Message #26 From:
NewsBot Date: March 26, 2007 05:46:00 AM
SHMT News Shumate Industries Announces Fourth Quarter and Fiscal Year 2006 Financial Results
CONROE, Texas--(BUSINESS WIRE)--Shumate Industries, Inc. (OTCBB:SHMT), a technology-oriented energy field services company, today announced final financial results for the fourth quarter and fiscal year ended 2006.
Key milestones achieved in 2006 include the following:
Shumate Machine Works achieved increased revenues, gross margin improvements, and increased EBITDA* (defined as net income plus interest, taxes, depreciation and amortization) as compared to the fiscal year ended 2005.
Hemiwedge Valve Corporation achieved key operational milestones, including securing corporate partners, research and development milestones, new intellectual property enhancements, infrastructure build, supply chain scale up, inventory build, initial product launch and key employee acquisitions.
Shumate Machine Works (SMW)
SMW revenues increased 49% to approximately $7.4 million, and gross margins increased by a significant amount to approximately 22% from the comparable period in 2005, reflecting strong pricing, higher margin product mix and volume gains. EBITDA for SMW was approximately $923,000 (not including a $2 million gain from debt forgiveness) for the fiscal year 2006 compared to an EBITDA loss of $954,192 during fiscal year 2005. Based on current customer indications and backlog, the Company does not see any softness in demand during fiscal 2007.
Hemiwedge Valve Corporation (HVC)
HVC revenues were approximately $316,000 for the fiscal year 2006, which represented $292,000 of R&D revenues from the Hemiwedge® Downhole Isolation Valve (DIV) Development Agreement announced in July 2006. Additionally, the Company booked a deferred revenue item of $400,000 on its Balance Sheet during the fourth quarter of 2006 in connection with cash received from a Phase II milestone payment during December 2006, which is currently anticipated to be realized as revenues during the first quarter 2007.
The launch of the Hemiwedge® Cartridge valve product targeting energy flow control applications occurred in late December 2006, and the Company anticipates its first full quarter of sales of this product in the first quarter 2007. HVC’s EBITDA loss of approximately $1.9 million for fiscal year 2006, as compared to an EBITDA loss of $123,000 in the comparable period in 2005 with HVC’s operations commencing in the fourth quarter 2005, represented higher costs associated with infrastructure build, employee acquisition and overheads, as well as significant R&D expenses incurred in developing new applications and product forms of the Hemiwedge® technology.
In addition to the commercialization of the surface-level Hemiwedge® Cartridge valve, important milestones were met during 2006 with our Hemiwedge® DIV, which moved from Phase I, engineering and development, to Phase II, manufacture of prototypes. The Company currently believes it will finish Phase II by May 2007 and finish the Phase III testing by late summer 2007.
The Consolidated Net Loss for the 2006 fiscal year of approximately $1.32 million, or $(.09) EPS on a fully diluted basis, included a non-cash gain of approximately $2 million from debt settlement reported in the first quarter 2006, and non-cash charges of approximately $322,000 from FASB 123R stock options expenses during the fiscal year 2006.
Larry Shumate, the Company’s Chairman and CEO stated, “We have achieved several major milestones during our 2006 growth plans. Part of our 2007 strategic plan includes further monetizing our Hemiwedge® technology through licensing agreements and long term distribution contracts with our corporate partners. Our Hemiwedge® Cartridge valve got a late start in the fourth quarter 2006 due to constraints related to its supply chain. In management’s opinion, the current market is tight on supply, and product delays are common. In order to decrease product delays, at our request our primary foundry vendor in Asia has built a dedicated 40,000 square foot manufacturing facility, which we believe will enhance deliveries of our Hemiwedge® Cartridge valve components. Additionally, we have brought online additional internal manufacturing processes for faster through-put of our intellectual property related parts and components made in-house. We anticipate a big year for our cartridge valve product line including more orders and distribution agreements in the near future. Also, in terms of new energy technologies, the Company is currently reviewing some exciting candidates that could have a positive impact on our 2007 growth plans. Finally, we also wish to thank our dedicated employees for their focused efforts during 2006.”
Matthew Flemming, Shumate's CFO commented, "We are pleased with the significant improvement of the Company’s Balance Sheet in year over year comparison as well as the positioning of HVC’s technology platform for 2007. The Company currently anticipates first quarter 2007 revenues for HVC to be approximately $675,000, representing revenues from the Hemiwedge® DIV development agreement and Hemiwedge® Cartridge valve sales. For the fiscal year 2007, the Company currently is issuing guidance in the range of $2 million to $4 million in revenues for its first full year of Hemiwedge® Cartridge valve sales as well as over approximately $1 million from anticipated down-hole valve development revenues and licensing deals. The Company currently anticipates its Hemiwedge® DIV to be commercialized by January 2008."
Earnings Conference Call Information
The conference call will take place today at 4:15 p.m. Eastern, Monday, March 26, 2007. Anyone interested in participating should call (800) 811-0667 if calling within the United States or (913) 981-4901 if calling internationally. Once connected please enter pass code 5705624, approximately 5 to 10 minutes prior to 4:15 p.m. There will be a playback available until April 2, 2007. To listen to the playback, please call (888) 203-1112 if calling within the United States or (719) 457-0820 if calling internationally. Please use pass code 5705624 for the replay.
The call is also being webcast and may be accessed at Shumate’s website at www.shumateinc.com. The webcast replay will be available through June 26, 2007.
Additional information will also be set forth in the Company’s annual report on Form 10-KSB for the year ended December 31, 2006, which will be filed with the SEC by April 2, 2007.
SHUMATE INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2006 and 2005
2006
2005
ASSETS
Current assets:
Cash and cash equivalents
$ 1,547,326
$ 214,218
Accounts receivable, net of allowance for doubtful accounts of $40,000 and $60,000
554,134
959,916
Inventory
893,650
237,173
Prepaid expense and other current assets
198,753
87,920
Total current assets
3,193,863
1,499,227
Fixed assets, net of accumulated depreciation of $1,922,242 and $1,455,868
2,303,372
1,853,013
Patents, net of accumulated amortization of $29,038 and $0
307,331
283,017
Deposits
104,140
30,340
Total assets
$ 5,908,706
$ 3,665,597
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable
$ 652,980
$ 463,141
Accrued expenses
435,234
408,796
Deferred revenue
400,000
-
Current portion of notes payable - other
75,370
48,504
Current portion of capital lease obligation
31,924
-
Current portion of term note payable - Stillwater National Bank
480,565
235,891
Line of credit - Stillwater National Bank
778,916
837,615
Total current liabilities
2,854,989
1,993,947
Long term liabilities:
Notes payable - other
-
51,496
Long term portion of capital lease obligation
51,838
-
Term note payable - Stillwater National Bank
2,883,392
5,397,162
Convertible note payable - Stillwater National Bank
-
2,500,000
Total long term liabilities
2,935,230
7,948,658
Total liabilities
5,790,219
9,942,605
Commitments and contingencies
-
-
Stockholders' equity (deficit):
Preferred stock, $.001 par value, 10,000,000 shares authorized, no shares issued or outstanding
-
-
Common stock, $.001 par value, 50,000,000 shares authorized, 19,322,277 and 12,116,394 shares issued and outstanding
19,322
12,116
Additional paid-in-capital
20,015,762
12,278,742
Deferred compensation
(39,600)
-
Accumulated deficit
(19,876,997)
(18,567,866)
Total stockholders' equity (deficit)
118,487
(6,277,008)
Total liabilities and stockholders' equity (deficit)
