## ** **

## **FORM 10-K/A**

**(AmendmentNo. 1)**

 

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C.  20549**

 

**(Mark One)**

 
| **ý** | **ANNUAL  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934**                                                                                                                                                                                                                                                                                  |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |                                                                                                                                                                                                                                                                                                                                                                                  |
|       | **For the fiscal year ended  June 30, 2005**                                                                                                                                                                                                                                                                                                                                     |
|       |                                                                                                                                                                                                                                                                                                                                                                                  |
| **OR**     |
|       |                                                                                                                                                                                                                                                                                                                                                                                  |
| **o**      | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934**                                                                                                                                                                                                                                                                              |
|       |                                                                                                                                                                                                                                                                                                                                                                                  |
| ** ** | **For the transition period  from                            to                            ** |

 

**Commissionfile number:  33-74876-D**

 

**SPORT-HALEY, INC.**

(Exact Name ofRegistrant as Specified in Its Charter)

 
| **Colorado**                                                                 | ** ** | **84-1111669**          |
|------------------------------------------------------------------------------|------------|-------------------------|
| (State or Other  Jurisdiction of                                             |       | (I.R.S. Employer        |
| Incorporation or  Organization)                                              |       | Identification  Number) |
|                                                                         |       |                    |
| **4600  East 48th Avenue**                                                   |       |                    |
| **Denver,  Colorado**                                                        | ** ** | **80216-3215**          |
| (Address of  Principal Executive Offices)                                    |       | (Zip Code)              |
|                                                                         |       |                    |
| Registrant’s  telephone number, including area code: **(303) 320-8800** |

 

Securitiesregistered pursuant to Section 12(b) of the Exchange Act:

 
| **Title of each class** | ** ** | **Name of each exchange on which registered** |
|-------------------------|------------|-----------------------------------------------|
| **None**                | ** ** | **None**                                      |

 

Securitiesregistered pursuant to section 12(g) of the Exchange Act:

**None**

 

Indicate by checkmarkwhether the registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the Registrant was required to filesuch reports), and (2) has been subject to such filing requirements forthe past 90 days.  Yes  ý   No  o

 

Indicate by check mark ifdisclosure of delinquent filers pursuant to Item 405 of Regulation S-K is notcontained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated byreference in Part III of this Form 10-K or any amendment to this Form 10-K.  ý

 

Indicate by check markwhether the registrant is an accelerated filer (as defined in Rule 12b-2of the Exchange Act).Yes  o   No  ý

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).Yes  o   No  ý

 

As of December 31,2004, the last business day of the registrant’s most recently completed secondfiscal quarter, the aggregate market value of the 2,306,635 shares of CommonStock (the Registrant’s only common equity) held by non-affiliates was$10,541,000 based on the closing sale price of the Registrant’s Common Stock onthe Nasdaq National Market® on such date. For purposes of the foregoingcalculation only, each of the Registrant’s officers and directors is deemed tobe an affiliate. This determination of affiliate status is not a conclusivedetermination for other purposes.

 

There were 2,770,252shares of the Registrant’s Common Stock outstanding at the close of business onSeptember 8, 2005.

 

DOCUMENTSINCORPORATED BY REFERENCE:

 

**None**

 

 

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**PART I**

 

**Explanatory Note**

 

Thisamendment to annual report of Sport-Haley, Inc. on Form 10-K for thefiscal year ended June 30, 2005 is being made to amend certain matters inItem 5 and 9A. The remainder of the original Form 10-K previously filed onOctober 13, 2005 (the “Original Form 10-K”) has not been changed oramended. This amendment relates primarily to the Company’s determination thatthe number of record holders of its common stock as reported in the original Form 10-Krequired correction. The Company wishes to correct this disclosure and also tomore clearly state the method used by the Company to determine its number ofrecord holders, as opposed to the number of its beneficial shareholders. TheCompany has also provided information to correct the number of record holders reportedin prior years.

 

Thisamendment also amends the cover page of this Form 10-K by removingthe reference to the Company’s common stock being registered pursuant to §12(g) ofthe Securities Exchange Act (the “Exchange Act”). The Company believed thatwhen it withdrew its listing from the Pacific Stock Exchange in November 1998,at which time the common stock was registered pursuant to §12(b) of theExchange Act, the Company had complied with Rule 12g-2 which the Companybelieved caused its common stock to be deemed to be registered under §12(g) withoutfiling a separate registration statement. Since November 1998, we haveconsidered the Company’s common stock to be registered under §12(g) andhave made periodic and other filings with the Commission consistent with thatbelief. It has recently come to the Company’s attention that this belief was inerror and that the Company, in order for its common stock to be registeredpursuant to §12(g), is required to file a registration statement on Form 10,which the Company filed on November 11, 2006. The registration of ourcommon stock pursuant to §12(g) of the Exchange Act has not been declaredeffective.

 

Thisamendment also amends our disclosure in Item 9A to note that our computation ofrecord holders of our common stock, and our assumption that our common stockwas properly registered pursuant to §12(g) of the Exchange Act, wasincorrect.

 

Exceptas otherwise expressly noted herein, this Amendment to Annual Report on Form 10-K/Adoes not reflect events occurring after the October 13, 2005, filing ofour Original Form 10-K in any way, except to reflect the changes discussedin this amendment. The Registrant does not undertake to update any item on thatAnnual Report other than those items set forth below. Accordingly, thisamendment should be read in conjunction with the Original Form 10-K.

 

Asa result of these amendments, the Company is also filing as exhibits to thisAmendment the certifications pursuant to Section 302 of the Sarbanes-OxleyAct of 2002. Because no financial statements are contained within thisAmendment the Company is not including those parts of the Section 302certifications pertaining to financial statements and is not includingcertifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.Except for the amendments described above, this Amendment does not modify orupdate other disclosures in, or exhibits to, the original filing.

 

**PART II**

 

**ITEM5.  MARKET FOR REGISTRANT’S COMMON EQUITYAND RELATED SHAREHOLDER MATTERS**

 

Ourcommon stock is quoted on the Nasdaq National Market® under the trading symbol “SPOR.”The following table sets forth the range of high and low sale prices of ourcommon stock, as reported by The Nasdaq Stock Market®, from July 1, 2002through June 30, 2005. The prices set forth below reflect interdealerquotations, without retail markups, markdowns or commissions, and may not berepresentative of actual transactions.

 

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| ** **            | ** ** | **High**   | ** ** | **Low**    | ** ** |
|-----------------------|------------|------------|------------|------------|------------|
| **Fiscal Year 2005**  |       |       |       |       |       |
| Fourth Quarter        |       | $          | 4.990      |       | $          | 2.970 |   |
| Third Quarter         |       | 4.370      |       | 4.000      |       |
| Second Quarter        |       | 4.889      |       | 3.830      |       |
| First Quarter         |       | 4.990      |       | 3.812      |       |
|                  |       |       |       |       |       |
| **Fiscal  Year 2004** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Fourth Quarter        |       | $          | 6.000      |       | $          | 5.000 |   |
| Third Quarter         |       | 6.090      |       | 4.230      |       |
| Second Quarter        |       | 4.590      |       | 3.840      |       |
| First Quarter         |       | 4.640      |       | 3.830      |       |
|                  |       |       |       |       |       |
| **Fiscal  Year 2003** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Fourth Quarter        |       | $          | 4.300      |       | $          | 3.700 |   |
| Third Quarter         |       | 4.000      |       | 3.150      |       |
| Second Quarter        |       | 3.500      |       | 3.180      |       |
| First Quarter         |       | 4.100      |       | 3.150      |       |

 

Asof April 8, 2005, there were approximately 124 holders of record of ourcommon stock. We computed the number of record holders by adding to the numberof actual record holders as shown on the securities holder list obtained fromour transfer agent, the number of individual participants or accounts held bythe Depository Trust Company (“DTC”), according to securities position listings,as defined in Rule 17Ad-8.  The vastmajority of our common shares are held in trust by Cede & Co., asnominee for the DTC. We estimate that as of April 8, 2005, our commonstock was owned beneficially by approximately 900 shareholders.

 

Thefollowing table shows the number of record holders of our common stock for the fiscalyears indicated, which were all calculated in accordance with the methoddescribed above.

 
| ** ** | ** ** | ** ** | ** ** | **Number of Record Holders** | ** ** |
|------------|------------|------------|------------|------------------------------|------------|
| ** ** | ** ** | ** ** | ** ** | **Securities**               | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** ** | ** ** | ** ** | ** ** | **Position**                 | ** ** | **Securities** | ** ** | **Total** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Fiscal** | ** ** | **Record** | ** ** | **Listings**                 | ** ** | **Holder** | ** ** | **Holders** | ** ** | **Held in** | ** ** | ** ** | ** ** |
| **Year**   | ** ** | **Date**   | ** ** | **Participants**             | ** ** | **List** | ** ** | **of Record** | ** ** | **Treasury** | ** ** | **Totals** | ** ** |
|       |       |       |       |                         |       |   |   |   |   |   |   |   |   |
| 2005       |       | 02/24/05   |       | 59                           |       | 65 |   | 124 |   | — |   | 124 |   |
| 2004       |       | 02/13/04   |       | 70                           |       | 67 |   | 137 |   | — |   | 137 |   |
| 2003       |       | 02/13/03   |       | 69                           |       | 61 |   | 130 |   | 1 |   | 131 |   |
| 2002       |       | 01/18/02   |       | 79                           |       | 60 |   | 139 |   | 1 |   | 140 |   |
| 2001       |       | 05/18/01   |       | 81                           |       | 63 |   | 144 |   | — |   | 144 |   |

 

Holdersof common stock are entitled to receive such dividends as may be declared byour Board of Directors from time to time. No dividends have been paid on ourcommon stock throughout the history of the Company, and the Board of Directorsdoes not anticipate that dividends will be declared in the foreseeable future.

 

**ITEM9A.  CONTROLS AND PROCEDURES**

 

**(a)****           Evaluation ofDisclosure Controls and Procedures.** Our management, with the participationof our Interim Chief Executive Officer and our Chief Financial Officer,conducted an evaluation of the effectiveness of our disclosure controls andprocedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 asof the end of the period covered by this report. Based on that evaluation,management, including the Interim Chief Executive Officer and Chief FinancialOfficer, concluded that, as of the end of the period covered by this report,our disclosure controls and procedures were effective in reaching a reasonablelevel of assurance that:  (a) allmaterial information relating to the Company, required to be disclosed in thisreport, was made known to management in a timely manner;

 

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and (b) information wasrecorded, processed, summarized and reported within the time periods specifiedin the SEC’s rules and regulations.

 

As discussed in our Original Form 10-K, weconsider the programming and human computational errors, which caused us to usea standard cost method, to be a material weakness in our internals control overfinancial reporting with respect to inventory valuation during the periodcovered by this report. After we implemented our operations software in January 2004,we discovered certain programming and human errors within the new system thatadversely affected the software’s ability to accurately compute the valuationof our finished goods inventories using a weighted average method. The systemwas designed to utilize a series of complex valuation computations, and wedetermined that a manual reconstruction of the numerous amount of transactionsaffected by the programming and human errors was impracticable. This weaknessin our controls prevented us from relying upon the system-recorded transactionswith respect to finished goods inventory valuation during the period covered bythis report. Based upon analyses performed to compare the landed costcomponents of our finished goods inventories with our respective standard costcomponents and analyses of the allocated overhead portion of our standardcosts, we concluded that recomputing the value of our finished goodsinventories using a standard cost method yielded a fair estimation of the valueof our finished goods inventories. We used the standard cost method to valueour finished goods inventories from the fiscal quarter ended March 31,2004, through the fiscal quarter ended March 31, 2005. At June 30,2005, certain inventory items remained on hand that had been valued using thestandard cost method. The methods we use to determine the standard costs of ourfinished goods inventories have not changed since our initial analyses of suchcosts were performed in fiscal 2004. Had we been able to rely upon the systemto properly compute the cost of our finished goods inventories using theweighted average method, the Interim Chief Executive Officer and the ChiefFinancial Officer believe that the weighted average method would not haveyielded a materially different computation of the value than the standard costmethod that we applied. The Interim Chief Executive Officer and the ChiefFinancial Officer believe that the procedures we applied to value our finishedgoods inventories for the period covered by this report provide us withreasonable assurance that the Company’s disclosure controls and procedures wereeffective as of the end of the period covered by this report.

 

The material weakness in our internal controls overfinancial reporting with respect to inventory valuation impaired our ability torely upon information created by our computer system to fairly present, in allmaterial respects, our financial condition, results of operations and cashflows for the period covered by this report. The inability of our computersystem to properly calculate the valuation of our finished goods inventoriesalso affected the system-recorded amounts within our cost of goods sold duringthe period covered by this report. Costs associated with invoiced sales andreturns as well as inventory adjustments are natural components of our cost ofgoods sold. Because we concluded with reasonable assurance that our using astandard cost assumption yielded a fair estimation of our finished goodsinventories during the period covered by this report, and because weconsistently recorded adjustments to inventories as components of cost of goodssold during the period covered by this report, we believe with reasonableassurance that our cost of goods sold are fairly stated during the periodcovered by this report. Therefore, the Interim Chief Executive Officer andChief Financial Officer believe that the procedures we applied to value ourfinished goods inventories for the period covered by this report provide uswith reasonable assurance that our report fairly states, in all materialrespects, our financial condition, results of operations and cash flows.

 

Based upon tests we performed subsequent to June 30,2005, we believe that the computer software has been properly programmed, andemployees have been adequately trained to utilize the system procedures, toaccurately compute our finished goods inventory valuations using a weightedaverage cost assumption for fiscal periods subsequent to this report.

 

In addition, it recently came to our attention thatour computation of record holders of our common stock, and our assumption thatour common stock was properly registered pursuant to §12(g) of theExchange Act, was incorrect.  Since November 1998,we had believed that our common stock

 

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wasregistered pursuant to § 12(g) of the Exchange Act.  It recently came to our attention that ourreliance upon Rule 12g-2, which, if applicable, would have deemed us to beso registered, was misplaced.  We arecorrecting this situation by registering our common shares pursuant to §12(g) ofthe Exchange Act on Form 10, which form was filed on November 11, 2006.The registration has not been declared effective.

 

**(b)****          ****Changes in Internal Control OverFinancial Reporting.**Duringthe last quarter of fiscal 2005, we did not implement any changes in ourinternal controls over financial reporting that materially affected, or arereasonably likely to materially affect, our internal controls over financialreporting.

 

Our management, including our Interim ChiefExecutive Officer and our Chief Financial Officer, does not expect that ourdisclosure controls and procedures or our internal controls over financialreporting will, in all instances, prevent all errors and all fraud. A controlsystem, no matter how well conceived or operated, can only provide reasonable,not absolute, assurance that the objectives of the control system are met.While our control systems provide a reasonable assurance level, the design ofour control systems reflects the fact that there are resource constraints, andthe benefits of such controls were considered relative to their costs. Becauseof the inherent limitations in all control systems, no evaluation of controlscan provide absolute assurance that all control issues and instances of fraud,if any, within the financial reports of Sport-Haley, Inc. have beendetected. These inherent limitations include the realities that judgments indecision-making can be faulty, and that breakdowns can occur because of simpleerrors or mistakes. Additionally, a control can be circumvented by theindividual act of some person, by collusion of two or more persons, or bymanagement’s override of a specific control. The design of any system ofcontrols is also based in part on certain assumptions about the likelihood offuture events, and there can be no assurance that any design will succeed inachieving its stated goals under all potential future conditions. Because ofthe inherent limitations in a cost-effective control system, misstatements dueto error or fraud may occur and not be detected.

 

**PART IV**

 

**ITEM15.   EXHIBITS AND FINANCIAL STATEMENTSCHEDULES**

 

**(a)  Exhibits, Financial Statements and Financial StatementSchedules**

 

Thefollowing documents are filed herewith or have been included as exhibits toprevious filings with the Securities and Exchange Commission and areincorporated herein by this reference:

 
| **(3)** | **Exhibits** |   |
|---------|--------------|--------|

 
| ** ** | **Exhibit No.** | ** ** | **Document**                                                                                |
|------------|----------------------|------------|---------------------------------------------------------------------------------------------|
|       | *** 31.1             |       | Certification of Donald W. Jewell pursuant to  Exchange Act Rule 13a-14(a)/15d-14(a).  |
|       |                 |       |                                                                                        |
|       | *** 31.2             |       | Certification of Patrick W. Hurley pursuant to  Exchange Act Rule 13a-14(a)/15d-14(a). |

 

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***         Filed herewith.

 

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**SIGNATURES**

 

Pursuantto the requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized.

 

 
|                   | SPORT-HALEY,  INC.                  |
|------------------------|-------------------------------------|
|                   |                                |
|                   |                                |
| January 12,  2006 | By:                                 | /s/PATRICK  W. HURLEY |   |
|                   | Patrick  W. Hurley, Chief Financial |
|                   | Officer                             |

 

Pursuantto the requirements of the Securities Act of 1934, this report has been signedbelow by the following persons on behalf of the registrant and in thecapacities and on the dates indicated.

 
| **Signature**         | ** ** | **Title** | ** **                           | **Date** |
|-----------------------|------------|-----------|--------------------------------------|----------|
|                  |       |      |                                 |     |
|                  |       |      |                                 |     |
| /s/ DONALD W. JEWELL  |       |      | Interim Chief Executive  Officer,    |     | January 12, 2006 |
| Donald W. Jewell      |       |      | President  and Senior Vice President |     |   |
|                  |       |      |                                 |     |
|                  |       |      |                                 |     |
| /s/ PATRICK W. HURLEY |       |      | Chief Financial  Officer, Secretary, |     | January 12, 2006 |
| Patrick W.  Hurley    |       |      | Treasurer  and Controller            |     |   |
|                  |       |      |                                 |     |
|                  |       |      |                                 |     |
| /s/ RONALD J. NORICK  |       |      | Director                             |     | January 12, 2006 |
| Ronald J. Norick      |       |      | and  Chairman of the Board           |     |   |
|                  |       |      |                                 |     |
|                  |       |      |                                 |     |
| /s/ JAMES R. TENBROOK |       |      | Director                             |     | January 12, 2006 |
| James R.  TenBrook    |       |      | and  Audit Committee Chairman        |     |   |
|                  |       |      |                                 |     |
|                  |       |      |                                 |     |
| /s/ MARK J. STEVENSON |       |      | Director                             |     | January 12, 2006 |
| Mark J.  Stevenson    |       |      | and  Compensation Committee Chairman |     |   |
|                  |       |      |                                 |     |
|                  |       |      |                                 |     |
| /s/ JAMES H. EVEREST  |       |      | Director                             |     | January 12, 2006 |
| James H. Everest      |       |      |                                 |     |   |

 

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