ý | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Fiscal Year Ended December 31, OR |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Transition Period from ___________ to ________ Commission File Number 0-6247 |
Delaware (State or other jurisdiction of incorporation or organization) | 75-1256622 (I.R.S. Employer Identification No.) |
10830 North Central Expressway Suite 175 Dallas, Texas (Address of principal executive offices) | 75231 (Zip code) |
PART I | |||||
ITEM 1. BUSINESS | |||||
General | 1 | ||||
International Operations | 2 | ||||
Competition | 5 | ||||
Environmental Matters | 6 | ||||
Personnel | 7 | ||||
Available Information | 8 | ||||
ITEM 1A. RISK FACTORS | 8 | ||||
ITEM 1B. UNRESOLVED STAFF COMMENTS | 11 | ||||
ITEM 2. PROPERTIES | |||||
United States Specialty Products Facility | 11 | ||||
Saudi Arabia Mining Properties | 13 | ||||
United States Mineral Interests | |||||
18 | |||||
Offices | 19 | ||||
ITEM 3. LEGAL PROCEEDINGS | 21 | ||||
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS | 21 | ||||
PART II | |||||
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | 22 | ||||
ITEM 6. SELECTED FINANCIAL DATA | 23 | ||||
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION | |||||
General | 23 | ||||
Liquidity and Capital Resources | 23 | ||||
Results of Operations | 27 | ||||
Critical Accounting Policies | 32 | ||||
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 35 | ||||
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | 35 | ||||
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | 36 | ||||
ITEM 9A. CONTROLS AND PROCEDURES | 36 | ||||
ITEM 9B. OTHER INFORMATION | 37 | ||||
PART III | |||||
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT | 38 | ||||
ITEM 11. EXECUTIVE COMPENSATION | 39 | ||||
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | 43 | ||||
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS | 45 |
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES | 45 | ||||
PART IV | |||||
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES | 47 |
1 | “Gossan” means the rust colored oxidized, capping or staining of a mineral deposit, generally formed by the oxidation or alteration of iron sulphide. |
2 | “Dore” means unrefined gold and silver bullion bars consisting of approximately 90% precious metals which will be further refined to almost pure metal. |
Average Price | Spot Price as of | Percentage | |||||
For | 12/ | 31/08 | Increase (Decrease) | ||||
Gold | $ | $ | % | ||||
Silver | $ | $ | %) | ||||
Copper | $ | $ | ( | %) | |||
Zinc | $ | $ | ( | %) |
Zone | Mineralized Materials (Tonnes) | Copper (%) | Zinc (%) | Gold (g/t) | Silver (g/t) | |||||||||||||||
Saadah | 3,872,400 | 1.67 | 4.73 | 1.00 | 28.36 | |||||||||||||||
Al Houra | 2,465,230 | 1.22 | 4.95 | 1.46 | 50.06 | |||||||||||||||
Moyeath | 874,370 | 0.88 | 8.92 | 1.29 | 64.85 | |||||||||||||||
Total | 7,212,000 | 1.42 | 5.31 | 1.19 | 40.20 |
Pink Sheets/OTC Bulletin Board | ||||||||
High | Low | |||||||
Fiscal Year Ended December 31, 2007 | ||||||||
First Quarter ended March 31, 2007 | $ | 3.41 | $ | 3.30 | ||||
Second Quarter ended June 30, 2007 | $ | 6.30 | $ | 6.00 | ||||
Third Quarter ended September 30, 2007 | $ | 6.07 | $ | 5.91 | ||||
Fourth Quarter ended December 31, 2007 | $ | 7.74 | $ | 7.55 | ||||
Fiscal Year Ended December 31, 2006 | ||||||||
First Quarter ended March 31, 2006 | $ | 1.70 | $ | 1.51 | ||||
Second Quarter ended June 30, 2006 | $ | 1.54 | $ | 1.38 | ||||
Third Quarter ended September 30, 2006 | $ | 2.58 | $ | 2.27 | ||||
Fourth Quarter ended December 31, 2006 | $ | 3.05 | $ | 2.94 | ||||
NASDAQ/OTC Bulletin Board | ||||||||
High | Low | |||||||
Fiscal Year Ended December 31, 2008 | ||||||||
First Quarter ended March 31, 2008 | $ | 7.16 | $ | 6.88 | ||||
Second Quarter ended June 30, 2008 | $ | 6.21 | $ | 5.89 | ||||
Third Quarter ended September 30, 2008 | $ | 4.66 | $ | 4.35 | ||||
Fourth Quarter ended December 31, 2008 | $ | 1.76 | $ | 1.50 | ||||
Fiscal Year Ended December 31, 2007 | ||||||||
First Quarter ended March 31, 2007 | $ | 3.41 | $ | 3.30 | ||||
Second Quarter ended June 30, 2007 | $ | 6.30 | $ | 6.00 | ||||
Third Quarter ended September 30, 2007 | $ | 6.07 | $ | 5.91 | ||||
Fourth Quarter ended December 31, 2007 | $ | 7.74 | $ | 7.55 | ||||
2007 | 2006 | 2005 | 2004 | 2003 | ||||||||||||||||
Revenues | $ | 108,638 | $ | 98,502 | $ | 82,416 | $ | 59,793 | $ | 39,625 | ||||||||||
Net Income (Loss) | $ | 7,771 | $ | 7,875 | $ | 16,636 | $ | (2,551 | ) | $ | (3,505 | ) | ||||||||
Net Income (Loss) Per Share-Diluted | $ | 0.33 | $ | 0.34 | $ | 0.73 | $ | (.11 | ) | $ | (.15 | ) | ||||||||
Total Assets (at December 31) | $ | 84,221 | $ | 71,590 | $ | 66,974 | $ | 51,048 | $ | 52,672 | ||||||||||
Notes Payable (at December 31) | $ | 11,012 | $ | 11,013 | $ | 11,026 | $ | 11,744 | $ | 11,744 | ||||||||||
Current Portion of Long-Term Debt (at December 31) | $ | 31 | $ | 489 | $ | 1,426 | $ | 3,071 | $ | 3,170 | ||||||||||
Total Long-Term Obligations (at December 31) | $ | 9,078 | $ | 5,108 | $ | 9,839 | $ | 4,916 | $ | -- |
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
Revenues | $ | 154,630 | $ | 108,638 | $ | 98,502 | $ | 82,416 | $ | 59,793 | ||||||||||
Net Income (Loss) | $ | (8,875 | ) | $ | 7,771 | $ | 7,875 | $ | 16,636 | $ | (2,551 | ) | ||||||||
Net Income (Loss) Per Share-Diluted | $ | (0.38 | ) | $ | 0.33 | $ | 0.34 | $ | 0.73 | $ | (.11 | ) | ||||||||
Total Assets (at December 31) | $ | 98,146 | $ | 84,221 | $ | 71,590 | $ | 66,974 | $ | 51,048 | ||||||||||
Notes Payable (at December 31) | $ | 12 | $ | 11,012 | $ | 11,013 | $ | 11,026 | $ | 11,744 | ||||||||||
Current Portion of Long-Term Debt (at December 31) | $ | 4,920 | $ | 31 | $ | 489 | $ | 1,426 | $ | 3,071 | ||||||||||
Total Long-Term Debt Obligations (at December 31) | $ | 23,557 | $ | 9,078 | $ | 5,108 | $ | 9,839 | $ | 4,916 |
Payments due by period | ||||||||||||||||||||
Contractual Obligations | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
Long-Term Debt Obligations | $ | 9,058,726 | --- | $ | 6,058,726 | $ | 3,000,000 | --- | ||||||||||||
Capital Lease Obligations | 52,994 | $ | 33,471 | 19,523 | --- | --- | ||||||||||||||
Operating Lease Obligations | 2,568,000 | 808,500 | 234,600 | 234,600 | $ | 1,290,300 | ||||||||||||||
Purchase Obligations | --- | --- | --- | --- | --- | |||||||||||||||
Other Long-Term Liabilities Reflected on the Company’s Balance Sheet under GAAP | --- | --- | --- | --- | --- | |||||||||||||||
Total | $ | 11,679,720 | $ | 841,971 | $ | 6,312,849 | $ | 3,234,600 | $ | 1,290,300 |
Payments due by period | ||||||||||||||||||||
Contractual Obligations | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
Long-Term Debt Obligations | $ | 28,458,726 | $ | 4,901,432 | $ | 13,326,312 | $ | 2,707,585 | $ | 7,523,397 | ||||||||||
Capital Lease Obligations | 19,523 | 19,523 | --- | --- | --- | |||||||||||||||
Operating Lease Obligations | --- | --- | --- | --- | --- | |||||||||||||||
Purchase Obligations | --- | --- | --- | --- | --- | |||||||||||||||
Other Long-Term Liabilities Reflected on the Company’s Balance Sheet under GAAP | --- | --- | --- | --- | --- | |||||||||||||||
Total | $ | 28,478,249 | $ | 4,920,955 | $ | 13,326,312 | $ | 2,707,585 | $ | 7,523,397 |
2007 | 2006 | 2005 | ||||||||||
TOCCO | (in thousands) | |||||||||||
Product Sales | $ | 103,205 | $ | 93,855 | $ | 76,268 | ||||||
Toll Processing | $ | 5,433 | $ | 4,647 | $ | 4,105 | ||||||
Gross Revenue | $ | 108,638 | $ | 98,502 | $ | 80,373 | ||||||
Volume of sales (thousand gallons) | 40,144 | 38,073 | 34,826 | |||||||||
COIN | ||||||||||||
Gross Revenue | -0- | -0- | $ | 2,043 | ||||||||
TOCCO | ||||||||||||
Cost of Materials | $ | 66,989 | $ | 60,131 | $ | 45,638 | ||||||
Total Operating Expense | $ | 22,696 | $ | 19,758 | $ | 17,989 | ||||||
Natural Gas Expense | $ | 6,109 | $ | 5,707 | $ | 4,743 | ||||||
General & Administrative Expense | $ | 5,687 | $ | 4,600 | $ | 4,281 | ||||||
COIN | ||||||||||||
Cost of Materials | -0- | -0- | $ | 503 | ||||||||
Total Operating Expense | -0- | -0- | $ | 654 | ||||||||
Natural Gas Expense | -0- | -0- | $ | 294 | ||||||||
General & Administrative Expense | -0- | -0- | $ | 388 | ||||||||
Capital Expenditures | $ | 10,799 | $ | 3,734 | $ | 3,491 |
2008 | 2007 | 2006 | ||||||||||
TOCCO | (in thousands) | |||||||||||
Petrochemical Product Sales | $ | 130,264 | $ | 103,205 | $ | 93,855 | ||||||
Transloading Sales | 20,239 | - | - | |||||||||
Toll Processing | 4,127 | 5,433 | 4,647 | |||||||||
Gross Revenue | $ | 154,630 | $ | 108,638 | $ | 98,502 | ||||||
Volume of sales (thousand gallons) | 46,311 | 40,144 | 38,073 | |||||||||
Cost of Materials | $ | 131,665 | $ | 66,989 | $ | 60,131 | ||||||
Total Operating Expense | $ | 27,562 | $ | 22,696 | $ | 19,758 | ||||||
Natural Gas Expense | $ | 7,310 | $ | 6,109 | $ | 5,707 | ||||||
General & Administrative Expense | $ | 6,966 | $ | 5,687 | $ | 4,600 | ||||||
Capital Expenditures | $ | 15,038 | $ | 10,799 | $ | 3,734 |
(in thousands) | 2007 | 2006 | 2005 | |||||||||
General corporate expenses | $ | 2,178 | $ | 1,242 | $ | 187 |
(in thousands) | 2008 | 2007 | 2006 | |||||||||
General corporate expenses | $ | 2,399 | $ | 2,178 | $ | 1,242 |
Name; Current Positions Held | Age | Date of Election | |||
Hatem El Khalidi President of the Company since 1975; prior to 1975 Vice President of the Company; Chief Executive Officer of the Company since February 1994 | 84 | April 1968 | |||
Nicholas N. Carter ………………………………………………. Executive Vice President, Chief Executive Officer of the Company since January 2008, President of the Petrochemical Company since 1987 | 62 | August 2004 | |||
Robert E. Kennedy ………………………………………………. Chairman of the Audit and Compensation Committees; Member of Nominating Committee | 65 | January 2007 | |||
Ghazi Sultan Chairman of the Nominating Committee; Member of Compensation and Audit Committees | 71 | September 1993 | |||
Ibrahim Al Moneef Member of the Compensation and Nominating Committees | 68 | April 2007 | |||
Mohammed Al Omair Member of Audit, Compensation and Nominating Committees | 65 | October 2007 | |||
Charles Goehringer, Jr. Member of Compensation and Nominating Committees | 50 | October 2007 |
Name | Positions | Age | ||||
Hatem El Khalidi | President, Chief Executive Officer and Director | 84 | ||||
Nicholas N. Carter | Executive Vice President, Chief Operating Officer and Director/President - TOCCO | 62 | ||||
Connie Cook | Secretary and Treasurer/Secretary - TOCCO | 46 |
Name and Principal Position | Year | Salary ($) (1) | Bonus ($) | Restricted Stock Award(s) ($) | Stock Award(s) | Non-Equity Incentive Plan Compensation($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings($) | All Other Compensation ($) (2)(3) | Total ($) | ||||||||||||||||||||||||
Hatem El Khalidi, President and Chief Executive Officer, Director | 2007 | $ | 72,000 | -- | -- | -- | -- | -- | $ | 8,000 | $ | 80,000 | |||||||||||||||||||||
2006 | $ | 72,000 | -- | -- | -- | -- | -- | $ | 8,000 | $ | 80,000 | ||||||||||||||||||||||
2005 | $ | 72,000 | -- | -- | -- | -- | -- | $ | 8,000 | $ | 80,000 | ||||||||||||||||||||||
Nicholas N. Carter, Executive Vice President and Chief Operating Officer President, Petrochemical Company | 2007 | $ | 172,059 | $ | 96,506 | $ | 66,000 | -- | -- | -- | $ | 10,324 | $ | 344,889 | |||||||||||||||||||
2006 | $ | 163,044 | $ | 97,994 | $ | 30,000 | -- | -- | -- | $ | 9,783 | $ | 300,821 | ||||||||||||||||||||
2005 | $ | 155,748 | $ | 45,705 | -- | -- | -- | -- | $ | 9,288 | $ | 210,741 | |||||||||||||||||||||
Connie J. Cook, Secretary and Treasurer | 2007 | $ | 108,500 | $ | 70,085 | $ | 33,000 | -- | -- | -- | $ | 6,510 | $ | 218,095 | |||||||||||||||||||
2006 | $ | 102,816 | $ | 73,057 | $ | 15,000 | -- | -- | -- | $ | 6,169 | $ | 197,042 | ||||||||||||||||||||
2005 | $ | 98,215 | $ | 46,067 | -- | -- | -- | -- | $ | 5,893 | $ | 150,175 | |||||||||||||||||||||
Mark D. Williamson, Vice President of Marketing, Petrochemical Company | 2007 | $ | 190,393 | $ | 70,023 | -- | -- | -- | -- | $ | 11,424 | $ | 271,840 | ||||||||||||||||||||
2006 | $ | 193,830 | $ | 80,124 | $ | 15,000 | -- | -- | -- | $ | 11,630 | $ | 300,584 | ||||||||||||||||||||
2005 | $ | 199,269 | $ | 53,116 | -- | -- | -- | -- | $ | 11,956 | $ | 264,341 |
Name and Principal Position | Year | Salary ($) (1) | Bonus ($) | Restricted Stock Award(s) ($) | Stock Award(s) | Non-Equity Incentive Plan Compensation($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings($) | All Other Compensation ($) (2)(3) | Total ($) | ||||||||||||||||||||||||
Hatem El Khalidi, President and Chief Executive Officer, Director | 2008 | $ | 72,000 | -- | -- | -- | -- | -- | $ | 8,000 | $ | 80,000 | |||||||||||||||||||||
2007 | $ | 72,000 | -- | -- | -- | -- | -- | $ | 8,000 | $ | 80,000 | ||||||||||||||||||||||
2006 | $ | 72,000 | -- | -- | -- | -- | -- | $ | 8,000 | $ | 80,000 | ||||||||||||||||||||||
Nicholas N. Carter, Executive Vice President and Chief Operating Officer President, Petrochemical Company | 2008 | $ | 209,918 | $ | 78,665 | $ | 99,800 | -- | -- | -- | $ | 12,595 | $ | 400,978 | |||||||||||||||||||
2007 | $ | 172,059 | $ | 96,506 | $ | 66,000 | -- | -- | -- | $ | 10,324 | $ | 344,889 | ||||||||||||||||||||
2006 | $ | 163,044 | $ | 97,994 | $ | 30,000 | -- | -- | -- | $ | 9,783 | $ | 300,821 | ||||||||||||||||||||
Connie J. Cook, Secretary and Treasurer | 2008 | $ | 133,009 | $ | 51,143 | $ | 49,900 | -- | -- | -- | $ | 7,981 | $ | 242,033 | |||||||||||||||||||
2007 | $ | 108,500 | $ | 70,085 | $ | 33,000 | -- | -- | -- | $ | 6,510 | $ | 218,095 | ||||||||||||||||||||
2006 | $ | 102,816 | $ | 73,057 | $ | 15,000 | -- | -- | -- | $ | 6,169 | $ | 197,042 | ||||||||||||||||||||
Mark D. Williamson, Vice President of Marketing, Petrochemical Company | 2008 | $ | 240,705 | $ | 51,143 | 49,900 | -- | -- | -- | $ | 14,442 | $ | 356,190 | ||||||||||||||||||||
2007 | $ | 190,393 | $ | 70,023 | -- | -- | -- | -- | $ | 11,424 | $ | 271,840 | |||||||||||||||||||||
2006 | $ | 193,830 | $ | 80,124 | $ | 15,000 | -- | -- | -- | $ | 11,630 | $ | 300,584 |
(1) | Includes $0, $0 and |
(2) | Includes $8,000 in termination benefits for each of the fiscal years ended December 31, 2008, 2007, |
(3) | Includes amounts as shown for Mr. Carter, Ms. Cook, and Mr. Williamson that were contributed on the employee’s behalf into the Company’s 401(k) plan. |
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price | Option Expiration Date | ||||||||||||
Hatem El Khalidi | 400,000 | - | - | $ | 1.00 | Undetermined | |||||||||||
Ghazi Sultan | 100,000 | - | - | $ | 2.00 | 08/28/09 |
Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||
Nicholas N. Carter | 20,000 | $ | 66,000 | |||||
Connie Cook | 10,000 | $ | 33,000 |
Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||
Nicholas N. Carter | 20,000 | $ | 99,800 | |||||
Connie Cook | 10,000 | $ | 49,900 | |||||
Mark Williamson | 10,000 | $ | 49,900 |
Name | Grant Date | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock Awards | ||||||
Nicholas N. Carter | March 20, 2007 | 20,000 | $ | 66,000 | |||||
Connie Cook | March 20, 2007 | 10,000 | $ | 33,000 |
Name | Grant Date | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock Awards | ||||||
Nicholas N. Carter | January 15, 2008 | 20,000 | $ | 141,000 | |||||
Connie Cook | January 15, 2008 | 10,000 | $ | 70,500 | |||||
Mark Willaimson | January 15, 2008 | 10,000 | $ | 70,500 |
Name and Address Of Beneficial Owner | Shares Beneficially Owned (1) | Percent of Class | ||
Fahad Mohammed Saleh Al Athel c/o Saudi Fal P. O. Box 4900 Riyadh, Saudi Arabia 11412 | 3,632,953 | 15.3% | ||
Mohammad Salem ben Mahfouz c/o National Commercial Bank Jeddah, Saudi Arabia | 1,500,000 | 6.3% | ||
Harb S. Al Zuhair P.O. Box 3750 Riyadh, Saudi Arabia | 1,423,750 | 6.0% | ||
Prince Talal Bin Abdul Aziz P. O. Box 930 Riyadh, Saudi Arabia | 1,272,680 | 5.4% | ||
Hatem El Khalidi 10830 North Central Expressway, Suite 175 Dallas, Texas 75231 | 460,000(2) | 1.9% | ||
Ghazi Sultan �� P.O. Box 5360 Jeddah, Saudi Arabia 21422 | 190,000 (3) | 0.8% | ||
Nicholas N. Carter P.O. Box 1636 Silsbee, Texas 77656 | 207,918 | 0.9% | ||
Charles W. Goehringer, Jr. P.O. Box 4915 Beaumont, Texas 77704 | 32,967 | 0.1% | ||
Robert E. Kennedy. 450 Gears Rd., Suite 290 Houston, Texas 77067 | 10,000 | * | ||
Mohammed O. Al Omair. P. O. Box 4900 Riyadh, Saudi Arabia | 1,667 | * |
Name and Address Of Beneficial Owner | Shares Beneficially Owned (1) | Percent of Class | ||||||
Fahad Mohammed Saleh Al Athel c/o Saudi Fal P. O. Box 4900 Riyadh, Saudi Arabia 11412 | 3,603,568 | 15.7 | % | |||||
Mohammad Salem ben Mahfouz c/o National Commercial Bank Jeddah, Saudi Arabia | 1,500,000 | 6.6 | % | |||||
Harb S. Al Zuhair P.O. Box 3750 Riyadh, Saudi Arabia | 1,423,750 | 6.2 | % | |||||
Prince Talal Bin Abdul Aziz P. O. Box 930 Riyadh, Saudi Arabia | 1,272,680 | 5.6 | % | |||||
Hatem El Khalidi 10830 North Central Expressway, Suite 175 Dallas, Texas 75231 | 460,000 | (2) | 2.0 | % | ||||
Ghazi Sultan P.O. Box 5360 Jeddah, Saudi Arabia 21422 | 225,000 | (3) | 1.0 | % | ||||
Nicholas N. Carter P.O. Box 1636 Silsbee, Texas 77656 | 92,500 | * | ||||||
Charles W. Goehringer, Jr. P.O. Box 4915 Beaumont, Texas 77704 | 3,000 | * |
Robert E. Kennedy. 450 Gears Rd., Suite 290 Houston, Texas 77067 | - | * | ||||||||||
Mohammed O. Al Omair. P. O. Box 4900 Riyadh, Saudi Arabia | - | * | ||||||||||
Name and Address Of Beneficial Owner | Shares Beneficially Owned (1) | Percent of Class | ||||||||||
Ibrahim Al Moneef. P. O. Box 10850 Riyadh, Saudi Arabia | - | * | 600,000 | 2.5% | ||||||||
Connie J. Cook. P. O. Box 1636 Silsbee, Texas 77656 | 20,000 | * | 32,500 | 0.1% | ||||||||
Mark Williamson. P. O. Box 1636 Silsbee, Texas 77656 | 10,000 | * | 20,000 | 0.1% | ||||||||
All directors and executive officers as a group (8 persons) | 810,500 | (4) | 3.5 | % | 1,555,052(4) | 6.6% |
(1) | Unless otherwise indicated, to the knowledge of the Company, all shares are owned directly and the owner has sole voting and investment power. |
(2) | Includes 400,000 shares which Mr. El Khalidi has the right to acquire through the exercise of presently exercisable stock options. Excludes 385,000 shares owned by Ingrid El Khalidi, Mr. El Khalidi’s wife, and 443,000 shares owned by relatives of Hatem El Khalidi. |
(3) | Includes 100,000 shares which Mr. Sultan has the right to acquire through the exercise of presently exercisable stock options. |
(4) | Includes 500,000 shares which certain directors and executive officers have the right to acquire through the exercise of stock options or other rights exercisable presently or within 60 days. Excludes 385,000 shares owned by Ingrid El Khalidi, the wife of Hatem El Khalidi, the President, Chief Executive Officer and a director of the Company, and 443,000 shares owned by relatives of Hatem El Khalidi. |
2007 | 2006 | |||||||||||
Audit Fees | $ | 209,325 | $ | 192,176 | ||||||||
Audit-Related Fees | $ | 0 | $ | 0 | ||||||||
Tax Fees | $ | 23,200 | $ | 16,436 | ||||||||
All Other Fees | $ | $ | 0 |
2008 | 2007 | |||||||
Audit Fees | $ | 335,173 | $ | 209,325 | ||||
Audit-Related Fees | $ | 0 | $ | 0 | ||||
Tax Fees | $ | 33,545 | $ | 23,200 | ||||
All Other Fees | $ | 0 | $ | 0 |
Reports of Independent Registered Public Accounting Firm. |
Consolidated Balance Sheets dated December 31, |
Consolidated Statements of |
Consolidated Statement of Stockholders’ Equity for the three years ended December 31, |
Consolidated Statements of Cash Flows for the three years ended December 31, |
Notes to Consolidated Financial Statements. |
Schedule II -- Valuation and Qualifying Accounts for the three years ended December 31, |
Exhibit Number | Description |
3(a) | - Certificate of Incorporation of the Company as amended through the Certificate of Amendment filed with the Delaware Secretary of State on July 19, 2000 (incorporated by reference to Exhibit 3(a) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000 (File No. 0-6247)). |
3(b) | - Restated Bylaws of the Company dated April 26, 2007 (incorporated by reference to Item 5.03 to the Company’s Form 8-K dated April 26, 2007 (File No. 0-6247)). |
10(a) | - Loan Agreement dated January 24, 1979 between the Company, National Mining Company and the Government of Saudi Arabia (incorporated by reference to Exhibit 10(b) to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 0-6247)). |
Exhibit
48
POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that each of Arabian American Development Company, a Delaware corporation, and the undersigned directors and officers of Arabian American Development Company, hereby constitutes and appoints Nicholas Carter its or his true and lawful attorney-in-fact and agent, for it or him and in its or his name, place and stead, in any and all capacities, with full power to act alone, to sign any and all amendments to this Report, and to file each such amendment to the Report, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorney-in-fact and agent full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as it or he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. ARABIAN AMERICAN DEVELOPMENT COMPANY
Hatem El Khalidi President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Company in the capacities indicated on March
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors Arabian American Development Company and Subsidiaries Dallas, Texas We have audited the accompanying consolidated balance sheets of Arabian American Development Company and Subsidiaries (the We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Arabian American Development Company and Subsidiaries as of December 31, We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Arabian American Development Company and Subsidiaries’ internal control over financial reporting as of December 31, As discussed in /s/ Dallas, Texas March 13, F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors Arabian American Development Company and Subsidiaries Dallas, Texas We have audited Arabian American Development Company and Subsidiaries’ internal control over financial reporting as of December 31, 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 perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, Arabian American Development Company maintained, in all material respects, effective internal control over financial reporting as of December 31, F-2 We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets and the related consolidated statements of income, stockholders’ equity and cash flows of Arabian American Development Company, and our report dated March 13, /s/ Travis, Wolff & Company, L.L.P. (also known as Moore Stephens Dallas, Texas March 13, 2009 F-3 ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
See notes to the consolidated financial statements. F-4 ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - Continued
See notes to the consolidated financial statements. F-5 ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF For the years ended December 31,
See notes to the consolidated financial statements. F-6
ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY For the years ended December 31, 2008, 2007,
See notes to the consolidated financial statements. ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31,
See notes to the consolidated financial statements. ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - continued For the years ended December 31,
See notes to the consolidated financial statements.
Arabian American Development Company (the “Company”) was organized as a Delaware corporation in 1967. The Company’s principal business activities include manufacturing various specialty petrochemical products (also referred to as the “Petrochemical Segment”) and developing mineral properties in Saudi Arabia and the United States (also referred to as the “Mining Segment”). All of its mineral properties are presently undeveloped and require significant capital expenditures before beginning any commercial operations (see Notes 2, 8 and 9). In December 2008 mining assets located in Saudi Arabia were transferred into a joint stock company “Al Masane Al Kobra” (AMAK) of which the Company owns fifty percent. The Company’s Petrochemical Segment activities are primarily conducted through a wholly-owned subsidiary, American Shield Refining Company (the “Petrochemical Company”), which owns all of the capital stock of Texas Oil and Chemical Co. II, Inc. (“TOCCO”). TOCCO owns all of the capital stock of South Hampton Resources Inc. (“South Hampton”), and Summary of Significant Accounting Policies Principles of Consolidation – The Company evaluates its equity and other contractual relationships in order to determine whether the guidelines of FASB Interpretation (“FIN”) No. 46, “Consolidation of Variable Interest Entities,” as revised under FIN 46R, should be applied in the consolidated financial statements. FIN 46R addresses consolidation by business enterprises of variable interest entities that possess certain characteristics. A variable interest entity is defined as an entity in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. The primary beneficiary is required to consolidate the financial position and results of the variable interest entity. The Company consolidates its wholly owned interests and all inter-company accounts are eliminated in consolidation. Cash, Cash Equivalents and Short-Term Investments - The Company’s principal banking and short-term investing activities are with local and national financial institutions. Short-term investments with an original maturity of three months or less are classified as cash equivalents. At December 31, Inventories - Finished products and feedstock are recorded at the lower of cost, determined on the last-in, first-out method (LIFO) Accounts Receivable and Allowance for Doubtful Accounts – The Company evaluates the collectibility of its accounts receivable and adequacy of the allowance for doubtful accounts based upon historical experience and any specific customer financial difficulties of which the Company NOTE 1 - BUSINESS AND OPERATIONS OF THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued becomes aware. For the years ended December 31, 2008 and 2007, the allowance balance was increased by $465,000 and $0, respectively. Notes Receivable – The Company periodically makes changes in or expands its toll processing units at the request of the customer. The cost to make these changes is shared by the customer. Upon completion of the project a non-interest note receivable is recorded with an imputed interest rate. Interest rates used on outstanding notes at December 31, Mineral Exploration and Development Costs - All costs related to the acquisition, exploration, and development of mineral deposits are capitalized until such time as (1) the Company commences commercial exploitation of the related mineral deposits at which time the costs will be amortized, (2) the related project is abandoned and the capitalized costs are charged to operations, or (3) when any or all deferred costs are permanently impaired. In December 2008 all Saudi mining costs were transferred to the Company’s investment in AMAK. At December 31, Plant, Pipeline and Equipment - - Plant, pipeline and equipment are stated at cost. Depreciation is provided over the estimated service lives using the straight-line method. Gains and losses from disposition are included in operations in the period incurred. Maintenance and repairs are expensed as incurred. Major renewals and improvements are capitalized. Interest costs incurred to finance expenditures during construction phase are capitalized as part of the historical cost of constructing the assets. Construction commences with the development of the design and ends when the assets are ready for use. Capitalized interest costs are included in property, pipeline and equipment and are depreciated over the service life of the related assets. Platinum catalyst is included in property, pipeline and equipment at cost. Amortization of the catalyst is based upon Other Assets - Other assets include a license used in petrochemical operations and certain petrochemical assets. Long-Lived Assets Impairment - Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, in accordance with the Statement of Financial Accounting Standards No. 144 (SFAS 144), “Accounting for the Impairment or Disposal of Long-Lived Assets.” An impairment loss would be recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition. F-11 NOTE 1 - BUSINESS AND OPERATIONS OF THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued The amount of the impairment loss to be recorded is calculated by the excess of the asset's carrying value over its fair value. Fair value is generally determined using a discounted cash flow Revenue recognition - Sales of petrochemicals are recorded when title passes to the customer. Revenue associated with processing fees is recognized in the period the service is performed. Sales are presented net of discounts and allowances. Freight costs billed to customers are recorded as a component of revenue. Shipping and handling costs - Shipping and handling cost are classified as cost of petrochemical product sales and processing and are expensed as incurred. Retirement plan – The Company offers employees the benefit of participating in a 401(K) plan. The Company matches 100% up to 6% of pay with vesting occurring over 7 years. As of December 31, 2008, 2007, Environmental Liabilities - Remediation costs are accrued based on estimates of known environmental remediation exposure. Ongoing environmental compliance costs, including maintenance and monitoring costs, are expensed as incurred. Other Liabilities – The Company periodically makes changes in or expands its toll processing units at the request of the customer. The cost to make these changes is shared by the customer. Upon completion of the project a note receivable and a deferred liability are recorded to recover the project costs which were Net Income Per Share - The Company computes basic income per common share based on the weighted-average number of common shares outstanding. Diluted income per common share is computed based on the weighted-average number of common shares outstanding plus the number of additional common shares that would have been outstanding if potential dilutive Foreign Currency and Operations - The functional currency for each of the Company’s subsidiaries is the US dollar. Transaction gains or losses as a result of conversion from the subsidiaries local currency to the US dollar are reflected in the statements of income as a foreign exchange transaction gain or loss. The Company does not employ any practices to minimize foreign currency risks. As of December 31, The Company’s foreign operations have been, and will continue to be, affected by periodic changes or developments in the foreign countries’ political and economic conditions, as well as, changes in their laws and regulations. Any such changes could have a material adverse effect on the Company’s financial condition, operating results, or cash flows. Saudi Arabian investors, including certain members of the Company’s Board of Directors, own approximately 57% of the Company’s outstanding common stock at both December 31, 2008 and 2007. NOTE 1 - BUSINESS AND OPERATIONS OF THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued When the Company’s carrying value in an equity method Investee company is reduced to zero, no further losses are recorded in the Company’s consolidated financial statements unless the Company guaranteed obligations of the Investee company or has committed additional funding. When the Investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. Management Estimates - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include allowance for doubtful accounts Share-Based Compensation – On January 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123R, “Share-Based Payments” on a prospective basis. Prior to January 1, 2006, the Company had applied the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25 and has adopted the disclosure requirements of Statement of Financial Accounting Standards (SFAS) No. 123, as amended by Statement of Financial Accounting Standards No. 148. Accordingly, the compensation expense of any employee stock options granted is the excess, if any, of the quoted market price of the Company’s common stock at the grant date over the amount the employee must pay to acquire the stock. See Note 14 for additional information relating to stock options. Share-based compensation expense recognized during the period is based on the fair value of the portion of share-based payments awards that is ultimately expected to vest. Share-based compensation expense recognized in the consolidated statement of Derivatives - Statement of Financial Accounting Standard (SFAS) No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS Nos. 138 and 149, establishes accounting and reporting standards for derivative instruments and hedging activities. SFAS No. 133 establishes accounting and reporting standards requiring that every derivative instrument be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement requires that changes in the derivative instrument’s fair value be recognized currently in earnings unless specific F-13
hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative instrument’s gains and losses to offset related results on the hedged item in the income statement, to the extent effective, and requires that a company must formally document, designate and assess the effectiveness of transactions that receive hedge accounting. Income Taxes – Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded if there is uncertainty as to the realization of deferred tax assets. Fair Value of Financial Instruments – The Company’s consolidated financial instruments include cash, cash equivalents, notes payable and long-term debt. The carrying amount of cash, cash equivalents and variable rate long-term debt approximates fair value at December 31, New Accounting Pronouncements measurements. In February 2008 the In October 2008 the In December 2007 F-14
Combinations.” SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008, with earlier adoption prohibited. The Company is currently evaluating the impact adoption of SFAS 160 may have on the consolidated financial statements. In December 2007 The Company is currently evaluating the impact adoption of SFAS 141(R) may have on the consolidated financial statements. In March 2008 FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (“SFAS 161”). SFAS 161 requires enhanced disclosures about an entity’s derivative and hedging activities. Entities will be required to provide enhanced disclosures about: (a) how and why an entity uses derivative instruments; (b) how derivative instruments and related hedge items are accounted for under SFAS 133 and its related interpretations; and (c) how derivative instruments and related hedge items affect an entity’s financial position, financial performance and cash flows. The Company is required to adopt SFAS 161 beginning in fiscal year 2009. The Company is currently evaluating the impact adoption of SFAS 161 may have on the consolidated financial statements. In May 2008 the FASB issued Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS 162”). The new standard is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles (GAAP) for nongovernmental entities. Prior to the issuance of SFAS 162, GAAP hierarchy was defined in the American Institute of Certified Public Accountants (AICPA) Statement on Auditing Standards (SAS) No. 69, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. SAS 69 has been criticized because it is directed to the auditor rather than the entity. SFAS 162 addresses these issues by establishing that GAAP hierarchy should be directed to entities because it is the entity (not its auditor) that is responsible for selecting accounting principles for financial statements that are presented in conformity with GAAP. SFAS 162 is effective November 15, 2008 and is only effective for nongovernmental entities; therefore, the GAAP hierarchy will remain in SAS No. 69 for state and local governmental entities and federal governmental entities. SFAS 162 did not have a material impact on the Company’s consolidated financial statements upon adoption. In June 2008 the FASB issued FSP Emerging Issues Task Force (“EITF”) 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (“FSP EITF 03-6-1”). FSP EITF 03-6-1 provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. FSP EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008, F-15
and interim periods within those years. Upon adoption, a company is required to retrospectively adjust its earnings per share data (including any amounts related to interim periods, summaries of earnings and selected financial data) to conform to the provisions of FSP EITF 03-6-1. The Company is currently evaluating the impact adoption of FSP EITF 03-6-1 may have on the consolidated financial statements. In November 2008 the FASB ratified the consensus reached in EITF 08-06, “Equity Method Investment Accounting Considerations” (“EITF 08-06”). EITF 08-06 was issued to address questions that arose regarding the application of the equity method subsequent to the issuance of SFAS 141(R). EITF 08-06 concluded that equity method investments should continue to be recognized using a cost accumulation model, thus continuing to include transaction costs in the carrying amount of the equity method investment. In addition, EITF 08-06 clarifies that an impairment assessment should be applied to the equity method investment as a whole, rather than to the individual assets underlying the investment. EITF 08-06 is effective for fiscal years beginning on or after December 15, 2008. EITF 08-06 will not have a material impact on the Company’s consolidated financial statements upon adoption. NOTE 2 - LIQUIDITY MATTERS, REALIZATION OF ASSETS AND BUSINESS RISKS The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America which contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the financial statements, the Company had an excess of current assets over current liabilities of
Over the last F-16 NOTE 2 - LIQUIDITY MATTERS, REALIZATION OF ASSETS AND BUSINESS RISKS The obligation on the financial swaps which are due at the end of January through March of 2009 results in a cash outlay each month of approximately $1.9 million split between two trading partners. The Company has sufficient cash on hand and cash from operations to ensure that it is able to make such payments timely. Additionally, as a safe guard, the Company has received a temporary extension of its line of credit with the bank which will The earnings of the Petrochemical Segment have been sufficient to provide working capital for the operation of the business and for the addition of needed capital improvements. Certain former lenders had restrictions on the amount of dividends the Petrochemical Segment was allowed to pass to the Company. NOTE 3 - CONCENTRATIONS OF REVENUES AND CREDIT RISK The Petrochemical Segment sells its products and services to companies in the chemical and plastics industries. It performs periodic credit evaluations of its customers and generally does not require collateral from its customers. For the year ended December 31, 2008, two customers accounted for 13.2% and 10.6% of total product sales. For the year ended December 31, 2007, two customers accounted for 13.9% and 12.2% of total product sales. For the year ended December 31, 2006, two customers accounted for 10.5% and South Hampton utilizes one major supplier for its feedstock supply. The feedstock is a commodity product commonly available from other suppliers if needed. The percentage of feedstock purchased from the supplier during 2008, 2007, The Company holds its cash with various financial institutions that are insured by the Federal Deposit Insurance Corporation up to F-17 NOTE 4 – FAIR VALUE MEASUREMENTS As discussed in Note 1, “New Accounting Pronouncements,” the Company adopted SFAS 157 effective January 1, 2008, with the exception of the application to non-financial assets and liabilities measured at fair value on a nonrecurring basis (such as other real estate owned and goodwill and other intangible assets for impairment testing) in accordance with FSP 157-2. SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard amends numerous accounting pronouncements but does not require any new fair value measurements of reported balances. SFAS 157 emphasizes that fair value, among other things, is based on exit price versus entry price, should include assumptions about risk such as nonperformance risk in liability fair values, and is a market-based measurement, not an entity-specific measurement. When considering the assumptions that market participants would use in pricing the asset or liability, SFAS 157 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). The fair value hierarchy prioritizes inputs used to measure fair value into three broad levels.
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Commodity Financial Instruments South Hampton periodically enters into financial instruments to hedge the cost of natural gasoline (the primary feedstock) and natural gas (used as fuel to operate the plant). South Hampton uses financial swaps on feedstock and options on natural gas to limit the effect of significant fluctuations in price on operating results. In the third quarter of 2008 the Company also began using crude oil options as a method of hedging feedstock prices over longer periods of time. South Hampton has not designated these financial instruments as hedging transactions under FAS 133. South Hampton assesses the fair value of the financial swaps on feedstock using quoted prices in active markets for identical assets or liabilities (Level 1 of fair value hierarchy). South Hampton assesses the fair value of the options held to purchase crude oil using a pricing valuation model. This valuation model considers various assumptions, including publicly available forward prices for crude, time value, F-18 NOTE 4 – volatility factors and current market and contractual prices for the underlying instrument, as well as other relevant economic measures (Level 2 of fair value hierarchy). Interest Rate Swaps In The following items are measured at fair value on a recurring basis subject to disclosure requirements of SFAS 157 at December 31, 2008. Assets and Liabilities Measured at Fair Value on a Recurring Basis
The Company has consistently applied valuation techniques in all periods presented and believes it has obtained the most accurate information available for the NOTE 5 - INVENTORIES Inventories include the following at December 31:
Inventory serving as collateral for the Company’s line of credit with a domestic bank was At December 31, 2008, the Company recorded a charge of approximately $1,786,000 to reduce inventory to net realizable value. At December 31, 2007, F-19 NOTE 6 – NOTES RECEIVABLE Notes receivable balances at December 31 were:
NOTE 7 – PROPERTY, PIPELINE AND EQUIPMENT
Property, pipeline, and equipment serve as collateral for a F-20 NOTE 7 – PROPERTY, PIPELINE AND EQUIPMENT - continued Interest capitalized for construction for In August 2007 a contract was entered into for the construction of additional office space at the South Hampton facility. The total amount of the contract was approximately $1.0 million. The Company completed its expansion of the petrochemical facility in October 2008 for a total cost of approximately $18.0 million which is included in property, pipeline and equipment. NOTE 8 - MINERAL EXPLORATION AND DEVELOPMENT COSTS IN SAUDI ARABIA/INVESTMENT IN AL MASANE AL KOBRA MINING COMPANY (“AMAK”) In the accompanying consolidated financial statements, the deferred exploration and development costs have been presented based on the related projects’ geographic location within Saudi Arabia. This includes the “Al Masane Project” (the “Project”) and “Other Interests in Saudi Arabia” which primarily pertains to the costs of rentals, field offices and camps, core drilling and labor incurred at the Wadi Qatan and Jebel Harr properties. All of these costs were transferred to the Company’s Investment in AMAK (called ALAK in prior years) in December 2008. The following is some background of the Saudi mining assets. Al Masane Project The Project, consisting of a mining lease area of approximately 44 square kilometers, contains extensive ancient mineral workings and smelters. From ancient inscriptions in the area, it is believed that mining activities went on sporadically from 1000 BC to 700 AD. The ancients are believed to have extracted mainly gold, silver and copper. The Project includes various quantities of proved zinc, copper, gold and silver reserves. lease is that repayment of this loan will be made in accordance with a repayment schedule to be agreed upon with the Saudi Arabian government from (20) years. Under the lease, the Company is obligated to pay advance surface rental in the amount of 10,000 Saudi Riyals (approximately $2,667) per square kilometer per year (approximately $117,300 annually) during the period of the lease. The F-21 NOTE 8 - MINERAL EXPLORATION AND DEVELOPMENT COSTS IN SAUDI ARABIA/INVESTMENT IN AL MASANE AL KOBRA MINING COMPANY (“AMAK”) – continued In late 2007 the Company and eight Saudi investors formed a Saudi joint stock company under the name Al Masane Al Kobra Mining Company the Chairman of Deferred exploration and development costs of the Al Masane Project at December 31, 2008, 2007
Other Interests in Saudi Arabia In 1971 the Saudi Arabian government awarded the Company exclusive mineral exploration licenses to explore and develop the Wadi Qatan area in southwestern Saudi Arabia. The Company was subsequently awarded an additional license in 1977 for an area north of Wadi Qatan at Jebel Harr. These licenses have expired. On June 22, 1999, the Company submitted a formal application for a five-year exclusive exploration license for the Greater Al Masane area of approximately 2,850 square F-22 NOTE 8 - MINERAL EXPLORATION AND DEVELOPMENT COSTS IN SAUDI ARABIA/INVESTMENT IN AL MASANE AL KOBRA MINING COMPANY (“AMAK”) – continued kilometers that surrounds the Al Masane mining lease area and includes the Wadi Qatan and Jebel Harr areas. Although a license has not been formally granted for the Greater Al Masane area, the Company has been authorized in writing by the Saudi Arabian government to carry out exploration work on the area. The Company previously worked the Greater Al Masane area after obtaining written authorization from the Saudi Ministry of Petroleum and Mineral Resources, and has expended over $2 million in exploration work. Geophysical, geochemical and geologic work and diamond core drilling on the Greater Al Masane area has revealed mineralization similar to that discovered at Al Masane. The license to develop the areas identified by the exploration work will be applied for by The Company on August 5, 2006, signed a one year Financial and Legal Services and Advice Agreement with a Saudi legal firm and a Saudi management consultant in Saudi Arabia to facilitate the: (1) formation of AMAK, (2) transfer of the mining assets and lease into AMAK, and (3) raising of additional capital. The attorney and consultant are to be paid in stock issued by the Company and up to one million shares will be issued in increments as each step is completed. The agreement has been extended on a month to month basis and remains in effect. As of December 31, 2008, 750,000 shares have been issued in payment due to the formation of AMAK and transfer of assets and lease into AMAK. Stock issued had a value of $3,712,500 using the Company’s closing stock price on the date of the issuance of the commercial license and approval of the transfer. The Company accounts for its investment in AMAK using the equity method of accounting. Accordingly, the investment in AMAK is carried at the cost of the net transferred assets and will be adjusted for the Company’s proportionate share of income or loss and reduced for any distributions received. The audited financial statements are not yet available for AMAK; however, management believes their proportionate share of income or loss is not significant for the year ended December 31, 2008. NOTE 9 - MINERAL PROPERTIES IN THE UNITED STATES The principal assets of Pioche are an undivided interest in 48 patented and 5 unpatented mining claims totaling approximately 1,500 acres, and a 300 ton-per-day mill located on the aforementioned properties in the Pioche Mining District in southeast Nevada. In August 2001, 75 unpatented claims were abandoned since they were deemed to have no future value to Pioche. Due to the lack of capital, the properties held by Pioche have not been commercially operated for approximately 35 years. The F-23 NOTE 9 - MINERAL PROPERTIES IN THE UNITED STATES – continued Company has recorded NOTE 10 - NOTES PAYABLE, LONG-TERM DEBT AND LONG-TERM OBLIGATIONS Notes payable, long-term debt and long-term obligations at December 31 are summarized as follows:
F-24
is allowing the Company until mid-June 2009 to repay the overage. Subsequent to year end the Company paid approximately $2.5 million of this amount with approximately $1.5 million outstanding. Interest is paid monthly. Covenants that must be maintained include EBITDA, capital expenditures, dividends payable to parent, and leverage ratio. |
On September 19, 2007 South Hampton entered into a $10.0 million term loan agreement with a domestic bank to finance the expansion of the petrochemical facility. An amendment was entered into on November 26, 2008 which increased the term loan to $14.0 million due to the increased cost of the expansion. This note is secured by property, |
Principal payments of long-term debt for the next five years and thereafter ending December 31 are as follows: |
Year Ending December 31, | Long-Term Debt | Capital Lease Obligations | ||||||
2008 | $ | -- | $ | 33,471 | ||||
2009 | 223,384 | 19,523 | ||||||
2010 | 6,296,402 | -- | ||||||
2011 | 252,883 | -- | ||||||
2012 | 2,286,057 | -- | ||||||
Total | $ | 9,058,726 | 52,994 | |||||
Less: Amount representing interest | (3,410 | ) | ||||||
Present value of future minimum lease payments | $ | 49,584 |
Year Ending December 31, | Long-Term Debt | Capital Lease Obligations | ||||||
2009 | $ | 4,901,432 | $ | 19,523 | ||||
2010 | 12,032,147 | -- | ||||||
2011 | 1,294,165 | -- | ||||||
2012 | 1,333,528 | -- | ||||||
2013 | 1,374,057 | -- | ||||||
Thereafter | 7,523,397 | -- | ||||||
Total | $ | 28,458,726 | 19,523 | |||||
Less: Amount representing interest | (513 | ) | ||||||
Present value of future minimum lease payments | $ | 19,010 |
NOTE 11 – ACCRUED LIABILITIES |
2007 | 2006 | |||||||
Accrued state taxes | $ | 258,407 | $ | 554,453 | ||||
Accrued operating costs | 275,000 | 200,000 | ||||||
Accrued payroll | 539,947 | 251,971 | ||||||
Accrued directors’ fees | 288,250 | -- | ||||||
Post retirement obligation | 180,000 | -- | ||||||
Accrued officers’ compensation | 100,000 | -- | ||||||
Other liabilities | 290,218 | 203,630 | ||||||
Total | $ | 1,931,822 | $ | 1,210,054 |
2008 | 2007 | |||||||
Accrued state taxes | $ | 147,221 | $ | 258,407 | ||||
Accrued operating costs | -- | 275,000 | ||||||
Accrued payroll | 514,218 | 539,947 | ||||||
Accrued directors’ fees | -- | 288,250 | ||||||
Post retirement obligation | -- | 180,000 | ||||||
Accrued officers’ compensation | -- | 100,000 | ||||||
Other liabilities | 368,251 | 290,218 | ||||||
Total | $ | 1,029,690 | $ | 1,931,822 |
2007 | 2006 | |||||||
Salaries | $ | 603,147 | $ | 866,376 | ||||
Termination benefits | 783,170 | 758,397 | ||||||
Other liabilities | 20,484 | 20,484 | ||||||
Total | $ | 1,406,801 | $ | 1,645,257 |
2008 | 2007 | |||||||
Salaries | $ | 602,503 | $ | 603,147 | ||||
Termination benefits | 807,944 | 783,170 | ||||||
Other liabilities | 18,709 | 20,484 | ||||||
Total | $ | 1,429,156 | $ | 1,406,801 |
Year Ending December 31 | ||||
2008 | $ | 808,500 | ||
2009 | 117,300 | |||
2010 | 117,300 | |||
2011 | 117,300 | |||
2012 | 117,300 | |||
Thereafter | 1,290,300 | |||
Total | $ | 2,568,000 |
2007 | 2006 | 2005 | ||||||||||||||||||||||
Shares | Weighted average exercise price | Shares | Weighted average exercise price | Shares | Weighted average exercise price | |||||||||||||||||||
Outstanding at beginning of year | 500,000 | $ | 1.20 | 400,000 | $ | 1.00 | 400,000 | $ | 1.00 | |||||||||||||||
Granted | - | 100,000 | $ | 2.00 | - | |||||||||||||||||||
Forfeited | - | - | - | |||||||||||||||||||||
Outstanding at end of year | 500,000 | $ | 1.20 | 500,000 | $ | 1.20 | 400,000 | $ | 1.00 | |||||||||||||||
Options exercisable at end of year | 500,000 | $ | 1.20 | 500,000 | $ | 1.20 | 400,000 | $ | 1.00 | |||||||||||||||
2008 | 2007 | 2006 | ||||||||||||||||||||||
Shares | Weighted average exercise price | Shares | Weighted average exercise price | Shares | Weighted average exercise price | |||||||||||||||||||
Outstanding at beginning of year | 500,000 | $ | 1.20 | 500,000 | $ | 1.20 | 400,000 | $ | 1.00 | |||||||||||||||
Granted | - | - | 100,000 | $ | 2.00 | |||||||||||||||||||
Forfeited | - | - | - | |||||||||||||||||||||
Outstanding at end of year | 500,000 | $ | 1.20 | 500,000 | $ | 1.20 | 500,000 | $ | 1.20 | |||||||||||||||
Options exercisable at end of year | 500,000 | $ | 1.20 | 500,000 | $ | 1.20 | 500,000 | $ | 1.20 | |||||||||||||||
Options outstanding and exercisable | |||||||
Number | Remaining contractual life | Exercise price | |||||
400,000 | Undetermined | $ | 1.00 | ||||
100,000 | 1.7 years | $ | 2.00 |
Options outstanding and exercisable | |||||||
Number | Remaining contractual life | Exercise price | |||||
400,000 | Undetermined | $ | 1.00 | ||||
100,000 | 0.7 years | $ | 2.00 |
NOTE 15 – INCOME TAXES |
Year ended December 31, | ||||||||
2007 | 2006 | |||||||
Current federal provision | $ | 3,357,184 | $ | 3,196,005 | ||||
Current state provision (benefit) | (68,103 | ) | 569,903 | |||||
Deferred federal provision | 141,443 | 222,721 | ||||||
Deferred state provision (benefit) | (4,281 | ) | 20,787 | |||||
Income tax expense | $ | 3,426,243 | $ | 4,009,416 |
Year ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Current federal provision | $ | 376,030 | $ | 3,357,184 | $ | 3,196,005 | ||||||
Current state provision (benefit) | 173,323 | (68,103 | ) | 569,903 | ||||||||
Deferred federal provision (benefit) | (5,388,895 | ) | 141,443 | 222,721 | ||||||||
Deferred state provision (benefit) | (139,304 | ) | (4,281 | ) | 20,787 | |||||||
Income tax expense (benefit) | $ | (4,978,846 | ) | $ | 3,426,243 | $ | 4,009,416 |
2007 | 2006 | 2005 | ||||||||||
Income taxes at U.S. statutory rate | $ | 3,807,192 | $ | 4,048,863 | $ | 6,064,431 | ||||||
State taxes, net of federal benefit | 166,685 | 385,756 | 533,763 | |||||||||
Prior year overpayments | (145,250 | ) | (358,054 | ) | - | |||||||
Refund from amended state return | (158,000 | ) | - | - | ||||||||
Change in valuation allowance | - | - | (3,170,892 | ) | ||||||||
Foreign operations with no benefit (tax) provided | - | - | (2,317,278 | ) | ||||||||
Permanent and other items | (244,384 | ) | ( 67,149 | ) | 23,763 | |||||||
Total tax expense | $ | 3,426,243 | $ | 4,009,416 | $ | 1,133,787 |
2008 | 2007 | 2006 | ||||||||||
Income taxes at U.S. statutory rate | $ | (4,882,123 | ) | $ | 3,807,192 | $ | 4,048,863 | |||||
State taxes, net of federal benefit | (42,141 | ) | 166,685 | 385,756 | ||||||||
Prior year overpayments | (49,872 | ) | (145,250 | ) | (358,054 | ) | ||||||
Refund from amended state return | - | (158,000 | ) | - | ||||||||
Permanent and other items | (4,710 | ) | (244,384 | ) | ( 67,149 | ) | ||||||
Total tax expense (benefit) | $ | (4,978,846 | ) | $ | 3,426,243 | $ | 4,009,416 |
December 31, | ||||||||
2008 | 2007 | |||||||
Deferred tax liabilities: | ||||||||
Plant, pipeline and equipment | $ | (4,122,410 | ) | $ | (1,368,531 | ) | ||
Unrealized gains on swap agreements | -- | (63,370 | ) | |||||
Deferred tax assets: | ||||||||
Accounts receivable | 265,901 | 82,250 | ||||||
Inventory | 635,865 | 33,001 | ||||||
Mineral interests | 365,293 | 217,051 | ||||||
Accrued liabilities | -- | 211,158 | ||||||
Net operating loss and contribution carry-forwards | -- | -- | ||||||
Capital loss carry-forward | 1,228,090 | 1,228,090 | ||||||
Deferred gain on sale of property | -- | -- | ||||||
Unrealized losses on swap agreements | 7,306,270 | -- | ||||||
Unrealized loss on interest rate swap | 577,007 | -- | ||||||
Post retirement benefits | 400,149 | 211,310 | ||||||
Gross deferred tax assets | 10,778,575 | 1,982,860 | ||||||
Valuation allowance | (1,228,090 | ) | (1,228,090 | ) | ||||
Net deferred tax assets (liabilities) | $ | 5,428,075 | $ | (677,131 | ) |
2008 | 2007 | |||||||
Current deferred tax asset | $ | 8,785,043 | $ | -- | ||||
Non-current deferred tax liability: | ||||||||
Deferred tax assets | 1,993,532 | 1,982,860 | ||||||
Deferred tax liability | (4,122,410 | ) | (1,431,901 | ) | ||||
Valuation allowance | (1,228,090 | ) | (1,228,090 | ) | ||||
Non-current deferred tax liability, net | (3,356,968 | ) | (677,131 | ) | ||||
Deferred tax assets (liabilities), net | $ | 5,428,075 | $ | (677,131 | ) |
December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Deferred tax liabilities: | ||||||||||||
Plant, pipeline and equipment | $ | (1,368,531 | ) | $ | (1,462,000 | ) | $ | (907,000 | ) | |||
Unrealized gains on swap agreements | (63,370 | ) | - | - | ||||||||
Deferred tax assets: | ||||||||||||
Accounts receivable | 82,250 | 55,000 | 42,000 | |||||||||
Inventory | 33,001 | - | - | |||||||||
Mineral interests | 217,051 | 236,000 | 236,000 | |||||||||
Accrued liabilities | 211,158 | 255,000 | 215,000 | |||||||||
Net operating loss and contribution carry-forwards | -- | 75,000 | 55,000 | |||||||||
Capital loss carry-forward | 1,228,090 | 1,336,000 | 1,336,000 | |||||||||
Deferred gain on sale of property | -- | 18,000 | 34,000 | |||||||||
Unrealized losses on swap agreements | -- | 283,000 | 28,000 | |||||||||
Post retirement benefits | 211,310 | - | - | |||||||||
Gross deferred tax assets | 1,982,860 | 2,258,000 | 1,946,000 | |||||||||
Valuation allowance | (1,228,090 | ) | (1,336,000 | ) | (1,336,000 | ) | ||||||
Net deferred tax liabilities | (677,131 | ) | (540,000 | ) | (297,000 | ) | ||||||
Net deferred taxes | $ | (677,131 | ) | $ | (540,000 | ) | $ | (297,000 | ) |
December 31, 2008 | ||||||||||||
Petrochemical | Mining | Total | ||||||||||
Continuing operations | ||||||||||||
Revenue from external customers | $ | 154,630,234 | $ | - | $ | 154,630,234 | ||||||
Depreciation | 1,630,428 | 856 | 1,631,284 | |||||||||
Operating income (loss) | (11,563,597 | ) | (2,399,134 | ) | (13,962,731 | ) | ||||||
Total assets | $ | 63,917,729 | $ | 34,228,411 | $ | 98,146,140 |
December 31, 2007 | ||||||||||||
Petrochemical | Mining | Total | ||||||||||
Continuing operations | ||||||||||||
Revenue from external customers | $ | 108,638,115 | $ | - | $ | 108,638,115 | ||||||
Depreciation | 1,073,620 | 1,142 | 1,074,762 | |||||||||
Operating income (loss) | 13,261,809 | (2,179,101 | ) | 11,082,708 | ||||||||
Total assets | $ | 42,077,819 | $ | 42,142,946 | $ | 84,220,765 |
December 31, 2006 | ||||||||||||
Petrochemical | Mining | Total | ||||||||||
Continuing operations | ||||||||||||
Revenue from external customers | $ | 98,502,157 | $ | - | $ | 98,502,157 | ||||||
Depreciation | 858,813 | 246 | 859,059 | |||||||||
Operating income (loss) | 13,130,693 | (1,218,931 | ) | 11,911,762 | ||||||||
Total assets | $ | 29,638,657 | $ | 41,951,509 | $ | 71,590,166 |
December 31, 2005 | ||||||||||||
Petrochemical | Mining | Total | ||||||||||
Continuing operations | ||||||||||||
Revenue from external customers | $ | 80,373,587 | $ | - | $ | 80,373,587 | ||||||
Depreciation | 651,582 | 25 | 651,607 | |||||||||
Operating income (loss) | 12,252,223 | (624,993 | ) | 11,627,230 | ||||||||
Discontinued operations (Coin) | ||||||||||||
Revenue from external customers | $ | 2,042,676 | $ | - | $ | 2,042,676 | ||||||
Depreciation | - | - | - | |||||||||
Operating income (loss) | 497,730 | - | 497,730 | |||||||||
Total assets | $ | 26,165,931 | $ | 40,808,237 | $ | 66,974,168 |
December 31, 2006 | ||||||||||||
Petrochemical | Mining | Total | ||||||||||
Continuing operations | ||||||||||||
Revenue from external customers | $ | 98,502,157 | $ | - | $ | 98,502,157 | ||||||
Depreciation | 858,813 | 246 | 859,059 | |||||||||
Operating income (loss) | 13,130,693 | (1,218,931 | ) | 11,911,762 | ||||||||
Total assets | $ | 29,638,657 | $ | 41,951,509 | $ | 71,590,166 |
Year ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Revenues | ||||||||||||
United States | $ | 108,638 | $ | 98,502 | $ | 80,373 | ||||||
Mexico (discontinued operations) | - | - | 2,043 | |||||||||
Saudi Arabia | - | - | - | |||||||||
$ | 108,638 | $ | 98,502 | $ | 82,416 | |||||||
Long-lived assets | ||||||||||||
United States | $ | 20,851 | $ | 11,711 | $ | 9,311 | ||||||
Mexico (discontinued operations) | - | - | - | |||||||||
Saudi Arabia | 39,899 | 39,568 | 39,235 | |||||||||
$ | 60,750 | $ | 51,279 | $ | 48,546 |
Year ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Revenues | ||||||||||||
United States | $ | 154,630 | $ | 108,638 | $ | 98,502 | ||||||
Saudi Arabia | - | - | - | |||||||||
$ | 154,630 | $ | 108,638 | $ | 98,502 | |||||||
Long-lived assets | ||||||||||||
United States | $ | 33,123 | $ | 20,851 | $ | 11,711 | ||||||
Saudi Arabia(A) | 33,002 | 39,899 | 39,568 | |||||||||
$ | 66,125 | $ | 60,750 | $ | 51,279 |
Year ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Basic earnings per common share | ||||||||||||
Income from continuing operations | $ | 0.34 | $ | 0.35 | $ | 0.43 | ||||||
Discontinued operations | - | - | 0.30 | |||||||||
Net income | $ | 0.34 | $ | 0.35 | $ | 0.73 | ||||||
Weighted average shares outstanding | 22,895,394 | 22,804,567 | 22,731,994 | |||||||||
Diluted earnings per common share | ||||||||||||
Income from continuing operations | $ | 0.33 | $ | 0.34 | $ | 0.43 | ||||||
Discontinued operations | - | - | 0.30 | |||||||||
Net income | $ | 0.33 | $ | 0.34 | $ | 0.73 | ||||||
Weighted average shares outstanding | 23,291,669 | 23,030,283 | 22,731,994 |
Year ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Net income (loss) | $ | (8,874,915 | ) | $ | 7,711,381 | $ | 7,875,328 | |||||
Basic earnings (loss) per common share: | ||||||||||||
Weighted average shares outstanding | 23,409,458 | 22,895,394 | 22,804,567 | |||||||||
Per share amount | $ | (0.38 | ) | $ | 0.34 | $ | 0.35 | |||||
Diluted earnings (loss) per common share: | ||||||||||||
Weighted average shares outstanding | 23,409,458 | 23,291,669 | 23,030,283 | |||||||||
Per share amount | $ | (0.38 | ) | $ | 0.33 | $ | 0.34 |
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||
2007 | 2006 | 2005 | 2008 | 2007 | 2006 | |||||||||||||||||||
Weighted average shares-denominator basic computation | 22,895,394 | 22,804,567 | 22,731,994 | 23,409,458 | 22,895,394 | 22,804,567 | ||||||||||||||||||
Effect of dilutive stock options | 396,275 | 225,716 | - | - | 396,275 | 225,716 | ||||||||||||||||||
Weighted average shares, as adjusted denominator diluted computation | 23,291,669 | 23,030,283 | 22,731,994 | 23,409,458 | 23,291,669 | 23,030,283 |
Year Ended December 31, 2007 | ||||||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total | ||||||||||||||||
Revenues | $ | 23,663 | $ | 27,141 | $ | 28,038 | $ | 29,796 | $ | 108,638 | ||||||||||
Gross profit | 9,263 | 5,168 | 2,441 | 2,905 | 19,777 | |||||||||||||||
Net income (loss) | 4,641 | 2,172 | 382 | 576 | 7,771 | |||||||||||||||
Basic EPS | $ | 0.20 | $ | 0.10 | $ | 0.02 | $ | 0.02 | $ | 0.34 | ||||||||||
Diluted EPS | $ | 0.20 | $ | 0.09 | $ | 0.02 | $ | 0.02 | $ | 0.33 |
Year Ended December 31, 2008 | ||||||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total | ||||||||||||||||
Revenues | $ | 31,234 | $ | 42,611 | $ | 47,742 | $ | 33,043 | $ | 154,630 | ||||||||||
Gross profit (loss) | 4,878 | 6,846 | (9,110 | ) | (7,211 | ) | (4,597 | ) | ||||||||||||
Net income (loss) | 1,416 | 3,172 | (6,931 | ) | (6,532 | ) | (8,875 | ) | ||||||||||||
Basic EPS | $ | 0.06 | $ | 0.14 | $ | (0.30 | ) | $ | (0.28 | ) | $ | (0.38 | ) | |||||||
Diluted EPS | $ | 0.06 | $ | 0.13 | $ | (0.30 | ) | $ | ( 0.28 | ) | $ | (0.38 | ) |
Year Ended December 31, 2006 | ||||||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total | ||||||||||||||||
Revenues | $ | 24,316 | $ | 24,082 | $ | 27,541 | $ | 22,563 | $ | 98,502 | ||||||||||
Gross profit | 5,917 | 6,086 | 2,777 | 3,833 | 18,613 | |||||||||||||||
Net income (loss) | 2,701 | 2,648 | 514 | 2,012 | 7,875 | |||||||||||||||
Basic EPS | $ | 0.12 | $ | 0.12 | $ | 0.02 | $ | 0.09 | $ | 0.35 | ||||||||||
Diluted EPS | $ | 0.12 | $ | 0.11 | $ | 0.02 | $ | 0.09 | $ | 0.34 |
Year Ended December 31, 2007 | |||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total | |
Revenues | $23,663 | $ 27,141 | $ 28,038 | $ 29,796 | $108,638 |
Gross profit | 9,065 | 4,970 | 2,243 | 2,706 | 18,984 |
Net income | 4,641 | 2,172 | 382 | 576 | 7,771 |
Basic EPS | $ 0.20 | $ 0.10 | $ 0.02 | $ 0.02 | $ 0.34 |
Diluted EPS | $ 0.20 | $ 0.09 | $ 0.02 | $ 0.02 | $ 0.33 |
NOTE 20 – DERIVATIVE INSTRUMENTS |
NOTE 20 – DERIVATIVE INSTRUMENTS - continued |
Description | Beginning balance | Charged (credited) to earnings | Deductions(a) | Ending balance | ||||||||||||
ALLOWANCE FOR DEFERRED TAX ASSET | ||||||||||||||||
December 31, 2005 | 3,274,588 | 1,336,451 | (3,274,588 | ) | 1,336,451 | |||||||||||
December 31, 2006 | 1,336,451 | - | - | 1,336,451 | ||||||||||||
December 31, 2007 | 1,336,451 | (108,361 | ) | - | 1,228,090 |
Description | Beginning balance | Charged (credited) to earnings | Deductions(a) | Ending balance | ||||||||||||
ALLOWANCE FOR DEFERRED TAX ASSET | ||||||||||||||||
December 31, 2006 | 1,336,451 | - | - | 1,336,451 | ||||||||||||
December 31, 2007 | 1,336,451 | (108,361 | ) | - | 1,228,090 | |||||||||||
December 31, 2008 | 1,228,090 | - | - | 1,228,090 |
Description | Beginning balance | Charged to earnings | Deductions | Ending balance | ||||||||||||
ALLOWANCE FOR DOUBTFUL ACCOUNTS | ||||||||||||||||
December 31, 2005 | - | - | - | - | ||||||||||||
December 31, 2006 | - | 190,829 | (155,829 | ) | 35,000 | |||||||||||
December 31, 2007 | 35,000 | - | - | 35,000 |
Description | Beginning balance | Charged to earnings | Deductions | Ending balance | ||||||||||||
ALLOWANCE FOR DOUBTFUL ACCOUNTS | ||||||||||||||||
December 31, 2006 | - | 190,829 | (155,829 | ) | 35,000 | |||||||||||
December 31, 2007 | 35,000 | - | - | 35,000 | ||||||||||||
December 31, 2008 | 35,000 | 465,000 | - | 500,000 |