EXHIBIT 99.1
GALES INDUSTRIES
INCORPORATED
Michael A. Gales, Executive Chairman
631-968-5000 ext: 124
GALES INDUSTRIES INCORPORATED ANNOUNCES FISCAL 2005 FINANCIAL RESULTS
Successful 2006 Expected Based on F-35 Contracts Previously Announced
BAY SHORE, NY, April 19, 2006 - Gales Industries Incorporated (OTC BB: GLDS), a
leading operating/holding and management services integrator group within the
defense and aerospace field, today announced its financial results for the year
ending December 31, 2005.
On November 30, 2005, Gales raised $9 million in a private placement that was
used to complete six separate transactions, including the acquisition of AIR
Industries Machining Corp. ("AIM"). On the date the acquisition closed, AIM also
entered into a $14 million credit facility with PNC Business Credit, portions of
which were used to acquire AIM's 5.4 acre, 76,000 sq. ft., three-building
corporate campus and refinance outstanding indebtedness. Simultaneously, Gales
also completed a reverse merger with Ashlin Development Corp.
Adjusted to include the results of AIM for the entire year, Gales' revenue for
the year ended December 31, 2005 was $30.7 million, up from AIM's revenue of
$24.8 million in the year ended December 31, 2004. Inclusive of AIM's results,
pro forma gross profit in 2005 was just under $4.4 million, up from AIM's $3.5
million in 2004. Net income for 2005 (pro forma) was $225,000, or $0.01 per
fully diluted share. For 2004, the pro forma net income was $484,000, also $0.01
per fully diluted share. The foregoing pro forma information reflects the
results of operations of Gales as if the acquisition of AIM had occurred on
January 1, 2004. These results are not necessarily indicative of the results
that would have been obtained had Gales owned AIM for the entire year or the
results to be expected for the upcoming year. Complete financial statements of
Gales are available in the company's 10-KSB and included in this release is
Gales' Statement of Operations for the year ended December 31, 2005. This
Statement of Operations reflects the year's operations of Gales which was in a
developing phase for the first eleven months of the year and only acquired AIM
on November 30th and includes all of Gales' expenses for the year and the
expenditures related to the transactions that occurred on November 30, 2005,
generally of a non-recurring, one-time nature, totaling approximately $603,000,
which were expensed in the month subsequent to the closing.
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Gales' Executive Chairman, Michael A. Gales, continued, "We have completed the
task of creating the framework for a successful aerospace/defense company. We
acquired AIM and, as referenced above, completed a reverse merger with Ashlin
Development Corp. and changed the name of the corporation. This provides us with
a unified image that will make it easier for customers and the public to more
readily recognize us in the marketplace, and the corporate domicile is now
Delaware, which is extremely business friendly."
He added, "We believe that 2006 will be a successful first full year for Gales
Industries. We base this belief on the contracts we have in hand for the drag
brace assemblies and retract fitting assemblies on the main landing gear for the
Marine Corps' F-35 JSF Short Take Off and Vertical Landing Aircraft (STOVL) and
follow-on contracts for similar drag braces for the F-35 Conventional Take Off
and Landing Aircraft (CTOL) to be deployed by the US Air Force. Combined, these
could generate $17.1 million for Gales by 2011."
-more-
Gales concluded, "Naturally, these contracts, plus existing contracts,
and our current backlog over the ensuing 18 months of approximately $39 million,
are only the beginning, and although there are no guarantees, we expect to
announce a number of contracts of prospectively significant dimension in the
near future. At the same time, we wish investors to understand that a major and
implicit element part of our tactical plan is to rapidly advance our
acquisitions strategy to enhance the dimensions of our organic growth."
ABOUT GALES INDUSTRIES INCORPORATED
Gales' strategy and attendant tactical plan is to execute consolidation among
Tier III and IV aerospace/defense subcontractors. Gales offers a tailored exit
strategy in exchange for qualified acquisitions and targets technically superior
organizations in the $15-100 million annual revenue range. Gales is an
operating/holding and management services integrator group within the
defense/aerospace field, focusing on manufacturing, technical services and
strategic product distribution opportunities.
Certain matters discussed in this press release are `forward-looking statements'
intended to qualify for the safe harbors from liability established by the
Private Securities Litigation Reform Act of 1995. In particular, the Company's
statements regarding trends in the marketplace and potential future results are
examples of such forward-looking statements. The forward-looking statements
include risks and uncertainties, including, but not limited to, the timing of
projects due to the variability in size, scope and duration of projects,
estimates made by management with respect to the Company's critical accounting
policies, regulatory delays, and other factors, including general economic
conditions, not within the Company's control. The factors discussed herein and
expressed from time to time in the Company's filings with the Securities and
Exchange Commission could cause actual results and developments to be materially
different from those expressed in or implied by such statements. The
forward-looking statements are made only as of the date of this press release
and the Company undertakes no obligation to publicly update such forward-looking
statements to reflect subsequent events or circumstance.
FINANCIAL TABLES TO FOLLOW
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GALES INDUSTRIES INCORPORATED
Pro Forma Statement of Operations
Year Ended
December 31,
-----------------------------
(Unaudited) (Unaudited)
2005 2004
----------- -----------
Net sales $30,735,103 $24,818,333
Cost of Sales 26,361,387 21,305,071
----------- -----------
Gross profit 4,373,716 3,513,262
Operating costs and expenses
Selling and marketing 357,854 321,727
General and Administrative 2,583,375 1,519,008
----------- -----------
Income from operations 1,432,487 1,672,527
Other expenses
Interest and financing costs 1,056,317 862,729
----------- -----------
Income before income taxes 376,170 809,798
Provision for income taxes 151,031 325,539
----------- -----------
Net Income $ 225,139 $ 484,259
=========== ===========
Earnings per share
Basic $ 0.02 $ 0.03
=========== ===========
Diluted $ 0.01 $ 0.01
=========== ===========
Weighted average shares outstanding
Basic 14,723,421 14,723,721
=========== ===========
Diluted 40,282,810 40,282,810
=========== ===========
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GALES INDUSTRIES INCORPORATED
Consolidated Balance Sheet at December 31, 2005
ASSETS
Current Assets
Cash and Cash Equivalents $ 1,058,416
Accounts Receivable, Net of Allowance for Doubtful Accounts of $45,000 2,623,612
Inventory 12,603,810
Prepaid Expenses and Other Current Assets 210,124
Deposits 65,595
------------
Total Current Assets 16,561,557
Property, Plant, and Equipment, net 7,716,469
Cash Surrender Value - Officer's Life 66,216
Deferred Financing Costs 486,207
Other Assets 41,306
Goodwill 1,265,963
------------
TOTAL ASSETS $ 26,137,718
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts Payable and Accrued Expenses $ 5,294,629
Advance Payment - Customers 188,199
Notes Payable - Current Portion 6,322,665
Notes Payable - Sellers - Current Portion 192,400
Capital Lease Obligations - Current Portion 359,197
Due to Sellers 91,232
------------
Total current liabilities 12,448,322
Long term liabilities
Notes Payable - Net of Current Portion 3,648,131
Notes Payable - Sellers - Net of Current Portion 1,434,862
Capital Lease Obligations - Net of Current Portion 820,375
Deferred Tax Liability 676,394
------------
Total liabilities 19,028,084
------------
Commitments and contingencies
Stockholders' Equity
Series A Convertible Preferred - $.001 Par value, 8,003,716 Shares Authorized 1
900 Shares Issued and Outstanding as of December 31, 2005
Liquidation Value, $ 18,060,000
Common Stock - $.001 Par, 120,055,746 Shares Authorized
14,723,421 Shares Issued and Outstanding as of December 31, 2005 14,723
Additional Paid-In Capital 7,844,614
Accumulated Deficit (749,704)
------------
Total Stockholders' Equity 7,109,634
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 26,137,718
============
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GALES INDUSTRIES INCORPORATED
Consolidated Statement of Operations for the Year Ended December 31, 2005
Net sales $ 2,777,409
Cost of Sales 2,539,433
------------
Gross profit 237,976
Operating costs and expenses
Selling and marketing 34,987
General and administrative 774,401
------------
Loss from operations (571,412)
Interest and financing costs 178,292
------------
Net Loss (749,704)
Less: Dividend attributable to preferred stockholders 60,000
------------
Net Loss attributable to common stockholders $ (809,704)
============
Loss per share (basic and diluted) $ (0.06)
============
Weighted average shares outstanding (basic and diluted) 12,722,060
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