|
|
|
þ
|
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
|
|
o
|
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
|
Nevada
|
|
33-0215295
|
(State
or other jurisdiction of
incorporation
or organization)
|
|
(I.R.S.
Employer
Identification
No.)
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
Consolidated
Statements of Operations (unaudited) for the three
and nine months ended August 31, 2006 and 2005
|
|
|
|
|
|
|
|
Consolidated
Balance Sheets at August 31, 2006 (unaudited) and
November 30, 2005
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
Management's
Discussion and Analysis or Plan of
Operation
|
|
||
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
Unregistered
Sales of Equity Securities and Use of
Proceeds
|
|
||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
Exhibits
|
|
||
|
|
|
|
|
|
||
|
|
|
|
Certifications
|
|
|
|
|
Three
Months Ended
|
|
Nine
Months Ended
|
||||||||||
|
|
|
August
31, 2006
|
|
|
August
31, 2005
|
|
|
August
31, 2006
|
|
|
August
31, 2005
|
|
|
Net
sales
|
|
$
|
2,327,246
|
|
$
|
1,943,450
|
|
$
|
7,228,617
|
|
$
|
5,967,379
|
|
|
Cost
of sales
|
|
|
1,714,339
|
|
1,550,911
|
|
|
5,221,472
|
|
|
4,786,436
|
|
||
Gross
profit
|
|
|
612,907
|
|
|
392,539
|
|
|
2,007,145
|
|
|
1,180,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative
|
|
|
453,370
|
|
|
344,344
|
|
|
1,375,046
|
|
1,259,710
|
|
||
Depreciation
and amortization
|
|
|
19,751
|
|
|
39,214
|
|
|
66,816
|
|
139,656
|
|
||
Total
operating expenses
|
|
|
473,121
|
|
|
383,558
|
|
|
1,441,862
|
|
1,399,366
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||||
Income
(loss) from operations
|
|
|
139,786
|
|
|
8,981
|
|
565,283
|
|
(218,423
|
)
|
|||
Other
income (expense):
|
|
|
|
|
|
|
|
|
|
|
||||
Interest
expense
|
|
|
(32,671
|
)
|
|
(39,982
|
)
|
|
(111,623
|
)
|
|
(113,471
|
)
|
|
Other,
net
|
|
|
1,019
|
|
51,358
|
|
|
12,202
|
|
90,034
|
|
|||
Total
other income (expense), net
|
|
|
(31,652
|
)
|
|
11,376
|
|
(99,421
|
)
|
|
(23,437
|
)
|
||
|
|
|
|
|
|
|
|
|
|
|
||||
Net
income (loss)
|
|
$
|
108,134
|
|
$
|
20,357
|
$
|
465,862
|
$
|
(241,860
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
and diluted earnings (loss) per common share
|
|
$
|
0.01
|
|
$
|
0.00
|
$
|
0.04
|
$
|
(0.02
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted
Average Common Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
|
|
12,116,026
|
|
|
10,932,693
|
|
|
12,116,026
|
|
10,654,915
|
|
||
Diluted
|
|
|
12,230,854
|
|
|
10,941,264
|
|
|
12,172,626
|
|
10,654,915
|
|
|
|
August
31, 2006 (unaudited)
|
|
November 30,
2005
|
|
||
|
|
|
|
|
|
||
ASSETS
|
|
|
|
|
|
||
Current
assets:
|
|
|
|
|
|
||
Cash
and cash equivalents
|
|
$
|
341,811
|
|
$
|
407,039
|
|
Accounts
receivable, net
|
|
1,634,316
|
|
1,470,805
|
|
||
Inventories,
net
|
|
974,991
|
|
1,085,057
|
|
||
Prepaid
expenses and other
|
|
87,496
|
|
218,242
|
|
||
Total
current assets
|
|
3,038,614
|
|
3,181,143
|
|
||
|
|
|
|
|
|||
Property
and equipment, net
|
|
391,979
|
|
519,888
|
|
||
Other
assets
|
|
78,862
|
|
80,964
|
|
||
Total
assets
|
|
$
|
3,509,455
|
|
$
|
3,781,995
|
|
|
|
|
|
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|||
Current
liabilities:
|
|
|
|
|
|||
Accounts
payable
|
|
$
|
413,471
|
|
$
|
849,715
|
|
Accrued
liabilities
|
|
17,013
|
233,287
|
|
|||
Notes
payable - related parties
|
|
57,736
|
|
99,418
|
|
||
Line
of credit
|
|
1,235,012
|
|
1,168,879
|
|
||
Current
portion of term loan
|
|
55,000
|
|
90,000
|
|
||
Current
portion of capital lease obligations
|
|
22,204
|
|
31,886
|
|
||
Total
current liabilities
|
|
1,800,436
|
|
2,473,185
|
|
||
|
|
|
|
|
|||
Capital
lease obligations, net of current portion
|
|
25,013
|
|
54,781
|
|
||
Term
loan, net of current portion
|
|
--
|
|
35,885
|
|
||
Total
liabilities
|
|
1,825,449
|
|
2,563,851
|
|
||
|
|
|
|
|
|||
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; 12,116,026 shares
issued and outstanding at August 31, 2006 and November 30,
2005
|
|
12,116
|
|
12,116
|
|
||
Additional
paid-in capital
|
|
8,355,497
|
|
8,355,497
|
|
||
Accumulated
deficit
|
|
(6,683,607
|
)
|
(7,149,469
|
)
|
||
Total
stockholders' equity
|
|
1,684,006
|
|
1,218,144
|
|
||
Total
liabilities and stockholders' equity
|
|
$
|
3,509,455
|
|
$
|
3,781,995
|
|
|
|
Nine
Months Ended
|
|
||||
|
|
August
31, 2006
|
|
August
31, 2005
|
|
||
Cash
flows from operating activities:
|
|
|
|
|
|
||
Net
income (loss)
|
|
$
|
465,862
|
|
$
|
(241,860
|
)
|
Adjustments
to reconcile net income (loss) to net cash provided by operating
activities
|
|
|
|
|
|||
Depreciation
and amortization
|
|
174,996
|
|
295,957
|
|
||
Changes
in operating assets and liabilities:
|
|
|
|
|
|||
Accounts
receivable
|
|
(163,511
|
)
|
122,099
|
|
||
Inventories
|
|
110,066
|
|
(403,783
|
)
|
||
Prepaid
expenses and other assets
|
|
132,848
|
|
(92,220
|
)
|
||
Accounts
payable and accrued liabilities
|
|
(652,518
|
)
|
194,716
|
|
||
Restructuring
reserve
|
|
--
|
(12,656
|
)
|
|||
Net
cash provided by (used in) operating activities
|
|
67,743
|
(137,747
|
)
|
|||
|
|
|
|
||||
Cash
flows from investing activities:
|
|
|
|
||||
Purchases
of property and equipment
|
|
(47,087
|
)
|
(22,261
|
)
|
||
Net
cash used in investing activities
|
|
--
|
(22,261
|
)
|
|||
|
|
|
|
||||
Cash
flows from financing activities:
|
|
|
|
||||
Sale
of common stock
|
--
|
249,833
|
|||||
Net
borrowings (repayments) under line of credit
|
|
66,133
|
189,621
|
|
|||
Repayments
under term loan
|
|
(70,885
|
)
|
(77,500
|
)
|
||
Repayments
of other long-term obligations
|
|
(81,132
|
)
|
(116,734
|
)
|
||
Net
cash provided by (used in) financing activities
|
|
(85,884
|
)
|
245,220
|
|
||
Net
change in cash and cash equivalents
|
|
(65,228
|
)
|
85,212
|
|
||
|
|
|
|
||||
Cash
and cash equivalents, beginning of period
|
|
407,039
|
|
55,289
|
|
||
Cash
and cash equivalents, end of period
|
|
$
|
341,811
|
|
$
|
140,501
|
|
|
|
|
|
|
|||
Supplemental
disclosures of cash flow information
|
|
|
|
|
|||
Cash
paid during the period for:
|
|
|
|
|
|||
Interest
|
|
$
|
111,623
|
|
$
|
113,470
|
|
Income
taxes
|
|
$
|
|
$
|
--
|
|
|
Three
Months Ended
|
|
Nine
Months Ended
|
|
|||||||||
|
|
|
August
31, 2006
|
|
|
August
31, 2005
|
|
|
August
31, 2006
|
|
|
August
31, 2005
|
|
Net
income (loss) available to common stockholders
|
|
$
|
108,134
|
|
$
|
20,357
|
$
|
465,862
|
|
$
|
(241,860
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Plus:
Stock-based employee compensation included in reported net income
(loss)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Less:
Total stock-based employee compensation determined using fair value
based
method
|
|
|
(1,700
|
)
|
|
(9,378
|
)
|
|
(11,200
|
)
|
|
(18,755
|
)
|
Pro
forma net income (loss) available to common stockholders
|
|
|
106,434
|
|
|
10,979
|
|
454,662
|
|
|
(260,615
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Net
income (loss) per common share - as reported:
|
|
|
|
|
|
|
|
|
|
|
|
||
Basic
|
|
|
0.01
|
|
|
0.00
|
|
0.04
|
|
|
(0.02
|
)
|
|
Diluted
|
|
|
0.01
|
|
|
0.00
|
|
0.04
|
|
|
(0.02
|
)
|
|
Net
income (loss) per common share - pro forma:
|
|
|
|
|
|
|
|
|
|
|
|
||
Basic
|
|
|
0.01
|
|
|
0.00
|
|
0.04
|
|
|
(0.02
|
)
|
|
Diluted
|
|
|
0.01
|
|
|
0.00
|
|
0.04
|
|
|
(0.02
|
)
|
|
|
August
31, 2006
|
|
November 30,
2005
|
|
||
|
|
(unaudited)
|
|
|
|
||
|
|
|
|
|
|
||
Raw
Materials
|
|
$
|
525,114
|
|
$
|
479,206
|
|
Work-in-process
|
|
143,795
|
|
150,763
|
|
||
Finished
Goods
|
320,982
|
|
489,988
|
|
|||
|
|
|
|
|
|||
Less
allowance for obsolete inventory
|
|
(14,900
|
)
|
(34,900
|
)
|
||
|
|
$
|
974,991
|
|
$
|
1,085,057
|
|
|
¡¡è
|
The
Company's, its customer's or its competitor's announcement of new
or
discontinued products,
|
|
¡¡è
|
Quarterly
increases or decreases in
earnings,
|
|
¡¡è
|
Changes
in revenue or earnings estimates by the investment community,
and
|
|
¡¡è
|
Speculation
in the press or investment
community.
|
Exhibit
No.
|
|
Description
|
|
|
|
|
|
31.1
31.2
|
|
Certifications
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 and Chief Financial Officer Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
|
|
Dated:
October 13, 2006
|
ADVANCED
MATERIALS GROUP, INC.
|
||
|
|
|
|
|
|
|
|
|
By:
|
/s/
William G. Mortensen
|
|
|
|
William
G. Mortensen
|
|
|
|
President
and Chief Financial Officer
|