U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC
20549
 

FORM 10-Q

 

 

/X/
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2008
 
/ /
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-32134
 
Z TRIM HOLDINGS, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
 
  ILLINOIS
  36-4197173
(State or Other Jurisdiction of
Incorporation or Organization)
  (I.R.S. Employer
Identification No.)
 
1011 CAMPUS DRIVE , MUNDELEIN , ILLINOIS   60060
(Address of Principal Executive Offices)

(847) 549-6002
(Issuer's Telephone Number, Including Area Code)

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No /  /

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

The registrant has a single class of common stock, par value $.00005 per share, of which there were 76,301,375 shares issued and outstanding as of August 10, 2008.

Transitional Small Business Disclosure Format (Alternative 2): Yes / / No /X/

1
 

 
PART I – FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

See Consolidated Financial Statements beginning on page F-1.


2
 
 
ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.

The following discussion is intended to assist in understanding the financial condition and results of operations of Z Trim Holdings, Inc. You should read the following discussion along with our financial statements and related notes included in this Form 10-Q. The following discussion contains forward-looking statements that are subject to risks, uncertainties and assumptions. Our actual results, performance and achievements in 2008 and beyond may differ materially from those expressed in, or implied by, these forward looking statements.


Overview.

Z Trim Holdings, Inc. is an emerging growth company focused on the production, marketing and distribution of custom functional food ingredient solutions for both domestic and international markets. The Company’s namesake product is a USDA-developed, all-natural, zero calorie functional food ingredients made from healthy dietary fiber. The Company has an extensive intellectual property portfolio, highlighted by an exclusive license from the USDA to make, use and sell Z Trim both domestically and internationally.   Z Trim can be produced from virtually any agricultural product, including corn and/or oat.  Current Z Trim products include gels and powders used to replace portions of fat, gums, starches and carbohydrates in foods.  In addition to replacing fat and adding fiber, Z Trim’s products provide a number of other value-added functionalities. Specifically, Z Trim’s products can improve capacity and yield to a finished product line.  Z Trim’s Products offer significant process improvements by reducing loss, reducing breakage, and contributing toward waste reduction and utilization.  Our products also offer moisture control, flavor encapsulation, heat, pH and freeze/thaw stability, while enhancing mouthfeel and texture.

The Company currently manufactures and markets Z Trim products as competitive ingredients that improve the food industry's ability to deliver on its promises of healthier foods. The Company's primary goal is establishing Z Trim as an important ingredient in revolutionizing the food industry.  The Company is developing its market through (i) direct sales to major food manufacturers, as well as small and mid size companies, and (ii) direct sales to large food institutions such as those that supply to restaurants, hospitals, schools and cafeterias. We have an aggressive plan to educate the food industry about the uses and benefits of Z Trim products. Additionally, our research and development team, including strategic industry partners, continues to develop additional products.
 
Z Trim Holdings, Inc. was incorporated in the State of Illinois on May 5, 1994 under the original name Circle Group Entertainment Ltd.

Z Trim’s products compete against fats, fat replacers, modified starches, gums, and similar ingredients.  None of these other products functions identically to our products.  Our business is part of the global $25-30 billion per year (2006) business of food additives.  The global hydrocolloid business is a comparably minor $3.80 billion per year.  Specifically, the U.S. fat replacer and bulk dietary fiber (supplement) markets are estimated to be $ 500 million each.  The global business of hydrocolloids at large is intensely oligopolistic with few major players and the food sector market, although growing at 6.5%, is still very competitive.
 
 
 
3

 
The Company protects an array of intangible assets that includes patents pending and issued, as well as a wide array of trade secrets and know-how, trademarks and copyrights.  Central to this portfolio is an exclusive license to US Patent No. 5,766,662, including all related international patents, issued to Dr. George Inglett of the USDA.  This license expires upon the expiration of the underlying patent in late 2015.  Through the process of development and commercialization of the technology, the Company has identified and sought patent protection for improvements to the manufacturing process, product applications and is currently developing several commercially promising spin-off technologies.  The Company also maintains a stable of trademarks that continues to gain value through usage and increased brand recognition.
 
Presently, the Company employs 24 full-time employees and no part-time employees.


RECENT MATERIAL DEVELOPMENTS

The results of the last 6 months are the beginning of what we believe is a very positive trend.  Although our net sales numbers are slightly down from the first 6 months of 2007, that does not tell the whole story.  Since new management took over in August of 2007, we have significantly changed our marketing strategy.  In the first half of 2007, the vast majority of our sales came directly through internet sales to individual end-users.  Most of these sales were in very small quantities to customers who were not necessarily repeat customers.  In the first six months of 2008, the vast majority of our sales have been to food manufacturers, who are purchasing in much greater quantities with repeat and expanding orders.

In fact, this trend in sales growth to food manufacturers, shows a 316% increase from the first quarter of 2008 to the second quarter of 2008.  Early indications are that sales growth will continue in the third quarter of 2008.
 
On May 15, 2008, the Company provided samples of three shelf-stable Heinz Heart Healthy dressings made with Z Trim at the Z Trim booth #9554 during the National Restaurant Show, May 17-20 in McCormick Place in Chicago.  The 1.5 ounce single-serving pouches of Heart Healthy Ranch, Heart Healthy Thousand Island, and Heart Healthy French dressings each contain zero grams of trans fat, zero grams of saturated fat, and zero milligrams of cholesterol, with a calorie count ranging between 45 and 60 calories.  Interest generated by the demonstration of the Z Trim natural functional fiber ingredient across most of Heinz's "Heart Healthy" line of 1.5 ounce single-serving pouches of salad dressings during the National Restaurant Show resulted in the transference of the relevant sales leads from Z Trim to the marketing and sales department at Heinz.  Z Trim's natural corn fiber ingredient also generated interest during the NRA when introduced as a functional ingredient in the formulation for a reduced fat lemon blueberry loaf, sold throughout the western regional network of retail stores of a national beverage chain. A 136 gram serving of the loaf contains just 10 total grams of fat, and 80 total calories from fat, and zero trans fats. More details concerning nutritionals are available at http://www.starbucks.com/retail/nutrition_food_detail.asp?selProducts=%7B1ACFC CB7%2DF9A7%2D43A7%2D9DDA%2D0B9A7AB59595%7D&store=559&foodZone=53.  The company recently began formulating their Z Trim ingredient without use of soy lecithin or sodium benzoate in order to further advance its appeal as a natural ingredient.
 
On May 28, 2008 the American Stock Exchange ("Amex") notified Z Trim Holdings, Inc. (the "Company") that the staff of the Amex has determined that the Company is not in compliance with certain of Amex' continued listing standards. Specifically, based upon a review of the Company's Form 10-Q for the period ended March 31, 2008, the Amex Staff determined that the Company reported $5,970,120 of shareholders' equity, which is less than the $6,000,000 threshold for shareholders' equity after losses from continuing operations and net losses in its five most recent fiscal years as required by Section 1003(a)(iii) of the Company Guide. The Amex Staff further determined that the Company has sustained losses which are so substantial in relation to its overall operations or its existing financial resources, or its financial condition has become so impaired that it appears questionable, in the opinion of the Amex, as to whether the Company will be able to continue operations and/or meet its obligations as they mature, in violation of Section 1003(a)(iv) of the Company Guide. The letter constitutes a "Deficiency Letter" pursuant to Section 1009 of the Amex Company Guide (the "Guide"). Amex has provided the Company the opportunity to submit a compliance plan to resolve the deficiencies.
 
 
 
4
 

 
On June 27, 2008, the Company submitted its compliance Plan to Amex. On August 13, 2008, Z Trim Holdings, Inc. announced that it intends to file an application with the Securities and Exchange Commission concerning its voluntary withdrawal of its common stock from listing on the American Stock Exchange and seeking withdrawal of registration of its common stock under Section 12(b) of the Securities Exchange Act of 1934. Z Trim anticipates that the application with the SEC will be filed on Monday August 25, 2008 and the voluntary withdrawal will take effect on Friday September 5, 2008. The Company is currently working with a sponsoring market maker to complete the process to qualify trades in the Company's common stock to be quoted on the Over-the-Counter Bulletin Board.
 
"The Board of Directors and management of this company continue to take positive steps toward righting our course," said Z Trim President Steve Cohen. "We are in the process of evaluating and implementing a broad spectrum of beneficial strategies toward that end," he added. "As regards the public trading of our stock, we began as an over-the-counter issue and our current management believes the OTC arena is, at this time, the better fit for us. After lengthy consideration, our Board and management unanimously agree that this is in the best interests of our shareholders."
 
The decision follows an examination undertaken by Z Trim management comparing the types of benefits generally realized by a listing on Amex versus the status of Z Trim Holdings currently.
 
"While there are benefits of an Amex listing for companies that fit a particular profile, we are realizing no particular benefit at this point in our life cycle," said Brian Chaiken, the company's Chief Financial Officer. "The direct and indirect costs of such a listing in terms of finance, working capital, human resources and time can be more efficiently managed as an OTC company. Significantly, this move allows us to more quickly and easily gain access to financing for working capital."
 
The Company successfully resolved a prior finding of deficiency by Amex in regard to reporting inaccuracies. According to Amex, new and unrelated deficiencies stemming from historical financial performance remain.
 
"We recognize that at first glance this move from Amex may not appear to be positive to all," Cohen said. "After thorough examination of all information before us, however, it is readily apparent that the added expenses relating to maintaining our listing status do not fit with current management's goal of concentrating all of our resources on building our business," he added. "We are committed to executing our business model, achieving profitability and maximizing shareholder value. As we continue to successfully execute our plans, we will reconsider joining an exchange."
 
"We're appreciative of Amex and its staff for their service over the past several years," Cohen said. "We believe we will ultimately regain compliance with listing standards regarding financial performance, irrespective of our listing status," he added.
 
On July 22, 2008, the Company announced that it is exhibiting and providing samples of healthier burgers, dressings and snack bars to an estimated 7,000 food service directors and school nutrition professionals at the School Nutrition Association's 2008 Annual Nutrition Conference (ANC) July 20-23 in Philadelphia, Pennsylvania.
 
The exhibited products, made by a host of small to large food manufacturing firms who sell their items to school food service, represent an increasingly broad array of marketplace goods that are made healthier with Z Trim’s unique natural corn bran fiber.
 
Multi-functional Z Trim improves nutritional profiles while at the same time contributing other benefits, such as helping one of the top privately held meat processors in the United States to sustain juiciness in the leanest of meats throughout cooking.
 
"American Foods Group has been investing in the development of nutritious lean meat products for many years," said Vincent Degrado, Corporate Vice President of Technical Services for American Foods Group. "Our new turkey burger has only 120 calories and 7 grams of fat per serving, plus a gram of fiber," he said of the turkey burger containing the Z Trim natural corn bran fiber. "Child nutrition is a major focus of our R & D department and we have many ideas for other better tasting, low calorie products to keep American kids healthy," he added.
 
A varied list of food producers selling to both retail and to schools is realizing the benefits and attributes of Z Trim. Z Trim's successes within the school districts of Florida gained the attention of one of the top dressing manufacturers for retail and food service. That same company, which has since become a customer of Z Trim, now makes and sells a line of reduced fat dressings containing Z Trim to a group of 39 of the 67 school districts in Florida. That group of 39 districts, which now includes Dade County, is the largest buying entity for school food service in the nation, serving approximately 115 million meals per year to Florida school children, according to Frank Mullins, MS, RD, advisor to the school group.
 
Mullins relays a healthy enthusiasm from the group toward Z Trim. "They like the taste of these dressings so much that they have expressed interest in hearing about any other products made with Z Trim," he said, "as would any of the states with whom Florida has reciprocal buying arrangements." Those dressings will be sampled at the Z Trim booth at the ANC.
 
Scott Vrana, President of Houston-based Consolidated Mills, a producer of a broad array of food products to the foodservice industry including baker's emulsions and processed foods, sees Z Trim as an important option at the right time for food manufacturers.
 
"Our prime objective in using Z Trim is to reduce fat and caloric content of the foods we manufacture along with offsetting the ever increasing cost of raw materials," he said. "Z Trim allows us to provide a naturally healthier product during a challenging economic period," he added. "It is a win-win for us as manufacturers and for the consumer."
 
Mr. Vrana notes both the improved nutritional profile and taste attributes Z Trim brings to his items. "One of our sauces without Z Trim has 70 calories with 50 coming from fat," he said. "With Z Trim, we are able to reduce the calories to 25 with only 15 coming from fat while providing virtually an identical product in taste and functionality," he said.
 
Bakery items are another category well served by Z Trim, which not only replaces fat with fiber in such applications, but can also assure that the other ingredients used, such as in a filling, remain stable when blended.
 
 
 
5
 
"We dedicate our efforts to baking as healthfully as we can for all the schools throughout Texas and beyond," said Ignacio Alvarez, owner of San Antonio-based Lux Bakery. "We are currently launching a Sunbutter & Grape Jelly Bar, as well as other breakfast or after school bars, such as a Cinnamon-Apple-Cranberry bar, an oatmeal cinnamon apple cranberry bar, and a sweet potato chocolate flavor bar," he said. "All will feature Z Trim."
 
Rounding out the array of food categories made healthier by Z Trim, the thousand island, ranch, and French entries into the Heinz "Heart Healthy" line of portion packed salad dressings will be sampled at the Heinz booth.
 
On June 18, 2008, the Company entered into a private placement agreement where it issued 8% Convertible Senior Secured Notes in the aggregate principal amount of $1,400,000 (“Notes”).  This transaction is described more fully in Note 7 to the Financial Statements set forth herein.
 


SUMMARY OF FINANCIAL RESULTS

RESULTS OF OPERATIONS

THREE AND SIX MONTHS ENDING June 30, 2008 COMPARED TO THE THREE AND SIX MONTHS ENDING June 30, 2007

Revenues

Revenues, excluding those from the discontinued on-line bedding segment (E-tailer), decreased 21% for the three months ending June 30, 2008, from $217,115 for the three months ending June 30, 2007 to $171,863 for the three months ending June 30, 2008.  Revenues, excluding those from the discontinued on-line bedding segment (E-tailer), decreased approximately 45% for the six months ending June 30, 2008 from $430,338 for the six months ending June 30, 2007 to $238,307, as a result of a decrease in product revenues.  The decrease in product revenue was primarily due to the decrease in Z Trim products sales via the internet.  The following table provides a breakdown of the revenues for the periods indicated:
 
 
   
 Three months ending June 30,
 
                                                        
 
2008
   
2007
 
           Products
  $ 171,863     $ 217,213  
           Services
    --       98  
        Total Revenues
  $ 171,863     $ 217,235  
                 
                 
                                                 
   
Six months ending June 30, 
 
                                                           
 
2008
   
2007
 
           Products
  $ 238,307     $ 430,289  
           Services
    --       49  
        Total Revenues
  $ 238,307     $ 430,338  


Operating expenses

Operating expenses consist of payroll and related costs, stock option expense, insurance,  occupancy  expenses,   professional  fees,  and  general operating expenses.   Total operating expenses decreased by $895,345 or 41.5% to   $1,261,468 for the three months ending June 30, 2008 from $2,156,813 for the three months ending June 30, 2007. The decrease in operating expenses was due to a decrease in production and stock based compensation expense.  However, these decreases were offset by increases in fees paid to legal, accounting and auditing professionals related to litigation and reconciliation and audit of past financial statements.  Total operating expenses decreased by $813,193 or approximately 22.9% to $2,745,179 for the six months ended June 30, 2008 from $3,558,372 for the six months ended June 30, 2007.
 
 
 
6
 
 
The stock based compensation expense for the three months ended June 30, 2008 was $12,292 compared to $1,063,302 for the three months ended June 30, 2007 – a decrease of 98.85%.  The stock based compensation expense for the six months ending June 30, 2008 was $249,711.  The stock based compensation expense for the six months ending June 30, 2007 was $1,370,257 – a decrease of 81.78%.

Other income (expense)

Total other expense for the three months ended June 30, 2008 was $14,436 compared to other income of $288,119 for the comparable period in 2007 -- a decrease of 1,050%. Total other income for the six months ending on June 30, 2008 was $10,228 compared to other income of $298,485 for the six months ending on June 30, 2007.  In the second quarter of 2007, the Company recovered a loan loss of $200,000.  In the second quarter of 2008, the Company had an interest expense of $23,008.

Net loss

The Company incurred a net loss for the second quarter of 2008 of $1,658,253 or $.02 per share, a $827,434 decrease from the net loss of $2,485,687 or $.03 per share for the second quarter of 2007.

The Company incurred a net loss of $3,544,561 for the six months ending on June 30, 2008 or $(.05) per share, from the net loss of $4,210,324 for the six months ending June 30, 2007 or $(.06) per share.

LIQUIDITY AND CAPITAL RESOURCES

THREE AND SIX MONTHS ENDING JUNE 30, 2008 COMPARED TO THE THREE AND SIX MONTHS ENDING JUNE 30, 2007

At June 30, 2008, we had cash and cash equivalents, of $719,591, compared to $5,918,435 at June 30, 2007. The Company raised approximately $8,898,376 in additional equity capital through equity transactions during the first six months of 2007.
 
 
 
7
 

 
Net cash used by operating activities decreased by 11.4% to $2,794,730 for the six months ending June 30, 2008 as compared to $3,153,691 for the six months ending June 30, 2007.  Cash provided by discontinued operations was $0 for the six months ending June 30, 2008 and $12,507 for the six months ending June 30, 2007.

Net cash used by investing activities was $28,618 for the six months ending June 30, 2008, as compared to $501,294 for the six months ending June 30, 2007. The change was due to additions of property and equipment for our manufacturing plant in 2007.

Net cash provided by financing activities was $1,105,874 for the six months ending June 30, 2008, as compared to $8,898,377 for the six months ending June 30, 2007.  Net cash provided by financing activities for both the six months ending June 30, 2008 and 2007 was primarily from the proceeds received from the sale of stock, options and warrants exercised.

As of June 30, 2008, our cash balance was approximately $719,591.  To successfully grow our business, we must improve our cash position through greater and sustainable sales of our product lines, increase the productivity of the production process, as well as raise additional capital through a combination of public or private equity offerings, strategic alliances or debt financing to allow us to make necessary changes to our plant and to provide working capital until we achieve profitability.  The Company estimates that it will take from 18 to 27 months to achieve profitability.  Given this estimate, the Company will likely need to find sources of funding for both the short and long terms.  The Company does not expect or anticipate that its concerns over its ability to continue as a going concern will have any impact on its ability to raise capital from internal and external sources.

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements.


CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

Certain information set forth in this report contains "forward-looking statements" within the meaning of federal securities laws. Forward looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, and financing needs and other information that is not historical information. When used in this report, the words "estimates," "expects," "anticipates," "forecasts," "plans," "intends," "believes" and variations of such words or similar expressions are intended to identify forward-looking statements. Additional forward-looking statements may be made by us from time to time. All such subsequent forward-looking statements, whether written or oral and whether made by us or on our behalf, are also expressly qualified by these cautionary statements.

Our forward-looking statements are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith and are believed by us to have a reasonable basis, including without limitation, our examination of historical operating trends, data contained in our records and other data available from third parties, but there can be no assurance that our expectations, beliefs and projections will result or be achieved or accomplished. Our forward-looking statements apply only as of the date made. We undertake no obligation to publicly update or revise forward-looking statements which may be made to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events.
 
 
8
 

 
There are a number of risks and uncertainties that could cause actual results to differ materially from those set forth in, contemplated by or underlying the forward-looking statements contained in this report. Those risks and uncertainties include, but are not limited to, our history of operating losses, lack thus far of significant market acceptance of our products, the fact that we may dilute existing shareholders through additional stock issuances, our reliance on our intellectual property, and the potential negative effects of manipulation in the trading of our common stock. Those risks and certain other uncertainties are discussed in more detail in our 2007 Annual Report on Form 10-KSB and our subsequent filings with the SEC. There may also be other factors, including those discussed elsewhere in this report that may cause our actual results to differ from the forward-looking statements. Any forward-looking statements made by us or on our behalf should be considered in light of these factors.

ITEM 3. QUANTITATIVE AND QUALITATIVE ANALYSIS OF MARKET RISKS

There are no material changes in the market risks faced by us from those reported in our Annual Report on Form 10-K for the year ended December 31, 2007.

 
ITEM 4. CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934) that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.  In designing and evaluating the disclosure controls and procedures, management recognized that any controls or procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Evaluation of our Disclosure Controls and Procedures

The Company’s management has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report.  Based on such evaluation and because of the material weakness described below, the Company’s Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective, at the reasonable assurance level, to enable us to record, process, summarize and report information required to be included in our periodic SEC filings within the required time period to ensure the information required to be disclosed by the Company in the reports it files or submits under the Securities Exchange Act is accumulated an communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding the required disclosure.
 
 
9
 

 
Material Weakness in Internal Control over Financial Reporting

A material weakness is a control deficiency, or a combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.  Management identified the following material weakness as of June 30, 2008 relating to the Company’s internal control over financial reporting:

n  
The Company did not maintain, and lacked resources to maintain, a sufficient complement of personnel with an appropriate level of accounting knowledge, experience and training in the application of generally accepted accounting principles commensurate with the Company’s financial reporting requirements.  Specifically, the Company had deficiencies in finance and accounting staff with sufficient depth and skill in the application of U.S. generally accepted accounting principles with respect to a complex financing transaction involving convertible debt and warrants entered into by the Company in June 2008.

This control deficiency could result in a misstatement in the aforementioned reporting that would result in a material misstatement to our annual or interim financial statements that would not be prevented or detected.

Remediation Efforts

Management has begun implementing the following actions to remediate the material weakness and deficiencies in disclosure and procedures described above:


n  
Increase communication internally and with outside advisors.  We are in the process of implementing policies and processes to increase communication by and among senior management, external advisors and other third parties relevant to the disclosure process.
 
Changes in Internal Control Over Financial Reporting .   During the second quarter of 2008, there were no changes in internal controls over financial reporting.


10
 
 

 
PART II – OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

 
As previously reported, the Company settled an outstanding case with Farhad Zaghi and related parties (collectively, "Zaghi").  As soon as the S.E.C. approves the registration statement for the shares of common stock issued pursuant to the settlement agreement, the shares will become free-trading, and the parties will be obligated to dismiss the case.
 
 
On July 7, 2007, the Company was served with a complaint by Joseph Sanfilippo and James Cluck for violation of the Consumer Fraud Act, purportedly due to the Company’s refusal to allow for the exercise of 300,000 stock options.  Management believes that the allegations are frivolous and wholly without merit and will vigorously defend the claim.
 
 
On March 20, 2007, the Company filed a patent infringement suit in the United States District Court for the Western District of Wisconsin seeking unspecified damages and equitable relief against a manufacturer of a competing product.  On January 28, 2008, the Court granted summary judgment in favor of the Defendant, finding non-infringement.  The Company has since filed an appeal.
 
 
On November 23, 2005, the Company entered into a Letter of Agreement ("LOA") with George Foreman Enterprises, Inc. ("GFME") pursuant to which both parties would form a new limited liability company for the purpose of promoting the Company's zero calorie fat replacement food ingredient, Z Trim®.  The parties did not reach any definitive Agreement as is required by the LOA.  On May 9, 2006, the Company filed a lawsuit alleging breach of the Parties' nondisclosure agreement and trade secret misappropriation in the Circuit Court of the 19th Judicial District, Lake County, Illinois seeking damages and injunctive relief against GFME.  On August 3, 2006 the court, based upon a finding that the Company has demonstrated a likelihood of success on the merits of the case, issued an order granting the Company a preliminary injunction enforcing the non-disclosure agreement between the parties.  GFME subsequently appealed the preliminary injunction.  The Appellate Court denied GFME’s appeal, and the injunctive order remains in place.
 
 
On July 17, 2006, George Foreman Enterprises, Inc. filed a complaint against Z Trim Holdings, Inc. in the U.S. District Court seeking damages in excess of $70,000,000 for specific performance, breach of contract, promissory estoppel and unjust enrichment.  The basis for all such claims is the underlying LOA, set forth above.  The Company received summary judgment in its favor as to the count seeking promissory estoppel.  Further, on September 18, 2007, the Court issued a number of orders limiting the evidence that GFME may bring in support of its claims. Management believes that GFME’s allegations are frivolous and wholly without merit and will vigorously defend the claim.  The trial date of February 2008 has been stricken, and reset for September 2008.
 
 
11
 
 
During November 2007, the Company determined, through the course of its investigation of all prior equity transactions, that 1,040,000 options that were issued in 2002 and 2003 to a former officer were both issued without proper authorization and as non-qualified stock options, as opposed to qualified.  The Company had previously treated these options as if properly issued and as qualified “incentive stock options.”  The former officer exercised these options in 2004 and 2005, resulting in the issuance of 1,040,000 shares of common stock.  The Company shall seek to rescind these transactions and thus recover the shares.  In order to do so, the Company would have to reimburse the former officer the amount paid to exercise the options (listed at $132,000).  If the Company is unsuccessful in recovering the shares, it could potentially be responsible for unpaid FICA and Medicare taxes resulting from the re-classification of the options from qualified to non-qualified.  This potential liability would be for approximately $166,000, half of which would be the responsibility of the Company, and half of which would the responsibility of the former officer.
 
ITEM 1A.  RISK FACTORS

There have been no material changes to the risk factors disclosed in Item 1A Risk Factors in our Annual Report for the year ended December 31, 2007.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

NONE

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

NONE

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

NONE

ITEM 5.  OTHER INFORMATION

NONE

ITEM 6.  EXHIBITS

A list of the exhibits required to be filed as part of this report are presented in the Exhibit Index.

12


                                   SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized as of August 19, 2008.
 
  Z TRIM HOLDINGS, INC.  
       
 
By:
/s/ Steven J. Cohen  
    Steven J. Cohen  
    Director, and Chief Executive Officer  
       

                        

     In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities as of August 19, 2008.
         
/s/ Steven J. Cohen
   
/s/ Brian Chaiken
 
Steven J. Cohen
   
Brian Chaiken
 
Director and Chief Executive Officer
(principal executive officer)
   
Chief Financial Officer (principal financial or accounting officer)
 


13

INDEX OF EXHIBITS
                       

EXHIBIT NO.  DESCRIPTION
   
3(i)
Articles of Incorporation of Z Trim Holdings, Inc. (filed as Exhibit 2.1 to the Company's Form 10-SB filed on August 21, 2000, and as Exhibit 3.3 to the Company's Form 10-QSB filed on August 16, 2004, and incorporated herein by reference).

3(ii)
Bylaws of Z Trim Holdings, Inc., as amended (filed as Exhibit 2.2 to the Company’s Registration Statement on Form 10-SB, Exhibit 3(ii) to the Company’s Form 8-K filed on November 2, 2007, and as Exhibit 3(ii) to the Company’s Form 8-K filed on November 16, 2007, and incorporated herein by reference).

4.1
Specimen Certificate for common stock (filed as Exhibit 3.1 to the Company's Form 10-SB filed on August 21, 2000, and incorporated herein by reference).

4.2
Form of Subscription Agreement (filed as Exhibit 4.1 to the Company's Form 8-K filed on March 30, 2006 and incorporated herein by reference).

4.3
Form of Warrant to Purchase Common Stock (filed as Exhibit 4.2 to the Company's Form 8-K filed on March 30, 2006 and incorporated herein by reference).

4.4
Form of Registration Rights Agreement (filed as Exhibit 4.3 to the Company's Form 8-K filed on March 30, 2006 and incorporated herein by reference).

4.5
Form of Subscription Agreement (filed as Exhibit 4.5 to the Company’s Form 10-KSB filed on April 2, 2007 and incorporated herein by reference).

4.6
Form of Warrant to Purchase Common Stock (filed as Exhibit 4.6 to the Company’s Form 10-KSB filed on April 2, 2007 and incorporated herein by reference).

4.7
Form of Registration Rights Agreement (filed as Exhibit 4.7 to the Company’s Form 10-KSB filed on April 2, 2007 and incorporated herein by reference).

10.1
Steve Cohen Employment Agreement (filed as Exhibit 10.12 to the Company’s Form 10-QSB for the quarter ending June 20, 2006 and incorporated herein by reference).

10.2
Brian Chaiken Employment Agreement, dated October 17, 2007 (filed as Exhibit 10.2 to the Company’s Form 10-KSB filed on April 15, 2008 and incorporated herein by reference).

10.3
Michael J. Theriault Employment Agreement (filed as Exhibit 10.2 to the Company’s Form 10-KSB filed on April 2, 2007 and incorporated herein by reference).

10.4
Z Trim Holdings, Inc. 2004 Equity Incentive Plan (filed as Appendix C to the Z Trim's Proxy Statement for its Annual Meeting conducted on June 16, 2004 and approved by its Shareholders on that date and incorporated herein by reference).

10.5
Industrial Lease Agreement between CLO Enterprises and Z Trim Holdings, Inc. dated May 20, 1999 (filed as Exhibit 6.7 the Company’s Registration Statement on Form 10-SB and incorporated herein by reference).

10.6
Industrial Lease Agreement between CLO Enterprises and Z Trim Holdings, Inc. dated June 18, 1999 (filed as Exhibit 6.8 to Z Trim's Registration Statement on Form 10-SB and incorporated herein by reference).

10.7
Assignment of License Agreement between UTEK Corporation, Z Trim Holdings, Inc. and Brookhaven Science Associates dated March 26 2003 (filed as Exhibit 10.14 to Z Trim's Form 10-QSB for the quarter ending September 30, 2003 and incorporated herein by reference).

10.8
Assignment of License Agreement between UTEK Corporation, Z Trim Holdings, Inc. and University of Illinois dated July 9, 2003 (filed as Exhibit 10.15 to Z Trim's Form 10-QSB for  the quarter ending September 30, 2003 and incorporated herein by reference).

10.9
Assignment of License Agreement between Z Trim Holdings, Inc. and Brookhaven Science Associates dated July 22, 2003 (filed as Exhibit 10.16 to Z Trim's Form 10-QSB for the quarter ending September 30, 2003 and incorporated herein by reference).
 
31.1*
Statement Under Oath of Principal Executive Officer of the Company pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

31.2*
Statement Under Oath of Principal Financial Officer of the Company pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

32.1*
Statement Under Oath of Principal Executive Officer of the Company pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

32.2*
Statement Under Oath of Principal Financial Officer of the Company pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

----------------------
*Filed herewith

14




INDEX TO FINANCIAL STATEMENTS
 
   PAGE
Consolidated Balance Sheets at June 30, 2008 (unaudited) and  December 31, 2007
  F-2
   
Consolidated Statements of Operations for six months and three months ended as of June 30, 2008 and 2007 (unaudited)
   F-4
   
Consolidated Statements of Cash Flows as of June 30, 2008 and 2007 (unaudited)
  F-5
 
   
Notes to Consolidated Financial Statements as of June 30, 2008 and 2007 (unaudited)
   F-6
 
  

                                                                   
F-1
 
 
Z TRIM HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS


ASSETS
           
             
             
   
Unaudited
       
Current Assets
 
6/30/2008
   
12/31/2007
 
Cash and cash equivalents
  $ 719,591     $ 2,436,581  
Accounts receivable (net of allowance of $10,067 in 2008
               
and  $1,005 in 2007)
    115,168       7,522  
Inventory
    534,212       592,666  
Prepaid expenses and other assets
    102,806       152,597  
Net assets of discontinued operations
    -       485  
                 
Total current assets
    1,471,777       3,189,851  
                 
Property and equipment, net
    5,909,454       6,221,653  
                 
Other Assets
               
Intangible assets, net
    -       140,001  
Prepaid Loan Cost
    427,917          
Deposits
    14,453       14,453  
                 
Total other assets
    442,370       154,454  
                 
TOTAL ASSETS
  $ 7,823,601     $ 9,565,958  
                 
                 

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

 
F-2
 
Z TRIM HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 

 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
           
             
             
   
Unaudited
       
Current Liabilities
 
6/30/2008
   
12/31/2007
 
Accounts payable
  $ 994,252     $ 709,027  
Accrued expenses and other
    619,966       2,189,308  
Total Current Liabilities
    1,614,218       2,898,335  
                 
               Notes Payable - Long Term
    16,397       -  
                 
                 
Total Liabilities
    1,630,615       2,898,335  
                 
Stockholders' Equity
               
Common stock, $0.00005 par value; authorized 200,000,000
               
shares; issued and outstanding 75,826,375 and
               
72,056,375 shares, respectively
    3,815       3,600  
Additional paid-in capital
    72,649,285       69,603,639  
Accumulated deficit
    (66,460,114 )     (62,939,616 )
                 
Total Stockholders' Equity
    6,192,986       6,667,623  
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  $ 7,823,601     $ 9,565,958  
                 

 

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

 
F-3
 
Z TRIM HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

             
             
FOR THE SIX MONTHS ENDED JUNE 30
 
2008
   
2007
 
REVENUES:
           
  Products
  $ 238,307     $ 430,289  
  Services
    -       49  
    Total revenues
    238,307       430,338  
                 
COST OF REVENUES:
               
  Products
    1,047,917       1,393,282  
    Total cost of revenues
    1,047,917       1,393,282  
                 
GROSS MARGIN
    (809,610 )     (962,944 )
                 
OPERATING EXPENSES:
               
Selling, general and administrative
    2,713,056       3,518,283  
Impairment of intangible assets
    136,668       -  
Amortization of intangible assets
    3,333       6,667  
Loss on asset disposals, net
    (74,987 )     3,922  
    Total operating expenses
    2,778,070       3,528,872  
                 
OPERATING LOSS
    (3,587,680 )     (4,491,816 )
                 
OTHER INCOME (EXPENSES):
               
Rental and other income
    17,663       21,000  
Interest income
    15,608       79,530  
Interest expense
    (23,043 )     (2,045 )
Recovery of (provision for) loan
            200,000  
Settlement (loss) gain
    32,891       (29,500 )
    Total other income (expenses)
    43,119       268,985  
                 
LOSS FROM CONTINUING OPERATIONS
  $ (3,544,561 )   $ (4,222,831 )
                 
DISCONTINUED OPERATIONS
               
Income from discontinued operations
               
(net of applicable tax of $0 in 2008 and 2007)
  $ -     $ 12,507  
                 
NET LOSS
  $ (3,544,561 )   $ (4,210,324 )
                 
Net Loss per Share from continuing operations
               
 - Basic and Diluted
  $ (0.05 )   $ (0.06 )
Net Loss per Share - Basic and Diluted
  $ (0.05 )   $ (0.06 )
                 
Weighted Average Number of Shares Basic and Diluted
    75,804,708       68,852,048  
                 
                 
 
 
The accompanying notes are an integral part of these consolidated condensed financial statements.
 
 
F-4
 
Z TRIM HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 
             
FOR THE SIX MONTHS ENDED  JUNE 30
 
2008
   
2007
 
Cash Flows From Operating Activities From Continuing Operations:
           
Net loss
  $ (3,544,561 )   $ (4,210,324 )
Less: Income from discontinued operations, net of tax
    -       12,507  
Adjustments to reconcile loss from continuing operations to
               
net cash used in operating activities:
               
Depreciation and amortization
    303,423       332,341  
Loss on asset disposal
    40,727       3,922  
Provision for bad debt
    9,062       -  
Issuance of common stock and warrants for services
    230,000       6,765  
Amortization of noncash expenses associated with stock and
               
warrants issued for services
    -       113,339  
Stock based compensation expense
    249,711       1,370,257  
Recovery of loan loss
    -       (200,000 )
Impairment of intangible assets
    136,668       -  
Stock and warrant settlements
    28,901       29,500  
Non-cash settlements of liabilities
    (111,792 )     -  
Amortization of noncash loan interest expense
    17,154       -  
(Increase) in:
               
Accounts receivable
    (116,708 )     (104,053 )
Inventory
    58,454       (283,151 )
Prepaid expenses and other assets
    57,043       (159,804 )
Increase in:
    -          
Accounts payable and accrued expenses
    (152,812 )     (39,976 )
Cash flows used in operating activities from continuing operations
    (2,794,730 )     (3,153,691 )
                 
Cash Flows From Investing Activities From Continuing Operations:
               
Purchase of property and equipment
    (28,818 )     (502,794 )
Proceeds from asset disposals
    200       1,500  
Cash flows used in investing activities from continuing operations
    (28,618 )     (501,294 )
                 
Cash Flows From Financing Activities From Continuing Operations:
               
Net proceeds from convertible notes payable
    1,105,874       -  
Net proceeds from sales of stock
    -       7,838,001  
Exercise of options and warrants
    -       872,289  
Payments on capital lease obligations
    -       (11,913 )
Proceeds from notes receivable for stock, net
    -       200,000  
Cash flows provided by financing activities from continuing operations
    1,105,874       8,898,377  
Net cash and cash equivalents used in (provided by) continuing operations
    (1,717,474 )     5,243,392  
Net (decrease)increase in cash and cash equivalents
    (1,717,474 )     5,243,392  
                 
Cash of discontinue segment beginning of period
    484       -  
Cash and cash equivalents, at beginning of period
    2,436,581       675,043  
Cash and cash equivalents, at end of period
  $ 719,591     $ 5,918,435  
                 
Supplemental Disclosures of Cash Flow Information:
               
Interest paid
  $ 5,841     $ 2,045  
Interest to be paid in stock
  $ 5,666     $   -  
Supplemental Schedule of Noncash Investing and Financing Activities:
               
Issuance of common stock and warrants for services
  $ 1,771,800     $ 6,765  
Stock subscription payable
  $ -     $ 150,000  
Issuance of common stock in settlement of accrual
  $ 903,700          
Stock subscriptions receivable incurred for issuance of stock
  $ -     $ 3,398,976  

 
F-5
 
Z TRIM HOLDINGS, INC.
 
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2008 AND 2007
 
NOTE 1 – NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Nature of Business
 
Z Trim Holdings, Inc. (the “Company”) manufactures a line of functional food ingredients that can be used to replace fats and deliver fiber to a wide variety of foods.  The Company’s products can be used by food manufacturers and processors, restaurants, schools, and the general public worldwide. The company continues to explore all available options for its other Z Trim technologies and related assets.
 
 
The Company has participated in several public and private offerings and has expanded its business.  In 2002, the Company acquired FiberGel Technologies, Inc. (“FiberGel”), which owns an exclusive license to Z Trim, an all-natural, agriculture-based fat replacement.
 
 
A summary of significant accounting policies follows.
 
Presentation of Interim Information

The financial information at June 30, 2008 is unaudited, but includes all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for a fair presentation of the financial information set forth herein, in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information, and with the instructions to Form 10-Q. Accordingly, such information does not include all of the information and footnotes required by U.S. GAAP for annual financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual Report on Form 10-KSB for the year ended December 31, 2007.
 
The results for the six months ended June 30, 2008 may not be indicative of results for the year ending December 31, 2008 or any future periods.

Principle of Consolidation and Presentation
 
The accompanying consolidated financial statements include the accounts of Z Trim Holdings, Inc. and its subsidiaries after elimination of significantly all intercompany accounts and transactions.
 
 
On September 17, 2007, the Company resolved to discontinue all subsidiaries, other than FiberGel.  Accordingly, the accompanying consolidated financial statements for the six months ended June 30, 2007 have been restated to present the results of two out of three segments as discontinued operations.
 
Use of Estimates
 
The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States (U.S. GAAP) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
 
Revenue Recognition
 
The Company generally recognizes product revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. In instances where the final acceptance of the product is specified by the customer, revenue is deferred until all acceptance criteria have been met. No provisions were established for estimated product returns and allowances based on the Company’s historical experience.
 


F-6
 
 
Z TRIM HOLDINGS, INC.
 
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2008 AND 2007

 
 
NOTE 1 – NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
Allowance for Doubtful Accounts
 
Management of the Company makes judgments as to its ability to collect outstanding receivables and provide allowances for the portion of receivables when collection becomes doubtful. Provisions are made based upon a specific review of all significant outstanding invoices. For those invoices not specifically reviewed, provisions are provided at differing rates, based upon the age of the receivable. In determining these percentages, management analyzes its historical collection experience and current economic trends. If the historical data the Company uses to calculate the allowance for doubtful accounts does not reflect the future ability to collect outstanding receivables, additional provisions for doubtful accounts may be needed and the future results of operations could be materially affected.  As of June 30, 2008, the allowance for doubtful accounts was $10,067.  As of June 30, 2007 the allowance for doubtful accounts was $0.
 
Cash and cash equivalents
 
For purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.
 
Fair value of financial instruments
 
All financial instruments are carried at amounts that approximate estimated fair value.
 
Concentrations
 
Cash and cash equivalents are maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and therefore bear minimal risk.
 
Inventory
 
Inventory is stated at the lower of cost or market, using the first-in, first-out method.
 
Property and Equipment
 
Property and equipment are stated at cost.  Maintenance and repair costs are expensed as incurred.  Depreciation is calculated on the accelerated and straight-line methods over the estimated useful lives of the assets. Estimated useful lives of five to ten years are used for machinery and equipment, office equipment and furniture, and automobile. Estimated useful lives of up to five years are used for computer equipment and related software. Depreciation and amortization of leasehold improvements are computed using the term of the lease.
 
Intangible Assets
 
Intangible assets were carried at the purchased cost less accumulated amortization. Amortization was computed over the estimated useful lives of the respective assets, generally from fifteen to twenty years.
 
Impairment of Long-Lived Assets
 
Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstance indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of an impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold and use is based on the fair value of the asset. Long-lived assets and certain identifiable intangible assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.
 
 
F-7
 
 
Z TRIM HOLDINGS, INC.
 
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2008 AND 2007
 
 
NOTE 1 – NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
Income Taxes
 
The Company and its subsidiaries are included in the consolidated federal income tax return filed by the Parent.  The amount of current and deferred taxes payable or refundable is recognized as of the date of the financial statements, utilizing currently enacted tax laws and rates.  Deferred tax expenses or benefits are recognized in the financial statements for the changes in deferred tax liabilities or assets between years.
 
Advertising Costs
 
The Company expenses all advertising costs as incurred.  The amount for six months ended June 30, 2008 was $35,978.  The amount for the six months ended June 30, 2007 was $329,987.
 
Income (Loss) Per Common Share
 
 
Basic net income (loss) per share includes no dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average number of common stock outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares outstanding and, when diluted, potential shares from options and warrants to purchase common stock using the treasury stock method. Diluted net loss per common share does not differ from basic net loss per common share since potential shares of common stock are anti-dilutive for all periods presented.
 
 
Cashless Exercise of Warrants
 
 
The Company has issued warrants to purchase common stock where the holder is entitled to exercise the warrant via a cashless exercise, when the exercise price is less than the fair value of the common stock. The Company accounts for
 
 
the issuance of common stock on the cashless exercise of warrants on a net basis.
 
Stock Based Compensation
 
Effective January 1, 2006, the Company adopted the fair value recognition provisions of FASB Statement No. 123(R), “Share-Based Payment” (SFAS 123R), using the modified-prospective-transition method. Under that transition method, compensation cost recognized in 2006 includes: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006 based on the grant date fair value calculated in accordance with the original provisions of SFAS 123, and (b) compensation cost for all share-based payments granted subsequent to December 31, 2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123(R).
 
 
As a result of adopting SFAS 123(R) on January 1, 2006, the Company recognized pre-tax compensation expense related to stock options of $12,292 and $1,063,302 for quarters ended June 30, 2008 and 2007, respectively.
 
 
F-8
 
 
Z TRIM HOLDINGS, INC.
 
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2008 AND 2007
 
 
NOTE 1 –NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
New Accounting Pronouncements
 
In February 2007, the Financial Accounting Standards Board (“FASB”) issued Financial Accounting Standards (“FAS”) No. 159, The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115 , which permits entities to choose to measure many financial instruments and certain other items at fair value at specified election dates. A business entity is required to report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. This statement is expected to expand the use of fair value measurement. FAS No.159 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company believes this has no impact on its current financial reporting.
 
 
In September 2006, the FASB issued FAS No. 157, Fair Value Measurements . FAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This statement addresses how to calculate fair value measurements required or permitted under other accounting pronouncements. Accordingly, this statement does not require any new fair value measurements. However, for some entities, the application of the statement will change current practice. FAS No. 157 is effective for the Company beginning January 1, 2008. The adoption of FAS No. 157 did not affect the Company’s consolidated financial statements.
 
 
In December 2007, the FASB issued SFAS No. 141 (R), Business Combinations , and SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements .  SFAS N. 141 (R) requires an acquirer to measure the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree at their fair values on the acquisition date, with goodwill being the excess value over the net identifiable assets acquired.  SFAS No. 160 clarifies that a noncontrolling interest in a subsidiary should be reported as equity in the consolidated financial statements.  The calculation of earnings per share will continue to be based on income amounts attributable to the parent.  SFAS No. 141 (R) and SFAS No. 160 are effective for financial statements issued for fiscal years beginning after December 15, 2008.  Early adoption is prohibited.  We have not yet determined the effect on our consolidated financial statements, if any, upon adoption of SFAS No. 141 (R) or SFAS No. 160.
 
 
F-9
 
 
Z TRIM HOLDINGS, INC.
 
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2008 AND 2007
 
 
Reclassification.
 
On August 6, 2008, in connection with the United States Securities and Exchange Commission’s review of our financial statements, we determined that we needed to amend our financial statements for the year end 2007 in order to clarify certain information, be compliant with federal rule and regulations and correct an error relating to an expense recognized in the first quarter of 2007 that should have been incurred in the fourth quarter of 2004. Specifically, the Company’s recognition of expense of $2,182,175 relating to the release of restrictions on shares of stock on March 9, 2007 was incorrect.  The Company has restated the transaction to fully recognize the expense when the shares of stock were issued, in the fourth quarter of 2004.  As a result, the investor relation expense of $2,182,175 that was recognized in the first quarter of 2007 has been removed against additional paid in capital.  Further, as a result of the recognition of expense as of the fourth quarter 2004, the valuation of the unrecognized stock at fourth quarter of 2004 was $1,170,000 less than the valuation in the first quarter of 2007. This results in an increase in investor relations expense in 2004 of $1,012,175 and a reduction in retained earnings in 2004 of $1,012,175, with a corresponding reduction in retained earnings for all periods thereafter.  For the year ended December 31, 2007, the net result was an increase to retained earnings of $1,170,000.  Further, the net loss per share for the year ending December 31, 2007 was reduced from $0.21 per share to $0.18 per share.
 

 
 
NOTE 2 – GOING CONCERN
 
The Company's consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.  In the near term, the Company expects operating costs to continue to exceed funds generated from operations.  As a result, the Company expects to continue to incur operating losses and may not have enough capital to grow its business in the future.  The Company can give no assurance that it will achieve profitability or be capable of sustaining profitable operations.  As a result, operations in the near future are expected to continue to use working capital.

To successfully grow the business, the Company must decrease its cash outflows, improve its cash position and its revenue base, and succeed in its ability to raise additional capital through a combination of primarily public or private equity offerings or strategic alliances.

The Company is currently in the process of obtaining additional financing for its current operations.

 
NOTE 3 – INVENTORY
 
 
At June 30, 2008 and December 31, 2007, inventory consists of the following:
 
   
6/30/2008
   
12/31/2007
 
Raw materials
  $ 42,850     $ 30,402  
Work-in-process
    -       4,850  
Packaging
    55,812       67,421  
Finished goods
    435,549       489,993  
Other
            -  
  Total inventory
  $ 534,212     $ 592,666  
                 
 
 
F-10
 
 
NOTE 4 – PROPERTY AND EQUIPMENT, NET
 
At June 30, 2008 and December 31, 2007, property and equipment, net consists of the following:
 
   
Three months ended
         
Six months ended
       
   
June 30
         
June 30,
       
   
2008
   
2007
   
2008
   
2007
 
                         
Production, engineering and other equipment
    5,301,635       5,258,094       5,230,198       4,976,871  
Leasehold improvements
    2,801,053       2,776,314       2,801,053       2,745,917  
Office equipment and furniture
    588,521       596,750       591,853       574,960  
Computer equipment and related software
    150,584       369,077       188,179       336,143  
Construction in process - equipment
    -       -       62,700       -  
      8,841,792       9,000,235       8,873,982       8,633,891  
                                 
Accumulated depreciation
    (2,932,339 )     (2,565,565 )     (2,801,659 )     (2,398,629 )
                                 
Property and equipment, net
    5,909,454       6,434,670       6,072,324       6,235,262  
                                 
 
Depreciation expense was $340,802 and $327,078 for the six months ended June 30, 2008 and June 30, 2007, respectively. The depreciation expense was $171,393 and $168,704 for the three months ended June 30, 2008 and June 30, 2007 respectively.
 
           
NOTE 5 – INTANGIBLE ASSETS
 
 
As of April 16, 2008, management determined that it did not want to continue paying the costs associated with the License Rights to our Nutritional Analysis Tools System (“NATS”) website, and therefore the Company terminated the license agreement and wrote off the asset as impaired.  At June 30, 2008, the carrying cost of $136,668 was expensed.
 
Amortization of intangibles was $0 and $3,337 for the quarters ended June 30, 2008 and 2007, respectively.
 
NOTE 6 – ACCRUED EXPENSES AND OTHER
 
At  June 30, 2008 and December 31, 2007 accrued expenses consist of the following:
 
   
6/30/2008
   
12/31/2007
 
Accrued legal
  $ 38,469     $ 457,747  
Accrued payroll and taxes
    18,764       65,510  
Accrued settlements
    332,424       1,328,273  
Accrued expenses and other
    230,310       337,778  
Total accrued  expenses and other
  $ 619,967     $ 2,189,308  
                 
 
 
 
 
 

F-11
 
 
 
Z TRIM HOLDINGS, INC.
 
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2008 AND 2007

 
NOTE 7 – STOCKHOLDERS' EQUITY
 
 
Private Placement Offerings
 
 
On June 18, 2008, the Company issued 8% Convertible Senior Secured Notes in the aggregate principal amount of $1,400,000 (“Notes”).  Interest is payable quarterly in registered shares of common stock of the Company at $0.26 per share.  Upon the event of a default, the stated interest rate of the Notes will be increased to 18% per annum. The Notes mature in two years from date of issuance.  The Notes and accrued interest are payable in full at maturity.  All amounts due under the Notes may be converted at any time, in part or in whole, at the written election of the holder thereof, into shares of the Company’s common stock at a conversion price of $.26 per share.  The Notes are secured by a first priority perfected interest in all the assets of the Company.
 
 
Each $100,000 principal amount of Notes is convertible, at the option of the holders, into 384,615 shares of the Company’s common stock.  Holders of each $100,000 principal amount of Notes received two five-year warrants, one to purchase 230,769 shares of Common Stock with an exercise price of $0.01 per share (the “$0.01 Warrants”), and the other to purchase 153,846 shares of Common Stock with an exercise price of $0.26 per share (the “$0.26 Warrants” and, together with the $0.01 Warrants, collectively the “Warrants”).  The total warrants issued were 5,384,613 with a fair value of $1,287,981.  Proceeds from the Notes have been allocated to Convertible Notes Payable and Additional Paid-In Capital based upon the fair value of these financial instruments in accordance with Accounting Principles Board Opinion No. 14, “Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants.” The Notes have a beneficial conversion feature, which have a value of $455,416, as defined by Emerging Issues Task Force Issue No. 98-5, “Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios.”  The warrants value and the beneficial conversion value are discounted against the Notes and are being amortized as interest expense using the effective interest method over the term of the Notes.
 
 
The terms of the Notes require redemption in cash at 115% of face value upon certain defaults that are indexed to risks other than interest or credit risk.  The put feature should be separately accounted for as a derivative under FASB Statement No. 133 (SFAS 133), “Accounting for Derivative Instruments and Hedging Activities.” The Company’s assessment of the value of the put feature is de minimus.
 
 
In connection with the issuance of the Notes and Warrants, the Company incurred $1,340,085 of issuance costs, which primarily consisted of investment banker fees in cash and warrants and legal and other professional fees.  The costs have been allocated to the Warrants and Notes based upon the fair value of these financial instruments.  The costs allocated to the Notes are $435,159, of which $427,917 are noncurrent. These costs are being amortized as interest expense using the effective interest method over the term of the Notes.
 
 
The Notes were sold to an “accredited investor” within the meaning of Rule 501 under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the private placement exemption afforded by Section 4(2) of the Securities Act and of Regulation D promulgated under the Act.  In connection with the issuance of the Notes, the Company entered into registration rights agreements and has agreed to file with the Securities and Exchange Commission a registration statement covering the resale of the Common Stock underlying the Notes and the Warrants.
 
 
The following is a summary of principal maturities of long-term debt during the next five years:
 
2009   $ -  
2010     1,400,000  
         
 

Exercising of Stock Warrants and Options
 
During the first six months of 2008 no stock warrants and options were exercised.  The Company received total proceeds of $1,469,000 by virtue of 1,569,551 options and warrant exercised, and an additional 11,578 non-cash warrants exercised, in the first six months of 2007.
 
Common Stock Issued on the Cashless Exercise of Warrants
 
No shares of common stock were issued on the cashless exercise of warrants during the first six months of 2008 or 2007.
 
 
F-12
 
 
Z TRIM HOLDINGS, INC.
 
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2008 AND 2007

 
Director’s Grant of Equity
 
 
On January 3, 2008, the Board of Directors approved a compensation plan that includes a grant of 200,000 shares of common stock to each of the five external directors.  A tax gross up of up to 35% will be included.  These shares were issued in April of 2008.  The Board also created a pool of an additional 500,000 shares of common stock that will be awarded based on the amount of time spent per director on Company affairs outside of monthly board meetings.
 
NOTE 8 – NET LOSS PER SHARE
 
 
The computation of basic and diluted net loss per share is as follows:
 
   
Six Months Ended
 
   
June 30
 
   
2008
   
2007
 
Numerator:
           
  Net loss from continuing operations
  $ (1,658,253 )   $ (2,483,174 )
  Income from discontinued operations
  $ -     $ (2,513 )
  Net loss
  $ (1,658,253 )   $ (2,485,687 )
Denominator:
               
                 
Weighted average number of shares outstanding
    75,804,708       72,026,042  
                 
Net loss per share from continuing operations- basic and diluted
  $ (0.02 )   $ (0.03 )
Income per share from discontinued operations - basic and diluted
  $ -     $ 0.00  
Net loss per share-basic and diluted
  $ (0.02 )   $ (0.03 )
                 
 
   
Six Months Ended
 
   
June 30
   
2008
   
2007
 
Numerator:
           
  Net loss from continuing operations
  $ (3,544,561 )   $ (4,222,831 )
  Income from discontinued operations
  $ -     $ 12,507  
  Net loss
  $ (3,544,561 )   $ (4,210,324 )
Denominator:
               
                 
Weighted average number of shares outstanding
    75,430,542       68,852,048  
                 
Net loss per share from continuing operations- basic and diluted
  $ (0.05 )   $ (0.06 )
Income per share from discontinued operations - basic and diluted
  $ -     $ 0.00  
Net loss per share-basic and diluted
  $ (0.05 )   $ (0.06 )
                 
 
F-13
 
 
Z TRIM HOLDINGS, INC.
 
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2008 AND 2007
 
 
As the Company incurred net losses for the three and six months ended June 30, 2008 and 2007, the effect of dilutive securities totaling 2,206,128 and 3,906,811 equivalent shares, respectively, has been excluded from the calculation of diluted loss per share because the effect was anti-dilutive.
 
NOTE 9 – STOCK OPTION PLAN AND WARRANTS
 
 
The Company has a Stock Option Plan (the Plan) effective January 2, 1999 and amended in 2002 and 2004, which provides for the issuance of qualified options to all employees and non-qualified options to directors, consultants and other service providers.
 
 
A summary of the status of stock options as of June 30, 2008 and December 31, 2007 is as follows:
 
   
Six Months Ended
   
Year Ended
 
   
6/30/2008
         
12/31/2007
       
         
Weighted
         
Weighted
 
   
Number
   
Average
   
Number
   
Average
 
   
of
   
Exercise
   
of
   
Exercise
 
   
Shares
   
Price
   
Shares
   
Price
 
Outstanding at beginning of year
    16,595,523     $ 1.04       20,285,749     $ 0.99  
Granted
    100,000       0.27       2,532,000       1.19  
Exercised
    -       -       (453,318 )     0.77  
Expired and Cancelled
    (1,426,750 )   $ 1.02       (5,768,908 )     0.96  
Outstanding at end of period
    15,268,773     $ 1.04       16,595,523     $ 1.04  
                                 
Exercisable at end of period
    15,143,773     $ 1.04       16,270,523     $ 1.04  
 
At June 30, 2008 the aggregate intrinsic value of all outstanding options was $0 with a weighted average remaining contractual term of 1.5 years, of which 15,143,773 of the outstanding options are currently exercisable with an aggregate intrinsic value of $0, a weighted average exercise price of $1.04 and a weighted average remaining contractual term of 1.5 years.  The total intrinsic value of options exercised during the quarter ended June 30, 2008 was $0.  The total fair value of options vested during the first quarter of 2008 was $237,419.
 
 
The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option valuation model.  This model uses the assumptions listed in the table below.  Expected volatilities are based on the historical volatility of the Company’s stock.  The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.
 
   
2008
   
2007
 
Weighted average fair value per option granted
  $ 0.27     $ 1.35  
Risk-free interest rate
    2.91 %     4.89 %
Expected dividend yield
    0.00 %     0.00 %
Expected lives
    3.00       3.00  
Expected volatility
    98.59 %     108.95 %
                 
                 
                 
 
As of June 30, 2008, the unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plan was $16,162, which had an average expense recognition period of 135 days.
 
 
F-14

 
Z TRIM HOLDINGS, INC.
 
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2008 AND 2007
 
 
As of June 30, 2008, the Company had reserved 20.0 million shares for issuance under the Plan.  As of June 30, 2008, the Company had 3.77 million options available for grant under the Plan.
 
Stock options outstanding at June 30, 2008 are as follows:
 
       
Weighted
     
       
Average
Weighted
 
Range of
     
Remaining
Average
 
Exercise
 
Options
 
Contractual
Exercise
Options
Prices
 
Outstanding
 
Life
Price
 
Exercisable
 $0.01-$1.50
        14,773,773
 
1.5
 
 $     0.99
 
        14,648,773
 $1.51-$3.00
            495,000
 
1.7
 
 $     2.35
 
            495,000
   
        15,268,773
 
1.5
 
 $     1.03
 
        15,143,773
                 
 
 
As of June 30, 2008 and 2007, the Company has warrants outstanding to purchase 5,056734 and 4856,734 shares of the Company’s common stock, respectively, at prices ranging from $0.26 to $1.20 per share.  These warrants expire at various dates through May 2012.   There were 200,000 warrants issued in the second quarter of 2008 and 220,000 warrants issued in the second quarter of 2007, respectively.  These numbers exclude the warrants issued pursuant to the private placement executed by the Company on June 18, 2008 and described more fully in Note 7 hereinabove.
 
NOTE 10 – SETTLEMENT LOSSES
 
In April 2008, the Company settled a case with a former employee, Daniel Caravette.  The Company agreed to pay $50,000 cash, and to provide 245,000 shares of unrestricted common stock with a fair value of $63,700 and 200,000 three-year warrants at a strike price of $0.26, with a fair value of $33,326, in exchange for a release of all claims.
 
The Company executed an agreement with Farhad Zaghi on February 8, 2008.  Pursuant to the agreement, 3,000,000 shares of the Company’s common stock were issued at a fair value of $840,000 as of February 8, 2008 and 2,500,000 warrants are to be issued with a fair value of $332,424 as of June 30, 2008.
 
NOTE 11 – MAJOR CUSTOMERS AND CREDIT CONCENTRATION
 
The Company’s customers are food manufacturers, school districts and the general public that orders directly over the internet.  There were three significant customers that accounted for greater than 9% (each) for the quarter ended June 30, 2008. These three customers accounted for 45 %, 12% and 9 % of total sales.  There were no significant customers for the quarter ended June 30, 2007.  There were no outstanding amounts at June 30, 2008.
 
The Company maintains cash deposits with major banks, which from time to time may exceed federally insured limits.  At June 30, 2008 and December 31, 2007, $619,591 and $2,336,581 respectively, were in excess of federally insured limits.  The Company periodically assesses the financial condition of the institutions and believes that the risk of any loss is minimal.
 
NOTE 12 – COMMITMENTS
 
Building Lease
 
The Company leases a combined production and office facility located in Mundelein, Illinois.  The facility is approximately 44,000 square feet.  The Company extended the lease until March 2010 and the required monthly rental payments increased to $21,000, exclusive of property taxes.   The Company also is responsible for payment of all property taxes.  Insurance and maintenance are billed when due.
 
The Company subleases approximately 9,800 square feet of the facility to two tenants.  Both tenants terminated their respective leases in 2008.
 
 
F-15
 
Z TRIM HOLDINGS, INC.
 
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2008 AND 2007
 
 
The Company also leases a 5,000 square foot warehouse in Mundelein, Illinois.  The lease commenced on August 1, 2007 and ends July 31, 2011.  The monthly net rent is $2,750.
 
The future minimum annual rental payments and sub-lease income for the years ended December 31 under the lease terms are as follows:
 
 
Year Ended
 
Rentals
 
2009
    286,433  
2010
    98,466  
2011
    21,046  
    $ 405,945  
 
NOTE 13 – PENDING LITIGATION/ CONTINGENT LIABILITY
 
 
As previously reported, the Company settled an outstanding case with Farhad Zaghi and related parties (collectively, "Zaghi").  As soon as the S.E.C. approves the registration statement for the shares of common stock issued pursuant to the settlement agreement, the shares will become free-trading, and the parties will be obligated to dismiss the case.
 
 
On July 7, 2007, the Company was served with a complaint by Joseph Sanfilippo and James Cluck for violation of the Consumer Fraud Act, purportedly due to the Company’s refusal to allow for the exercise of 300,000 stock options.  Management believes that the allegations are frivolous and wholly without merit and will vigorously defend the claim.
 
 
On March 20, 2007, the Company filed a patent infringement suit in the United States District Court for the Western District of Wisconsin seeking unspecified damages and equitable relief against a manufacturer of a competing product.  On January 28, 2008, the Court granted summary judgment in favor of the Defendant, finding non-infringement.  The Company has since filed an appeal.
 
 
F-16

Z TRIM HOLDINGS, INC.
 
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2008 AND 2007
 
 
NOTE 14 – PENDING LITIGATION/ CONTINGENT LIABILITY (CONTINUED)
 
On November 23, 2005, the Company entered into a Letter of Agreement ("LOA") with George Foreman Enterprises, Inc. ("GFME") pursuant to which both parties would form a new limited liability company for the purpose of promoting the Company's zero calorie fat replacement food ingredient, Z Trim®.  The parties did not reach any definitive Agreement as is required by the LOA.  On May 9, 2006, the Company filed a lawsuit alleging breach of the Parties' nondisclosure agreement and trade secret misappropriation in the Circuit Court of the 19th Judicial District, Lake County, Illinois seeking damages and injunctive relief against GFME.  On August 3, 2006 the court, based upon a finding that the Company has demonstrated a likelihood of success on the merits of the case, issued an order granting the Company a preliminary injunction enforcing the non-disclosure agreement between the parties.  GFME subsequently appealed the preliminary injunction.  The Appellate Court denied GFME’s appeal, and the injunctive order remains in place.
 
On July 17, 2006, George Foreman Enterprises, Inc. filed a complaint against Z Trim Holdings, Inc. in the U.S. District Court seeking damages in excess of $70,000,000 for specific performance, breach of contract, promissory estoppel and unjust enrichment.  The basis for all such claims is the underlying LOA, set forth above.  The Company received summary judgment in its favor as to the count seeking promissory estoppel.  Further, on September 18, 2007, the Court issued a number of orders limiting the evidence that GFME may bring in support of its claims. Management believes that GFME’s allegations are frivolous and wholly without merit and will vigorously defend the claim.  The trial date of February 2008 has been stricken, and reset for September 2008.
 
During November 2007, the Company determined, through the course of its investigation of all prior equity transactions, that 1,040,000 options that were issued in 2002 and 2003 to a former officer were both issued without proper authorization and as non-qualified stock options, as opposed to qualified.  The Company had previously treated these options as if properly issued and as qualified “incentive stock options.”  The former officer exercised these options in 2004 and 2005, resulting in the issuance of 1,040,000 shares of common stock.  The Company shall seek to rescind these transactions and thus recover the shares.  In order to do so, the Company would have to reimburse the former officer the amount paid to exercise the options (listed at $132,000).  If the Company is unsuccessful in recovering the shares, it could potentially be responsible for unpaid FICA and Medicare taxes resulting from the re-classification of the options from qualified to non-qualified.  This potential liability would be for approximately $166,000, half of which would be the responsibility of the Company, and half of which would the responsibility of the former officer.
 
NOTE 15 – RELATED PARTY TRANSACTIONS
 
There were no related party transactions for the first six months of 2008.  There were no related party transactions for the first six months of 2007.
 
NOTE 16 – GUARANTEES
 
The Company from time to time enters into certain types of contracts that contingently require the Company to indemnify parties against third party claims. These contracts primarily relate to: (i) divestiture agreements, under which the Company may provide customary indemnifications to purchasers of the Company’s businesses or assets; (ii) certain real estate leases, under which the Company may be required to indemnify property owners for environmental and other liabilities, and other claims arising from the Company’s use of the applicable premises; and (iii) certain agreements with the Company's officers, directors and employees, under which the Company may be required to indemnify such persons for liabilities arising out of their employment relationship.  The terms of such obligations vary. Generally, a maximum obligation is not explicitly stated. Because the obligated amounts of these types of agreements often are not explicitly stated, the overall maximum amount of the obligations cannot be reasonably estimated. Historically, the Company has not been obligated to make significant payments for these obligations, and no liabilities have been recorded for these obligations on its consolidated balance sheet as of June 30, 2008.
 
 
In general, the Company offers a one-year warranty for most of the products it sold.  To date, the Company has not incurred any material costs associated with these warranties.
 
NOTE 17 – RESIGNATION OF CHIEF OPERATING OFFICER/ SUBSEQUENT EVENT
 
 
On August 18, 2008 the Company’s Chief Operating Officer (“COO”), Michael Theriault, resigned from his position as COO, and has accepted a position as Director of Operational Logistics.  The Company appreciates Mr. Theriault’s service and dedication over the years.  This move is a strategic re-deployment of expertise toward facilitating the long-term growth of the Company.  The Company, as of this time, has not hired a replacement.
 
 

F-17
Z-Trim Holdings, (AMEX:ZTM)
Gráfico Histórico do Ativo
De Nov 2024 até Dez 2024 Click aqui para mais gráficos Z-Trim Holdings,.
Z-Trim Holdings, (AMEX:ZTM)
Gráfico Histórico do Ativo
De Dez 2023 até Dez 2024 Click aqui para mais gráficos Z-Trim Holdings,.