TWENTY YEARS TWENTY YEARS - Equal Exchange

Dec. 31, 2006 Dec. 31, 2005$3,006,846 $1,524,011200,001 373,044250,328 236,7381,219,767 978,467661,840 702,614228,036 185,2885,566,818 4,000,1623,238,671 3,162,672866,058 1,116,386292,000 148,000- -9,963,547 8,427,2204,564,605 3,844,270222,165 188,515(80,755) (68,490)1,619,725 1,255,4506,325,740 5,219,745$16,289,287 $13,646,965Dec. 31, 2006 Dec. 31, 2005$23,639,456 $20,779,04714,164,991 12,701,0869,474,465 8,077,9617,946,163 6,621,0151,528,302 1,456,946(515,617) (410,634)(80,410) (65,035)20,147 9,978- -(575,880) (465,691)952,422 991,255250,000 355,000165,000 60,000415,000 415,000537,422 576,2551,255,450 799,519(173,147) (120,324)$1,619,725 $1,255,450STATEMENTS OF CASH FLOWSDec. 31, 2006 Dec. 31, 2005CASH FLOWS FROM OPERATING ACTIVITIES:Cash Received from Customers $23,513,467 $20,797,028Cash Paid for Operating Expenses (22,827,787) (19,891,427)Interest Paid (515,617) (410,634)Income Taxes Paid (551,149) (60,359)Interest Received 20,147 9,978Net Cash (Used for) Provided by Operating Activities (360,939) 444,586CASH FLOWS FROM INVESTING ACTIVITIES:Cash Paid for Purchase of Property and Equipment (914,238) (1,345,310)Cash Paid for Investments (105,864) -Cash (Advance) Collected on Notes Receibable - Other, Net (90,000) 14,500Cash Paid for Deferred Financing Costs (6,289) (80,619)Net Cash (Used for) Investing Activities (1,116,391) (1,411,429)CASH FLOWS FROM FINANCING ACTIVITIES:Net Cash Advances (Payments) on Notes Payable -Lines-of-Credit 1,482,835 (518,671)Proceeds from Issuance of Preferred Stock 626,047 833,804Proceeds Received from New Long-Term Debt Borrowings 200,000 250,000Proceeds Received from Dividend Reinvestment 110,065 81,952Proceeds Received from Common Stock Subscriptions 37,885 30,036Cash Paid to Reduce Mortgages and Notes Payable (297,044) (85,336)Cash Paid to Reduce Capitalized Lease Obligations (236,738) (38,188)Preferred Stock Dividends Paid (173,147) (120,324)Cash Paid to Redeem Preferred Stock (15,777) (19,166)Cash Paid to Redeem Common Stock (16,500) (13,134)Repayment of Notes Payable - Stockholder - -Net Cash Provided by Financing Activities 1,717,626 400,973NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 240,296 (565,870)CASH AND EQUIVALENTS, Beginning of Year 239,854 805,724CASH AND EQUIVALENTS, End of Year $480,150 $239,854RECONCILIATIONS OF NET INCOME TO NET CASH(USED FOR) PROVIDED BY OPERATING ACTIVITIES:Net Income $537,422 $576,255Adjustments to Reconcile Net Income to Net Cash(Used for) Provided by Operating Activities:Depreciation and Amortization 521,210 337,508Loss on Disposal of Equipment - -Changes in Assets and Liabilities:(Increase) Decrease in Accounts Receivable - Trade (125,989) 17,981(Increase) in Inventories (1,404,601) (1,484,254)(Increase) Decrease in Prepaid Expenses and Other Assets (198,369) 25,223(Increase) Decrease in Prepaid Income Taxes (98,886) 92,378Decrease (Increase) in Deferred Income Tax Asset 21,000 (8,000)Decrease in Other Assets - -Increase in Accounts Payable 241,300 447,964Increase in Accrued Expenses and Other CurrentLiabilities 161,489 73,451(Decrease) Increase in Accrued Income Taxes Payable (202,263) 202,263Increase in Accrued Patronage Rebates Payable 42,748 95,817Increase in Deferred Income Taxes Payable 144,000 68,000Total Adjustments (898,361) (131,669)Net Cash (Used for) Provided by Operating Activities $(360,939) $444,58618