UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 11-K
 

(Mark One)
x
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
   
  For the fiscal year ended: December 31, 2008
 
OR
 
¨
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
   
  For the transition period from              to             
 
Commission file number 000-23016
 
 
 
A.
Full title of the plan and the address of the plan, if different from that of the issuer named below:
 
Jason Pharmaceuticals, Inc. 401(k)Plan
 
B.
Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
 
Medifast, Inc.
11445 Cronhill Dr.
Owings Mills, MD  21117
 



 
 
SIGNATURES
 
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
 
         
       
Jason Pharmaceuticals, Inc. 401(k) Plan
       
                    (Name of Plan)
     
Date: June 29, 2009
      
/s/ Michael S. McDevitt
       
Michael S. McDevitt
       
Chief Executive Officer and Chief Financial Officer
       
Medifast, Inc.
 
 
 

 
 
JASON PHARMACEUTICALS, INC 401(k) PLAN
 
FINANCIAL STATEMENTS

FOR THE YEAR ENDED

DECEMBER 31, 2008
 
 
 
 
 
 
 
JASON PHARMACEUTICALS, INC 401(k)

DECEMBER 31, 2008
 
TABLE OF CONTENTS
 
 

 
 
Report of Independent Registered Public Accounting Firm
1
     
Financial Statements:
  
     
 
Statements of Net Assets Available for
  
 
Benefits, December 31, 2008 and 2007*
2
     
 
Statements of Changes in Net Assets Available
  
 
for Benefits for the years ended
  
 
December 31, 2008
3
     
 
Notes to Financial Statements
4-11
     
     
Supplemental Schedule
  
     
     
 
Schedule of Assets
  
 
(Held at the End of the Year) December 31, 2008
12

 

 
* Fiscal year 2007 were unaudited, and is being included for presentation purpose only.
 
BAGELL, JOSEPHS, LEVINE & COMPANY, LLC
Certified Public Accountants
406 Lippincott Drive, Suite J
Marlton, NJ 08053
856-355-5900


To the 401(k) Plan Administrative and Investment Committee and Participants
Jason Pharmaceuticals, Inc. 401(k) Plan

We have audited the accompanying Statements of Net Assets Available for Plan Benefits of the Jason Pharmaceuticals, Inc 401(k) Plan as of December 31, 2008, and the related Statement of Changes in Net Assets Available for Plan Benefits for the year ended December 31, 2008.  These financial statements are the responsibility of the Plan’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and performed the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan at December 31, 2008, and the changes in its net assets available for plan benefits for the year ended December 31, 2008, in conformity with U.S. generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the 2008 basic financial statements taken as a whole. The supplemental Schedule H, Line 4(i) — Schedule Of Assets (Held At End Of Year) as of December 31, 2008 is presented for the purpose of additional analysis and is not a required part of the 2008 basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in our audit of the 2008 basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the 2008 basic financial statements taken as a whole.

 
BAGELL, JOSEPHS, LEVINE & COMPANY, L.L.C.
 
BAGELL, JOSEPHS, LEVINE & COMPANY, L.L.C.
Certified Public Accountants
Marlton, New Jersey
June 29, 2009

1
 
JASON PHARMACEUTICALS, INC 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31,
 
 
   
2008
      
2007*
  
 ASSETS
              
               
Investments (at fair value)
   $ 990,562     $ 1,128,453  
                 
Receivables:
                
Employer’s contribution
     4,902       4,050  
Participants’ contributions
     9,804       8,100  
      14,706       12,150  
                 
TOTAL ASSETS
     1,005,268       1,140,603  
                 
                 
 LIABILITIES
                
Accounts payable
     8,372       -  
                 
TOTAL LIABILITIES
     8,372       -  
                 
NET ASSETS AVAILABLE FOR BENEFITS
   $ 996,896     $ 1,140,603  
 
* Fiscal year 2007 was unaudited and is being included for presentation purpose only.
 
 
 
See accompanying notes to financial statements
 
2
 
JASON PHARMACEUTICALS, INC 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2008
 
ADDITIONS
      
       
Additions to net assets attributed to:
      
    Investment income:
      
        Net (depreciation) in fair value of investments
   $ (407,024 )
        Interest
     4,740  
      (402,284 )
         
        Less investment expenses
     (6,381 )
      (408,665 )
    Contributions:
        
        Participants’
     278,002  
        Employer’s
     97,710  
      375,712  
         
TOTAL ADDITIONS
     (32,953 )
         
DEDUCTIONS
        
         
Deductions from net assets attributed to:
        
        Benefits paid to participants
     88,937  
        Return of excess contribution:
     8,372  
        Administration expenses
     13,445  
         
TOTAL DEDUCTIONS
     102,382  
         
NET (DECREASE)
   $ (135,335 )
         
NET ASSETS AVAILABLE FOR BENEFITS
        
    Beginning of year
     1,140,603  
         
END OF YEAR
   $ 1,005,268  
 
 
See accompanying notes to financial statements
3
 
 
JASON PHARMACEUTICALS, INC 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008
 
 
 
NOTE 1—
DESCRIPTION OF PLAN
 
 
The following description of the Jason Pharmaceuticals, Inc (“Company”) 401(k) Plan (“Plan”) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.
 
General:

Jason Pharmaceuticals, Inc. 401 (k) Plan (the Plan) is a defined contribution plan covering all full-time employees of Jason Pharmaceuticals, Inc. who have completed 12 months of service or attained 1,000 hours of service, are age 21 or older and are employed by Jason Pharmaceuticals, Inc. on the last day of the Plan year.  It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).

Contributions:

Each year participants may contribute to the plan by signing a salary deferral agreement (as defined in the Plan), which then will be deducted on a pre-tax basis.  The Company will contribute a matching contribution based upon the participant’s salary deferral for the Plan year. The Company has chosen to contribute 50% of the first 6% of a participant’s salary deferral. However, a participant’s total deferrals in any taxable year may not exceed a dollar limitation, which is set by law - $15,500 for 2008.  Participants who have attained age 50 before the end of the Plan year are eligible to make catch-up contributions. In 2008, catch-up contributions limit is set to $5,000. These limits will be increased in future years for cost of living changes. Participants may also contribute amounts representing distributions from other qualified defined benefit or contribution plans. Participants may change contribution rates at any time after initial eligibility. Contributions are subject to certain limitations.

Participant Accounts:
 
Each participant’s account is credited with the participant’s contribution and allocations of (a) the Company’s contribution and, (b) Plan earnings, and charged with an allocation of administrative expenses. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
 
4
JASON PHARMACEUTICALS, INC 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2008

 
NOTE 1—
DESCRIPTION OF PLAN (CONTINUED)
 
 
Vesting:
 
Participants are immediately vested in their contributions plus actual earnings thereon. Vesting in the Company’s contribution portion of their accounts is based on years of continuous service. A participant is 100% vested after three years of credited service.
 
Participant Loans:
 
Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their account balance. The loans are secured by the balance in the participant’s account and bear interest at rates ranging from 6% to 10%, which are commensurate with local prevailing rates as determined quarterly by the Plan administrator. Principal and interest is paid ratably through monthly payroll deductions.
 
Payment of Benefits:
 
On termination of service due to death, disability or retirement, a participant may elect to receive either a lump-sum amount equal to the value of the participant’s vested interest in his or her account, or annual installments over a ten year period. For termination of service due to other reasons, a participant may receive the value of the vested interest in his or her account as a lump-sum distribution.
 
Forfeited Accounts.:
 
At December 31, 2008 forfeited non-vested accounts totaled $4,455. These accounts will be used to reduce future employer contributions.
 
Risks and Uncertainties:
 
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statement of net assets available for benefits.
 
5
JASON PHARMACEUTICALS, INC 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2008
 
 
 
NOTE 2—
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 
Estimates:
 
The preparation of financial statements in conformity with generally accepted accounting principles requires the plan administrator to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates.
 
Investment Valuation and Income Recognition:
 
The Plan’s investments are stated at fair value. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
 
Payment of Benefits:
 
Benefits are recorded when paid.
 
Operating Expenses:
 
All expenses of maintaining the Plan are applied against forfeited amounts. Any excess is allocated to individual participants.
 
6
JASON PHARMACEUTICALS, INC 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2008

 
 
NOTE 3—
FAIR VALUE MEASUREMENTS
 
 
The Plan’s investments are reported at fair value in the accompanying statement of net assets available for benefit.
 
         
Fair Value
Measurements Using:
  
                         
         
Quoted Prices in
Active Markets
for Identical Assets
    
Significant
Other
Observable
Inputs
    
Significant
Unobservable
Inputs
  
   
Fair Value
    
(Level 1)
    
(Level 2)
    
(Level 3)
  
                         
    December 31, 2008
                        
Mutual funds
   $ 833,822     $ 833,822     $ -     $ -  
Investment contract with insurance company
     143,491       -       -       143,491  
Participant loans
     13,249       -       -       13,249    
    Total
   $ 990,562     $ 833,822     $ -     $ 156,740  
                                 
                               
Mutual funds
   $ 1,003,386     $ 1,003,386     $ -     $ -  
Investment contract with insurance company
     113,757       -       -       113,757  
Participant loans
     11,310       -       -       11,310  
    Total
   $ 1,128,453     $ 1,003,386     $ -     $ 125,067  
 
* Fiscal year 2007 was unaudited, and is being included for presentational purposes only.

7
JASON PHARMACEUTICALS, INC 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2008
 
 
 
NOTE 3—
FAIR VALUE MEASUREMENTS (CONTINUED)
 
 
SFAS No. 157, Fair Value Measurements, establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels: Level 1 inputs consist of unadjusted quoted prices in active markets for identical assets and have the highest priority, and Level 3 inputs have the lowest priority. The Plan uses appropriate valuation techniques based on the available inputs to measure the fair value of its investments. When available, the Plan measures fair value using Level 1 inputs because they generally provide the most reliable evidence of fair value. No Level 2 inputs were available to the Plan, and Level 3 inputs were only used when Level 1 or Level 2 inputs were not available.
 
Level 1 Fair Value Measurements:
 
Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access.
 
Level 2 Fair Value Measurements:
 
Inputs to the valuation methodology include:
 
 
•
  
Quoted prices for similar assets or liabilities in active markets;
       
 
•
  
Quoted prices for identical or similar assets or liabilities in inactive markets;
       
 
•
  
Inputs other than quoted prices that are observable for the asset or liability; and
       
 
•
  
Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
 
Level 3 Fair Value Measurements:
 
Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
 
8
JASON PHARMACEUTICALS, INC 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2008

 
NOTE 3—
FAIR VALUE MEASUREMENTS (CONTINUED)
 
Fair Value Measurements Using Significant
 
Unobservable Inputs (Level 3):
 
   
Investment
    
Participant
        
   
Contract
    
Loans
    
Total
  
December 31, 2008
                  
    Beginning balance
   $ 113,757     $ 11,310     $ 125,067  
    Total gains or losses (realized and unrealized) included in changes in net assets available for benefits
     -       -       -  
    Purchases, sales, issuances, and settlements (net)
     29,734       1,939       31,673  
    Ending balance
   $ 143,491     $ 13,249     $ 156,740  
                         
December 31, 2007
                        
    Beginning balance
   $ 80,972     $ 7,510     $ 88,482  
    Total gains or losses (realized and unrealized) included in changes in net assets available for benefits
     -       -       -  
    Purchases, sales, issuances, and settlements (net)
     32,785       3,800       36,585  
    Ending balance
   $ 113,757     $ 11,310     $ 125,067  
 
 
Gains and losses (realized and unrealized) included in changes in net assets available for benefits for the year ended December 31, 2008 are reported in net appreciation in fair value of investments.
 
 
9
JASON PHARMACEUTICALS, INC 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2008

 
 
NOTE 4—
INVESTMENTS
 
The following presents investments that represent 5% or more of the Plan’s net assets.
 
   
2008
  
Fund
      
Lincoln SA48 Afis Growth
     109,854  
Lincoln SA35 Fidelity VIP Contrafund
     103,962  
Lincoln SA14 Short Term
     85,016  
Lincoln SA56 Delaware VIP Small Cap Value
     40,434  
Lincoln SA21 Balanced
     39,578  
Group Variable Annuity Contract
     143,491  

 
NOTE 5—
PLAN TERMINATION
 
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants would become 100% vested in their employer contributions.
 
 
NOTE 6—
TAX STATUS
 
The Internal Revenue Service has determined and informed the Company by a letter dated September 27, 2002, that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (IRC). Although the Plan has been amended since receiving the determination letter, the Plan administrator and the Plan’s tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC.
 
 
10
 
JASON PHARMACEUTICALS, INC 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2008

 
 
NOTE 7— 
RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
 
   
2008
  
       
Net assets available for benefits per the financial statements
   $ 996,896  
Amounts distributed to participants for loans
     (13,249 )
Employer and employee contributions
     (14,706 )
Refund of excess distributions
     8,372  
         
Net assets available for benefits per the Form 5500
   $ 977,313  
 

 
 

 
 

 
11
 
 
 
 
 
 
 
 
SUPPLEMENTAL SCHEDULE
 
JASON PHARMACEUTICALS, INC 401(k) PLAN
EIN: 52-1237423
Plan Number: 64312
Schedule H, line 4i—Schedule of Assets (Held At End of Year)
 
 
DECEMBER 31, 2008
 
 
 
 
 
 
 
 
 
 
12
 
 
(a)
(b) Identification of Issue, Borrower, Lessor or Similar Party
  
(c ) Description of investment, including maturity date, rate of interest, collateral, par or maturity value
  
(d) Cost
  
(e) Current Value
 
Mutual Funds
            
*
Lincoln Financial Group
  
Short Term
  
**
  
    85,016
*
Lincoln Financial Group
  
Balanced
  
**
  
    39,578
*
Lincoln Financial Group
  
Afis Growth
  
**
  
  109,854
*
Lincoln Financial Group
  
Delaware VIP Small Cap Value
  
**
  
    40,434
*
Lincoln Financial Group
  
Fidelity VIP Contrafund
  
**
  
  103,962
*
Lincoln Financial Group
  
American Century VP Inflation Protected
  
**
  
      3,183
*
Lincoln Financial Group
  
Delaware VIP Diversified
  
**
  
      1,627
*
Lincoln Financial Group
  
Delavare VIP Capital Reserves
  
**
  
      5,433
*
Lincoln Financial Group
  
Government/Corporate Bond
  
**
  
    36,688
*
Lincoln Financial Group
  
High Yield Bond
  
**
  
    19,431
*
Lincoln Financial Group
  
Templeton Global Income
  
**
  
      1,595
*
Lincoln Financial Group
  
Aggressive Balanced
  
**
  
         329
*
Lincoln Financial Group
  
Alliance Bernstein VPS Growth
  
**
  
      4,011
*
Lincoln Financial Group
  
Afis Growth-Income
  
**
  
    22,569
*
Lincoln Financial Group
  
Blackrock Large Cap Value
  
**
  
      5,107
*
Lincoln Financial Group
  
Conservative Balanced
  
**
  
         436
*
Lincoln Financial Group
  
Delaware VIP Value
  
**
  
         392
*
Lincoln Financial Group
  
Fidelity VIP Equity-Income
  
**
  
    26,861
*
Lincoln Financial Group
  
LVIP Wilshire Conservative
  
**
  
      1,594
*
Lincoln Financial Group
  
LVIP Wilshire Moderate
  
**
  
    23,857
*
Lincoln Financial Group
  
LVIP Wilshire Moderate Pro
  
**
  
      3,197
*
Lincoln Financial Group
  
Value Equity
  
**
  
         852
*
Lincoln Financial Group
  
Afis International
  
**
  
    19,811
*
Lincoln Financial Group
  
Afis Global Growth
  
**
  
    17,734
*
Lincoln Financial Group
  
Blackrock Capital Appreciation
  
**
  
      1,352
*
Lincoln Financial Group
  
Blackrock Mid-Cap Value
  
**
  
      9,562
*
Lincoln Financial Group
  
LVIP Cohen & Steers Global
  
**
  
      2,822
*
Lincoln Financial Group
  
Core Equity
  
**
  
    30,037
*
Lincoln Financial Group
  
Fidelity VIP Growth
  
**
  
      4,931
               
             
OVER
 
 
13

 
 
(a)
(b) Identification of Issue, Borrower, Lessor or Similar Party
  
(c ) Description of investment, including maturity date, rate of interest, collateral, par or maturity value
  
(d) Cost
  
(e) Current Value
               
*
Lincoln Financial Group
  
Fidelity VIP Overseas
  
**
  
    28,926
*
Lincoln Financial Group
  
International Equity
  
**
  
      8,559
*
Lincoln Financial Group
  
Janus Aspen Series Large
  
**
  
      9,891
*
Lincoln Financial Group
  
Large Capitalization Equity
  
**
  
      3,171
*
Lincoln Financial Group
  
LVIP Delavare Social Aware
  
**
  
    14,206
*
Lincoln Financial Group
  
LVIP Mid-Cap Value
  
**
  
      1,425
*
Lincoln Financial Group
  
LVIP SSGA S&P500 Index
  
**
  
    28,624
*
Lincoln Financial Group
  
LVIP T. Rowe Price Growth
  
**
  
      2,042
*
Lincoln Financial Group
  
LVIP Templeton Growth
  
**
  
      1,701
*
Lincoln Financial Group
  
LVIP Wilshire Aggressive
  
**
  
    11,325
*
Lincoln Financial Group
  
LVIP Wilshire 2040
  
**
  
         186
*
Lincoln Financial Group
  
MFS VIT Utilities Series
  
**
  
      4,537
*
Lincoln Financial Group
  
Afis Global Small Capital
  
**
  
    32,155
*
Lincoln Financial Group
  
Alliance Berstein VPS Global
  
**
  
      2,052
*
Lincoln Financial Group
  
Blackrock Aurora
  
**
  
      6,488
*
Lincoln Financial Group
  
Blackrock Global Resources
  
**
  
    11,431
*
Lincoln Financial Group
  
Blackrock Small/Mid-Cap Growth
  
**
  
      8,513
*
Lincoln Financial Group
  
Delaware VIP Emerging Markets
  
**
  
    11,516
*
Lincoln Financial Group
  
Fidelity VIP Mid-Cap
  
**
  
      4,526
*
Lincoln Financial Group
  
Janus Aspen Series Mid-Cap
  
**
  
      1,683
*
Lincoln Financial Group
  
LVIP SSGA Small Cap Index
  
**
  
         285
*
Lincoln Financial Group
  
Medium Capitalization Equity
  
**
  
         433
*
Lincoln Financial Group
  
MFS VIT Growth Series
  
**
  
      8,911
*
Lincoln Financial Group
  
Small Capitalization Equity
  
**
  
      8,983
               
*
Party-in-interest as defined by ERISA.
        
               
**
The cost of participant-directed investments is not required to be disclosed.
        
 

 
 
14