Executive Overview
Our revenue is directly related to the level of construction activity in our markets. Ordinarily, the construction segments that affect our business the most are: the single-family residential segment, the commercial construction segment and, to a lesser degree, the public works infrastructure segment, both highway and non-highway. Accordingly, the significant reduction in residential construction during 2007 has caused a corresponding drop in demand for our product. Fortunately, the construction activity in the non-residential sectors remained sufficiently strong to mitigate the effect of the residential slowdown. A prolonged decline in residential activity coinciding with a decline in one or more of the other sectors of the construction market could result in significant additional reductions in demand for our product. Results of Operations
The following table sets forth statement of operations data expressed as a percentage of revenue for the periods indicated:

                                                                 Years ended December 31,
Dollars in Thousands                    2007                               2006                               2005
Revenue                      $ 75,620             97.7 %        $ 83,152             99.5 %        $ 66,898             98.8 %
Related party revenue           1,745              2.3 %             437              0.5 %             836              1.2 %

Total revenue                  77,365            100.0 %          83,589            100.0 %          67,734            100.0 %

Gross profit                    6,154              8.0 %           9,206             11.0 %           7,072             10.4 %
General and
administrative
expenses                        4,574              5.9 %           4,279              5.1 %           3,128              4.6 %

Income from operations          1,580              2.0 %           4,927              5.9 %           3,943              5.8 %
Interest income                   385              0.5 %             395              0.5 %             174              0.3 %
Interest expense                 (138 )           -0.2 %            (163 )           -0.2 %            (227 )           -0.3 %
Income tax expense                756              1.0 %           1,872              2.2 %           1,435              2.1 %

Net income                   $  1,355              1.8 %        $  3,339              4.0 %        $  2,486              3.7 %


Depreciation and
amortization                 $  4,377              5.7 %        $  3,439              4.1 %        $  2,411              3.6 %

Year Ended December 31, 2007 Compared to Year Ended December 31, 2006 Revenue. Revenue declined 7.4% to $77.4 million for the year ended December 31, 2007, which we refer to as "2007," from $83.6 million for the year ended December 31, 2006, which we refer to as "2006." The decrease in revenue resulted from a 10.1% decrease in sales of cubic yards of concrete, which we refer to as "units," offset by an increase of 3.2% in the average unit sales price. The increased average unit sales price reflects a shift toward selling more expensive higher strength concrete typically used in commercial and infrastructure projects. But, when comparing the average unit selling price by mix, prices are down across the board. The decreased volume in 2007 was primarily attributable to the residential sector's continuing decline. We provide ready-mix concrete to a related party. Related party revenue represented 2.3% of our 2007 revenue. The increase in related party revenue when compared to 2006 was the result of the location of the projects, type of products needed and the availability of product and personnel. Location of the project, type of product needed and the availability of product and personnel are factors which we consider when quoting prices to our customers, including our related party. Based on that criteria, future sales to the related party could increase or decrease in any given year, but are not anticipated to be material. We expect raw material prices and transport costs associated with those materials to remain stable during 2008, thus it is unlikely that we will be raising our prices during 2008.
Gross Profit. Gross profit decreased by 33.2% to $6.2 million for 2007 from $9.2 million for 2006 and gross margin, as a percent of revenue, decreased to 8.0% in 2007 from 11.0% in 2006. Gross profit margin can be affected by a variety of factors including customers' construction schedules, weather conditions and availability of raw materials. The decrease in gross profit and gross margin during 2007 resulted primarily from increased costs associated with the expansion of our operations, under utilizing new equipment placed in service and a decrease in

the volume of units sold. During 2008, we will likely continue to under-utilize equipment, but we expect long-term margins will benefit from our expansion efforts. Our fixed costs will increase in 2008 as a result of our expansion efforts implemented during 2007 and will impact our gross profit margin in the interim as we are bringing the equipment up to full utilization.
Depreciation and Amortization. Depreciation and amortization expense increased $.9 million, or 27.3%, to $4.4 million for 2007 from $3.4 million for 2006. This increase resulted from the additional plant, equipment and vehicles we placed in service in 2007.
General and Administrative Expenses. General and administrative expenses increased to $4.6 million for 2007 from $4.3 million for 2006. The increase resulted primarily from a $.3 million increase in public company expense, a $.2 million increase in expenses associated with the ownership of our office facility in Phoenix, Arizona, offset by a $.2 million decrease in administrative salaries, wages, bonuses and related payroll taxes. We record rent income associated with our office building to other income.
Interest Income and Expense. Interest income for 2007 remained flat at $.39 million when compared to 2006. Interest expense decreased in 2007 to $.14 million compared to $.16 million for 2006. The decrease in interest expense was related to the repayment of a portion of our outstanding balance on our line of credit, thereby reducing interest expense. Interest expense associated with assets used to generate revenue is included in cost of revenue. The interest included in cost of revenue during 2007 was $.74 million compared to $.60 million for 2006. The increase in interest expense included in cost of revenue represents the increase in debt obligations used to finance our expansion efforts over the past year. We intend to enter into additional financing agreements to acquire equipment and fund working capital when needed, which could increase interest expense in future periods.
Income Taxes. The income tax provision for 2007 decreased to $.8 million from $1.9 million for 2006. For 2007, our effective income tax rate differed from the statutory rate due primarily to state income taxes, non-deductible expenses and the Domestic Production Activities deduction.
Net Income. Net income was $1.4 million for 2007 as compared to net income of $3.3 million for 2006. The decrease in net income resulted from a decrease in the volume of units sold as discussed above and our under-utilizing equipment, which resulted from the continued slow down of the residential construction sector.
Year Ended December 31, 2006 Compared to Year Ended December 31, 2005 Revenue. Revenue improved 23.4% to $83.6 million for the year ended December 31, 2006, which we refer to as "2006," from $67.7 million for the year ended December 31, 2005, which we refer to as "2005." The increase in revenue resulted from a 15.6% increase in the average unit sales price, complemented by an 8.2% increase in sales of cubic yards of concrete, which we refer to as "units." The increased average sales price reflected our ability to pass our additional costs to our customers, such as the increased costs of raw materials and transportation of those materials, and a change in the types of concrete mixes we sold which required higher strength concrete typically used in commercial and infrastructure projects. The increased volume in 2006 was primarily attributable to our expansion efforts, including the opening of two new concrete batch plants during the year and increased focus to obtain commercial projects. We provide ready-mix concrete to a related party. Related party revenue represented .5% of our total 2006 revenue. The decrease in related party revenue when compared to 2005 was the result of the location of the projects, type of products needed and the availability of product and personnel. Location of the project, type of product needed and the availability of product and personnel are factors which we consider when quoting prices to our customers, including our related party.
Gross Profit. Gross profit increased by 30.2% to $9.2 million for 2006 from $7.1 million for 2005 and gross margin, as a percent of revenue, increased to 11.0% in 2006 from 10.4% in 2005. Gross profit margin can be affected by a variety of factors including customers' construction schedules, weather conditions and availability of raw materials. The increase in gross profit and gross margin during 2006 resulted primarily from the expansion of our operations and utilizing new equipment placed in service.

Depreciation and Amortization. Depreciation and amortization expense increased $1.0 million, or 42.7%, to $3.4 million for 2006 from $2.4 million for 2005. This increase resulted from the additional plant, equipment and vehicles we placed in service in 2006.
General and Administrative Expenses. General and administrative expenses increased to $4.3 million for 2006 from $3.1 million for 2005. The increase resulted primarily from a $.4 million increase in administrative salaries, wages, bonuses and related payroll taxes, a $.1 million increase in public company expense, $.3 million increase in bad debt expense and a $.1 million increase in insurance expense.
Interest Income and Expense. Interest income for 2006 increased to $.39 million from $.17 million for 2005 resulting primarily from an increase in invested cash reserves from our initial public offering. Interest expense decreased in 2006 to $.16 compared to $.23 million for 2005. The decrease in interest expense was related to the repayment of related party debt and repayment of our outstanding balance on our line of credit. Interest expense associated with assets used to generate revenue is included in cost of revenue. The interest included in cost of revenue during 2006 was $.60 million compared to $.41 million for 2005.
Income Taxes. The income tax provision for 2006 increased to $1.9 million from $1.4 million for 2005. For 2006, our effective income tax rate differed from the statutory rate due primarily to state income taxes, non-deductible expenses and the Domestic Production Activities deduction.
Net Income. Net income was $3.3 million for 2006 as compared to net income of $2.5 million for 2005. The increase in net income resulted from an increase in our average unit sales price and our increase in volume of units sold as discussed above.
Liquidity and Capital Resources
Our primary need for capital has been to increase the number of mixer trucks in our fleet, to increase the number of concrete batch plant locations, to purchase support equipment at each location, to secure and equip aggregate sources to ensure a long-term source and quality of the aggregate products used to produce our concrete and to provide working capital to support the expansion of our operations. As we expand our business, we will continue to utilize the availability of capital offered by financial institutions, in turn increasing our total debt and debt service obligations. Historically, our largest provider of financing has been Wells Fargo Equipment Financing, Inc. formerly known as CIT Construction, who we refer to as "WFE." We believe our working capital and our historical sources of capital will be satisfactory to meet our needs for at least one year from the date of this Annual Report on Form 10-K.
We have a credit facility with WFE which provides a $5.0 million revolving credit facility, as well as $15.0 million capital expenditure commitment. As of December 31, 2007 we had approximately $4.3 million available on our revolving credit facility and we also had approximately $7.0 million available on the capital expenditure commitment. The WFE revolving credit facility is collateralized by all of our assets as well all of the assets of Meadow Valley, our parent company. Under the terms of the agreement, we and/or our Parent are required to maintain a certain level of tangible net worth, a ratio of total debt to tangible net worth as well as a minimum cash flow to debt ratio. The Parent is also required to maintain a certain level of earnings before interest, tax, depreciation and amortization (EBITDA). We are also required to maintain a certain level of cash flow to current portion of long-term debt. As of December 31, 2007, both Meadow Valley and Ready Mix were compliant with the facility covenants.
Over the next 24 months, if market conditions warrant, we intend to expand our operations by adding one additional ready-mix production plant, related production plant equipment and site improvements, for which we anticipate utilizing the capital expenditure commitment of our WFE credit facility.
In February 2007, we completed the purchase and installation of the equipment we needed to begin producing aggregate products from our pit in the northwest metropolitan Las Vegas area, which we refer to as Lee Canyon. Bringing this facility on line should improve our ability to better service the anticipated growth in the Las Vegas metropolitan area.

As a result of the expansion efforts we have already executed over the past two years, we have entered into additional debt and operating lease obligations which, in turn, have increased our total fixed minimum monthly payment obligations. To date our liquidity has not been negatively impacted by this increase as our cash flow from operations has provided an amount in excess of the increase in these payments. We expect, but cannot assure, that cash flow from operations will be adequate to provide for the cash outflow needed to service all of our obligations.
The following table sets forth, for the periods presented, certain items from our Statements of Cash Flows:

                                                                  For the years ended December 31,
(Dollars in Thousands)                                        2007               2006               2005
Cash provided by operating activities                     $    7,293          $   5,158          $  2,123
Cash used in investing activities                              3,586              8,394             4,582
Cash provided by (used in) financing activities               (2,920 )             (504 )          13,145

Cash provided by operating activities during 2007 of $7.3 million represents a $2.1 million increase from the amount provided by operating activities during 2006. The change was primarily due to the decrease in our outstanding accounts receivable, which is a result of reduced sales and continued emphasis on collections, a reduction in our refundable deposits and the change in depreciation expense year over year, offset by lower net income, a decrease in accounts payable and accrued liabilities, also a result of reduced sales.
Cash used in investing activities during 2007 of $3.6 million represents a $4.8 million decrease from the amount used by investing activities during 2006. The decrease in investing activities during 2007 was due primarily to the completion of the expansion of our production facilities and equipment to be used at those locations.
Cash used in financing activities during 2007 of $2.9 million represents a $2.4 million increase from the amount used in financing activities during 2006. The increase in cash used in financing activities during 2007 was the result of the repayment of debt obligations.
Cash provided by operating activities during 2006 of $5.2 million represents a $3.0 million increase from the amount provided by operating activities during 2005. The change was primarily due to improved net income, reduction of tax obligations due and payable during the year and the change in depreciation expense year over year offset by deposits made near the end of 2006, which were primarily made to secure the production equipment at our Lee Canyon facility as mentioned above.
Cash used in investing activities during 2006 of $8.4 million represents a $3.8 million increase from the amount used by investing activities during 2005. The increase in investing activities during 2006 was due primarily to the expansion of our production facilities and equipment to be used at those locations.
Cash used in financing activities during 2006 of $.5 million represents a $13.6 million decrease from the amount provided by financing activities during 2005. The decrease in financing activities during 2006 was the result of not obtaining additional proceeds from a public offering or obtaining extensive debt to fund our expansion efforts.

Summary of Contractual Obligations and Commercial Commitments Contractual obligations at December 31, 2007, and the effects such obligations are expected to have on liquidity and cash flow in future periods, are summarized as follows:

                                                               Payments Due by Period
                                                      Less than          1 - 3           4 - 5          After
(Dollars In thousands)                Total            1 Year            Years           Years         5 Years
Contractual Obligations
Long-term debt obligations           $  9,841        $     2,019        $  4,875        $ 1,841        $  1,106
Interest payments on long-term
debt (1)                                1,907                662             830            271             144
Capital lease obligations                   5                  5               -              -               -
Operating leases obligations            6,798              2,624           3,583            591               -
Purchase obligations                   23,990              3,842           6,323          4,740           9,085
Other long-term liabilities (2)           287                287               -              -               -

Total contractual obligations        $ 42,828        $     9,439        $ 15,611        $ 7,443        $ 10,335

(1) Interest payments are based on the individual interest rates of each obligation, which range from 5.22% to 8.45% per annum. We do not assume an increase in the variable interest rate. See Note 7 -
Line of Credit
and Note 8 -
Notes Payable
in the notes
to the
financial
statements
included in
Item 8.

(2) Other long-term liabilities reflected on the registrant's balance sheet under GAAP include employment contracts with two of our key executive officers that call for annual salaries of $165,000 and $132,300 through January 2008, respectively, and are to be reviewed annually by our Compensation Committee. In addition, other long-term liabilities include an administrative services agreement with Meadow Valley in the amount of $22,000 per month expiring December 31, 2008.

Impact of Inflation
We may experience increases in the cost of our raw materials and the transport of those materials. Given the current downward pressure on pricing due to slackening demand, we are not always able to pass on additional costs, thereby possibly decreasing our margins. Increases in labor costs, worker compensation rates and employee benefits, equipment costs, or material or subcontractor costs could also adversely affect our operations in future periods. Therefore, inflation may have a negative material impact on our operations to the extent that we cannot pass on higher costs to our customers. Critical Accounting Estimates
General
Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our financial statements, which have been prepared in accordance with accounting policies generally accepted in the United States of America, or "GAAP." We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may materially differ from these estimates under different assumptions or conditions.
An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our financial statements. We believe the following critical accounting policies reflect our more significant estimates and assumptions used in the preparation of our financial statements. Our significant accounting policies are described below and in Note 1 - Summary of Significant Accounting Policies and Use of Estimates to our financial statements included in Item 8.

Reportable Segments
We currently operate our business within one reportable segment of operation. All of the revenue from our customers is substantially from the sale of ready-mix concrete. Ready-mix concrete can have many different variations and characteristics, from the strength of the concrete to its color and consistency. However, we do not maintain the quantity or dollar amount of each variation of our product sold as the variations in the ready-mix concrete sales are simply variations of ready-mix concrete. We also sell sand, aggregate and colored rock from our production facility in Moapa, Nevada, but the primary purpose of this production facility is to provide us with more control over quality and assurance of timely availability of a portion of the raw materials used in the product we sell to customers. The revenue generated from the sale of sand, aggregate and colored rock represented 3.3% of our gross revenue for the years ended December 31, 2007 and 2006. In addition, we view the market similarities between the Phoenix, Arizona and the Las Vegas, Nevada metropolitan areas to be of such a similar nature that we do not distinguish between them for financial statement reporting.
Collectibility of Account Receivables
We are required to estimate the collectibility of our account receivables. A considerable amount of judgment is required in assessing the realization of these receivables, including the current credit worthiness of each customer and the related aging of the past due balances. Our provision for bad debt as of December 31, 2007 and 2006 amounted to approximately $380,000 and $309,000, respectively. The increase in our provision for bad debt as of December 31, 2007 represented the use of our historic bad debt rate, identifying specific accounts potentially uncollectible and write offs in the amount of approximately $46,000 during 2007. We determine our reserve by using percentages applied to certain types of revenue, as well as a review of individual accounts outstanding and our collection history. Furthermore, if one or more major customers fail to pay us, it would significantly affect our current results as well as future estimates. We pursue our lien rights to minimize our exposure to delinquent accounts. Valuation of Property and Equipment
We are required to report property and equipment net of depreciation and amortization expense. We expense depreciation and amortization utilizing the straight-line method, over what we believe to be the estimated useful lives. Leasehold improvements are amortized over their estimated useful lives or the lease term, whichever is shorter. The estimated useful lives of property and equipment are:

                   Batch plants                     4-15 years
                   Office buildings                   39 years
                   Computer equipment                3-5 years
                   Equipment                        3-10 years
                   Leasehold improvements           3-10 years
                   Office furniture and equipment    5-7 years
                   Vehicles                         5-10 years

The life on any piece of equipment can vary, even within the same category of equipment, due to the quality of the maintenance, care provided by the operator and the general environmental conditions, such as temperature, rain and the terrain conditions to reach the job site where the material is delivered. We maintain, service and repair approximately 95% of our equipment through the use of our mechanics. If we inaccurately estimate the life of any given piece of equipment or category of equipment we may be overstating or understating earnings in any given period.
We also review our property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. The impairments are

recognized in the period during which they are identified. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
Income taxes
We are required to estimate our income taxes in each jurisdiction in which we operate. This process requires us to estimate the actual current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and financial reporting purposes. These temporary differences result in deferred tax assets and liabilities on our balance sheets. We must calculate the blended tax rate, combining all applicable tax jurisdictions, which can vary over time as a result of the allocation of taxable income between the tax jurisdictions and the changes in tax rates. We must also assess the . . .