Message #19 From:
NewsBot Date: November 14, 2006 10:16:00 AM
SHMT News Shumate Industries Reports Third Quarter and Nine Months 2006 Financial Results
CONROE, Texas--(BUSINESS WIRE)--Shumate Industries, Inc. (OTCBB:SHMT):
Third Quarter Revenues Increase 67% to $2.18 Million
Nine Months Revenues Increase 66% to $5.6 Million
Shumate Industries, Inc. (OTCBB:SHMT) a technology-oriented energy field
services company, today announced financial results for the three months
and nine months ended September 30, 2006.
Revenues for the quarter ended September 30, 2006 were $2,183,412, an
increase of approximately 67% from $1,309,232 for the comparable period
ended September 30, 2005. On a segmental reporting basis, Hemiwedge
Valve Corporation (“HVC”)
generated $200,000 in initial revenues during the quarter in connection
with the Hemiwedge® technology development
agreement announced in July 2006, with the remaining revenues generated
by Shumate Machine Works.
Results from operations for the quarter ended September 30, 2006
resulted in a loss of $492,218. On a segmental basis, Shumate Machine
Works generated an operating profit of $290,431, which was offset by HVC’s
pre-launch expenses, and research and development costs of $486,571, and
corporate overhead expenses of $296,078 (which included a non-cash
charge of approximately $133,120 for FASB 123®
stock option based accounting charge). This consolidated operating loss
for the quarter ended September 30, 2006 was an improvement from a loss
of $629,737 during the quarter ended September 30, 2005. The net loss
for the quarter ended September 30, 2006 was $663,713, an improvement of
$307,191 from a loss of $970,910 for the quarter ended September 30,
2005.
For the quarter ended September 30, 2006, increased volumes in Shumate
Machine Works’ machining and manufacturing
division of oil field tools and equipment contributed to the growth in
revenues for the quarter. The decreased operating loss resulted
primarily from increased revenues, stronger pricing, and better cost
controls in the Company’s Shumate Machine
Works unit. The results were offset by expenses associated with the
pre-launch and scale up of HVC’s new Hemiwedge®
Cartridge Valve product. See Note 2 within the Company’s
Quarterly Report on Form 10-QSB for a breakdown of results of operations
by segment.
For the nine month period ended September 30, 2006, revenues were
$5,596,070, up approximately 66% from $3,366,645 for the comparable
period a year ago. Operating loss was $1,404,171 for the nine month
period ended September 30, 2006, an improvement from a loss of
$2,197,852 for the comparable period ending September 30, 2005. On a
segmental reporting basis, for the nine month period ended September 30,
2006, operating income for Shumate Machine Works was $597,352, which was
offset by an operating loss of $1,157,921 at HVC and general corporate
overhead of $843,602 (which included FASB 123®
non-cash charges of $331,000 in the period).
Net income for the nine month period ending September 30, 2006 was
$6,069, which included a $2,000,000 gain from debt settlement during the
first quarter 2006, as compared to a net loss of $3,140,783 during the
comparable period in 2005.
The earnings per share for the quarter ended September 30, 2006 were a
loss of $.04 on a fully-diluted earnings per share basis, based on the
September 30, 2006 weighted-average total outstanding shares fully
diluted of 15,503,749. This compared to a loss of $.14 per share in the
quarter ending September 30, 2005. Without weighted average calculation,
the total outstanding shares were 15,534,727 as of September 30, 2006.
For the quarter ended September 30, 2006 and year to date 2006, the
Company reported Adjusted EBITDA (see definition and table below) of
$(382,014) and $910,522, respectively, representing improvements of
$188,312 and $2,911,982, respectively, from the comparable periods
during 2005.
Larry Shumate, Chief Executive Officer, said, “The
third quarter’s revenues, which included HVC’s
initial revenues from the Hemiwedge®
technology development agreement, exceeded our expectations. The Company
accomplished several important milestones within the quarter. With the
surface-level valve product, known as the Hemiwedge®
Cartridge Valve, the Company finalized pre-launch activities, personnel
acquisition, and its initial inventory build. After the quarter end, the
Company received its first significant purchase order for two inch
through six inch sizes of the Hemiwedge®
Cartridge Valve product line. The Company also met milestones with the
Hemiwedge® DIV or down hole isolation valve
project currently in development, and important other business
development objectives were met relating to the Hemiwedge®
sub-sea high pressure valve product, which is now in discussions for
licensing to a third party company.”
Matt Flemming, Chief Financial Officer, said, “The
third quarter of 2006 illustrated continued positive trends in the
Company’s operations as compared to the prior
year periods. Gross margins as a percentage of sales for the quarter
ended September 30, 2006 were 26% as compared to 11% for the quarter
ended September 30, 2005, and year to date gross margins were 24% as
compared to a negative margin in the comparable period a year ago.
Looking at the full year 2006, the Company believes that the Hemiwedge®
technology development agreement revenues, first orders for the Hemiwedge®
Cartridge Valve and Shumate Machine Works trends, will generate
continued growth in revenues in the fourth quarter 2006 and fiscal year
2007.Shumate Machine Works’ backlog,
defined as purchase orders received that are not yet in
work-in-progress, was nearly $2 million as of September 30, 2006, not
including HVC’s backlog from new Hemiwedge®
Cartridge Valve orders received during the fourth quarter 2006. We
believe that the trend in revenue growth of Shumate Machine Works,
coupled with the current backlog, and the addition of new Hemiwedge®
revenues, should have a significant positive impact on our fiscal 2006
year end results.”
For the full unaudited financial results and management’s
discussion and analysis of its third quarter 2006 financial operations,
please see the Company’s Quarterly Report
filed on Form 10-QSB, filed on or about November 14, 2006 with the
Securities and Exchange Commission. The Form 10-QSB, along with other
public filings can be viewed on the SEC’s web
site at www.sec.gov.
Conference Call Reminder
The conference call will take place at 4:15 p.m. Eastern, on Thursday,
November 16, 2006. Anyone interested in participating should call
877-704-5385 if calling within the United States or 913-312-1303 if
calling internationally and enter pass code 2744187, approximately 5 to
10 minutes prior to 4:15 p.m. call. There will be a playback available
until November 23, 2006. 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 2744187 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 December 01, 2006.
About Shumate Industries, Inc.
Shumate Industries, Inc. is a Texas-based, energy field services company
that incorporates new technologies to bring products to market
leveraging its existing infrastructure, expertise and customer channels.
The Company operates through two wholly owned subsidiaries: (1) Shumate
Machine Works, a contract machining and manufacturing division which
makes energy exploration and production products for its customers; and
(2) Hemiwedge Valve Corporation (HVC), a manufacturer and marketer of
the proprietary new Hemiwedge® valve
technology. HVC’s first proprietary product,
the Hemiwedge® Cartridge valve is a
surface-level valve targeting energy flow control applications, while
the Hemiwedge® sub sea high pressure valve is
in discussions for licensing. The Hemiwedge®
DIV or down hole isolation valve is under a development agreement
announced in July 2006.
Shumate Industries employs approximately 65 people at two plants in
Conroe, Texas, north of Houston which total 85,000 square feet. For
additional information on the Company and its products please visit www.shumateinc.com.
Tables Follow
SHUMATE INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30,
December 31,
2006
2005
ASSETS
Current assets:
Cash and cash equivalents
$ 79,500
$ 214,218
Accounts receivable, net of allowance for doubtful accounts of
$40,000 and $60,000
817,030
959,916
Inventory
925,256
237,173
Prepaid expenses and other current assets
82,514
87,920
Total current assets
1,904,300
1,499,227
Fixed assets, net of accumulated depreciation of $1,789,507 and
$1,455,868
2,324,545
1,853,013
Patents, net of accumulated amortization of $21,779 and $0
297,272
283,017
Deposits
55,340
30,340
Total assets
$ 4,581,457
$ 3,665,597
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable
$ 1,203,033
$ 463,141
Accrued expenses
553,230
408,796
Current portion of notes payable - other
88,929
48,504
Current portion of capital lease obligation
29,075
-
Current portion of term note payable - Stillwater National Bank
493,515
235,891
Line of credit - Stillwater National Bank
893,735
837,615
Total current liabilities
3,261,517
1,993,947
Long term liabilities:
Notes payable - other
13,164
51,496
Long term portion of capital lease obligation
60,970
-
Term note payable - Stillwater National Bank
2,961,092
5,397,162
Convertible note payable - Stillwater National Bank
2,500,000
2,500,000
Total long term liabilities
5,535,226
7,948,658
Total liabilities
8,796,743
9,942,605
Commitments and contingencies
-
-
Stockholders' 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,
15,534,727 and 12,116,394 shares issued and outstanding
