UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No 001-32440

READY MIX, INC.

(Exact name of registrant as specified in its charter)

Nevada		86-0830443
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

4602 East Thomas Road
Phoenix, Arizona 85018
(Address of principal executive offices)

(602) 957-2722
(Registrant’s telephone number, including area code)

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 þ No o

Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

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. (Check one):

Large accelerated filer o		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Number of shares outstanding of the registrant’s common stock as of November 13, 2009:

3,809,500 shares of Common Stock, $.001 par value per share

 

 

READY MIX, INC.
INDEX
REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2009

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets — As of September 30, 2009 (Unaudited) and December 31, 2008			3
Condensed Statements of Operations (Unaudited) — Nine months and three months ended September 30, 2009 and 2008 and Changes in Stockholders’ Equity (Unaudited)			4
Condensed Statements of Cash Flows (Unaudited) — Nine months ended September 30, 2009 and 2008			5
Notes to Condensed Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			17
Item 3. Quantitative and Qualitative Disclosure About Market Risk			26
Item 4. Controls and Procedures			26
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			27
Item 1A. Risk Factors			27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			29
Item 3. Defaults Upon Senior Securities			29
Item 4. Submission of Matters to a Vote of Security Holders			29
Item 5. Other Information			29
Item 6. Exhibits			29
EX-10.26
EX-10.27
EX-10.28
EX-10.29
EX-31.1
EX-31.2
EX-32

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

READY MIX, INC.

CONDENSED BALANCE SHEETS

		September 30,				December 31,
		2009				2008
		(Unaudited)
Assets:
Current assets:
Cash and cash equivalents		$	2,532,980			$	4,204,280
Accounts receivable, net			3,281,175				6,751,769
Inventory			1,568,236				1,411,761
Prepaid expenses			1,301,056				1,189,598
Due from affiliate			38,643				—
Income tax receivable			971,361				1,026,133
Deferred tax asset			725,553				696,892
Total current assets			10,419,004				15,280,433
Property and equipment, net			20,547,367				23,988,688
Refundable deposits			108,079				108,079
Deferred tax asset			244,515				—
Total assets		$	31,318,965			$	39,377,200
Liabilities and stockholders’ equity:
Current liabilities:
Accounts payable		$	1,901,248			$	2,329,620
Accrued liabilities			668,895				966,058
Notes payable			2,155,723				2,204,706
Due to affiliate			—				177,825
Total current liabilities			4,725,866				5,678,209
Notes payable, less current portion			4,698,746				6,041,731
Deferred tax liability			—				1,216,100
Total liabilities			9,424,612				12,936,040
Commitments and contingencies
Stockholders’ equity:
Preferred stock — $.001 par value; 5,000,000 shares authorized, none issued and outstanding			—				—
Common stock — $.001 par value; 15,000,000 shares authorized, 3,809,500 issued and outstanding			3,810				3,810
Additional paid-in capital			18,522,816				18,362,557
Retained earnings			3,367,727				8,074,793
Total stockholders’ equity			21,894,353				26,441,160
Total liabilities and stockholders’ equity		$	31,318,965			$	39,377,200

The accompanying notes are an integral part of these condensed financial statements.

READY MIX, INC.

CONDENSED STATEMENTS OF OPERATIONS AND
CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)

		Nine months ended								Three months ended
		September 30,								September 30,
		2009				2008				2009				2008
Revenue:
Revenue		$	21,612,547			$	48,683,689			$	6,155,232			$	16,088,023
Revenue — related parties			9,198				529,674				2,815				264,632
Total revenue			21,621,745				49,213,363				6,158,047				16,352,655
Cost of revenue			26,783,619				48,909,838				7,899,579				16,329,953
Gross profit (loss)			(5,161,874	)			303,525				(1,741,532	)			22,702
General and administrative expenses			2,479,637				3,128,390				710,430				1,037,471
Loss from operations			(7,641,511	)			(2,824,865	)			(2,451,962	)			(1,014,769	)
Other income (expense):
Interest income			11,492				135,834				2,244				31,136
Interest expense			(77,528	)			(81,983	)			(25,682	)			(27,094	)
Other income			539,839				74,873				345,144				61,431
			473,803				128,724				321,706				65,473
Loss before income taxes			(7,167,708	)			(2,696,141	)			(2,130,256	)			(949,296	)
Income tax benefit			2,460,642				970,611				747,908				341,747
Net loss		$	(4,707,066	)		$	(1,725,530	)		$	(1,382,348	)		$	(607,549	)
Basic net loss per common share		$	(1.24	)		$	(0.45	)		$	(0.36	)		$	(0.16	)
Diluted net loss per common share		$	(1.24	)		$	(0.45	)		$	(0.36	)		$	(0.16	)
Basic weighted average common shares outstanding			3,809,500				3,809,500				3,809,500				3,809,500
Diluted weighted average common shares outstanding			3,809,500				3,809,500				3,809,500				3,809,500

		Common Stock
		Number of								Additional
		Shares								Paid-in				Retained
		Outstanding				Amount				Capital				Earnings
Balance at January 1, 2009			3,809,500			$	3,810			$	18,362,557			$	8,074,793
Stock based compensation expense											160,259
Net loss for the nine months ended September 30, 2009															(4,707,066	)
Balance at September 30, 2009			3,809,500			$	3,810			$	18,522,816			$	3,367,727

The accompanying notes are an integral part of these condensed financial statements.

READY MIX, INC.

CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)

		Nine months ended
		September 30,
		2009				2008
Increase (decrease) in cash and cash equivalents:
Cash flows from operating activities:
Cash received from customers		$	25,790,005			$	47,959,943
Cash paid to suppliers and employees			(26,965,140	)			(49,478,620	)
Taxes paid			—				(11,091	)
Taxes refunded			1,026,138				—
Interest received			11,492				135,834
Interest paid			(77,528	)			(81,983	)
Net cash used in operating activities			(215,033	)			(1,475,917	)
Cash flows from investing activities:
Purchase of property and equipment			(44,114	)			(748,442	)
Cash received from sale of equipment			362,883				111,726
Net cash provided by (used in) investing activities			318,769				(636,716	)
Cash flows from financing activities:
Received from (repayment of) due to affiliate			(216,468	)			64,563
Proceeds from notes payable			—				990,676
Repayment of notes payable			(1,558,568	)			(2,463,052	)
Repayment of capital lease obligations			—				(4,634	)
Net cash used in financing activities			(1,775,036	)			(1,412,447	)
Net decrease in cash and cash equivalents			(1,671,300	)			(3,525,080	)
Cash and cash equivalents at beginning of period			4,204,280				9,157,868
Cash and cash equivalents at end of period		$	2,532,980			$	5,632,788
Reconciliation of net loss to net cash used in operating activities:
Net loss		$	(4,707,066	)		$	(1,725,530	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			3,395,106				3,529,821
(Gain) loss on sale of equipment			(272,554	)			126,099
Deferred taxes, net			(1,489,276	)			(30,345	)
Stock-based compensation expense			160,259				143,836
Provision for doubtful accounts			(430,381	)			130,332
Changes in operating assets and liabilities:
Accounts receivable			3,900,975				(1,454,391	)
Prepaid expenses			55,142				250,524
Inventory			(156,475	)			(535,373	)
Income tax receivable/payable			54,772				(951,357	)
Refundable deposits			—				31,772
Accounts payable			(428,372	)			(550,218	)
Accrued liabilities			(297,163	)			(441,087	)
Net cash used in operating activities		$	(215,033	)		$	(1,475,917	)

The accompanying notes are an integral part of these condensed financial statements.

READY MIX, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies and Use of Estimates:

     Presentation of Interim Information:

          The condensed financial statements included herein have been prepared by Ready Mix, Inc. (“we,” “us,” “our” or the “Company”) without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) and should be read in conjunction with our December 31, 2008 annual report on Form 10-K. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted, as permitted by the SEC, although we believe the disclosures, that are made are adequate to make the information presented not misleading. Further, the condensed financial statements reflect, in the opinion of management, all normal recurring adjustments necessary to present fairly our financial position at September 30, 2009, and the results of our operations and cash flows for the periods presented. The December 31, 2008 balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.

     Seasonal Variations:

          Interim results are subject to significant seasonal variations and the results of operations for the nine months ended September 30, 2009 are not necessarily indicative of the results to be expected for the full year.

     Nature of Corporation:

          The Company was organized under the laws of the State of Nevada on June 21, 1996. The principal business purpose of the Company is to manufacture and distribute ready-mix concrete. The Company targets prospective customers such as concrete subcontractors, prime contractors, homebuilders, commercial and industrial property developers and homeowners in the states of Nevada and Arizona. The Company began operations in March 1997 and is 69% owned by Meadow Valley Parent Corp (“Parent”).

     Accounting Estimates:

          The preparation of financial statements in conformity with GAAP 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 revenue and expenses during the reporting period. Actual results could materially differ from those estimates.

          Significant estimates are used when accounting for the allowance for doubtful accounts, depreciation and amortization, accruals, taxes, contingencies and the valuation of stock options, which are discussed in the respective notes to the condensed financial statements.

     Revenue Recognition:

          We recognize revenue on the sale of our concrete and aggregate products at the time of delivery and acceptance and only when all of the following have occurred:

	•		The contract has been evidenced by the customer’s signature on the delivery ticket;
	•		A price per unit has been determined; and
	•		Collectibility has been reasonably assured either by credit authorization of the customer or by COD terms.

          Large orders requiring multiple deliveries and spanning more than one day are invoiced daily for the deliveries on that day.

     Loss per Share:

          The earnings (loss) per share accounting guidance provides for the calculation of basic and diluted earnings (loss) per share. Basic earnings (loss) per share includes no dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflect the potential dilution of securities that could share in the earnings or losses of an entity. Dilutive securities are not included in the weighted average number of shares when inclusion would be anti-dilutive.

READY MIX, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies and Use of Estimates (Continued):

     Stock-Based Compensation:

          The Company accounts for stock-based compensation according to the fair value recognition provisions of the stock-based compensation accounting guidance. The Company recognizes expected tax benefits related to employee stock-based compensation as awards are granted and the incremental tax benefit or liability when related awards are deductible. The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award, which is typically three years.

          We estimate fair value using the Black-Scholes valuation model. Assumptions used to estimate compensation expense are determined as follows:

	•		Expected term is generally determined using an average of the contractual term and vesting period of the award and in some cases the contractual term is used;
	•		Expected volatility is measured using the average of historical daily changes in the market price of the Company’s common stock since the Company’s initial public offering;
	•		Risk-free interest rate is equivalent to the implied yield on zero-coupon U.S. Treasury bonds with a remaining maturity equal to the expected term of the awards; and
	•		Forfeitures are based on the history of cancellations of similar awards granted by the Company and management’s analysis of potential forfeitures.

     Fair Value of Financial Instruments:

          The carrying amounts of financial instruments including cash, certain current maturities of long-term debt, accrued liabilities and long-term debt approximate fair value because of their short maturities or for long term debt based on borrowing rates currently available to the Company for loans with similar terms and maturities.

          The balance of due from affiliate (due to affiliate) as of September 30, 2009 and December 31, 2008 was $38,643 and ($177,825), respectively. During the quarter ended September 30, 2009 and the year ended December 31, 2008, no interest was paid as the balance due to or from affiliate was paid monthly. Each current month-end balance is repaid in the following month for expenditures incurred by the affiliate on behalf of the Company or sales made to the affiliate.

          The carrying amount of long-term debt approximates fair value as the interest rates on these instruments approximate the rates at which the Company could borrow at September 30, 2009 and December 31, 2008.

     Recent Accounting Pronouncements

          In April 2009, the FASB issued the following authoritative guidance intended to provide additional application guidance and enhance disclosures regarding fair value measurements and impairments of securities:

	•		Guidance in determining fair value when volume and level of activity for assets or liabilities have decreased significantly and identifying transactions that are not orderly provides additional guidance for estimating fair value when volume and level of activity for assets or liabilities have decreased significantly. This guidance also provides for identifying circumstances that indicate a transaction is not orderly. These provisions became effective for the Company’s interim period ended June 30, 2009 and did not affect the Company’s financial position and results of operations.
	•		Guidance surrounding interim disclosures about fair value of financial instruments requires disclosures about fair value of financial instruments in interim reporting periods of publicly traded companies that were previously only required to be disclosed in annual financial statements. The provisions of this disclosure-only guidance became effective for the Company’s interim period ended June 30, 2009 and did not affect the Company’s financial position and results of operations.

READY MIX, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies and Use of Estimates (Continued):

     Recent Accounting Pronouncements (Continued):

•

Guidance in determining recognition and presentation of other-than-temporary impairments amends current other-than-temporary impairment guidance in GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in financial statements. This guidance does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. This guidance became effective for the Company’s interim period ended June 30, 2009 and did not affect the Company’s financial position and results of operations.

          In May 2009, the FASB issued authoritative guidance intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. It requires disclosure of the date through which an entity has evaluated subsequent events and the basis for selecting that date, that is, whether that date represents the date the financial statements were issued or were available to be issued. This guidance became effective for the Company’s interim period ended June 30, 2009. The Company has evaluated subsequent events through November 13, 2009, which is the date the financial statements were issued.

          In June 2009, the FASB issued authoritative guidance surrounding accounting for transfers of financial assets. This guidance removes the concept of a qualifying special-purpose entity arising from existing guidance determining accounting for transfers and servicing of financial assets and extinguishments of liabilities and removes the exception from additional existing guidance. This guidance also clarifies the requirements for isolation and limitations on portions of financial assets that are eligible for sale accounting. This guidance is effective for the Company’s fiscal year beginning January 1, 2010. The Company is currently evaluating the impact of this guidance on the Company’s financial statements.

          In June 2009, the FASB issued authoritative guidance changing how a reporting company determines when an entity that is insufficiently capitalized or is not controlled through voting should be consolidated. The guidance requires a number of new disclosures about a reporting company’s involvement with variable interest entities, any significant changes in risk exposure due to that involvement and how that involvement affects the reporting company’s financial statements. This guidance is effective beginning January 1, 2010. As this guidance amends provisions surrounding the consolidation of reporting companies’ financial statements, it’s adoption is not expected to affect the Company’s financial position and results of operations.

          In June 2009, the FASB established the FASB Accounting Standards Codification^TM (the “Codification”) as the single source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The Codification did not have a material impact on the Company’s financial statements upon its adoption. Accordingly, the Company’s notes to its financial statements explain accounting concepts rather than cite specific GAAP standards.

READY MIX, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

2. Stock-Based Compensation:

          The Company accounts for stock-based compensation utilizing the fair value recognition provisions stock-based compensation accounting guidance. The Company recognizes expected tax benefits related to employee stock-based compensation as awards are granted and the incremental tax benefit or liability when related awards are deductible.

          As of September 30, 2009, the Company has the following stock-based compensation plan:

     Equity Incentive Plan:

          In 2005, the Company adopted the 2005 Equity Incentive Plan (the “2005 Plan”). The 2005 Plan permits the granting of up to 675,000 shares of the Company’s common stock in any or all of the following types of awards: (1) incentive and nonqualified stock options, (2) stock appreciation rights, (3) stock awards, restricted stock and stock units, and (4) other stock or cash-based awards. In connection with any award or any deferred award, payments may also be made representing dividends or their equivalent.

          As of September 30, 2009, the Company had reserved 673,000 shares of its common stock for issuance under the 2005 Plan. Shares of common stock covered by an award granted under the 2005 Plan will not be counted as used unless and until they are actually issued and delivered to a participant. As of September 30, 2009, 120,625 shares were available for future grant under the 2005 Plan. The term of the stock options granted under the 2005 Plan is five years and they typically may be exercised after issuance as follows: 33.3% after one year of continuous service, 66.6% after two years of continuous service and 100% after three years of continuous service. The exercise price of each option is equal to the closing market price of the Company’s common stock on the date of grant. The board of directors has full discretion to modify these terms on a grant by grant basis.

          The Company uses the Black Scholes option pricing model to estimate fair value of stock-based awards with the following assumptions for the indicated periods:

		Awards granted during the nine				Awards granted prior to
		months ended September 30, 2009				January 1, 2009
Dividend yield			0	%			0	%
Expected volatility			63.4% - 66.4	%			21.4% - 39.1	%
Weighted-average volatility			64.96	%			27.47	%
Risk-free interest rate			1.99	%			3.00% - 5.00	%
Expected life of options (in years)			3-5				3-5
Weighted-average grant-date fair value		$	1.15			$	2.53

          During the nine months ended September 30, 2009, options to purchase an aggregate of 215,000 shares of the Company’s common stock were granted to Company employees and outside directors. The following table summarizes additional stock option activity during the nine months ended September 30, 2009:

										Weighted Average
						Weighted Average				Remaining				Aggregate				Aggregate
						Exercise Price				Contractual				Fair				Intrinsic
		Shares				per Share				Term (1)				Value				Value (2)
Outstanding January 1, 2009			379,125			$	10.76				1.88			$	967,716
Granted			215,000				2.13								246,200
Exercised			—				—								—				—
Forfeited or expired			(31,750	)			7.98								(67,513	)
Outstanding September 30, 2009			562,375			$	7.62				2.34			$	1,146,403			$	323,900
Exercisable September 30, 2009			360,703			$	10.07				1.33			$	844,886			$	77,800

READY MIX, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

2. Stock-Based Compensation (Continued):

          A summary of the status of the Company’s nonvested shares as of September 30, 2009 and changes during the nine months ended September 30, 2009 is presented below:

						Weighted Average
						Grant-Date
		Shares				Fair Value
Nonvested stock options at January 1, 2009			33,333			$	3.33
Granted			215,000				1.15
Vested			(33,334	)			1.34
Forfeited			(13,327	)			1.68
Nonvested stock options at September 30, 2009			201,672			$	1.44

          The following table summarizes various information regarding award grants, exercises and vested options to purchase the Company’s shares of common stock for the nine months ended September 30, 2009 and 2008:

		2009				2008
Number of options to purchase shares granted			215,000				20,000
Weighted-average grant-date fair value		$	1.15			$	2.31
Number of options to purchase shares exercised			—				—
Aggregate intrinsic value of options exercised		$	—			$	—
Number of options to purchase shares vested			33,334				91,458
Aggregate fair value of options vested		$	44,602			$	185,543

          During the nine months ended September 30, 2009 and 2008, the Company recognized compensation expense of $160,259 and $143,836, respectively, and a tax benefit of $28,660 and $30,345, respectively, related to grants of options to purchase shares of the Company’s common stock. As of September 30, 2009, there was $185,640 of total unrecognized compensation cost. That cost is expected to be recognized over the weighted average period of 2.27 years. During the nine months ended September 30, 2009, options to purchase 31,750 shares of the Company’s common stock were forfeited, with a weighted average fair value per share of $2.13 at the date of grant, or a total fair value of $67,513.

3. Statement of Cash Flows:

     Non-Cash Investing and Financing Activities:

          The Company recognized investing and financing activities that affected assets and liabilities, but did not result in cash receipts or payments. These non-cash activities are as follows:

          During the nine months ended September 30, 2009 and 2008, the Company financed the purchase of property, equipment and insurance policies in the amounts of $166,600 and $1,380,450, respectively.

          During the nine months ended September 30, 2009 and 2008, the Company incurred $160,259 and $143,836, respectively, in stock-based compensation expense associated with stock option grants to employees and directors.

READY MIX, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

4. Notes Payable:

          Notes payable consists of the following:

		September 30,				December 31,
		2009				2008
7.99% note payable, with monthly principal payments of $14,362 plus interest, due March 25, 2011, collateralized by equipment		$	287,238			$	387,771
8.14% note payable, with monthly principal payments of $30,470 plus interest, due March 28, 2011, collateralized by equipment			609,408				822,701
8.45% notes payable, with combined monthly principal payments of $26,182 plus interest, due June 28, 2011, collateralized by equipment			602,198				785,475
7.46% note payable, with a monthly payment of $13,867, due May 26, 2021, collateralized by a building and land			1,292,209				1,343,188
7.90% note payable, with monthly principal payments of $10,774 plus interest, due November 30, 2011, collateralized by equipment			312,454				377,100
7.04% note payable, with monthly principal payments of $4,496 plus interest, due September 30, 2009, collateralized by equipment			13,489				40,467
7.13% note payable, with monthly principal payments of $34,966 plus interest, due February 28, 2013, collateralized by equipment			1,538,523				1,748,322
7.13% note payable, with monthly principal payments of $5,375 plus interest, due February 28, 2012, collateralized by equipment			172,011				204,263
7.35% note payable, with monthly principal payments of $2,793 plus interest, due September 28, 2012, collateralized by equipment			106,122				125,671
6.25% notes payable, with combined monthly principal payments of $5,705 plus interest, due January 28, 2012, collateralized by equipment			171,160				211,097
5.39% note payable, with monthly principal payments of $2,695 plus interest, due March 21, 2012, collateralized by equipment			86,244				105,110
		$	5,191,056			$	6,151,165

READY MIX, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

4. Notes Payable (Continued):

          Notes payable consists of the following (Continued):

		September 30,				December 31,
		2009				2008
Total from previous page		$	5,191,056			$	6,151,165
5.65% note payable, with monthly principal payments of $11,440 plus interest, due April 18, 2013, collateralized by equipment			514,820				594,903
6.25% note payable, with monthly principal payments of $5,448 plus interest, due June 26, 2011, collateralized by equipment			130,744				163,430
6.80% notes payable, with combined monthly principal payments of $9,782 plus interest, due June 26, 2013 and June 26, 2014, collateralized by equipment			567,978				626,669
6.99% note payable, with monthly principal payments of $2,420 plus interest, due November 30, 2013, collateralized by equipment			128,270				142,791
6.99% notes payable, with combined monthly principal payments of $4,778 plus interest, due December 29, 2013, collateralized by equipment			258,038				317,479
4.60% note payable, with a monthly payment of $21,348, due December 28, 2009, collateralized by the Company’s umbrella insurance policy			63,563				—
Line of credit, variable interest rate was 3.50% at December 31, 2008, interest only payments until December 31, 2008, 36 equal monthly principal payments plus interest therafter, collateralized by all of the Company’s assets			—				250,000
			6,854,469				8,246,437
Less: current portion			(2,155,723	)			(2,204,706	)
		$	4,698,746			$	6,041,731

          Following are maturities of long-term debt as of September 30, 2009 for each of the following years:

2010		$	2,155,723
2011			1,878,743
2012			1,036,368
2013			676,894
2014			236,627
Subsequent to 2014			870,114
		$	6,854,469

          The majority of the Company’s notes payable are payable to the Company’s capital expenditure commitment lender, Wells Fargo Equipment Finance, Inc. (“WFE”). Effective February 2, 2009, the Company amended its master security agreement with WFE to remove guaranties from Meadow Valley Corporation and Meadow Valley Contractors, Inc. In connection with the release of the guaranties, the Company added certain financial covenants and prepayment provisions.

READY MIX, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

4. Notes Payable (Continued):

          Listed below are the covenants required to be maintained by the Company for the quarter ended September 30, 2009 and thereafter under the WFE agreement:

		September 30, 2009
		Minimum /
(amounts in thousands)		Maximum				Actual
Leverage (1)			1.50 to 1.0				.49 to 1.0
Fixed charge coverage ratio (2)			.65 to 1.0			-.64 to 1.0
Available cash minimum (3)			750,000				2,532,980
Dividends paid (4)			—				—
Management fee agreement (5)			22,000				22,000
Change of control (6)
Sale or assignment of real estate (7)

          The Company’s amended WFE agreement also calls for a prepayment penalty. The prepayment penalty is calculated on any prepaid principal balances paid prior to their scheduled due date. The prepayment penalty is as follows:

		On or before				After				After				After
		December 31,
		2009				2009				2010				2011
Prepayment penalty			6.00	%			5.00	%			3.00	%			2.00	%

          If the Company prepays any amounts due under its separate lease agreement with WFE on or before January 1, 2011, the Company must pay all remaining rents and all purchase option amounts contained in the lease agreement.

READY MIX, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

4. Notes Payable (Continued):

     As of June 30, 2009 and September 30, 2009, the Company was not in compliance with the fixed charge coverage ratio. The Company and WFE have amended the agreements to: (1) include a waiver of the fixed charge coverage ratio covenant requirement for the quarters ending June 30, 2009 and September 30, 2009; (2) have WFE accept payments of interest only for four months, which will defer the Company’s payment of approximately $695,000 in principal during such period; (3) require the Company to provide approximately an additional $750,000 in collateral to secure the deferred principal; (4) require the Company to pay WFE a $8,500 consent fee; and (5) require the Company to pay WFE 35% of proceeds in excess of related loans and costs if the Company were to sell its headquarters building and the real estate on which it is located. The Company will be in default of this covenant again for the quarter ending December 31, 2009. If the Company is not able to obtain another waiver and amendment from WFE, the WFE loan could become immediately due and payable and WFE could proceed against the Company’s equipment securing the loan. If WFE were to accelerate the payment requirements, the Company would not have sufficient liquidity to pay off the related debt and there would be a material adverse effect on the Company’s financial condition and results of operations. Further, if the Company were not able to refinance the debt and WFE seized the Company’s equipment, the Company may not be able to continue as a going concern.

     The Company also has a covenant requirement with its lender National Bank of Arizona (“NBA”). The NBA loan is secured by the Company’s headquarters building in Phoenix, Arizona. The covenant requirement is a minimum adjusted earnings before interest, taxes, depreciation and amortization expense debt coverage ratio evaluated at year end. By letter received on August 10, 2009, NBA alleged that the minimum covenant requirement is 1.25 to 1.0 for the year end December 31, 2008 and that the Company is out of compliance with a ratio of .80 to 1.0. The Company has made all payments timely, is currently in discussions with NBA and expects to obtain a waiver of the covenant requirement and amend the loan agreement. Although these discussions are ongoing and the Company and NBA have agreed in principle to basic terms that would accomplish the foregoing, there can be no assurance that the Company will be able to obtain an amendment or waiver from NBA. If the Company is not able to do so, the $1.3 million note payable that is currently outstanding to NBA could become immediately due and payable and NBA could proceed against collateral granted to it to secure that debt if the Company were not able to repay it. If NBA accelerates the payment requirements, the Company may not have sufficient liquidity to pay off the related debt and there could be a material adverse effect on the Company’s financial condition and results of operations.

     Since the Company has obtained a waiver through September 30, 2009 related to the WFE covenant violation and the Company believes that it has reached an agreement of waiver related to the NBA notice of covenant violation there has been no acceleration of debt as of September 30, 2009 in the accompanying financial statements.

5. Line of Credit:

     The Company’s revolving loan agreement, which provided a $5.0 million revolving credit facility, as well as a $15.0 million capital expenditure commitment, expired December 31, 2008. On February 2, 2009, the Company repaid the outstanding principal of $.25 million on the revolving credit facility. The capital expenditure commitment remains outstanding and as of September 30, 2009, the Company has drawn the principal amount of $5.6 million on such commitment. In addition, effective February 2, 2009, the Company amended the master security agreement to remove the guaranties from the Company’s parent and another affiliate. See Note 4 — Notes Payable above.

6. Commitments:

     During the nine months ended September 30, 2009, the Company entered into a new office equipment lease commitment that involved the payoff of a separate lease agreement for the same type of office equipment. The new lease is for 60 months and the minimum amount of future lease payments is approximately $400 per month or $24,000 over the entire lease term.

READY MIX, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

6. Commitments (Continued):

     The Company has agreed to indemnify its officers and directors for certain events or occurrences that may arise as a result of the officer or director serving in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. However, the Company has a directors and officers’ liability insurance policy that enables it to recover a portion of any future amounts paid up to $10 million. As a result of its insurance policy coverage and that there is no current or expected litigation against its officers and directors, the Company believes the estimated fair value of these indemnification agreements is minimal. Accordingly, the Company has no liabilities recorded for these agreements as of September 30, 2009.

     The Company enters into indemnification provisions under its agreements with other companies in its ordinary course of business, typically with business partners, customers, landlords, lenders and lessors. Under these provisions the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of the Company’s activities or, in some cases, as a result of the indemnified party’s activities under the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is unlimited. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the estimated fair value of these agreements is minimal. Accordingly, the Company has no liabilities recorded for these agreements as of September 30, 2009.

     The Company is, from time to time, involved in legal proceedings arising in the normal course of business. During the quarter ended September 30, 2009, the Company was not involved in any material legal proceedings.

7. Loss per Share:

     The earnings (loss) per share accounting guidance provides for the calculation of basic and diluted earnings (loss) per share. Basic earnings (loss) per share includes no dilution and is computed by dividing earnings or losses available to common stockholders by the weighted average number of common shares outstanding for the period.

     Diluted earnings or losses per share reflects the potential dilution of securities that could share in the earnings or losses of an entity, as set forth below:

		Nine months ended								Three months ended
		September 30,								September 30,
		2009				2008				2009				2008
Weighted average common shares outstanding			3,809,500				3,809,500				3,809,500				3,809,500
Dilutive effect of:
Stock options and warrants			—				—				—				—
Weighted average common shares outstanding assuming dilution			3,809,500				3,809,500				3,809,500				3,809,500

     All dilutive common stock equivalents are reflected in our loss per share calculations. Anti-dilutive common stock equivalents are not included in our loss per share calculations. For the nine months and three months ended September 30, 2009, the Company had outstanding options to purchase 562,375 shares of common stock at a range of $1.99 to $12.85 per share, which were not included in the loss per share calculation as they were anti-dilutive. In addition, the Company did not include warrants to purchase 116,250 shares of common stock at a price of $13.20 per share in the loss per share calculation as they were anti-dilutive.

READY MIX, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

7. Loss per Share (Continued):

     For the nine months and three months ended September 30, 2008, the Company had outstanding options to purchase 379,125 shares of common stock at a range of $6.40 to $12.85 per share which were not included in the loss per share calculation as they were anti-dilutive. In addition, the Company did not include warrants to purchase 116,250 shares of common stock at a price of $13.20 per share in the loss per share calculation as they were anti-dilutive.

8. Income Taxes:

     The Company’s effective tax rate is based on expected income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which it operates. In accordance with the accounting guidance surrounding interim financial reporting, the Company estimates the annual tax rate based on projected taxable income for the full year and records a quarterly income tax provision in accordance with the anticipated annual rate. As the year progresses, the Company refines the estimates of the year’s taxable income as new information becomes available, including year-to-date financial results. This continual estimation process can result in a change to the expected effective tax rate for the year. When this occurs, the Company adjusts the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected annual tax rate. Significant judgment is required in determining the Company’s effective tax rate and in evaluating the Company’s tax positions.

     The effective income tax rate of approximately 34% and 36%, respectively, for the nine months ended September 30, 2009 and 2008 differed from the statutory rate, due primarily to state income taxes and non-deductible stock-based compensation expense associated with employee incentive stock options.

9. Subsequent Events:

     The Company has evaluated subsequent events through November 13, 2009, which is the date the financial statements were issued.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statement Disclosure

     This Quarterly Report on Form 10-Q (“Form 10-Q”) and the documents we incorporate by reference herein include forward-looking statements. All statements other than statements of historical facts contained in this Form 10-Q and the documents we incorporate by reference, including statements regarding our future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements within the meaning of the “safe harbor” provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs.

     These forward-looking statements are subject to a number of risks, uncertainties and assumptions described in “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008, and any changes thereto in Part II. Item 1A. “Risk Factors” of this Form 10-Q. In addition, our past results of operations do not necessarily indicate our future results. Moreover, the ready-mix concrete business is very competitive and rapidly changing. New risk factors emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any risk factor, or combination of risk factors, may cause actual results to differ materially from those contained in any forward-looking statements. These factors include, among others, the risks associated with:

	•		the current economic environment and our continuing operating losses;
	•		further declines in industry volume, due to the continued housing crisis, the deepening recession and other factors;
	•		continued or increased price competition resulting from industry overcapacity;
	•		inability to implement our plans to further reduce structural costs and increase liquidity;
	•		ability to achieve the level of cost reductions required to sustain cost competiveness in our market;
	•		we will be in default of a financial covenant in our loan agreement with WFE for the quarter ending December 31, 2009;
	•		whether we will be able to obtain a waiver of such covenant and amend our loan agreement with WFE, and the possible acceleration of the loan and seizure of our equipment if we able not able to do so;
	•		our alleged default of a financial covenant in our agreement with National Bank of Arizona;
	•		whether we will be able to obtain a waiver of such covenant and amend our loan agreement with National Bank of Arizona, and the possible acceleration of the loan and seizure of our headquarters building if we are not able to do so;
	•		our possible inability to continue as a going concern if we are not able to obtain a waiver of the financial covenant from WFE or refinance the obligations owed to WFE;
	•		whether our Board’s evaluation of strategic alternatives will result in the Company pursuing any particular transaction, or, if it pursues any such transaction, whether it will be completed; and,
	•		other unanticipated events and conditions that may hinder our ability to compete.

     Except as otherwise required by applicable laws, we undertake no obligation to publicly update or revise any forward-looking statements or the risk factors described in this Form 10-Q or in the documents we incorporate by reference, whether as a result of new information, future events, changed circumstances or any other reason after the date of this Form 10-Q. You should not rely upon forward-looking statements as predictions of future events or performance. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

General

     The following is management’s discussion and analysis of certain significant factors affecting the Company’s financial position and operating results during the periods included in the accompanying condensed financial statements. Except for the historical information contained herein, the matters set forth in this discussion and analysis are forward-looking statements.

     We concentrate on supplying rock, sand and ready-mix concrete to our customers in the Las Vegas, Nevada and Phoenix, Arizona metropolitan areas. From our rock quarry, located approximately 50 miles northeast of Las Vegas in Moapa, Nevada, and our Lee Canyon pit located about 20 miles northwest of Las Vegas, we supply rock and sand to outside customers and for our own Las Vegas area ready-mix plants. The coarse aggregate and sand produced at the Moapa Quarry and the Lee Canyon Pit supply substantially all of the rock and sand needs for our Nevada operations. In the Phoenix metropolitan area, all of our ready-mix plants are currently supplied rock and sand from third parties.

Overview

     Recently, growth in the gross domestic product has been widely reported. Unfortunately, our market has yet to show much improvement. Diminishing rates of decline in construction activity indicators appear to be the sole encouraging sign in a market where demand for our product has decreased further and average unit selling prices continue to fall. Notwithstanding fewer units sold at a lower average sales price, our efforts to manage costs were evident as third quarter losses slowed when compared to the first two quarters of this year.

     Residential construction is a key indicator of demand for ready-mix concrete. For any given period of time, we measure construction activity in the residential sector by the number of single family housing permits issued and the number of new home sales closed. For the quarter ended September 30, 2009, single family housing permits in our market decreased 25% and new home closings decreased 57% from the same period one year ago. For the first nine months of this year compared to last year, single family housing permits decreased 48% while new home closings decreased by 55%.

     We believe that non-residential construction will lag the residential sector and we expect no improvement in demand of ready-mix concrete from non-residential construction activity for the foreseeable future. We expect that our market will experience a slower and more gradual emergence from the current cycle than has been historically experienced. Meanwhile, construction spending associated with the American Recovery and Reinvestment Act of 2009 has provided negligible relief for the construction industry and has not resulted in any significant demand for ready-mix concrete.

     We have identified and begun to implement additional initiatives to further reduce costs that we believe will decrease the operating losses we are experiencing. We realize the urgent need to bring our operations into a neutral cash flow position and are striving to do so. This need is particularly urgent given that we will be in default of a financial covenant in our loan agreement with WFE for the quarter ending December 31, 2009. If we are not able to obtain another waiver and amendment from WFE, the WFE loan could become immediately due and payable and WFE could proceed against our equipment securing the loan. If WFE were to accelerate the payment requirements, we would not have sufficient liquidity to pay off the related debt and there would be a material adverse effect on our financial condition and results of operations. Further, if we were not able to refinance the debt and WFE seized our equipment, we may not be able to continue as a going concern.

     As announced on June 17, 2009, we engaged the services of Lincoln International LLC to evaluate and advise the Board of Directors regarding strategic alternatives to enhance shareholder value, including the potential sale of the Company. The implementation of any strategic alternative would be subject to, among other things, the results of the Board’s evaluation of strategic alternatives, our ability to obtain Board and stockholder approvals of any proposed transaction, and customary conditions to the closing of any proposed transaction. Accordingly, we cannot assure you that the review of strategic alternatives will result in the Company pursuing any particular transaction, or, if it pursues any such transaction, that it will be completed. We do not expect to make further public comment regarding the review until the Board of Directors has approved a specific transaction or otherwise deems disclosure of significant developments is appropriate.

Critical Accounting Policies, Estimates and Judgments

     Significant accounting policies are described in the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2008. We believe our most critical accounting policies are the collectability of accounts receivable, the valuation of property and equipment, estimating income taxes, classification of leases and the valuation of stock-based compensation.

     We are required to estimate the collectability of our accounts receivable. A considerable amount of judgment is required in assessing the realization of these receivables, including the current credit worthiness of each customer and the related aging of the past due balances. Our provision for bad debt at September 30, 2009 and December 31, 2008 amounted to $779,866 and $1,210,247, respectively. We determine our reserve by using percentages, derived from our collection history, applied to certain types of revenue generated, as well as a review of the individual accounts outstanding. The decrease in the provision for bad debt for the nine months ended September 30, 2009 represented the write off of one large customer balance determined completely uncollectible during the nine months ended September 30, 2009. Should our estimate for the provision of bad debt not be sufficient to allow for the write off of future bad debt we will incur additional bad debt expense, thereby reducing net income in a future period. If, on the other hand, we determine in the future that we have over estimated our provision for bad debt we will reduce bad debt expense, thereby increasing net income in a future period. Furthermore, if one or more major customers fail to pay us, it would significantly affect our current results as well as future estimates. We pursue our lien rights to minimize our exposure to delinquent accounts.

     We are required to provide property and equipment, net of depreciation and amortization expense. We expense depreciation and amortization utilizing the straight-line method over what we believe to be the estimated useful lives of the assets. Leasehold improvements are amortized over their estimated useful lives or the lease term, whichever is shorter. The life of any piece of equipment can vary, even within the same category of equipment, due to the quality of the maintenance, care provided by the operator and general environmental conditions, such as temperature, weather severity and the terrain in which the equipment operates. We maintain, service and repair a majority of our equipment through the use of our mechanics. If we inaccurately estimate the life of any given piece of equipment or category of equipment we may be overstating or understating earnings in any given period.

     We also review our property and equipment, including land and water rights, 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 recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. The impairments are recognized in the period during which they are identified. Assets to be disposed of, if any, are reported at the lower of the carrying amount or fair value less costs to sell.

     We are required to estimate our income taxes in each jurisdiction in which we operate. This process requires us to estimate the actual current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and financial reporting purposes. These temporary differences result in deferred tax assets and liabilities on our balance sheets. We must calculate the blended tax rate, combining all applicable tax jurisdictions, which can vary over time as a result of the allocation of taxable income between the tax jurisdictions and the changes in tax rates. We must also assess the likelihood that the deferred tax assets, if any, will be recovered from future taxable income and, to the extent recovery is not likely, must establish a valuation allowance. As of September 30, 2009, we had total deferred tax assets of $2.2 million with no valuation allowance and total deferred tax liabilities of $1.2 million. For presentation purposes, the accompanying financial statements and notes thereto, indicate that non-current deferred tax assets and liabilities have been offset against each other resulting in a current deferred tax asset of $.7 million and a non-current deferred tax asset of $.2 million. The deferred tax asset does not contain a valuation allowance as we believe we will be able to utilize the deferred tax asset through future taxable income.

     Furthermore, we are subject to periodic review by domestic tax authorities for audit of our income tax returns. These audits generally include questions regarding our tax filing positions, including the amount and timing of deductions and the allocation of income among various tax jurisdictions. In evaluating the exposures associated with our various tax filing positions, including federal and state taxes, we believe we have complied with the rules of the service codes and therefore have not recorded reserves for any possible exposure. Typically, the taxing

authorities can audit the previous three years of tax returns and in certain situations audit additional years. Therefore a significant amount of time may pass before an audit is conducted and fully resolved. Although no audits are currently being conducted, if a taxing authority were to require us to amend a prior year’s tax return, we would record the increase or decrease in our tax obligation in the period in which it is more likely than not to be realized.

     One factor of the accounting guidance surrounding accounting for leases when determining if a lease is an operating lease or a capital lease, is the intention from the inception of the lease regarding the final ownership, or transfer of title, of the asset to be leased. We are currently leasing 62 ready-mix trucks under operating lease agreements, because at the inception of those leases we had not intended to take title to those vehicles at the conclusion of the leases. Therefore, we did not request transfer of ownership provisions at the conclusion of the leases such as bargain purchase options or direct transfers of ownership. Because we do not intend to take ownership at the conclusion of the leases and we do not meet the remaining criteria for capitalization, the leases are classified as operating leases. If we had desired at the inception of the leases to have the ownership transferred to us at the conclusion of the leases, we would have classified those leases as capital leases and would have recorded the ready-mix trucks as assets on our balance sheet as well as recording the liability as capital lease obligations. We believe that the lease expense under the operating lease classification approximates the depreciation expense which would have been incurred if the leases had been classified as capital leases.

     We account for stock-based compensation utilizing the fair value recognition provisions of the stock-based compensation accounting guidance. Under these provisions, we recognize compensation expense for all share-based payments granted. In accordance with the accounting guidance, we use the Black-Scholes option valuation model to value the share-based payment awards and we recognize stock-based compensation net of an estimated forfeiture rate and only recognize compensation cost for those shares expected to vest on a straight-line basis over the requisite service period of the award.

     Determining the appropriate fair value model and calculating the fair value of share-based payment awards requires the input of highly subjective assumptions, including the expected life of the share-based payment awards and stock price volatility. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future. In addition, we are required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. If our actual forfeiture rate is materially different from our estimate, the stock-based compensation expense could be significantly different from what we have recorded in the current period. See Note 2 — Stock-Based Compensation in the accompanying Notes to the Condensed Financial Statements for a further discussion on stock-based compensation.

New Accounting Pronouncements

     In April 2009, the FASB issued the following authoritative guidance intended to provide additional application guidance and enhance disclosures regarding fair value measurements and impairments of securities:

	•		Guidance in determining fair value when volume and level of activity for assets or liabilities have decreased significantly and identifying transactions that are not orderly provides additional guidance for estimating fair value when volume and level of activity for assets or liabilities have decreased significantly. This guidance also provides for identifying circumstances that indicate a transaction is not orderly. These provisions became effective for our quarter ended on June 30, 2009 and did not affect our financial position and results of operations.
	•		Guidance surrounding interim disclosures about fair value of financial instruments requires disclosures about fair value of financial instruments in interim reporting periods of publicly traded companies that were previously only required to be disclosed in annual financial statements. The provisions of this disclosure-only guidance became effective for our quarter ended June 30, 2009 and did not affect our financial position and results of operations.
	•		Guidance in determining recognition and presentation of other-than-temporary impairments amends current other-than-temporary impairment guidance in GAAP for debt securities to make the guidance more

operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in financial statements. This guidance does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. The provisions of this guidance became effective for our quarter ended June 30, 2009 and did not affect our financial position and results of operations.

     In May 2009, the FASB issued authoritative guidance intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. It requires disclosure of the date through which an entity has evaluated subsequent events and the basis for selecting that date, that is, whether that date represents the date the financial statements were issued or were available to be issued. This guidance became effective for our quarter ended June 30, 2009. We have evaluated subsequent events through November 13, 2009, which is the date the financial statements were issued.

     In June 2009, the FASB issued authoritative guidance surrounding accounting for transfers of financial assets. This guidance removes the concept of a qualifying special-purpose entity arising from existing guidance determining accounting for transfers and servicing of financial assets and extinguishments of liabilities and removes the exception from additional existing guidance. This guidance also clarifies the requirements for isolation and limitations on portions of financial assets that are eligible for sale accounting. This guidance is effective for our fiscal year beginning January 1, 2010. We are currently evaluating the impact of this guidance on our consolidated financial statements.

     In June 2009, the FASB issued authoritative guidance changing how a reporting company determines when an entity that is insufficiently capitalized or is not controlled through voting should be consolidated. The guidance requires a number of new disclosures about a reporting company’s involvement with variable interest entities, any significant changes in risk exposure due to that involvement and how that involvement affects the reporting company’s financial statements. This guidance is effective beginning January 1, 2010. As this guidance amends provisions surrounding the consolidation of reporting companies’ financial statements, its adoption is not expected to affect our financial position and results of operations.

     In June 2009, the FASB established the FASB Accounting Standards Codification^TM (the “Codification”) as the single source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The Codification did not have a material impact on our financial statements upon its adoption. Accordingly, our notes to condensed financial statements explain accounting concepts rather than cite specific GAAP standards.

Results of Operations

     The following table sets forth certain items derived from our Condensed Statements of Operations for the periods indicated and the corresponding percentage of total revenue for each item:

(dollars in thousands)		Nine months ended																Three months ended
		September 30,																September 30,
		2009								2008								2009								2008
		(Unaudited)																(Unaudited)
Revenue		$	21,613				99.9	%		$	48,684				98.9	%		$	6,155				99.9	%		$	16,088				98.4	%
Related party revenue			9				0.1	%			529				1.1	%			3				0.1	%			265				1.6	%
Total revenue			21,622				100.0	%			49,213				100.0	%			6,158				100.0	%			16,353				100.0	%
Gross profit (loss)			(5,162	)			-23.9	%			304				0.6	%			(1,742	)			-28.3	%			23				0.1	%
General and administrative expenses			2,480				11.5	%			3,128				6.4	%			710				11.5	%			1,037				6.3	%
Loss from operations			(7,642	)			-35.3	%			(2,825	)			-5.7	%			(2,452	)			-39.8	%			(1,015	)			-6.2	%
Interest income			11				0.1	%			136				0.3	%			2				0.1	%			31				0.2	%
Interest expense			(77	)			-0.4	%			(82	)			-0.2	%			(25	)			-0.4	%			(27	)			-0.2	%
Other income			540				2.5	%			75				0.2	%			345				5.6	%			61				0.4	%
Income tax benefit			2,461				11.4	%			971				2.0	%			748				12.1	%			342				2.1	%
Net loss		$	(4,707	)			-21.8	%		$	(1,725	)			-3.5	%		$	(1,382	)			-22.4	%		$	(608	)			-3.7	%
Depreciation and amortization		$	3,395				15.7	%		$	3,530				7.2	%		$	1,062				17.3	%		$	1,191				7.3	%

Nine months ended September 30, 2009 compared to nine months ended September 30, 2008

     Revenue. Revenue decreased 56.1% to $21.6 million for the nine months ended September 30, 2009, which we refer to as “interim 2009,” from $49.2 million for the nine months ended September 30, 2008, which we refer to as “interim 2008.” The decreased revenue resulted primarily from a 52.3% decrease in the sale of cubic yards of concrete, which we refer to as “units,” aggravated by a 13.4% decrease in the average unit sales price. The decreased volume in interim 2009 was due to the continued decline in the housing market, which has negatively affected our residential concrete customers and has created an overall slowdown in the construction sector of our market. The overall demand for ready-mix concrete has decreased and the average number of ready-mix concrete providers has remained relatively the same in our market. The result of this intense market competition has been a decreased average unit sales price. We expect the intense level of competition in our market to continue until the market recovers from the current economic downturn or there is a decrease in the number of ready-mix providers in our market.

     We provide ready-mix concrete to related parties. Revenue from related parties for interim 2009 was $9.2 thousand or 0.1% of total revenue, compared to $.5 million or 1.1% of total revenue in interim 2008. Location of the project, type of product needed and the availability of product and personnel are factors that we consider when quoting prices to our customers, including related parties. Based on that criteria, future sales to related parties could increase or decrease in any given year, but are not currently anticipated to be material.

     Gross Profit (Loss). Gross profit (loss) decreased to ($5.2) million in interim 2009 from $.3 million in interim 2008 and the gross profit margin decreased to (23.9%) from .6% in the respective periods. The decrease in the gross profit margin during interim 2009 when compared to interim 2008 was primarily due to reduced sales volume, reduced average selling price, and higher fixed costs associated with the increased capacity completed during 2007 and early 2008. The fixed costs will continue to impact our gross profit and margin until our volume reaches an adequate and consistent level. We believe that the capacity expansions completed in 2007 and interim 2008 have positioned us to reap the benefits of our market expansion when demand in our market returns.

     Depreciation and Amortization. Depreciation and amortization expense decreased slightly from $3.5 million for interim 2008 to $3.4 million for interim 2009.

     General and Administrative Expenses. General and administrative expenses decreased to $2.5 million for interim 2009 from $3.1 million for interim 2008. The $.6 million decrease resulted primarily from a decrease in

administrative salaries, wages, accrued bonuses, related payroll taxes and benefits and cost reductions in office and employee welfare related expenses, sales, marketing and advertising expenses and bad debt expenses. This was offset in part by an increase in public company related expenses and an increase in legal expense associated with certain litigation that has been settled.

     Interest Income and Expense. Interest income decreased to $11.5 thousand for interim 2009 from $135.8 thousand for interim 2008. The decrease in interest income was primarily due to declining interest rates earned and the decrease in the amount of our invested cash reserves. Interest expense decreased in interim 2009 to $77.5 thousand compared to $82.0 thousand for interim 2008. Interest expense associated with assets used to generate revenue is included in cost of revenue. The interest included in the cost of revenue during interim 2009 was $.3 million compared to $.5 million for interim 2008. The decrease in interest expense was related to the payoff of debt associated with plant real property and our revolving line of credit.

     Income Taxes. The increase in the income tax benefit for interim 2009 to $2.5 million compared to an income tax benefit of $1.0 million for interim 2008 was due to an increase in pre-tax losses in interim 2009 when compared to interim 2008. The difference between the effective tax rate and the statutory rate was due primarily to state income taxes and non-deductible stock-based compensation expense associated with employee incentive stock options.

     Net Loss. The net loss was ($4.7) million for interim 2009 as compared to a net loss of ($1.7) million for interim 2008. The increase in net loss resulted from a decrease in our sales of units and the decrease in the average unit sales price as discussed above.

Three Months Ended September 30, 2009 compared to Three Months Ended September 30, 2008

     Revenue. Revenue decreased 62.3% to $6.2 million for the three months ended September 30, 2009, which we refer to as “3rd quarter 2009,” from $16.4 million for the three months ended September 30, 2008, which we refer to as “3rd quarter 2008.” The decreased revenue resulted primarily from a 59.6% decrease in the sale of units, compounded by a 16.9% decrease in the average unit sales price. The decreased volume in 3rd quarter 2009 was due to the continued decline in the housing market, which has negatively affected our residential concrete customers and has created an overall slowdown in the construction sector of our market. The overall demand for ready-mix concrete has decreased and the average number of ready-mix concrete providers has remained relatively the same in our market. The result of this intense market competition has been a decreased average unit sales price. We expect the intense level of competition in our market to continue until the market recovers from the current economic downturn or there is a decrease in the number of ready-mix providers in our market.

     We provide ready-mix concrete to related parties. Revenue from related parties for 3rd quarter 2009 was $2.8 thousand or 0.1% of total revenue compared to $.3 million or 1.6% of total revenue in 3rd quarter 2008. Location of the project, type of product needed and the availability of product and personnel are factors that we consider when quoting prices to our customers, including related parties. Based on that criteria, future sales to related parties could increase or decrease in any given year, but are not currently anticipated to be material.

     Gross Profit (Loss). Gross profit (loss) decreased to ($1.7) million in 3rd quarter 2009 from $.02 million in 3rd quarter 2008 and the gross profit margin decreased to (28.3%) from .1% in the respective periods. The decrease in the gross profit margin during 3rd quarter 2009 was primarily due to reduced sales volume, reduced average selling price, and higher fixed costs associated with the increased capacity completed during 2007. The fixed costs will continue to impact our gross profit and margin until our volume reaches an adequate and consistent level.

     Depreciation and Amortization. Depreciation and amortization expense decreased $.1 million, or 10.8%, to $1.1 million for 3rd quarter 2009 from $1.2 million in 3rd quarter 2008.

     General and Administrative Expenses. General and administrative expenses decreased to $.7 million for 3rd quarter 2009 from $1.0 million in 3rd quarter 2008. The $.3 million decrease resulted primarily from a decrease in administrative salaries, wages, accrued bonuses, related payroll taxes and benefits, legal expenses, bad debt expenses and sales, marketing and advertising expenses, offset by increases in public company related expenses.

     Interest Income and Expense. Interest income decreased to $2.2 thousand for 3rd quarter 2009 from $31.1 thousand for 3rd quarter 2008. The decrease in interest income was primarily due to declining interest rates earned and the decrease in the amount of our invested cash reserves. Interest expense decreased slightly to $25.7 thousand in 3rd quarter 2009 from $27.1 thousand in 3rd quarter 2008. Interest expense associated with assets used to generate revenue is included in cost of revenue. The interest included in the cost of revenue during 3rd quarter 2009 was $.1 million compared to $.2 million for 3rd quarter 2008.

     Income Taxes. The increase in the income tax benefit for 3rd quarter 2009 to $.7 million compared to an income tax benefit of $.3 million for 3rd quarter 2008 was due to an increase in pre-tax losses in 3rd quarter 2009 when compared to 3rd quarter 2008. The difference between the effective tax rate and the statutory rate was due primarily to state income taxes and non-deductible stock-based compensation expense associated with employee incentive stock options.

     Net Loss. The net loss was ($1.4) million for 3rd quarter 2009 as compared to a net loss of ($.6) million for 3rd quarter 2008. The increase in net loss resulted from the decrease in our sales of units and the decrease in the average per unit sales price as discussed above.

Liquidity and Capital Resources

     Historically, our primary need for capital has been to increase the number of mixer trucks in our fleet, to increase the number of concrete batch plant locations, to purchase support equipment at each location, to secure and equip aggregate sources to allow a long-term source and quality of the aggregate products used to produce our concrete, and to provide working capital to support the expansion of our operations.

     Currently, we do not anticipate expanding our operations over the next 12 months. Our current need for capital will be to supplement our lack of cash flow from operations to cover our operating losses and meet our debt and lease commitment obligations. Historically, our largest provider of financing has been Wells Fargo Equipment Finance, Inc., who we refer to as “WFE.”

     Our credit facility with WFE which provided a $5.0 million revolving credit facility, as well as a $15.0 million capital expenditure commitment, expired December 31, 2008. On February 2, 2009, we repaid $.25 million, the outstanding principal, on the revolving credit facility. Our capital expenditure commitment from WFE remains outstanding and as of September 30, 2009, we have drawn the principal amount of $5.6 million on such commitment. In addition, during the nine months ended September 30, 2009, we amended the master security agreement with WFE to remove guaranties from Meadow Valley Corporation and Meadow Valley Contractors, Inc. In connection with the release of the guaranties, the Company added certain financial covenants and prepayment provisions.

     Listed below are the covenants required to be maintained by the Company for the quarter ended September 30, 2009 and thereafter under the WFE agreement:

		September 30, 2009
		Minimum /
(amounts in thousands)		Maximum				Actual
Leverage (1)			1.50 to 1.0				.49 to 1.0
Fixed charge coverage ratio (2)			.65 to 1.0			-.64 to 1.0
Available cash minimum (3)			750,000				2,532,980
Dividends paid (4)			—				—
Management fee agreement (5)			22,000				22,000
Change of control (6)
Sale or assignment of real estate (7)

     Our amended WFE agreement also calls for a prepayment penalty. The prepayment penalty is calculated on any prepaid principal balances paid prior to their scheduled due date. The prepayment penalty is as follows:

		On or before				After				After				After
		December 31,
		2009				2009				2010				2011
Prepayment penalty			6.00	%			5.00	%			3.00	%			2.00	%

     If we prepay any amount due under our separate lease agreement with WFE on or before January 1, 2011, we must pay all remaining rents and all purchase option amounts contained in the lease agreement.

     As of June 30, 2009 and September 30, 2009, we were not in compliance with the fixed charge coverage ratio. We and WFE have amended the agreements to: (1) include a waiver of the fixed charge coverage ratio covenant requirement for the quarters ending June 30, 2009 and September 30, 2009; (2) have WFE accept payments of interest only for four months, which will defer our payment of approximately $695,000 in principal during such period; (3) require us to provide approximately an additional $750,000 in collateral to secure the deferred principal; (4) require us to pay WFE a $8,500 consent fee; and (5) require us to pay WFE 35% of proceeds in excess of related loans and costs if we were to sell our headquarters building and the real estate on which it is located. We will be in default of this covenant again for the quarter ending December 31, 2009. If we are not able to obtain another waiver and amendment from WFE, the WFE loan could become immediately due and payable and WFE could proceed against our equipment securing the loan. If WFE were to accelerate the payment requirements, we would not have sufficient liquidity to pay off the related debt and there would be a material adverse effect on our financial condition and results of operations. Further, if we were not able to refinance the debt and WFE seized our equipment, we may not be able to continue as a going concern.

     We also have a covenant requirement with our lender National Bank of Arizona (“NBA”). The NBA loan is secured by our headquarters building in Phoenix, Arizona. The covenant requirement is a minimum adjusted earnings before interest, taxes, depreciation and amortization expense debt coverage ratio evaluated at year end. By letter received on August 10, 2009, NBA alleged that the covenant requirement is 1.25 to 1.0 for the year end December 31, 2008 and that we are out of compliance with a ratio of .80 to 1.0. We have made all payments timely, are currently in discussions with NBA and expect to obtain a waiver of the covenant requirement and amend the loan agreement. Although these discussions are ongoing and the Company and NBA have agreed in principle to basic terms that would accomplish the foregoing, there can be no assurance that we will be able to obtain an amendment or waiver from NBA. If we are not able to do so, the $1.3 million note payable that is currently outstanding to NBA could become immediately due and payable and NBA could proceed against collateral granted to it to secure that debt if we were not able to repay it. If NBA accelerates the payment requirements, we may not have sufficient liquidity to pay off the related debt and there could be a material adverse effect on our financial condition and results of operations.

     As a result of the expansion efforts after our initial public offering in August 2005, we entered into debt and operating lease obligations which, in turn, increased our total fixed minimum monthly payment obligations. As a result of the downturn in the economy, operations did not provide the cash flow needed to meet the monthly obligations and cash reserves were utilized. We cannot assure you that cash flows from operations will be adequate to provide for the cash outflow needed to service all of our obligations. Our efforts to maintain adequate liquidity

will be very challenging given the current business environment and the immediate working capital requirements of our business. We anticipate that the effect on working capital of reductions in production volume will result in significant liquidity needs during the first quarter of 2010. However, if we are able to obtain waivers and amendments from WFE until the economy improves and our market rebounds, we do anticipate that we will be able to manage our working capital as well as implement other financing and asset sales opportunities as needed to meet our needs over the next 12 months.

     The following table sets forth for the nine months ended September 30, 2009 and 2008, certain items from the condensed statements of cash flows.

(dollars in thousands)

		Nine months ended
		September 30,
		2009				2008
		(Unaudited)
Cash flows used in operating activities		$	(215	)		$	(1,476	)
Cash flows provided by (used in) investing activities			319				(637	)
Cash flows used in financing activities			(1,775	)			(1,412	)

     Cash used in operating activities during interim 2009 of $.2 million represents a $1.3 million decrease from the amount used in operating activities during interim 2008. The decrease was primarily due to the income tax receivable received in interim 2009. Net cash received from customers and cash paid to suppliers and employees decreased $.3 million during interim 2009 from interim 2008.

     Cash provided by investing activities during interim 2009 of $.3 million represents a $1.0 million increase in cash flow from the amount used in investing activities during interim 2008. Increases in cash flows from investing activities during interim 2009 were due to the reduction of the purchase of property and equipment of $.7 million and proceeds received from the sale of equipment.

     Cash used in financing activities during interim 2009 of $1.8 million represents a $.4 million increase from the amount used in financing activities during interim 2008. Financing activities during interim 2009 included the repayment of notes payable and amounts repaid to Meadow Valley Contractors, Inc. of $1.8 million. Financing activities during interim 2008 included the receipt of proceeds from notes payable in the amount of $1.0 million and proceeds from Meadow Valley of $.1 million, offset by the repayment of notes payable and capital leases of $2.5 million.

Website Access

     Our website address is www.readymixinc.com. On our website we make available, free of charge, our Annual Report on Form 10-K, our most recent quarterly reports on Form 10-Q, current reports on Form 8-K, Forms 3, 4, and 5 related to beneficial ownership of securities, our code of ethics and all amendments to those reports. We make such materials available as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. The information on our website is not incorporated into, and is not part of, this Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     Not applicable, as the Company is a smaller reporting company.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

     Our principal executive officer and principal financial officer, based on their evaluation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Form 10-Q, have concluded that: (i) our disclosure controls and procedures are effective for ensuring that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of

1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. (b) Changes in Internal Control over Financial Reporting

     There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

     None.

Item 1A. Risk Factors

     In addition to the other information set forth in this Form 10-Q, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2008, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. In fact, during the nine months ended September 30, 2009, events arose that lead us to add the following risk factors:

Our success in meeting our obligations and obtaining additional future waivers of covenant violations from our lenders in the next twelve months relies in large part, upon whether our business continues to experience significant declines in revenue. If we continue to experience similar significant declines in revenue, our ability to obtain future waivers of covenant violations may be unsuccessful and we may be unable to meet our payment obligations, especially if payment requirements are accelerated by our lenders.

     Our ability to meet covenant restrictions on our loan agreements is primarily based on current conditions in our market and expected future developments, especially if we continue to experience significant declines in revenue, as well as other factors. Whether actual future results and developments will be consistent with our recent financial performance depends on a number of factors, including but not limited to:

	•		Our customers’ confidence in our ability to serve their needs and our ability to continue to attract customers, particularly for new upcoming projects;
	•		The financial viability of our suppliers and our ability to purchase concrete materials from our key suppliers at competitive prices;
	•		Our ability to manage our batch plants and aggregate pit production facilities as needed to manage production volume with the least amount of cost and to complete other planned asset sales;
	•		Our ability to obtain adequate backlog to offset continued revenue declines and our ability execute on backlog at improved margins;
	•		The overall strength and stability of general economic conditions and of the ready-mix concrete industry, in the Phoenix, Arizona and Las Vegas, Nevada metropolitan areas.

     In addition, future violations of covenant restrictions could be a significant factor as such violations may cause long-term debt and lease obligations to be reclassified as debt that would be due within the next twelve months. If any amounts that are due beyond twelve months are accelerated by any of our lenders, our ability to meet covenant restrictions of other lenders may be unsuccessful and could materially adversely affect our ability to meet our payment obligations.

Inadequate liquidity could materially adversely affect our business operations in the future and threaten our ability to continue as a going concern.

     We require substantial liquidity to maintain our production facilities, meet scheduled term debt and lease obligations and run our normal business operations. If we continue to operate at or close to the minimum cash levels necessary to support our normal business operations, we will be forced to further curtail capital spending and other programs that are important to the future success of our business. Our suppliers might respond to an apparent weakening of our liquidity position by requesting quicker payment of invoices or other assurances. If this were to happen, our need for cash would be intensified, and we might be unable to make payments to our suppliers as they become due.

     Our efforts to continue to maintain adequate liquidity will be very challenging given the current business environment and the immediate working capital requirements of our business. We anticipate that the effect on working capital of reductions in production volume will result in significant liquidity needs during the first quarter of 2010. Our ability to maintain adequate liquidity through the first half of 2010 will depend significantly on the volume and sales prices of cubic yards of concrete sold, the continuing curtailment of operating expenses and capital spending, the availability of additional short-term financing and the completion of some of our planned asset sales. We currently have a waiver of a covenant violation through September 30, 2009 on the WFE loans and we anticipate obtaining a waiver with NBA for the covenant violations discussed above. Based upon current trends, we believe that we will also be in violation of the WFE covenant at December 31, 2009. If we are not able to obtain another waiver and amendment from WFE, the WFE loan could become immediately due and payable and WFE could proceed against our equipment securing the loan. If WFE were to accelerate the payment requirements, we would not have sufficient liquidity to pay off the related debt and there would be a material adverse effect on our financial condition and results of operations. Further, if we are not able to refinance the debt and WFE seized our equipment, we may not be able to continue as a going concern.

     We are committed to exploring liquidity enhancement options because there is no assurance that industry or capital markets conditions will improve before the first half of 2010, if then. If we implement planned operating actions that are substantially within our control, our estimated liquidity during 2010 will be inadequate to operate our business unless economic and construction industry conditions significantly improve, we receive substantial proceeds from asset sales, we take more aggressive working capital initiatives, or we gain access to capital markets and other private sources of funding, or some combination of these actions occurs. If we fail to obtain sufficient funding for any reason and we are unable to secure waivers for covenant violations and lenders accelerate payment requirements, we would not be able to meet our payment obligations and the Company may need to seek legal protection.

We are currently losing money, may need additional financing, and may not be able to obtain it on favorable terms or at all.

     As a result of the expansion efforts after our initial public offering in August 2005, we entered into debt and operating lease obligations which, in turn, increased our total fixed minimum monthly payment obligations. As a result of the downturn in the economy, operations did not provide the cash flow needed to meet the monthly obligations and cash reserves were utilized. Our ability to meet our debt and lease obligations and to fund our working capital needs will depend on the state of the economy generally and on our future operating performance and financial results, all of which will be subject in part to factors beyond our control. We cannot assure you that our cash flow from operations, combined with our existing cash and cash equivalents, will be adequate to meet our debt and operating lease obligations and our working capital needs over the next 12 months, particularly if we are not able to obtain a waivers and amendments from WFE and NBA and they accelerate our payment requirements. If we are unable to generate cash flow from operations sufficient to cover these obligations and needs, and if we are unable to borrow sufficient funds, we may be required to sell assets, reduce capital expenditures, refinance all or a portion of our existing debt or obtain additional financing. We cannot assure you that we will be able to refinance our debt, sell assets or borrow more money on terms acceptable to us, if at all. In addition, the terms of certain of our debt restricts our ability to sell assets and our use of the proceeds therefrom.

We cannot assure you that our Board’s consideration of strategic alternatives will result in any transaction being completed.

     As announced on June 17, 2009, we have engaged the services of Lincoln International LLC to evaluate and advise the Board of Directors regarding strategic alternatives to enhance shareholder value, including the potential sale of the Company. The implementation of any strategic alternative would be subject to, among other things, the results of the Board’s evaluation of strategic alternatives, our ability to obtain Board and stockholder approvals of any proposed transaction, and customary conditions to the closing of any proposed transaction. Accordingly, we cannot assure you that the review of strategic alternatives will result in the Company pursuing any particular transaction, or, if it pursues any such transaction, that it will be completed. We do not expect to make further public comment regarding the review until the Board of Directors has approved a specific transaction or otherwise deems disclosure of significant developments is appropriate.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

     None.

Item 3. Defaults Upon Senior Securities

     As of June 30, 2009 and September 30, 2009, we are not in compliance with the fixed charge coverage ratio in our master loan and security agreement with WFE. See Part I. Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources” and Part II. Item 1A. “Risk Factors” of this Form 10-Q.

     We have been notified that we were not in compliance with the adjusted earnings before interest, taxes, depreciation and amortization expense debt coverage ratio in our master loan and security agreement with NBA. See Part I. Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources” and Part II. Item 1A. “Risk Factors” of this Form 10-Q.

Item 4. Submission of Matters to a Vote of Security Holders

     None.

Item 5. Other Information

     None.

Item 6. Exhibits

   Exhibits:

10.26		Amendment No.1 to Master Loan and Security Agreement with Wells Fargo Equipment Finance, Inc.
10.27		Master Loan and Security Agreement with Wells Fargo Equipment Finance, Inc.
10.28		Amendment No. 1 to Master Lease Agreement with Wells Fargo Equipment Finance, Inc. (Formerly The CIT Group/Equipment Financing, Inc.)
10.29		Master Lease Agreement with Wells Fargo Equipment Finance, Inc. (Formerly The CIT Group/Equipment Financing, Inc.)
31.1		Certification of Chief Executive Officer Pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934
31.2		Certification of Chief Financial Officer Pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934
32		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.