Message #21 From:
NewsBot Date: December 14, 2006 02:42:00 PM
SHMT News Shumate Industries Announces Final Closing of $3.8 million Equity Private Placement
CONROE, Texas--(BUSINESS WIRE)--Shumate Industries, Inc. (OTCBB:SHMT), a Texas-based, energy field
services company, announced today the Company held the final closing in
connection with its sale of $3,787,550 of its securities in a private
placement of its common shares and warrants. In connection with the
private placement 3,787,550 shares of the Company's common stock and
1,893,775 Class A Warrants will be issued. The final closing of the
offering occurred on December 14, 2006. The net proceeds will be used to
accelerate the inventory build up and launch of the Hemiwedge®
Cartridge Valve and the reduction of Shumate’s
liabilities thus strengthening its balance sheet. The remaining proceeds
will be used for general working capital and to fund the Company's
strategic plan to expand its Hemiwedge®
Technology platform of products to meet the increasing demand of the
energy industry.
Matthew Flemming, Shumate’s CFO, stated, “We
are pleased to secure this capital infusion which will allow the Company
to ramp up inventory and build market momentum. During the fourth
quarter 2006, we are moving forward with a full scale launch of the
surface-level Hemiwedge® Cartridge Valve
adding to Shumate’s top line numbers.
Additionally, the Company used $525,000 of the offering proceeds to
fully retire its $2.5 million debenture and its accrued interest of
approximately $225,000 with its senior lender as referenced within the
previously filed Current Report on Form 8-K filed August 15, 2006. Due
to these events, the Company’s balance sheet
will be improved considerably.”
The Company’s total number of shares of
common stock outstanding after this final closing is approximately
19,322,277 and the fully diluted number of shares of common stock
outstanding, upon the exercise of all outstanding warrants and options,
is approximately 22,907,376. First Montauk Securities Corp., an NASD
member firm, acted as placement agent. The Placement Agent received a
cash commission of 7.0%, a non-accountable expense allowance of 2.0%,
and a 1.0% management fee, as well as warrants to purchase up to 378,755
shares of the Company’s common stock at a
price of $1.25 per share. In connection with the offering, the Company
agreed to file a registration statement with the SEC covering the resale
of the shares of common stock and the common stock underlying the
warrants and the placement agent warrants no later than 30 days after
the final closing. Net proceeds to the Company after the payment of
commissions and fees in connection with the offering were approximately
$3,350,000. Please see the Company’s Current
Report on Form 8-K/A filed on December 14, 2006 for additional details.
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.
Forward-Looking Statements
This document contains discussion of items that may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Although the Company believes the
expectations reflected in such forward-looking statements are based on
reasonable assumptions, it can give no assurances that its expectations
will be achieved. Factors that could cause actual results to differ from
expectations include, but are not limited to, customer concentration
risk, difficulties in refinancing its debt, difficulties in
consolidating the operations of the Company's operating subsidiaries,
difficulties in accelerating internal sales growth, volatility of the
energy business and its effects on the Company's business, difficulties
in new technology acceptance within the energy industry, restrictive
covenants in our existing credit facilities, fluctuations in metals
prices, general economic conditions in markets in which we do business,
extensive environmental and workplace regulation by federal and state
agencies and other general risks related to its common stock, and other
uncertainties and business issues that are detailed in its filings with
the Securities and Exchange Commission. Shumate Industries disclaims any
intention or obligation to revise any forward-looking statements,
whether as a result of new information, future events, or otherwise.
