1.

We note the revised disclosure that you have provided in response, in part, to prior comment number 7.  However, this disclosure did provide the analysis that we requested and therefore we reissue prior comment number 7.  Please clarify how you have determined that your revenue is fixed or determinable and collectible upon shipment when shipments to end users are unknown to you, customers take deductions from the sales price when they pay you, and take deductions that they are not contractually entitled to take.

 

 

 

Company Response:

As a further clarification to our prior response, unauthorized deductions, or deductions that customers are not contractually entitled to take, of any meaningful amount are almost always paid back.   This rarely provides a complication in estimating our revenue and we will delete this reference from future disclosures.  In accordance with our telephone discussion, with regard to shipments to end users being unknown to us and customers taking deductions when they pay us,  while this is true, our estimates of offsets to revenue for future deductions are based on a wide range of experience and are monitored monthly.  As an example, we may have a contract to sell our product to a school system in Florida (end user) for $8/case.  We sell our product for $10/case to a distributor (customer who we invoice) who delivers to the school system and to other of its own customers.  When the distributor pays our invoice, which was at $10/case, the distributor will deduct $2/case and an additional agreed to amount from the amount of our invoice for the deliveries made to the school system.  While we do not estimate these deductions on an end user by end user basis or on a distributor by distributor basis, our estimate is based on  averages of  past deductions as a percentage of revenue adjusted for knowledge of any factors that may affect the percentage going forward.  Based upon this knowledge and our methodology discussed above, we believe our revenue recognition policies allow for appropriate revenue recognition.

2.

We note your revised disclosure in connection with prior comment number 8 does not provide a discussion of the key indicators of financial condition and operating performance that management uses to analyze the short and long-term condition and results of the business.  Therefore we reissue prior comment number 8 and request that you tell us the all the significant key variables that management uses to manage the business, both consolidated and by reportable segment.  Please explain how the significant key variables that management uses to manage the business are fully disclosed in your MD&A discussion.

 

 

       There is one key variable that management monitors to manage our business and that is sales. Related to sales is our placements of frozen beverage machines, which, because of their significant costs, is routinely monitored and has been added to our disclosures.    While there are other variables that are indicators of the company’s financial condition and operating performance such as gross margins, commodity costs and operating expenses, management does not  put particular emphasis on any of these other variables or costs.  We believe that management of every single aspect of our business with the same diligence is important to the success of our company.   We believe that our current disclosures express management’s views on the key variables as well as the other variables and costs mentioned above although we propose to modify our disclosures going forward as follows:

 

3.

Your response to prior comment number 13 states that you believe that the products sold within your Food Service, Retail Supermarket and Restaurant Group segments are similar products.  Please clarify how you determined that the various food and beverage products that you sell are similar in nature, and hence why you do not believe that revenue disclosure by product is necessary pursuant to FASB ASC Topic 280-10-50-40.

Company Response: