Each one in plain English, with the numbers worked through for a shareholder.
14 Oct 2008asset acquisition disposition● NeutralMajor
The sale of Shumate Machine Works' assets to American International Industries closed on October 8, 2008, at an aggregate price of $6,703,749: the buyer took over $5 million of Stillwater notes plus $1,703,749 of other liabilities. The company expects to issue about 1,401,170 shares (about $420,351 at $0.30) to the buyer under the working-capital adjustment, subject to final calculation within 45 days. Larry Shumate resigned as President, CEO and Chairman, and Kenton Chickering III, previously head of Hemiwedge Valve Corporation, replaced him. This resolves the pending sale and removes the contract machining business, leaving Hemiwedge as the remaining operating subsidiary named in the filing.
On August 29, 2008 the company and its subsidiary Shumate Machine Works agreed to sell substantially all of Machine Works' assets to American International Industries for $5,000,000 plus assumed liabilities. The $5,000,000 could be paid in cash or by the buyer taking over the company's Stillwater term notes (up to $5,000,000). The deal was conditional on the buyer getting Stillwater financing, and closing was expected around October 1, 2008. Up to $700,000 of company stock (price capped at $0.40) could be issued to the buyer if liabilities exceed working assets.
On May 23, 2008 Stillwater agreed to lend the company $625,000 for working capital, at prime plus 2%, maturing August 31, 2008. It is secured by receivables, equipment, inventory and the stock of Shumate Machine Works and Hemiwedge Valve Corporation, and Shumate, Flemming and Clark each guarantee up to 50% of the outstanding amount. This adds a short-term loan on top of the January 2008 facilities and again leans on executives' personal guarantees.
On January 25, 2008 the company and its subsidiaries signed an amended loan agreement with Stillwater. A new term note of $3,329,000 replaces the old one (about $3,003,998 outstanding), now due April 19, 2010 instead of April 2008, and a new $1,000,000 revolver (about $893,676 drawn) runs to April 19, 2009. Both carry prime plus 2%, and now also have a security interest in certain personal assets of CEO Larry Shumate. This pushes out the maturity of the debt that was due in April 2008, supersedes the earlier balloon structure, and the term note requires 26 equal monthly payments from February 28, 2008 sized to amortise over 64 months.
13 Nov 2007material agreement termination▼ BadMajor
On November 5, 2007 Sunbelt terminated the August 2007 agreement to be acquired by the company. The filing says the principal reason was the company's inability to obtain the financing the closing required. The company now plans to buy about $2 million of equipment and lease a building next to its Conroe plant to make more HemiWedge valves, which management says would dilute shareholders less than the Sunbelt deal would have. This ends the Sunbelt thread without a deal.
On August 17, 2007 the company agreed to buy Sunbelt Machine Works Corporation for about $14,500,000: $9,000,000 cash, about $0.5 million of assumed debt, a $2.5 million note and $2.5 million of company stock. Closing depended on the company raising at least $14,000,000 in financing and was expected by September 30, 2007; a $150,000 break-up fee applies to certain terminations. This would be the company's first acquisition since HemiWedge, and it is not completed.
16 July 2007capital raising announcement● NeutralMajor
On July 10, 2007 the company agreed to issue a $2,000,000 convertible note (10%, one-year term, convertible at $1.89) and a warrant for 400,000 shares at $1.89 to a single accredited investor, with net proceeds of about $1,850,000 for working capital and general corporate purposes. The note must be prepaid if the company completes a later equity financing within 12 months. This adds new debt and potential dilution; SMH Capital was paid $140,000 in commissions.
In March 2007, 666,768 warrants were exercised, giving 666,768 new shares and gross proceeds of $752,570. Of these, 536,300 were Class A warrants exercised at $1.25 (about $670,375), and those holders also get a new Class B warrant at $2.00 for five years. First Montauk is owed a $16,760 fee. This brings in cash but adds shares.
On February 8, 2007 (effective January 19, 2007) the company renewed its $1,000,000 secured revolving line with Stillwater, with a balance of about $515,000 at January 19, 2007. Borrowing is limited to 85% of eligible receivables plus 50% of eligible inventory, interest is prime plus 2%, and it expires April 19, 2008. This continues the existing bank facility; the borrowing base percentage for receivables is 85% versus 80% in earlier context.
14 Dec 2006capital raising announcement▲ GoodMajor
This amended filing revises the fall 2006 offering: through December 14, 2006 the company sold 3,787,550 shares at $1.00 (not $1.10) for $3,787,550 gross, with 1,893,775 Class A warrants at $1.25 and no Class B warrants. It also reports that on December 1, 2006 the company paid Stillwater $525,000 in full settlement of the $2.5 million debenture, with the remaining principal and about $225,000 of accrued interest cancelled. This resolves the open thread on the Stillwater note. Stillwater still holds 2,368,000 shares (about 13%), plus an equipment term loan of about $3.46 million and about $900,000 on the credit line as of September 30, 2006. Investors have full-ratchet protection on sales below $1.00 until the earlier of March 14, 2008 or a definitive distribution agreement with @Balance.
3 Nov 2006capital raising announcement● NeutralMajor
Between October 30 and November 3, 2006 the company sold 953,228 shares at $1.10 each in a private placement for gross proceeds of $1,048,550, with Class A ($1.50) and Class B ($1.75) warrants of 238,308 each, and more closings expected. Proceeds are meant for the HemiWedge launch and working capital, including settling the $2.5 million Stillwater debenture for $525,000. Investors get full-ratchet price protection if the company later sells shares below $1.10, which could dilute existing holders further, and the company must file a resale registration within 30 days of the final closing.
On August 9, 2006 Stillwater extended the deadline for the discounted $500,000 payoff of the $2,500,000 convertible note (set in the April 2006 letter agreement). The price rises to $525,000 if paid Sept 2 to Dec 1, 2006 and to $550,000 if paid Dec 2, 2006 to March 1, 2007; other terms are unchanged. This gives the company more time on the open thread but at a slightly higher cost, and the payoff is still not done.
On July 13, 2006 the HemiWedge subsidiary signed a two-year development agreement (expires July 12, 2008) with At Balance Americas, a Shell Technology Ventures subsidiary, to jointly develop a downhole isolation valve. The company's subsidiary keeps ownership of any new technology; At Balance may later get a worldwide exclusive purchase right if it chooses to commercialise, subject to conditions including an exclusivity fee, a minimum purchase and funding of some or all of the production capital. Shell Technology Ventures also received rights to invest in future financings, behind the February 2006 investors. This extends the HemiWedge line begun in December 2005; no money amounts are stated.
On April 13, 2006 Stillwater agreed to accept $500,000 in full payment of the $2,500,000 convertible note from the October 2005 restructuring, if it is paid by September 1, 2006 from new equity funds (not borrowed money) on terms no better than those recently approved by Stillwater. If this happens the company expects about $2,000,000 of debt forgiveness income; it is conditional and not yet done.
The company and Stillwater signed an amendment forgiving $2,000,000 of the term note from the October 2005 restructuring, replaced by a new note of $3,633,053 due April 19, 2008, which follows through on the debt forgiveness flagged in February. Separately, Shumate Machine Works replaced its lease on its ~25,000 sq ft Conroe plant with a five-year lease at $18,600 a month, which is $4,000 a month lower. (The filing says the amendment was dated March 31, 2005, which appears to be a typo for 2006 - inference.)
23 Feb 2006capital raising announcement▲ GoodMajor
On February 22, 2006 the company sold 3,333,333 shares at $0.60 in a private placement (First Montauk as placement agent for 2,500,000), netting about $1,810,000 to launch the HemiWedge valve, and for working capital. The press release says the total raise was $2.25 million with the December 2005 closing, and that Stillwater agreed to forgive about $2.0 million of the $5.6 million term loan; this adds shares and dilutes existing holders but cuts debt.
On December 5, 2005 the company, through a new subsidiary HemiWedge Valve Corporation, bought the HemiWedge valve patents, trademarks and website from Soderberg Research and Development for $138,500 cash, a $100,000 two-year 6% note, $72,000 in escrowed monthly advances and 3% of related net sales through March 29, 2013. This starts a new product line alongside Shumate Machine Works; the cash was funded by A. Earl Swift buying 416,667 shares at $0.60 ($250,000). On December 1 the machine works also leased a ~60,000 sq ft Conroe facility (about $14,000 a month, with a purchase option at $1,825,000).
This amended 8-K replaces the October 25 report to reflect post-closing adjustments to the October 19, 2005 restructuring. The main change is that the restated Stillwater term note is about $5,600,000 (not ~$4,000,000), with interest-only payments for six months and 24 monthly payments after that; the other terms (convertible note, share swaps, restricted stock) are unchanged in the text.
26 Oct 2005capital raising announcement● NeutralMajor
On October 19, 2005 the company (now renamed Shumate Industries, formerly Excalibur Industries) completed an out-of-court debt restructuring, resolving the Excalibur Holdings/Shumate Machine Works stock sale threat from earlier in 2005: Stillwater transferred 100% of Shumate Machine Works' stock to the company. Stillwater's notes of about $9,413,000 were restated into a ~$4,000,000 term note, plus a $2,500,000 convertible note (at $1.00 per share) and $2,368,000 of debt swapped for shares (not less than 20% of the post-deal stock). Unsecured notes were swapped for about 1,691,310 shares (~14.61%), about 3,950,000 restricted shares (~34.12%) went to officers and directors, and a 1-for-7 reverse split took effect, so existing shareholders were heavily diluted.
This continues the Excalibur Holdings bankruptcy. On April 20, 2005 the court lifted the stay so Stillwater National Bank, the senior lender, could enforce its rights over the Shumate Machine Works stock, including foreclosure. Stillwater has given notice that it intends to sell the Shumate stock in a private sale after May 9, 2005, and Excalibur Industries says it intends to bid. The filing does not say whether the bid will succeed.
On March 9, 2005 Excalibur Holdings, the subsidiary created in the 2002 merger and parent of Shumate Machine Works, filed for Chapter 7 bankruptcy in the Southern District of Texas, listing about $13.6 million of liabilities. Shumate's stock is the estate's only asset and is pledged to senior lender Stillwater National Bank, which could sell it or a third party could buy it. Excalibur Industries and Shumate did not file, and Excalibur Industries says it intends to bid for the Shumate stock if it is put up for sale.
On January 19, 2004 the company dismissed Cross and Robinson as auditor and engaged Malone & Bailey, PLLC (engaged January 26, 2004). The filing says there was no disagreement, but Cross and Robinson's report for 2002 raised substantial doubt about the company continuing as a going concern, citing recurring losses, significant acquisition and operating debt (some in default) and a net capital deficiency. For shareholders this shows financial strain in the years after the 2002 merger.
The company reported its auditor changes around the merger. Salibello & Broder was dismissed on about April 8, 2002 in favour of Cross and Robinson, which had audited Excalibur Holdings. Salibello & Broder was re-hired to audit the pre-merger shell for the six months ended December 31, 2001, then dismissed again on about June 27, 2002. The filing says there were no disagreements, but Salibello & Broder's earlier reports on the pre-merger company carried going-concern doubt.
11 June 2002asset acquisition disposition● Neutral
This amends the April 2002 merger report. The company reincorporated in Delaware and changed its name to Excalibur Industries, Inc. on June 10, 2002. It repeats the Excalibur Holdings merger terms and adds that on May 22 the Series A and Series B preferred shares automatically converted into common stock. It also gives a fuller description of the four subsidiaries (Excalibur Steel, Excalibur Aerospace/Aero Weld, Excalibur Services and Shumate Machine Works) and the growth strategy.
On April 8, 2002 the company (then named Global Realty Management Group, Inc.) merged with Excalibur Holdings, Inc., a Texas steel fabrication and manufacturing group, which became its wholly owned subsidiary. Excalibur shareholders received 11,633,699 common shares, 1,000,000 Series A preferred and 806,000 Series B preferred (each preferred convertible into one common share). The filing says the company intends to rename itself Excalibur Industries, Inc., and Excalibur's management replaced the former directors and officers. This explains the earlier large holder notices and marks a complete change of business and control. Financial statements for the acquired business were promised by amendment within 60 days.
