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President and CEO of Xtreme Motorsports Provides Important Shareholder Update Regarding Current Business Initiatives Apr 30, 2007 9:00:00 AM BAKERSFIELD, CA -- (MARKET WIRE) -- 04/30/07 -- Today Alan McCaa, President and CEO of Xtreme Motorsports of California, Inc. (PINKSHEETS: XTMS) ("Xtreme" or the "Company"), provided an update to shareholders regarding its current initiatives:
"It has been several weeks since Xtreme has been in a position to issue a press release regarding its current business, operational and capital markets initiatives. Unfortunately, the majority of these initiatives were in a state of flux and required additional development before we could update shareholders.
CUSIP Change:
-- This process has taken longer than expected. With the CUSIP change, NASDAQ required a corresponding ticker symbol change. -- We had been working through the change process with the hope that would not need to change the ticker symbol. -- We expect to provide details regarding the CUSIP and ticker symbol change as soon as we hear from NASDAQ. -- As shareholders are aware from our March 22 press release, the CUSIP change is part of an extensive program to address the illegal naked short selling of Xtreme's stock. Additional details regarding the company's NSS strategy will be clarified in a press release to follow shortly. Share Reduction Program:
-- While the time frame to complete the share reduction has been extended, it has certainly not been on the back-burner. We continue to request return of shares from those who have agreed, but have been made aware that significant numbers of shares have been "lent out" to market makers. -- We regret this program has taken longer than anticipated, but the administrative procedures required to accomplish the return of shares are out of our control. As soon as we confirm receipt of the shares to be cancelled and retired, we will inform shareholders immediately. -- In the meantime, we have entered into certain arrangements with service providers and have agreed to issue shares of stock in lieu of cash. The goal remains to reduce the total issued and outstanding by 47% as we had previously announced, but the company may not ultimately reach this goal to the extent that we utilize Xtreme's common stock to fund strategic growth plans to include, among other programs, the acquisition of complementary businesses. -- The issuance of stock to any business that we might acquire would provide immediate revenues, profit and assets to Xtreme, and we believe this to be a wise use of our common stock. -- To increase transparency, the company will release a certified share structure list from its transfer agent at the end of each month in the form of a press release with clarification of any increase or decrease from the prior month's report. This will allow the company to ensure the accuracy of all information released to the public.
Current Operations:
-- Shareholders may be surprised to learn that Xtreme currently has open quotations amounting to approximately $150 million. We are in the process of designing, engineering and otherwise negotiating these contracts. We need to make it clear that these quotations do not necessarily represent revenue for this year or next. It represents potential business opportunities that may or may not be secured over the next few years. The company has not informed shareholders via press releases of these opportunities as they arise because we believe in providing realistic information and not "hype." Currently, Xtreme has booked contracted sales for the first quarter of 2007 amounting to approximately $2.5 million. This does not include approximately $1.0 million in quotations that management believes will convert to sales in the coming months, but are undergoing design and engineering that may increase the aggregate sales for the year. Branding
-- We have undertaken a program to fully protect the intellectual property of Xtreme to include new branding, trade marking, and marketing programs. The branding program includes a full Xtreme clothing line which will be available for sale in the summer or fall of 2007. -- Furthermore, the company has filed applications for two patents related to the utility-vehicle market. At this point, the company is not releasing details of these patents, for obvious reasons. Dealers and Global Expansion
-- The company currently has signed 4 dealerships under its dealer program and 3 additional dealers are under letters of intent ("LOI"). The dealers under LOI are currently examining their operations to ensure they will be able to accommodate the terms of the dealer agreement, such as floor space, maintenance and signage requirements. -- The dealer program has been more successful than we had anticipated, and therefore has required more thoughtful attention and time by Xtreme's management and staff. Instead of anticipated revenues of $1 to $2 million per dealer per year, dealers are looking to purchase up to $25 million or more in sandcars per year. -- Our international expansion efforts are ahead of schedule by 8-10 months. -- This has placed significant additional requirements upon management and staff to plan and manage. Clearly, the growth we are experiencing has resulted in the need to redesign purchasing, logistics, staffing, partnerships and a host of internal processes we did not expect to address this year or even next. Even though we only completed a refit and redesign of our facilities in January, we currently need to move our operations to a space at least three times the size of our current manufacturing footprint in order to meet current and future demand for the foreseeable future. We are looking to the future and need to be careful in our planning to ensure operational excellence.
I would like to ensure shareholders that all of our efforts over the last month have all been under the mindset of increasing shareholder value. We are as distressed and confused over the fact that our current stock price and market capitalization does not reflect the fair value of the company under any common measures of stock price appreciation potential such as "multiples of revenue" or other such metrics. In addition to the CUSIP and ticker symbol change, we have taken additional legal measures with regard to naked short selling to protect our company and our shareholders. Once these legal measures have been put in motion, we will provide explicit details in a press release to ensure that our shareholders are fully informed."
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