Gateway International Holdings, Inc. (PinkSheets:
GWYI.PK) issued a report on the Company today by its CEO, Timothy
D. Consalvi.
To Our Valued Shareholders:
I am pleased to take
this opportunity to communicate with our shareholders and the
investing public in regards to the significant progress that
our Company has achieved over the past year. While our communication
with the public has been less than we would normally prefer,
we have made every effort to make sure that our shareholders
are kept informed about important developments here at Gateway.
During the upcoming year, we will endeavor to improve our communications
whenever important news occurs.
Our management team has been
very busy over the past year rebuilding the foundation on which
we can grow Gateway and return to a fully reporting status.
Significant accomplishments during the past year include:
- Restructure
of corporate governance with the following changes in executive
management:
- Stephen Kasprisin, who has extensive public company
experience, was hired as Chief Financial Officer;
- Lawrence
Consalvi stepped down as President and CEO to take
full responsibility for the Machine and Tools Group;
- Timothy Consalvi relinquished
his role as President of All American CNC Sales to
take over the role of President and CEO of Gateway;
- James Cassidy of
Cassidy and Associates, a highly experienced SEC counsel,
was appointed as general and SEC counsel.
- Completion
of our audited financial reports for the nine months ended
June 30, 2006 after changing our year end from September
30;
- Sale of the Eran manufacturing facility for a gain of
approximately $682,000, allowing the Company to invest
in larger, more efficient facilities for our highly profitable
precision manufacturing segment;
- Identification, purchase and initial
implementation of the SAP Business One® ERP Suite,
which will integrate all operating companies under a single
system (go live date estimated as September 30, 2007);
- Divestiture
of non-core and underperforming operating subsidiaries
Accurate Technologies and NuTech Industrial Sales;
- Implementation
of accounting and reporting policies and procedures that
allowed us to release six month financial results within
90 days of the period close, with improvement to 60 days
for the nine month financial results.
Gateway has made significant strides
on multiple fronts throughout the past year. We have addressed
many of the issues that ultimately resulted in our 2006 deregistration
and have put a skilled and experienced leadership team in place
to rebuild the infrastructure and establish the controls necessary
to bring the Company back to a reporting status as quickly
as possible. With the improvements accomplished to date, we
fully expect to complete our annual audit for the year ended
June 30, 2007 and release financial results within the prescribed
90 days as required by the SEC.
As part of our commitment to
improve corporate communications with our shareholders, we
released our internal financial report for the nine months
ended March 31, 2007 on Pink Sheets (www.pinksheets.com) on
June 1, 2007. The following is a brief summary of these financial
results:
(Please note that financial results reflect the continuing
operations of Eran Engineering, Elite Machine Tool and All
American CNC unless stated otherwise.)
Revenue Growth
Gateway
reported net revenues of $11,815,016 from continuing operations
for the nine months ended March 31, 2007, up 5.5% over revenues
from continuing operations for the nine months ended June 30,
2006 of $11,200,364. Gateway achieved modest revenue growth
in the Pre-Owned Equipment Sales sub-segment (Machine and Tools
Group) of 2.5% and significant growth at the Precision Manufacturing
Group of 52.1%. The large increase at the Precision Manufacturing
Group was a direct result of increased sales efforts and a
strong market. The increases were partially offset by a sales
decline in the New Equipment Sales sub-segment (Machine and
Tools Group) of -23.5% for the nine months ended March 31,
2007. This decline was primarily a result of delivery problems
and longer than normal lead times at several key manufacturers.
Management has worked extensively with each of these manufactures
to address the delivery issues and positive results have been
seen during the fourth quarter.
Increased Gross Profit
Gross
profit from continuing operations increased significantly for
the nine months ended March 31, 2007 to $3,997,145 or 34% of
revenues, as compared to gross profit from continuing operations
of $2,347,164 or 21% of revenues, for the nine months ended
June 30, 2006. The margin improvement is principally related
to the increased mix of precision manufacturing revenues. During
the period, precision manufacturing carried a margin of approximately
53% as compared to equipment sales revenues, which had a margin
of approximately 23%.
Increased Operating Profit
Operating
profit from continuing operations significantly increased for
the nine months ended March 31, 2007 to $758,162 or 6% of revenues
as compared to an operating loss from continuing operations
of $516,878 or 5% of sales for the nine months ended June 30,
2006. The increase in operating profit was principally due
to the increased mix of precision manufacturing and its positive
impact on overall margins during the period.
Net Loss
Net loss
totaled $810,107 for the nine months ended March 31, 2007,
as compared to a net loss of $608,542 for the nine months
ended June 30, 2006. Net loss for the nine months ended March
31, 2007 included a net income from discontinued operations
of $23,875, a net loss from the disposal of discontinued
operations of $2,207,947, and a gain on the sale of a building
of $681,738.
It is important to note that the disposal of the discontinued
operations caused the net loss. While on paper we experienced
a net loss, the loss was strictly a non-cash loss and was primarily
the result of a decrease in the public share price of Gateway
from $0.78 per share at the date the operations were acquired
to $0.53 per share at the date they were divested. Non-cash
expenses do not impact operational results and from both a
cash flow and operational perspective, the Company reached
targeted profit goals and generated significant cash for future
expansion.
Focus on the Future
Gateway’s management team
is clearly focused on the future. There existed many opportunities
that under our old structure we were simply unable to capitalize
on. We have taken the steps we believe were necessary to
rebuild our foundation and are confident that we will successfully
grow our Company. During the upcoming year, we pledge to
demonstrate our new commitments and show we are fully dedicated
to delivering positive results to our shareholders. We pledge
to communicate with our shareholders, both the good and the
bad, and promise to follow through on our commitments. As
a result of the structure changes and additional leadership
at our Company, we are now in a much stronger position to
focus on value creation and future growth opportunities.
Gateway’s management team
and employees want to thank all of our shareholders for supporting
us during this difficult period and we will strive to justify
that support with exemplary results in the future. Thank
you for staying with us and we look forward to a long and
profitable relationship in the future.
Sincerely,
Timothy D. Consalvi
Chief Executive Officer Gateway
International Holdings, Inc.
'SAFE HARBOR':
This press release
may contain forward-looking statements. The words ‘estimate’, ‘possible’ and ‘seeking’ and
similar expressions identify forward-looking statements,
which speak only as to the date the statement was made. The
company undertakes no obligation to publicly update or revise
any forward-looking statements, whether because of new information,
future events, or otherwise. Forward-looking statements are
inherently subject to risks and uncertainties, some of which
cannot be predicted, or quantified. Future events and actual
results could differ materially from those set forth in,
contemplated by, or underlying the forward-looking statements.
The risks and uncertainties to which forward-looking statements
are subject include, but are not limited to, the effect of
government regulation, competition and other material risks.
Source: Gateway International Holdings,
Inc.
