MARSHALL, Texas, June 12 /PRNewswire-FirstCall/ -- North American Technologies Group, Inc. (Pink Sheets: NAMC) today announced its financial results for the fiscal year ended September 28, 2008. The Company experienced a net loss of $2,924,340, on revenues of $32,775,674. Net loss per common share was $0.29 compared to a net loss of $1.73 per share in the previous year. All per share amounts in this release are fully diluted.
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Product sales, net of rebates, increased 51% in 2008 from $21,661,240 in 2007. The change to a gross profit in 2008 from a gross loss in 2007 is primarily due to a 25% increase in the number of ties sold and a 21% increase in the sales price of ties sold. In addition, there was an improvement in the Company's cost per tie in 2008, primarily as a result of higher production volumes to absorb overhead costs, improvements in labor productivity and better quality controls. In the first two quarters of 2009, the Company has experienced a decrease in customer demand and revenues as the current credit and economic environment has caused railroads to decrease their spending budgets. As a result, the Company has reduced its production schedule and does not currently expect the same increase in sales and gross profit in fiscal 2009 that it experienced in fiscal 2008.
The Company experienced a number of significant management issues in fiscal 2008 and since the end of the fiscal year. In particular, the Company had heavy turnover among its executive officers which adversely affected Company operations by diverting scarce management resources and significant Company funds from operations. Most recently, the Company terminated the employment of Rod Wallace as Chief Executive Officer on February 26, 2009 for alleged misappropriation of Company funds.
Until the results of an internal investigation conducted by outside legal counsel into the alleged misappropriation of Company funds by Mr. Wallace were complete, the Company was unable to obtain the information necessary to prepare its financial statements, provide information to its independent public accountants to complete the audit of the Company's financial statements, and timely file Forms 10-KSB and 10-Q for the periods ended September 28, 2008 and December 28, 2008, respectively. As a consequence of the late filings, the Company's Common Stock was removed from the OTC Bulletin Board on February 18, 2009 for failure to maintain current financial information on file with the SEC. The Annual Report on Form 10-K of the Company was filed with the SEC today, and the Company expects to file its Forms 10-Q for the first and second quarters of the fiscal year ending September 27, 2009 promptly and to apply for the quotation of its Common Stock on the OTC Bulletin Board twelve months after all such reports have been timely filed.
The results of the internal investigation revealed that the total amount of alleged fraudulent purchases of raw material by Mr. Wallace during the third quarter ending June 29, 2008, the fourth quarter ending September 28, 2008, and each of the first and second quarters of its fiscal year ending September 27, 2009 were: $39,000, $362,997, $137,620 and $15,450, respectively. Through May 31, 2009, the Company also estimates that it has incurred total expenses of $136,000 related to the investigation and follow-up action. The Company intends to file a claim in the amount of $250,000, the maximum limits of its coverage, with the carrier of its fraud insurance policy. It is also evaluating obtaining restitution from Mr. Wallace through legal action. The Company is also in the process of implementing significant improvements in its accounting and financial controls and executive hiring procedures to ensure the integrity of key management personnel and prevent future misappropriation of its assets.
On June 5, 2009, the SEC notified the Company that it will conduct a formal investigation into the alleged fraudulent transactions by Mr. Wallace which formed the basis of the Company's internal investigation, for potential violations by the Company, its officers and directors, of the antifraud provisions and of the reporting and record keeping requirements, including internal controls sections, of the Securities Act of 1933 and the Securities Exchange Act of 1934.
About NAMC
North American Technologies Group, Inc. through its wholly owned subsidiary TieTek(TM) produces high-performance railroad ties and other engineered products. TieTek uses its patented technology to process recycled plastic, automobile tires and mineral additives to manufacture engineered composite products that are expected to last longer and perform better than hardwood and/or concrete alternatives in structural applications. The Company's securities are quoted in the pink sheets under the symbol "NAMC.PK". The Company's website is found at http://www.tietek.com/. For a description of the financial results for the Company's Current Report see Form 10-K filed with the Securities and Exchange Commission on June 12, 2009.
This press release contains forward-looking statements involving risks and uncertainties. Statements in this press release that are not historical, including statements regarding management intentions, beliefs, expectations, representations, plans or predictions of the future are forward-looking statements within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. These risks include, but are not limited to, fluctuations in financial results, availability and customer acceptance of products and services, the impact of competitive products, services and pricing.
Contact: Joe B. Dorman 972.996.5750 jdorman@tietek.com
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North American Technologies Group, Inc.
CONTACT: Joe B. Dorman of TieTek, +1-972-996-5745, jdorman@tietek.com
Web Site: http://www.tietek.com/
