TABLE
OF CONTENTS
|
|
PART
I
|
|
ITEM
1. DESCRIPTION OF
BUSINESS......................................................................................................................................................
|
1
|
ITEM
2. DESCRIPTION OF
PROPERTY.....................................................................................................................................................
|
6
|
ITEM
3. LEGAL
PROCEEDINGS.................................................................................................................................................................
|
6
|
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.................................................................................
|
6
|
PART
II
|
|
AND
SMALL BUSINESS ISSUER PURCHASES OF EQUITY
SECURITIES.......................................................................................
|
7
|
ITEM
6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF
OPERATION..............................................................
|
7
|
ITEM
7. FINANCIAL
STATEMENTS........................................................................................................................................................
|
11
|
ITEM
8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON
ACCOUNTING AND FINANCIAL
DISCLOSURE..................................................................................................................................................................................................
|
11
|
ITEM
8A. CONTROLS AND
PROCEDURES.............................................................................................................................................
|
11
|
ITEM
8B. OTHER
INFORMATION............................................................................................................................................................
|
11
|
PART
III
|
|
ITEM
9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION
16(a) OF
THE EXCHANGE
ACT.........................................................................
|
11
|
ITEM
10. EXECUTIVE
COMPENSATION.................................................................................................................................................
|
13
|
ITEM
11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS........................................................................................................................................................................
|
14
|
ITEM
12. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS AND DIRECTOR
INDEPENDENCE........................
|
15
|
ITEM
13. EXHIBITS.......................................................................................................................................................................................
|
15
|
ITEM
14. PRINCIPAL ACCOUNTANT FEES AND
SERVICES.............................................................................................................
|
15
|
PART
IV
|
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM.......................................................................................
|
F-1
|
SIGNATURES.................................................................................................................................................................................................
|
16 |
INDEX
TO
EXHIBITS....................................................................................................................................................................................
|
17 |
· |
Facility
equipment was upgraded with a 100 ton hydraulic press, a rewind/slitter,
and a rotary die cutter along with other equipment.
|
· |
Facility
increased the size of its Contained/Controlled environment Manufacturing
Environment.
|
FISCAL
2007
|
HIGH
|
LOW
|
Fourth
Quarter
|
$0.90
|
$0.70
|
Third
Quarter
|
$1.00
|
$0.70
|
Second
Quarter
|
$1.05
|
$0.53
|
First
Quarter
|
$0.58
|
$0.50
|
FISCAL
2006
|
HIGH
|
LOW
|
Fourth
Quarter
|
$0.70
|
$0.35
|
Third
Quarter
|
$0.45
|
$0.22
|
Second
Quarter
|
$0.45
|
$0.22
|
First
Quarter
|
$0.30
|
$0.20
|
PLAN
CATEGORY
|
NUMBER
OF SECURITIES TO BE ISSUED UPON EXERCISE OF OUTSTANDING OPTIONS,
WARRANTS
AND RIGHTS
|
WEIGHTED-AVERAGE
EXERCISE PRICE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS
|
NUMBER
OF SECURITIES REMAINING AVAILABLE FOR FUTURE ISSUANCE UNDER EQUITY
COMPENSATION PLANS (EXCLUDING SECURITIES REFLECTED IN COLUMN
(a))
|
|
(a)
|
(b)
|
(c)
|
Equity
compensation plans approved by
security
holders(1)
|
428,200
|
$
0.71
|
2,603,800
|
Equity
compensation plans not approved by security holders
|
-
|
-
|
-
|
Total
|
428,200
|
$
0.71
|
2,603,800
|
YEAR
|
THE
COMPANY
|
FOAMEX
|
1998
|
65
|
35
|
1999
|
60
|
40
|
2000
|
50
|
50
|
2001
|
50
|
50
|
2002
|
45
|
55
|
2003
|
40
|
60
|
2004
- 2007
|
35
|
65
|
· |
ISO
13485 Certification
|
· |
Equipment
Upgrades
|
· |
Controlled
Environment production facility
improvements
|
Name
|
Age
|
Position
|
Timothy
R. Busch
|
53
|
Chairman
of the Board of Directors
|
N.
Price Paschall
|
59
|
Director
|
Maurice
J. DeWald
|
67
|
Director
|
Ricardo
G. Brutocao
|
63
|
Chief
Executive Officer and Director
|
John
Sawyer
|
63
|
Director
|
William
G. Mortensen
|
42
|
President
and Chief Financial Officer
|
Name
and Principal Position
|
Fiscal
Year
|
Salary
|
Bonus
|
Total
|
Ricardo
Brutocao
|
2007
|
140,000
|
36,303
|
176,303
|
Chief
Executive Officer
|
2006
|
125,000
|
65,949
|
190,949
|
William
G. Mortensen
|
2007
|
135,000
|
36,303
|
171,303
|
President
and Chief Financial Officer
|
2006
|
120,000
|
65,949
|
185,949
|
Number
of Securities Underlying Unexercised Options (1)
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options
|
||||
Name
|
Exercisable
|
Unexercisable
|
Option
Exercise Price
|
Option
Expiration Date
|
|
Ricardo
Brutocao
|
60,000
|
40,000
|
-0-
|
$0.20
|
2015
|
William
G. Mortensen
|
30,000
|
20,000
|
-0-
|
$0.40
|
2009
|
Name
|
Fees
Earned or Paid in Cash
|
Option
Awards(1)
|
Non-Equity
Incentive Plan Compensation
|
Non-Qualified
Deferred Compensation Earnings
|
All
Other Compensation
|
Total
|
Timothy
R. Busch(2)
|
$10,000
|
$31,482
|
-0-
|
-0-
|
-0-
|
$41,482
|
N.
Price Paschall(2)
|
$10,000
|
$31,482
|
-0-
|
-0-
|
-0-
|
$41,482
|
Maurice
J. DeWald(2)
|
$12,500
|
$31,482
|
-0-
|
-0-
|
-0-
|
$43,982
|
John
Sawyer(3)
|
$10,000
|
$33,153
|
-0-
|
-0-
|
-0-
|
$43,153
|
(1)
|
The
valuation of stock option awards in this column represents the
compensation cost of awards recognized for financial statement purposes
for 2007 under Statement of Financial Accounting Standards No. 123,
as
revised. The amounts include portions of stock option grants that
were
expensed in 2007 based on the amortization schedule. See discussion
under
“Stock Option Awards” above for information concerning all assumptions
made in connection with determining the fair value of the
awards.
|
(2)
|
Includes
stock options granted under the 2007 Stock Incentive Plan on July
9, 2007,
which are exercisable for 45,200 shares of the Company’s common stock at
an exercise price of $0.90 per share. These options vest immediately
and
expire on July 9, 2017.
|
(3)
|
Includes
stock options granted under the 2007 Stock Incentive Plan on July
9, 2007,
which are exercisable for 47,600 shares of the Company’s common stock at
an exercise price of $0.90 per share. These options vest immediately
and
expire on July 9, 2017.
|
. |
each
person who is known by the Company to own beneficially or exercise
voting
or dispositive control over more than 5%of the common
stock;
|
. |
each
of the Company's directors and director
nominees;
|
. |
each
of the Company's current Named Executive Officers;
and
|
. |
all
current executive officers and directors as a
group.
|
TITLE
OF CLASS: COMMON STOCK
|
||
NAME
AND ADDRESS OF BENEFICIAL OWNER
|
AMOUNT
AND NATURE OF BENEFICIAL OWNERSHIP(1)
|
PERCENT
OF CLASS(2)
|
Dito
Caree LP, Dito Devcar LP, Plus 4 LLC and Richard H. Pickup
|
3,015,106(3)
|
24.82%
|
Gregory
J. Spagna
|
904,500(4)
|
7.45%
|
Timothy
R. Busch and the Lenawee Trust
|
2,775,119(5)
|
22.85%
|
N.
Price Paschall
|
325,200(6)
|
2.68%
|
Maurice
J. DeWald
|
105,200(7)
|
0.87%
|
William
G. Mortensen
|
250,300(8)
|
2.06%
|
John
Sawyer
|
57,600(9)
|
0.39%
|
Ricardo
G. Brutocao
|
579,739(10)
|
4.77%
|
All
current executive officers and directors as a group (6 persons)
(11)
|
8,002,764
|
65.89%
|
(1)
|
Beneficial
ownership has been determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934 and unless otherwise indicated, represents
securities for which the beneficial owner has sole voting and investment
power. Any securities held in the name of, and under, the voting
and
investment authority of a spouse of an executive officer or director
have
been excluded.
|
(2)
|
Calculated
based on 12,146,026 shares of common stock outstanding on
February 15, 2008, plus, for each person or group, any securities
that person or group has the right to acquire within 60 days pursuant
to
options, warrants, conversion privileges or other
rights.
|
(3)
|
Represents
986,300 shares held by Dito Caree LP, 200,000 shares held by Dito
Devcar
LP and 1,828,806 shares held by Plus 4 LLC. Mr. Pickup holds voting
and
dispositive power over these shares as general partner of each of
Dito
Caree LP and Dito Devcar LP, and Plus 4 LLC. Mr. Pickup's address
is c/o
David Hehn, 3753 Howard Hughes Parkway #200, Las Vegas, Nevada 89109-0938.
|
(4)
|
Represents
617,000 shares held by Mr. Spagna and 287,500 shares held jointly
by Mr.
Spagna and his spouse and children, as reported on a Schedule 13D/A
filed
with the Commission on February 5, 2003. Mr. Spagna's address is
515
Airport Executive Park, Nanuet, New York
10954.
|
(5)
|
Lenawee
Trust is a trust of which Timothy Busch and his spouse are beneficiaries
and hold voting and dispositive power. Represents 2,579,919 shares
held by
the Lenawee Trust, of which Mr. Busch and his spouse are beneficiaries
and
hold voting and dispositive power, 100,000 shares underlying warrants
to
purchase 100,000 shares of common stock a price of $0.363 per share
held
directly by Mr. Busch, and 95,200 shares underlying options to purchase
common stock held directly by Mr.
Busch.
|
(6)
|
Represents
20,000 shares purchased and 305,200 stock options to purchase common
stock.
|
(7)
|
Represents
105,200 stock options to purchase common stock
|
(8)
|
Represents
50,000 options to purchase common stock at $0.40 per share, 100,000
stock
warrants at $0.363 per share and 100,300 shares
purchased.
|
(9)
|
Represent
57,500 shares underlying options to purchase common
stock.
|
(10)
|
Represents
100,000 stock options and purchased stock of 479,739
shares.
|
(11)
|
Includes
8,002,764 shares of common stock underlying securities that members
of
this group have the right to aquire within 60 days pursuant to options,
warrants, conversion privileges or other
rights.
|
YEARS
ENDED NOVEMBER 30,
|
|
2007
|
|
2006
|
|
||
Net
sales
|
|
$
|
10,672,786
|
|
$
|
9,996,280
|
|
Cost
of sales (including depreciation of $109,102 and $144,165 for the
years
ended November 30, 2007 and 2006, respectively)
|
|
|
8,335,899
|
|
|
7,221,442
|
|
Gross
profit
|
|
|
2,336,887
|
|
|
2,774,838
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Selling,
general and administrative
|
|
|
1,643,524
|
|
1,874,791
|
|
|
Depreciation
and amortization
|
|
|
40,321
|
|
|
84,608
|
|
Total
operating expenses
|
|
|
1,683,845
|
|
|
1,959,399
|
|
Income
from operations
|
|
|
653,042
|
|
|
815,439
|
|
|
|
|
|
|
|
|
|
Other
(expense) income:
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(92,630)
|
|
|
(137,823)
|
|
Other,
net
|
|
|
33,010
|
|
|
22,357
|
|
Total
other expense, net
|
|
|
(59,620)
|
|
|
(115,466)
|
|
Income
from operations before income tax benefit
|
|
|
593,422
|
|
|
699,973
|
|
Income
tax benefit
|
|
|
219,113
|
|
|
634,000
|
|
Net
income with income tax benefit
|
|
$
|
812,535
|
|
$
|
1,333,973
|
|
|
|
|
|
|
|
|
|
Net
income per share basic and diluted
|
|
$
|
0.07
|
|
$
|
0.11
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
|
|
12,142,943
|
|
|
12,116,026
|
|
Diluted
|
|
|
12,372,229
|
|
|
12,195,704
|
|
YEARS
ENDED NOVEMBER 30,
|
|
2007
|
|
2006
|
|
||
ASSETS
|
|
|
|
|
|
|
|
Current
Assets:
|
|||||||
Cash
and cash equivalents
|
|
$
|
462,701
|
|
$
|
441,860
|
|
Accounts
receivable
|
|
|
1,799,657
|
|
|
1,519,282
|
|
Inventories
|
|
|
1,086,968
|
|
|
815,422
|
|
Prepaid
expenses and other assets
|
|
|
398,133
|
|
|
253,476
|
|
Deferred
tax assets
|
|
|
858,064
|
|
|
634,000
|
|
Total
current assets
|
|
|
4,605,523
|
|
|
3,664,040
|
|
Property
and equipment, net
|
|
|
736,398
|
|
|
342,237
|
|
Other
assets
|
|
|
69,395
|
|
|
75,703
|
|
Total
assets
|
|
$
|
5,411,316
|
|
$
|
4,081,980
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
251,301
|
|
|
405,493
|
|
Accrued
liabilities
|
|
|
119,468
|
|
|
185,155
|
|
Notes
payables - related parties
|
|
|
--
|
|
|
43,952
|
|
Line
of credit
|
|
|
1,354,167
|
|
|
855,850
|
|
Current
portion of capital lease obligations
|
|
|
59,782
|
|
|
19,728
|
|
Total
current liabilities
|
|
|
1,784,718
|
|
|
1,510,178
|
|
Capital
lease obligations, net of current portion
|
|
|
122,442
|
|
|
19,685
|
|
Total
liabilities
|
|
|
1,907,160
|
|
|
1,529,863
|
|
Commitments
and contingencies
|
|
|
--
|
|
|
--
|
|
Stockholders'
equity:
|
|||||||
Preferred
stock-$.001 par value; 5,000,000 shares authorized; no shares
issued
and outstanding
|
|
--
|
|
--
|
|||
Common
stock-$.001 par value; 25,000,000 shares authorized; 12,146,026 and
12,116,026 shares issued and outstanding at November 30, 2007 and
2006
|
|
|
12,146
|
|
|
12,116
|
|
Additional
paid-in capital
|
|
|
8,494,971
|
|
|
8,355,497
|
|
Accumulated
deficit
|
|
$
|
(5,002,961)
|
|
$
|
(5,815,496
|
)
|
Total
stockholders' equity
|
|
|
3,504,156
|
|
|
2,552,117
|
|
Total
liabilities and stockholders' equity
|
|
$
|
5,411,316,
|
|
$
|
4,081,980
|
|
|
COMMON
STOCK
|
|
|
|
|
|
SHARES
|
AMOUNT
|
PAID-IN
CAPITAL
|
ACCUMULATED
DEFICIT
|
TOTAL
STOCKHOLDERS' EQUITY
|
November
30, 2005
|
12,116,026
|
$
12,116
|
$
8,355,497
|
$ (7,149,469)
|
$
1,218,144
|
Net
income
|
1,333,973
|
1,333,973
|
|||
November
30, 2006
|
12,116,026
|
12,116
|
8,355,497
|
(5,815,496)
|
2,552,117
|
Exercise
of common stock options
|
30,000
|
30
|
5,069
|
5,099
|
|
Stock
based compensation
|
134,405
|
134,405
|
|||
Net
income
|
812,535
|
812,535
|
|||
November
30, 2007
|
12,146,026
|
$
12,146
|
$
8,494,971
|
$
(5,002,961)
|
$
3,504,156
|
YEARS
ENDED NOVEMBER 30,
|
|
2007
|
|
2006
|
|
||
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
Net income
|
|
$
|
812,535
|
$
|
1,333,973
|
|
|
Adjustments
to reconcile net income to net cash provided by (used) in operating
activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
|
|
149,423
|
|
228,773
|
|
|
Stock based compensation
|
|
|
134,405
|
|
--
|
|
|
Deferred tax expenses
|
|
|
(224,064)
|
|
(634,000)
|
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable
|
|
|
(280,375)
|
|
(48,477)
|
|
|
Inventories
|
|
|
(271,546)
|
|
269,635
|
|
|
Prepaid
expenses and other assets
|
|
|
(144,657)
|
|
(35,234)
|
|
|
Other
assets
|
|
|
6,308
|
|
5,262
|
|
|
Accounts payable and accrued liabilities
|
|
|
(219,879)
|
|
(492,353)
|
|
|
Net
cash provided by (used in) operating activities
|
|
|
(37,850)
|
|
627,579
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(360,584)
|
|
(51,122)
|
|
|
Net
cash used in investing activities
|
|
|
(360,584)
|
|
(51,122)
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
||
Borrowings (payments) under line of credit, net
|
|
|
498,317
|
|
(313,029)
|
|
|
Payments on debt obligations
|
|
|
(84,141)
|
|
(228,607)
|
|
|
Exercise of stock options
|
|
|
5,099
|
|
|
--
|
|
Net
cash provided by (used in) financing activities
|
|
|
419,275
|
|
(541,636)
|
|
|
Net
change in cash and cash equivalents
|
|
|
20,841
|
|
34,821
|
|
|
Cash
and cash equivalents, beginning of year
|
|
|
441,860
|
|
407,039
|
|
|
Cash
and cash equivalents, end of year
|
|
$
|
462,701
|
$
|
441,860
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
||
Cash paid during the year for:
|
|
|
|
|
|
||
Interest
|
|
$
|
92,630
|
$
|
137,823
|
|
|
Income taxes
|
|
$
|
--
|
$
|
--
|
|
|
Fixed
assets acquired under capital leases
|
|
$
|
183,000
|
|
--
|
|
YEAR
|
THE
COMPANY
|
FOAMEX
|
1998
|
65
|
35
|
1999
|
60
|
40
|
2000
|
50
|
50
|
2001
|
50
|
50
|
2002
|
45
|
55
|
2003
|
40
|
60
|
2004
- 2007
|
35
|
65
|
YEARS
ENDED NOVEMBER 30:
|
|
2007
|
|
2006
|
|
Net
income available to common shareholders
|
|
$
|
812,535
|
$
|
1,333,973
|
Plus:
Stock-based employee compensation expense included in reported net
loss
|
|
$
|
--
|
$
|
--
|
Less:
Total stock-based employee compensation reversals (expense) determined
using fair value based method
|
|
$
|
147,000
|
$
|
(12,900)
|
Pro
forma net income available to common shareholders
|
|
$
|
959,535
|
$
|
1,321,073
|
Net
income per common share, as reported
Basic
and diluted
|
|
$
|
0.07
|
$
|
0.11
|
Net
income per common share, pro forma
Basic
|
|
$
|
0.07
|
$
|
0.11
|
Diluted
|
|
$
|
0.07
|
$
|
0.11
|
|
|
2007
|
|
2006
|
|
||
Raw
materials
|
|
$
|
562,236
|
|
$
|
355,773
|
|
Work-in-progress
|
|
|
148,104
|
|
|
94,949
|
|
Finished
goods
|
|
|
376,628
|
|
|
364,700
|
|
|
|
|
1,086,968
|
|
|
815,422
|
|
Less
allowance for obsolete inventory
|
|
|
--
|
|
|
--
|
|
|
|
$
|
1,086,968
|
|
$
|
815,422
|
|
|
|
2007
|
|
2006
|
|
||
Machinery
and equipment
|
|
$
|
2,771,358
|
|
$
|
2,314,627
|
|
Furniture
and fixtures
|
|
|
1,533,202
|
|
|
1,451,649
|
|
Transportation
equipment
|
|
|
76,540
|
|
|
76,540
|
|
Leasehold
improvements
|
|
|
500,708
|
|
|
485,954
|
|
Construction
in progress
|
|
|
-
|
|
|
9,450
|
|
|
|
|
4,881,808
|
|
|
4,338,220
|
|
Less
accumulated depreciation
|
|
|
(4,145,410)
|
|
(3,995,983
|
)
|
|
|
|
$
|
736,398
|
|
$
|
342,237
|
|
|
|
|
OPERATING
LEASES
|
|
|
CAPITAL
LEASES
|
|
||||
2008
|
|
$
|
422,000
|
|
$
|
89,000
|
|
||||
2009
|
|
|
422,000
|
|
|
61,000
|
|
||||
2010
|
|
|
422,000
|
|
|
56,000
|
|
||||
2011
|
|
|
--
|
|
|
--
|
|
||||
2012
|
|
|
--
|
|
|
--
|
|
||||
Total
minimum lease obligations
|
|
$
|
1,266,000
|
|
$
|
206,000
|
|
||||
Less
amounts representing interest
|
|
|
|
|
|
(24,000)
|
|
||||
Present
value of capital lease payments
|
|
|
|
|
|
182,000
|
|
||||
Current
portion
|
|
|
|
|
|
(60,000)
|
|
||||
Long-term
portion
|
|
|
|
|
$
|
122,000
|
|
|
|
|
NUMBER
OF SHARES
|
|
|
WEIGHTED
AVERAGE EXERCISE PRICE
|
|
Outstanding,
November 30, 2005 (466,000 exercisable at a weighted average price
of
$1.04)
|
|
|
846,000
|
|
$
|
0.69
|
|
|
|||||||
Canceled/Expired
|
|
|
(371,000
|
)
|
$
|
0.37
|
|
Outstanding,
November 30, 2006 (466,000 exercisable at a weighted average price
of
$1.04)
|
|
|
475,000
|
|
|
0.94
|
|
Granted
(weighted average fair value of $0.70)
|
183,200
|
0.90
|
|||||
Exercised
|
(30,000
|
)
|
0.17
|
||||
Canceled/Expired
|
|
|
(200,000)
|
|
|
1.51
|
|
Outstanding,
November 30, 2007 (368,200 exercisable at a weighted average price
of
$0.78)
|
|
|
428,200
|
|
|
$
0.71
|
|
EXERCISE
PRICE
|
OUTSTANDING
|
EXERCISABLE
|
WEIGHTED
AVERAGE CONTRACTUAL LIFE REMAINING
|
NUMBER
OF OPTIONS
|
|||
$
0.20 - 0.40
|
210,000
|
150,000
|
5.6
years
|
0.90
|
183,200
|
183,200
|
9.6
|
1.75
- 3.69
|
35,000
|
35,000
|
0.6
|
|
428,200
|
368,200
|
|
YEARS
ENDED NOVEMBER 30:
|
|
2007
|
|
2006
|
|
||
Current:
|
|
|
|
|
|
||
Federal
|
|
$
|
--
|
|
$
|
--
|
|
State
|
|
|
5,000
|
|
|
2,000
|
|
|
|
|
5,000
|
|
|
2,000
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
Federal
|
|
|
(224,000)
|
|
|
(636,000)
|
|
State
|
|
|
--
|
|
|
--
|
|
|
|
|
|
|
--
|
|
|
Total
income tax provision
|
|
$
|
(219,000)
|
|
$
|
(634,000)
|
|
|
|
2007
|
|
2006
|
|
||
Deferred
tax assets:
|
|
|
|
|
|
||
Tax
(under) over book depreciation
|
|
$
|
100,000
|
|
$
|
85,000
|
|
Accrued
expenses
|
|
|
22,000
|
|
|
19,000
|
|
Federal
net operating loss carryforwards
|
|
|
2,064,000
|
|
|
2,148,000
|
|
State
net operating loss carryforwards
|
|
|
127,000
|
|
|
151,000
|
|
Goodwill
and other intangible assets
|
|
|
108,000
|
|
|
218,000
|
|
Stock
options
|
|
|
46,000
|
|
|
--
|
|
Total
deferred tax assets
|
|
|
2,467,000
|
|
|
2,621,000
|
|
Less
valuation allowance for deferred tax assets
|
|
|
(1,609,000
|
)
|
|
(1,987,000
|
)
|
Net
deferred tax assets
|
|
$
|
858,000
|
|
$
|
634,000
|
|
YEARS
ENDED NOVEMBER 30:
|
|
|
2007
|
|
|
2006
|
|
Income
tax benefit at statutory rates
|
|
$
|
200,000
|
$
|
238,000
|
|
|
Permanent
timing differences and other items
|
|
|
(42,000)
|
|
(62,000
|
)
|
|
Change
in federal valuation allowance and other permanent
items
|
|
|
(382,000)
|
|
(812,000
|
)
|
|
State
and local income taxes, net of federal income tax
|
|
|
5,000
|
|
2,000
|
|
|
|
|
|
|
|
|
||
Total
|
|
$
|
(219,000)
|
$
|
(634,000
|
)
|
|
|
|
AMI-US
OPERATIONS
|
|
|
AMI-SINGAPORE
|
|
|
CONSOLIDATED
|
|
NET
SALES
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
$
|
10,195,801
|
$
|
476,985
|
|
$
|
10,672,786
|
|
|
2006
|
|
$
|
9,412,260
|
|
$
|
584,020
|
|
$
|
9,996,280
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
INCOME BEFORE CORPORATE ALLOCATION
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
$
|
167,132
|
$
|
476,985
|
$
|
644,117
|
|||
2006
|
|
$
|
115,953
|
|
$
|
584,020
|
|
$
|
699,973
|
|
|
|
|
AMI-US
OPERATIONS
|
|
|
AMI-SINGAPORE
|
|
|
CONSOLIDATED
|
|
CORPORATE
ALLOCATION
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
$
47,699
|
$ |
(47,699)
|
$ |
644,117
|
|||
2006
|
|
$
|
58,402
|
|
|
(58,402
|
)
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
$
|
214,831
|
$
|
378,591
|
$
|
593,422
|
|||
2006
|
|
$
|
174,355
|
|
$
|
525,618
|
|
$
|
699,973
|
|
|
|
|
|
|
|
|
|
|
|
|
DEPRECIATION
AND AMORTIZATION
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
$
|
(149,423)
|
$
|
--
|
$
|
(149,423)
|
|||
2006
|
|
$
|
(228,773
|
)
|
$
|
--
|
|
$
|
(228,773
|
)
|
|
|
|
|
|
|
|
|
|
|
|
INCOME
TAXES BENEFIT (EXPENSE)
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
$
|
219,000
|
$
|
--
|
$
|
219,000
|
|||
2006
|
|
$
|
634,000
|
|
$
|
--
|
|
$
|
634,000
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
$
|
5,411,316
|
|
$
|
$
|
5,411,316
|
|||
2006
|
|
$
|
4,081,980
|
|
$
|
--
|
|
$
|
4,081,980
|
|
Signature
|
Title
|
Date
|
||
/s/
Ricardo G. Brutocao
Ricardo
G. Brutocao
|
Chief
Executive Officer and
Director
(Principal
Executive Officer)
|
February
28, 2008
|
||
/s/
William G. Mortensen
William
G. Mortensen
|
President
and
Chief
Financial Officer
(Principal
Financial Officer and Principal Accounting Officer)
|
February
28, 2008
|
||
/s/
Timothy R. Busch
Timothy
R. Busch
|
Chairman
and Director
|
February
28, 2008
|
||
/s/
Maurice J. DeWald
Maurice
J. DeWald
|
Director
|
February
28, 2008
|
||
/s/
N. Price Paschall
N.
Price Paschall
|
Director
|
February
28, 2008
|
||
/s/
John Sawyer
John
Sawyer
|
Director
|
February
28, 2008
|
3.1
|
Articles
of Incorporation of Advanced Materials Group, Inc. (formerly known
as Far
West Ventures, Inc.). (1)
|
3.2
|
Certificate
of Amendment of Articles of Incorporation of Advanced Materials Group,
Inc. (1)
|
3.3
|
Bylaws,
as amended, of Advanced Materials Group, Inc.
(1)
|
4.1
|
Advanced
Materials Group, Inc. 2007 Stock Incentive
Plan.(2)
|
4.2
|
Advanced
Materials Group, Inc. 2003 Stock
Plan.(3)
|
4.3
|
Amendment
No. One to the Advanced Materials Group, Inc. 2003 Stock
Plan.(4)
|
4.4
|
Advanced
Materials Group, Inc. 1998 Stock Option
Plan.(5)
|
4.5
|
Amendment
No. One to the Advanced Materials Group, Inc. 1998 Stock Option
Plan.(6)
|
10.1
|
Manufacturing
Agreement dated January 30, 1998 by and between Advanced Materials
FSC
Ltd. and Foamtec (Singapore) Pte. Ltd.
(7)
|
10.2
|
Credit
Agreement dated as of March 1, 2007 between JP Morgan Chase Bank,
N.A. and
Advanced Materials, Inc.(8)
|
10.3
|
Continuing
Security Agreement dated as of March 1, 2007, executed by Advanced
Materials, Inc. in favor of JP Morgan Chase Bank,
N.A.(9)
|
10.4
|
Line
of Credit Note dated March 1, 2007, in the principal amount of
$2,000,000.00, issued by Advanced Materials, Inc. to the order of
JP
Morgan Chase Bank, N.A.(10)
|
21.1
|
List
of Subsidiaries. (11)
|
23.1
|
Consent
of Fei-Fei Catherine Fang, LLP, CPA
|
31.1
|
Certification
by Chief Executive Officer Required by Rule 13a-14(a) of the Securities
Exchange Act of 1934, as amended, as Adopted Pursuant to Section
302 of
the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification
by Chief Financial Officer Required by Rule 13a-14(a) of the Securities
Exchange Act of 1934, as amended, as Adopted Pursuant to Section
302 of
the Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification
of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
32.2
|
Certification
of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
(1)
|
Filed
as a like-numbered exhibit to the Company's Registration Statement
on Form
SB-2 dated December 6, 1993 (Registration No. 33-72500), incorporated
herein by reference.
|
(2)
|
Filed
as Exhibit 4.1 to the Company’s Registration Statement on Form S-8 dated
October 9, 2007.
|
(3)
|
Filed
as Exhibit 4.2 to the Company’s Registration Statement on Form S-8 dated
October 9, 2007.
|
(4)
|
Filed
as Exhibit 4.3 to the Company’s Registration Statement on Form S-8 dated
October 9, 2007.
|
(5)
|
Filed
as Exhibit 4.4 to the Company’s Registration Statement on Form S-8 dated
October 9, 2007.
|
(6)
|
Filed
as Exhibit 4.5 to the Company’s Registration Statement on Form S-8 dated
October 9, 2007.
|
(7)
|
Filed
as Exhibit 10.23 to Form 10-KSB dated November 30, 1997, incorporated
herein by reference.
|
(8)
|
Filed
as Exhibit 10.1 to Form 10-QSB filed July 12, 2007, incorporated
herein by
reference.
|
(9)
|
Filed
as Exhibit 10.2 to Form 10-QSB filed July 12, 2007, incorporated
herein by
reference.
|
(10)
|
Filed
as Exhibit 10.3 to Form 10-QSB filed July 12, 2007, incorporated
herein by
reference.
|
(11)
|
Filed
as Exhibit 21 to Form 10-K filed February 28, 2000, incorporated
herein by
reference.
|