned on our cash reserves
in 2008 and 2007.
During the first half of 2008 and of 2007, expenditures for
research and development were not material (under 2% of revenues).
Three Months Ended June 30, 2008
Compared to Three Months Ended June 30, 2007
Comparative Net Sales
Three Months Ended June 30,
-----------------------------------------
Percentage
Increase
2008 2007 (Decrease)
----------- ----------- ----------
Scott's Liquid Gold and
other household products $ 1,792,700 $ 1,694,800 5.8%
Touch of Scent 174,700 241,400 (27.6%)
----------- ----------- ------
Total household
products 1,967,400 1,936,200 1.6%
----------- ----------- ------
Alpha Hydrox and
other skin care 932,700 681,000 37.0%
Montagne Jeunesse and other
distributed skin care 1,143,600 1,687,000 (32.2%)
----------- ----------- ------
Total skin care
products 2,076,300 2,368,000 (12.3%)
----------- ----------- ------
Total Net Sales $ 4,043,700 $ 4,304,200 (6.1%)
=========== =========== ======
Consolidated net sales for the second quarter of the current year
were $4,043,700 versus $4,304,200 for the comparable quarter of 2007, a
decrease of $260,500 or about 6.1%. Average selling prices for the
second quarter of 2008 were up by $25,100 over those of the comparable
period of 2007, prices of household products being up by $95,300, while
average selling prices of skin care products were down by $70,200.
Co-op advertising, marketing funds, slotting fees and coupon expenses
paid to retailers were subtracted from gross sales in accordance with
current accounting policies totaling $396,400 in the second quarter of
2008 versus $348,100 in the same period in 2007, an increase of $48,300
or about 13.9%. This increase consisted of an increase in coupon
expenses of $25,300, an increase in co-op advertising of $15,500, and
an increase in slotting of $7,500.
During the second quarter of 2008, net sales of skin care products
accounted for 51.3% of consolidated net sales compared to 55.0% for the
second quarter of 2007. Net sales of these products for those periods
were $2,076,300 in 2008 compared to $2,368,000 in 2007, a decrease of
$291,700 or about 12.3%. The reason for the increase in net sales of
Alpha Hydrox and other skin care products is explained in the discussion
above for the first half of 2008. Net sales of Montagne Jeunesse and
other distributed skin care products were approximately $1,143,600 in
the second quarter of 2008 compared to $1,687,000 in the second quarter
of 2007. This decrease was primarily a result of a decrease in
Montagne Jeunesse skin care skin care sales in the second quarter of
2008 versus the second quarter of 2007. The second quarter of 2007
included these products placement in additional stores, offset slightly
by sale of our Baylis and Harding line of products which were not in
stores in the second quarter of 2007.
Sales of household products for the second quarter of this year
accounted for 48.7% of consolidated net sales compared to 45.0% for the
same period of 2007. These products are comprised of Scott's Liquid
Gold wood care and mold remediation products, and "Touch of Scent", a
room air freshener. During the second quarter of 2008, sales of
household products were $1,967,400, as compared to sales of $1,936,200
for the same three months of 2007. Sales of Scott's Liquid Gold wood
care and other household products were up by $196,900, an increase of
13.7%. This increase was primarily due to an increase in Scott's Liquid
Gold Wood care products, a slight decrease in promotional costs in the
second quarter of 2008 versus the second quarter of 2007 (these costs
are deducted from gross sales to arrive at net sales) offset somewhat
by a decrease in sales of our Mold Control 500 product. Sales of "Touch
of Scent" were down by $99,000 or about 38.2% for the reasons stated
above in regard to the first half of 2008.
On a consolidated basis, cost of goods sold was $2,508,700 during
the second quarter of 2008 compared to $2,340,600 for the same period
of 2007, an increase of $168,100 or about 7.2%, on a sales decrease of
6.1%. As a percentage of consolidated net sales for the second quarter
of 2008, cost of goods sold was 62.0% compared to 54.4% in 2007, an
increase of 7.6%. This was essentially due to the increased costs of
steel cans and petroleum-based raw materials, lower plant utilization,
and an increase in sales and promotion expenses, which are deducted
from gross sales, and thus affected our margins particularly in the
skin care line of products.
Operating Expenses, Interest Expense and Other Income
Percentage
Increase
2008 2007 (Decrease)
----------- ----------- ----------
Operating Expenses
Advertising $ 97,000 $ 88,800 9.2%
Selling 1,320,800 1,379,000 (4.2%)
General & Administrative 729,800 768,800 (5.1%)
----------- ----------- ------
Total operating expenses $ 2,147,600 $ 2,236,600 (4.0%)
=========== =========== ======
Interest Income $ 5,900 $ 19,600 (69.9%)
Interest Expense $ 102,100 $ 104,200 (2.0%)
Operating expenses, comprised primarily of advertising, selling
and general and administrative expenses, decreased $89,000 in the second
quarter of 2008, when compared to the same period during 2007. The
various components of operating expenses are discussed below.
Advertising expenses for the second quarter of 2008 were $97,000
compared to $88,800 for the comparable quarter of 2007, an increase of
$8,800 or about 9.2%.
Selling expenses for the three months ended June 30, 2008 were
$1,320,800 compared to $1,379,000 for the comparable three months of
2007, a decrease of $58,200 or about 4.2%. That decrease was primarily
because of a decrease in royalty fee expenses of $27,500, a decrease in
promotional materials expense of $25,200 and a net decrease in other
selling expenses of $5,500.
General and administrative expenses for the second quarter of
2008 were $729,800 compared to $768,800 for the comparable period of
2007, a decrease of $39,000 or about 5.1%. That decrease was primarily
attributable to a decrease in professional fees and expenses of $56,700,
and a net increase in other general and administrative expenses of
$17,700.
Interest expense for the second quarter of 2008 was $102,100
versus $104,200 for the comparable period of 2007. Interest expense
decreased because of lower borrowing levels. Interest income for the
three months ended June 30, 2008 was $5,900 compared to $19,600 for
the same period of 2007.
During the second quarter of 2008 and of 2007, expenditures for
research and development were not material (under 2% of revenues).
Liquidity and Capital Resources
On June 28, 2006, we entered into a loan with a fifteen year
amortization with Citywide Banks for $5,156,600 secured by the land,
building and fixtures at our Denver, Colorado facilities. Interest on
the bank loan (5.0% at June 30, 2008) is at the prime rate as published
in The Wall Street Journal, adjusted annually each June. This loan
requires 180 monthly payments, currently of approximately $42,000, which
commenced on July 28, 2006. The loan agreement contains a number of
covenants, including the requirement for maintaining a current ratio of
at least 1:1 and a ratio of consolidated long-term debt to consolidated
net worth of not more than 1:1. We may not declare any dividends that
would result in a violation of either of these covenants. The foregoing
requirements were met at the end of the first half of 2008.
During the first half of 2008 our working capital decreased by
$965,800, and concomitantly, our current ratio (current assets divided
by current liabilities) decreased from 1.9:1 at December 31, 2007 to
1.6:1 at June 30, 2008. This decrease in working capital is attributable
to a net loss in the first half of 2008 of $1,163,000, and a reduction
in long-term debt of $100,300, offset by depreciation in excess of
capital additions of $303,200.
At June 30, 2008, trade accounts receivable were $948,800 versus
$1,004,900 at the end of 2007. Accounts payable increased from the end
of 2007 through June of 2008 by $139,200, primarily due to the timing of
purchases and payments. At June 30, 2008 inventories were $112,600 less
than at December 31, 2007. Prepaid expenses decreased from the end of
2007 by $66,300 primarily due to the expensing of prepaid promotional
expenses and reductions in the amount of deposits required on raw
material purchases.
We have no significant capital expenditures planned for the
remainder of 2008.
We expect that our available cash and cash flows from operating
activities may not fund the next twelve months' cash requirements,
ending June 30, 2009, unless one or more of the following takes place:
additional financing (which we are actively pursuing), the sale of
all or a portion of our real estate which we continue to have listed
with a real estate firm, improved revenues, and a reduction in our
fixed operating expenses.
Our dependence on operating cash flow means that risks involved
in our business can significantly affect our liquidity. Any loss of a
significant customer, any further decreases in distribution of our skin
care or household products, any new competitive products affecting
sales levels of our products, or any significant expense not included
in our internal budget could result in the need to raise cash. We have
no arrangements for any additional external financing of debt or equity,
and we are not certain whether any such financing would be available on
acceptable terms. In order to improve our operating cash flow, we need
to achieve profitability.
Forward-Looking Statements
This report may contain "forward-looking statements" within the
meaning of U.S. federal securities laws. These statements are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements and our
performance inherently involve risks and uncertainties that could cause
actual results to differ materially from the forward-looking statements.
Factors that would cause or contribute to such differences include, but
are not limited to, continued acceptance of each of our significant
products in the marketplace; the degree of success of any new product
or product line introduction by us; uncertainty of consumer acceptance
of the new Alpha Hydrox products introduced in 2005 and 2007, and Mold
Control 500 and wood wash products; competitive factors; any decrease in
distribution of (i.e., retail stores carrying) our significant products;
continuation of our distributorship agreement with Montagne Jeunesse;
the need for effective advertising of our products; limited resources
available for such advertising; new competitive products and/or
technological changes; dependence upon third party vendors and upon
sales to major customers; changes in the regulation of our products,
including applicable environmental regulations; continuing losses which
could affect our liquidity; the loss of any executive officer; and other
matters discussed in this Report. We undertake no obligation to revise
any forward-looking statements in order to reflect events or
circumstances that may arise after the date of this Report.
Item 3. Quantitative and Qualitative Disclosures About Market Risks.
Not Applicable
Item 4T. Controls and Procedures
Disclosure Controls and Procedures
As of June 30, 2008, we conducted an evaluation, under the
supervision and with the participation of the Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures. Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures are effective
as of June 30, 2008.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial
reporting during the quarter ended June 30, 2008 that has materially
affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
PART II OTHER INFORMATION
Item 1. Not Applicable
Item 2. Not Applicable.
Item 3. Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
On May 6, 2008, we held our 2008 Annual Meeting of
Shareholders. At that meeting, the seven existing directors were
nominated and re-elected as our directors. These seven persons
constitute all members of our Board of Directors. These directors and
the votes for and withheld for each of them were as follows:
For Withheld
--------- --------
Mark E. Goldstein 8,536,207 377,076
Jeffrey R. Hinkle 8,620,682 292,601
Jeffry B. Johnson 8,621,182 292,101
Dennis P. Passantino 8,620,457 292,826
Carl A. Bellini 8,659,732 253,551
Dennis H. Field 8,658,257 255,026
Gerald J. Laber 8,659,739 253,544
In addition, at our 2008 Annual Meeting of Shareholders, our
shareholders approved an amendment to the Scott's Liquid Gold-Inc.
2005 Incentive Stock Plan to increase the number of shares available
under the Plan as set forth in our Proxy Statement dated April 1,
2008. The votes at such meeting with respect to such amendment were
as follows:
For Against Abstain Broker Non-Votes
--------- --------- --------- ----------------
4,728,619 31,508 475,215 3,677,941
Item 5. Not Applicable
Item 6. Exhibits
31.1 Rule 13a-14(a) Certification of the Chief Executive
Officer
31.2 Rule 13a-14(a) Certification of the Chief Financial
Officer
32.1 Section 1350 Certification
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.
SCOTT'S LIQUID GOLD-INC.
August 14, 2008 BY: /s/ Mark E. Goldstein
Date --------------------------------------
Mark E. Goldstein
President and Chief Executive Officer
August 14, 2008 BY: /s/ Jeffry B. Johnson
Date --------------------------------------
Jeffry B. Johnson
Treasurer and Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Document
31.1 Rule 13a-14(a) Certification of the Chief Executive
Officer
31.2 Rule 13a-14(a) Certification of the Chief Financial
Officer
32.1 Section 1350 Certification