DELAWARE
|
75-1256622
|
(State
or other jurisdiction of
|
(I.R.S.
employer incorporation or
|
organization)
|
identification
no.)
|
10830
NORTH CENTRAL EXPRESSWAY, SUITE 175
|
75231
|
DALLAS,
TEXAS
|
(Zip
code)
|
(Address
of principal executive offices)
|
SEPTEMBER
30, 2007
(unaudited)
|
DECEMBER
31,
2006
|
|||||||
ASSETS
|
||||||||
Current
Assets
|
||||||||
Cash
and cash
equivalents
|
$ |
1,909,213
|
$ |
2,939,022
|
||||
Trade
Receivables, Net of allowance for doubtful accounts
of
$35,000 and $35,000, respectively
|
12,239,558
|
8,893,182
|
||||||
Current
portion of notes receivable, net of discount and
deferred
gross profit of $139,341 and $200,492,
respectively
|
572,055
|
605,955
|
||||||
Financial
contracts
|
423,639
|
--
|
||||||
Financial
contract deposits
|
--
|
1,500,000
|
||||||
Prepaid
expenses and other assets
|
538,750
|
576,751
|
||||||
Inventories
|
2,922,845
|
3,576,317
|
||||||
Income
tax receivable
|
--
|
619,598
|
||||||
Total
Current Assets
|
18,606,060
|
18,710,825
|
||||||
Plant,
Pipeline and Equipment
|
29,399,276
|
21,643,903
|
||||||
Less:
Accumulated Depreciation
|
(12,148,577 | ) | (11,017,503 | ) | ||||
Net
Plant, Pipeline and Equipment
|
17,250,699
|
10,626,400
|
||||||
Al
Masane Project
|
37,416,719
|
37,137,022
|
||||||
Other
Assets in Saudi Arabia
|
2,431,248
|
2,431,248
|
||||||
Mineral
Properties in the United States
|
1,085,209
|
1,084,711
|
||||||
Notes
Receivable, net of discount of $65,551 and
$172,041,
respectively, net of current portion
|
1,118,655
|
1,545,714
|
||||||
Other
Assets
|
22,875
|
54,246
|
||||||
TOTAL
ASSETS
|
$ |
77,931,465
|
$ |
71,590,166
|
||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
Liabilities
|
||||||||
Accounts
payable
|
$ |
4,313,935
|
$ |
2,989,203
|
||||
Accrued
interest
|
60,242
|
59,857
|
||||||
Financial
contracts
|
--
|
765,672
|
||||||
Accrued
liabilities
|
2,124,305
|
1,210,054
|
||||||
Accrued
liabilities in Saudi Arabia
|
1,378,923
|
1,645,257
|
||||||
Notes
payable
|
11,012,000
|
11,012,500
|
||||||
Current
portion of long-term debt
|
28,172
|
488,828
|
||||||
Current
portion of other liabilities
|
621,806
|
584,349
|
||||||
Total
Current Liabilities
|
19,539,383
|
18,755,720
|
||||||
Long-Term
Debt, net of current portion
|
3,087,399
|
5,108,309
|
||||||
Other
Liabilities, net of current portion
|
1,660,686
|
1,621,105
|
||||||
Deferred
Income Taxes
|
798,604
|
540,000
|
||||||
Minority
Interest in Consolidated Subsidiaries
|
803,529
|
817,558
|
||||||
STOCKHOLDERS'
EQUITY
|
||||||||
Common
Stock-authorized 40,000,000 shares of $.10 par
value; issued and outstanding, 22,601,994 and
22,571,994 shares
in
2007 and 2006, respectively
|
2,260,199
|
2,257,199
|
||||||
Additional
Paid-in Capital
|
37,183,206
|
37,087,206
|
||||||
Retained
Earnings
|
12,598,459
|
5,403,069
|
||||||
Total
Stockholders' Equity
|
52,041,864
|
44,747,474
|
||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ |
77,931,465
|
$ |
71,590,166
|
||||
|
THREE
MONTHS ENDED
|
NINE
MONTHS ENDED
|
|||||||||||||||
SEPTEMBER
30
|
SEPTEMBER
30
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
REVENUES
|
||||||||||||||||
Petrochemical
Product Sales
|
$ |
26,600,738
|
$ |
26,253,133
|
$ |
74,706,740
|
$ |
72,635,032
|
||||||||
Processing
Fees
|
1,437,684
|
1,288,351
|
4,135,064
|
3,305,099
|
||||||||||||
28,038,422
|
27,541,484
|
78,841,804
|
75,940,131
|
|||||||||||||
OPERATING
COSTS AND EXPENSES
|
||||||||||||||||
Cost
of Petrochemical Product
|
||||||||||||||||
Sales
and Processing
|
25,597,105
|
24,763,985
|
61,969,234
|
61,158,976
|
||||||||||||
GROSS
PROFIT
|
2,441,317
|
2,777,499
|
16,872,570
|
14,781,155
|
||||||||||||
GENERAL
AND ADMINISTRATIVE EXPENSES
|
||||||||||||||||
General
and Administrative
|
1,613,612
|
1,522,286
|
5,509,742
|
4,289,185
|
||||||||||||
Depreciation
|
268,180
|
230,391
|
772,096
|
637,589
|
||||||||||||
1,881,792
|
1,752,677
|
6,281,838
|
4,926,774
|
|||||||||||||
OPERATING
INCOME
|
559,525
|
1,024,822
|
10,590,732
|
9,854,381
|
||||||||||||
OTHER
INCOME (EXPENSE)
|
||||||||||||||||
Interest
Income
|
70,253
|
72,592
|
219,296
|
171,918
|
||||||||||||
Interest
Expense
|
(10,037 | ) | (92,973 | ) | (115,742 | ) | (632,804 | ) | ||||||||
Minority
Interest
|
3,680
|
3,184
|
14,029
|
6,791
|
||||||||||||
Miscellaneous
Income (Expense)
|
(22,621 | ) | (192,174 | ) | (3,356 | ) | (104,404 | ) | ||||||||
41,275
|
(209,371 | ) |
114,227
|
(558,499 | ) | |||||||||||
INCOME
BEFORE INCOME TAXES
|
600,800
|
815,451
|
10,704,959
|
9,295,882
|
||||||||||||
INCOME
TAXES
|
219,200
|
300,849
|
3,509,569
|
3,432,267
|
||||||||||||
NET
INCOME
|
$ |
381,600
|
$ |
514,602
|
$ |
7,195,390
|
$ |
5,863,615
|
||||||||
Basic
Earnings per Common Share
|
||||||||||||||||
Net
Income
|
$ |
0.017
|
$ |
0.023
|
$ |
0.314
|
$ |
0.257
|
||||||||
Basic
Weighted Average Number
|
||||||||||||||||
of
Common Shares Outstanding
|
22,901,994
|
22,808,954
|
22,893,194
|
22,782,092
|
||||||||||||
Diluted
Earnings per Common Share
|
||||||||||||||||
Net
Income
|
$ |
0.016
|
$ |
0.022
|
$ |
0.309
|
$ |
0.255
|
||||||||
Diluted
Weighted Average Number
|
||||||||||||||||
of
Common Shares Outstanding
|
23,299,289
|
23,073,902
|
23,274,093
|
22,967,626
|
ADDITIONAL
|
||||||||||||||||||||
COMMON
STOCK
|
PAID-IN
|
RETAINED
|
||||||||||||||||||
SHARES
|
AMOUNT
|
CAPITAL
|
EARNINGS
|
TOTAL
|
||||||||||||||||
DECEMBER
31, 2006
|
22,571,994
|
$ |
2,257,199
|
$ |
37,087,206
|
$ |
5,403,069
|
$ |
44,747,474
|
|||||||||||
Common
Stock
|
||||||||||||||||||||
Issued
to Employees
|
30,000
|
3,000
|
96,000
|
--
|
99,000
|
|||||||||||||||
Net
Income
|
--
|
--
|
-
|
7,195,390
|
7,195,390
|
|||||||||||||||
SEPTEMBER
30, 2007
|
22,601,994
|
$ |
2,260,199
|
$ |
37,183,206
|
$ |
12,598,459
|
$ |
52,041,864
|
|||||||||||
NINE
MONTHS ENDED
|
||||||||
SEPTEMBER
30,
|
||||||||
2007
|
2006
|
|||||||
OPERATING
ACTIVITIES
|
||||||||
Net
Income
|
$ |
7,195,390
|
$ |
5,863,615
|
||||
Adjustments
to Reconcile Net Income
|
||||||||
To
Net Cash Provided by Operating Activities:
|
||||||||
Depreciation
|
772,096
|
637,589
|
||||||
Accretion
of notes receivable discounts
|
(115,501 | ) | (135,340 | ) | ||||
Accretion
of unrealized gross profit
|
(52,138 | ) | (49,415 | ) | ||||
Unrealized
Gain on Financial Contracts
|
(1,189,311 | ) |
2,336,036
|
|||||
Stock
Compensation
|
99,000
|
589,000
|
||||||
Deferred
Income Taxes
|
258,604
|
(297,000 | ) | |||||
Postretirement
Obligation
|
589,455
|
--
|
||||||
Minority
interest
|
(14,029 | ) | (6,790 | ) | ||||
Changes
in Operating Assets and Liabilities:
|
||||||||
(Increase)
Decrease in Trade Receivables
|
(3,346,376 | ) |
2,290,021
|
|||||
Decrease
in Notes Receivable
|
628,598
|
604,165
|
||||||
Decrease
in Income Tax Receivable
|
619,598
|
--
|
||||||
Decrease
in Inventories
|
653,472
|
795,345
|
||||||
Decrease
in Other Assets
|
34,070
|
281,214
|
||||||
(Increase)
Decrease in Financial Contract Deposits
|
1,500,000
|
(2,300,000 | ) | |||||
Decrease
in Prepaid Expenses
|
35,302
|
91,724
|
||||||
Increase
(Decrease) in Accounts Payable and
|
||||||||
Accrued
Liabilities
|
2,091,028
|
(589,415 | ) | |||||
Increase
in Accrued Interest
|
385
|
7,063
|
||||||
Decrease
in Accrued Liabilities in Saudi Arabia
|
(266,334 | ) | (787,363 | ) | ||||
Net
Cash Provided by Operating Activities
|
9,493,309
|
9,330,449
|
||||||
INVESTING
ACTIVITIES
|
||||||||
Additions
to Al Masane Project
|
(279,697 | ) | (281,033 | ) | ||||
Additions
to Plant, Pipeline and Equipment
|
(7,760,857 | ) | (2,743,179 | ) | ||||
(Additions)Reductions
to Mineral Properties in the U.S.
|
(498 | ) |
413
|
|||||
Net
Cash Used in Investing Activities
|
(8,041,052 | ) | (3,023,799 | ) | ||||
FINANCING
ACTIVITIES
|
||||||||
Additions
to Long-Term Debt
|
--
|
4,558,726
|
||||||
Repayment
of Long-Term Debt
|
(2,481,566 | ) | (8,776,340 | ) | ||||
Repayment
of Note to Stockholders
|
(500 | ) | (13,333 | ) | ||||
Net
Cash Used in Financing Activities
|
(2,482,066 | ) | (4,230,947 | ) | ||||
NET
INCREASE (DECREASE) IN CASH
|
(1,029,809 | ) |
2,075,703
|
|||||
CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
2,939,022
|
1,738,558
|
||||||
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
$ |
1,909,213
|
$ |
3,814,261
|
||||
Supplemental
disclosure of cash flow information:
|
||||||||
Cash
payments for interest
|
$ |
225,890
|
$ |
625,740
|
||||
Cash
payments for taxes
|
$ |
2,800,000
|
$ |
3,882,398
|
||||
Supplemental
disclosure of non-cash items:
|
||||||||
Notes
Receivable issued for capital expansion
|
$ |
--
|
$ |
857,508
|
||||
Capital
expansion amortized to depreciation expense
|
$ |
364,462
|
$ |
308,447
|
September
30, 2007
|
December
31, 2006
|
|||||||
Raw
material
|
$ |
1,913,273
|
$ |
2,577,555
|
||||
Petrochemical
products
|
1,009,572
|
998,762
|
||||||
Total
inventory
|
$ |
2,922,845
|
$ |
3,576,317
|
Three
Months Ended
|
Three
Months Ended
|
|||||||||||||||||||||||
September
30, 2007
|
September
30, 2006
|
|||||||||||||||||||||||
Per
Share
|
Per
Share
|
|||||||||||||||||||||||
Income
|
Shares
|
Amount
|
Income
|
Shares
|
Amount
|
|||||||||||||||||||
Basic
Net Income per Share:
|
||||||||||||||||||||||||
Net
Income
|
$ |
382
|
22,902
|
$ |
0.02
|
$ |
515
|
22,809
|
$ |
0.02
|
||||||||||||||
Dilutive
stock options outstanding
|
397
|
265
|
||||||||||||||||||||||
Diluted
Net Income per Share:
|
||||||||||||||||||||||||
Net
Income
|
$ |
382
|
23,299
|
$ |
0.02
|
$ |
515
|
23,074
|
$ |
0.02
|
Nine
Months Ended
|
Nine
Months Ended
|
|||||||||||||||||||||||
September
30, 2007
|
September
30, 2006
|
|||||||||||||||||||||||
Per
Share
|
Per
Share
|
|||||||||||||||||||||||
Income
|
Shares
|
Amount
|
Income
|
Shares
|
Amount
|
|||||||||||||||||||
Basic
Net Income per Share:
|
||||||||||||||||||||||||
Net
Income
|
$ |
7,195
|
22,893
|
$ |
0.31
|
$ |
5,864
|
22,782
|
$ |
0.26
|
||||||||||||||
Dilutive
stock options outstanding
|
381
|
186
|
||||||||||||||||||||||
Diluted
Net Income per Share:
|
||||||||||||||||||||||||
Net
Income
|
$ |
7,195
|
23,274
|
$ |
0.31
|
$ |
5,864
|
22,968
|
$ |
0.26
|
Three
Months ended September 30, 2007
|
Petrochemical
|
Mining
|
Total
|
|||||||||
Revenue
from external customers
|
$ |
28,038,422
|
$ |
--
|
$ |
28,038,422
|
||||||
Depreciation
|
268,102
|
78
|
268,180
|
|||||||||
Operating
income (loss)
|
771,752
|
(212,227 | ) |
559,525
|
||||||||
Total
assets
|
$ |
36,771,041
|
$ |
41,160,424
|
$ |
77,931,465
|
||||||
Three
Months ended September 30, 2006
|
||||||||||||
Revenue
from external customers
|
$ |
27,541,484
|
$ |
--
|
$ |
27,541,484
|
||||||
Depreciation
|
230,312
|
79
|
230,391
|
|||||||||
Operating
income (loss)
|
1,160,760
|
(135,938 | ) |
1,024,822
|
||||||||
Total
assets
|
$ |
29,615,506
|
$ |
40,690,951
|
$ |
70,306,457
|
||||||
Nine
Months ended September 30, 2007
|
||||||||||||
Revenue
from external customers
|
$ |
78,841,804
|
$ |
--
|
$ |
78,841,804
|
||||||
Depreciation
|
771,861
|
235
|
772,096
|
|||||||||
Operating
income (loss)
|
12,116,920
|
(1,526,188 | ) |
10,590,732
|
||||||||
Nine
Months ended September 30, 2006
|
||||||||||||
Revenue
from external customers
|
$ |
75,940,131
|
$ |
--
|
$ |
75,940,131
|
||||||
Depreciation
|
637,421
|
168
|
637,589
|
|||||||||
Operating
income (loss)
|
10,445,345
|
(590,964 | ) |
9,854,381
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Revenues
|
||||||||||||||||
United
States
|
$ |
28,038
|
$ |
27,541
|
$ |
78,842
|
$ |
75,940
|
||||||||
Saudi
Arabia
|
--
|
-
|
--
|
--
|
||||||||||||
$ |
28,038
|
$ |
27,541
|
$ |
78,842
|
$ |
75,940
|
|||||||||
Long-lived
Assets
|
||||||||||||||||
United
States
|
$ |
18,336
|
$ |
11,082
|
||||||||||||
Saudi
Arabia
|
39,848
|
39,516
|
||||||||||||||
$ |
58,184
|
$ |
50,598
|
Number
of Stock Options
|
Weighted
Average Exercise Price per Share
|
|||||||
Outstanding
at January 1, 2007
|
500,000
|
$ |
1.20
|
|||||
Granted
|
--
|
|||||||
Exercised
|
--
|
|||||||
Forfeited
|
--
|
|||||||
Outstanding
at September 30, 2007
|
500,000
|
$ |
1.20
|
|||||
Exercisable
at September 30, 2007
|
500,000
|
$ |
1.20
|
Average
Price
|
Spot
Price as of
|
Percentage
|
||||
For
2004-2006
|
09/28/07
|
Increase
|
||||
Gold
|
$491.60
per ounce
|
$743.00
per ounce
|
51.14 | % | ||
Silver
|
$ 9.03
per ounce
|
$
13.65 per ounce
|
51.16 | % | ||
Copper
|
$ 1.98
per pound
|
$ 3.70
per pound
|
86.87 | % | ||
Zinc
|
$ 0.85
per pound
|
$ 1.40
per pound
|
64.71 | % |
Votes
For
|
Votes
Against or Withheld
|
Abstentions
|
||||||||||
Nicholas
N. Carter
|
15,082,094
|
64,518
|
--
|
|||||||||
Robert
E. Kennedy
|
15,098,851
|
47,761
|
--
|
|||||||||
Ibrahim
A. Al-Moneef
|
15,098,771
|
47,841
|
--
|
|||||||||
Hatem
El-Khalidi
|
15,095,284
|
51,328
|
--
|
|||||||||
Ghazi
Sultan
|
15,098,571
|
48,041
|
--
|
|||||||||
Moore
Stephens TravisWolff, LLP
|
15,003,184
|
127,028
|
16,400
|
Exhibit
Number
|
Description
|
3(i)
|
- 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)).
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3(ii)
|
- Bylaws
of the Company, as amended through March 4, 1998 (incorporated by
reference to Exhibit 3(b) to the Company’s Annual Report on Form 10-K for
the year ended December 31, 1999 (File No. 0-6247)).
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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)).
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10(b)
|
- Mining
Lease Agreement effective May 22, 1993 by and between the Ministry
of
Petroleum and Mineral Resources and the Company (incorporated
by reference to Exhibit 10(c) to the Company’s Annual Report on Form 10-K
for the year ended December 31, 1999 (File No. 0-6247)).
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10(c)
|
- Equipment
Lease Agreement dated November 14, 2003, between Silsbee Trading
and
Transportation Corp. and South Hampton Refining Company (incorporated
by
reference to Exhibit 10(o) to the Company’s Annual Report on Form 10-K for
the year ended December 31, 2003 (File No. 0-6247)).
|
10(d)
|
- Addendum
to Equipment Lease Agreement dated August 1, 2004, between Silsbee
Trading
and Transportation Corp. and South Hampton Refining Company (incorporated
by reference to Exhibit 10(q) to the Company’s Quarterly Report on Form
10-Q for the quarter ended September 30, 2004 (file No.
0-6247)).
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10(e)
|
- Partnership
Agreement dated August 6, 2006 between Arabian American Development
Company, Thamarat Najran Company, Qasr Al-Ma’adin Corporation, and Durrat
Al-Masani’ Corporation (incorporated by reference to Exhibit 10(i) to the
Company’s Quarterly Report on Form 10-Q/A for the quarter ended September
30, 2006 (file No. 0-6247)).
|
10(f)
|
- Financial
and Legal Service and Advice Agreement dated August 5, 2006 between
Arabian American Development Company, Nassir Ali Kadasa, and Dr.
Ibrahim
AL-Mounif (incorporated by reference to Exhibit 10(j) to the Company’s
Quarterly Report on Form 10-Q/A for the quarter ended September 30,
2006
(file No. 0-6247)).
|
10(g)*
|
- Retirement
Awards Program dated January 17, 2007 between Arabian American Development
Company and Jack Crichton (incorporated by reference to Exhibit 10(h)
to
the Company’s Quarterly Report on Form 10-Q for the quarter ended March
31, 2007(filed No. 0-6247)).
|
10(h)*
|
- Retirement
Awards Program dated February 16, 2007 between Arabian American
Development Company and Hatem El-Khalidi (incorporated by reference
to
Exhibit 10(i) to the Company’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2007(filed No. 0-6247)).
|
10(i)
|
- Waiver
and Second Amendment to Credit Agreement and First Amendment to Borrower
Security Agreement dated September 19, 2007 between South Hampton
Resources, Inc. and Bank of America, N.A.
|
31.1
|
- Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
31.2
|
- Certification
of Chief Financial Officer 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.
|