posted
This is a monster hurricane play, hardly any dilution in the past few years, provides emergency services for hurricanes and roofing, cat 3 hurricane about to hit land.
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posted
nice trader, i tried .08 and barely missed it, grrr lol..old repo man play..the real run will happen if they get a ton of work, then show them on the Q, but never know, i do think this is restricted for some reason online still, doesnt help. interesting one though..gl
Posts: 6397 | Registered: Jan 2006
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posted
Wait until Gustav makes landfall, one of ADDL's clients is the State of Louisiana. The company is prepared for roofing emergencies after a hurricane and will get plenty of contracts if a CAT3 hits the gulf. Then you also have Hannah now to worry about which may hit Florida..check out what happened when Katrina hit.
posted
The current forecast shows Gustav making landfall in central Louisiana on Sept. 2. Now go here... http://www.aduddell.com/index.php?page=247 ....as you can see State of Louisiana is one of their "Disaster Response" clients. The company is legit and real with over 40million in revenues in 2008. This isn't speculation that they will get contracts in Louisiana if the hurricane hits there, its more like its going to happen. They don't report PR's, but this will still explode, especially when the quarterly comes out showing huge revenue increase due to Gustav. Hannah is a threat too and they have an office in Tampa. Texas may get hit hard from Gustav too and these are their clients listed under "Disaster Response"...Texas Children's Hospital and University of Texas Science Center.
Get ready for a huge reaction to this as this fairly undiscovered hurricane stock gets picked up on. This will not make a move like it did with Katrina, but you never know with the MoMo where this could be. In my opinion .15 looks cheap here and this might really really take off next week
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quote:Originally posted by stocktrader22: The current forecast shows Gustav making landfall in central Louisiana on Sept. 2. Now go here... http://www.aduddell.com/index.php?page=247 ....as you can see State of Louisiana is one of their "Disaster Response" clients. The company is legit and real with over 40million in revenues in 2008. This isn't speculation that they will get contracts in Louisiana if the hurricane hits there, its more like its going to happen. They don't report PR's, but this will still explode, especially when the quarterly comes out showing huge revenue increase due to Gustav. Hannah is a threat too and they have an office in Tampa. Texas may get hit hard from Gustav too and these are their clients listed under "Disaster Response"...Texas Children's Hospital and University of Texas Science Center.
Get ready for a huge reaction to this as this fairly undiscovered hurricane stock gets picked up on. This will not make a move like it did with Katrina, but you never know with the MoMo where this could be. In my opinion .15 looks cheap here and this might really really take off next week
They are in default on a $10,000,000 revolving line of credit and the losses grew. It seems that they need more than just a Cat3 hurricane to make this work over time
------------------------------------ Form 10-Q for ADUDDELL INDUSTRIES INC
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. The following discussion should be read in conjunction with our financial statements and notes thereto.
Introduction
Aduddell Industries, Inc. is engaged in the commercial and industrial roofing and re-roofing, specialty roofing metals, waterproofing and concrete restoration and consulting businesses through our subsidiaries Aduddell Roofing, Inc., Aduddell Restoration and Waterproofing, Inc., and Global Specialty Group, Inc. In addition we provide pre-event planning, event management and post-event recovery services for disaster-related activities through our subsidiary Aduddell Enviro & Emergency Management Services, Inc. ("E2MS"), as well as marketing services through our EyeOpener Division. We were originally incorporated on March 4, 1991, in the state of Colorado. On June 7, 2006, we changed our name from Zenex International, Inc. to Aduddell Industries, Inc. and our state of incorporation from Colorado to Oklahoma.
Our revenues have been historically derived from comprehensive commercial roofing services, including re-roofing, restoration and repair, new roof construction, sheet metal fabrication, waterproofing, and emergency post-event response services. In 2008, we have continued to focus on the integration of our acquisitions, cost control, and operations. We have also embarked on efforts to raise our sales volume through the cross-selling of services at our regional and divisional offices as well as the continual pursuit of sales through the award of contracts through US Communities. We were recently awarded a contract through US Communities that amounted to approximately $5 million, which is our largest award to date through that program. In addition, we expect improvement in our divisional gross margins.
-------------------------------------------------------------------------------- In the second quarter of 2006, we increased our focus on providing services to the total exterior shell of a building through the asset purchase of Merit Construction, a concrete restoration company and expanded our roofing business to include standing seam and specialty metals. In the third quarter of 2006, we focused on the organic growth of these business areas, increased our marketing capability with the purchase of EyeOpener Creative Communications, LLC., and continued to execute our business plan by searching for acquisitions in key markets. On October 20, 2006, we signed a letter of intent to acquire Brent Anderson & Associates, Inc., a Minnesota based restoration, roofing and waterproofing company. This transaction closed in December 2006 adding significant resources, including below grade waterproofing to our service offerings. Cost of revenues consists primarily of compensation and benefits to field staff, materials, subcontracted services, parts and supplies, depreciation, fuel and other vehicle expenses and equipment rentals. Our gross profit percentage, which is gross profit expressed as a percentage of revenues, depends primarily on the relative proportions of costs related to labor and materials. On jobs in which a higher percentage of the cost of revenues consists of labor costs, we typically achieve higher gross margins than on jobs where materials represent more of the cost of revenues. Margins are also affected by the competitive bidding process and the technical difficulty of the project. New roof construction work is more likely to be competitively bid than re-roofing, restoration and repair. Typically, re-roofing, restoration and repair jobs are more labor intensive and have higher margins than new roof construction.
The following table sets forth information used by management to assess our results of operations of the current quarter over the same quarter in the prior year in aggregate amounts:
Six months ended Six months ended June 30, 2008 June 30, 2007
Total Revenue $ 24,151,450 $ 24,386,618
Total Gross Margin $ 1,680,714 $ 3,475,731
Cash Flow from Operations $ (2,897,484) $ 499,022
EBITDA $ (2,387,396) $ (2,146,450)
Net Income (Loss) $ (3,078,854) $ (3,359,211)
Free Cash Flow $ (2,999,633) $ 30,068
The following table sets forth the reconciliation of our free cash flow to our cash flow from operations:
Cash Flow from Operations $ (2,897,484) $ 499,022
Capital Expenditures 102,149 468,954
Free Cash Flow (2,999,633) 30,068
The following table reconciles our EBITDA to our net income:
Net Income $ (3,078,854) $ (3,359,211)
Interest (Income) 471,741 394,341
(Gain) Loss on Sale of Equipment 10,843 5,555
Provision (Benefit) for Income Taxes (1,146,586) (658,986)
Depreciation 1,355,460 1,471,851
EBITDA (2,387,396) (2,146,450)
-------------------------------------------------------------------------------- We present EBITDA and free cash flow because we believe that each provides useful information regarding our continuing operating results. We rely on EBITDA and free cash flow as primary measures to review and assess our operating performance and our management team's performance in connection with our executive compensation and bonus plans. We also review EBITDA and free cash flow to compare our current operating results with corresponding periods, and as an assessment of our overall liquidity and our ability to meet our debt service obligations. We believe that EBITDA and free cash flow are useful to investors to provide disclosures of our operating results on the same basis as that used by our management. We also believe that these measures can assist investors in comparing our performance to that of other companies on a consistent basis without regard to certain items, which do not directly affect our ongoing operating performance or cash flows. EBITDA and free cash flow, which are non-GAAP financial measures, have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for net income, cash flows from operating activities and other consolidated income or cash flows statement data prepared in accordance with accounting principles generally accepted in the United States. Because of these limitations, EBITDA and free cash flow should neither be considered as measures of discretionary cash available to us to invest in the growth of our business, nor as replacements for net income. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA and free cash flow as supplemental information.
Critical Accounting Policies and Estimates
Basis of Presentation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Aduddell Roofing, Inc., Aduddell Restoration and Waterproofing, Inc., Global Specialty Group, E2MS and Aduddell Financial Services. The accompanying financial statements of the Company have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. The Company believes that the disclosures made are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the Company's year end audited financial statements and related footnotes included in the annual 10-K filing. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company as of June 30, 2008, and the statements of its operations and accumulated deficit and cash flows for the six month periods ended June 30, 2008 and 2007 have been included. All significant inter-company accounts and transactions have been eliminated in the consolidation. The results of operations for interim periods may not be indicative of the results which may be realized for the full year.
Revenue Recognition
The Company recognizes fixed-price contract revenues on the percentage-of-completion method of accounting, measured by the percentage of cost incurred to date to the estimated total cost for each contract. Management uses this method because total cost is considered to be the best available measure of progress on the contracts. Revenues from cost-plus-fee contracts are recognized on the basis of costs incurred during the period plus the fee earned, measured by the cost-to-cost method.
Contract costs include all direct material and labor costs and those indirect costs related to contract performance such as indirect labor, interest, depreciation and supplies. General and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability may result in revisions to costs and income, which are recognized in the period in which the revisions are determined. The asset "Costs and estimated earnings in excess of billings on uncompleted contracts" represents revenues recognized in excess of amounts billed. The liability "Billings in excess of costs and estimated earnings on uncompleted contracts" represents billings in excess of revenues recognized.
-------------------------------------------------------------------------------- Cash and Cash Equivalents For purposes of the Consolidated Statement of Cash Flows, short-term investments, which have maturities of ninety days or less, are considered cash equivalents.
Investments
The Company accounts for its investments in marketable securities using Statement of Financial Accounting Standards No. 115 "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS No. 115"). This standard requires that investments in equity securities that have a readily determinable fair value and all investments in debt securities be adjusted to market value at the end of each accounting period. Unrealized market value gains and losses are charged to earnings if the securities are traded for short-term profit. Otherwise, such unrealized gains and losses are charged or credited to a separate component of shareholders' equity.
Management determines the proper classification of investments in obligations with fixed maturities and marketable equity securities at the time of purchase and reevaluates such designations as of each balance sheet date. At June 30, 2008, and December 31, 2007, all securities covered by SFAS No. 115 were designated as available-for-sale. Accordingly, these securities are stated at fair value, with unrealized gains and losses reported in a separate component of shareholders' equity. Any realized gains and losses on sales of investments, as determined on a specific identification basis, are included in the Consolidated Statement of Operations.
Fair Value of Financial Instruments
The Company's financial instruments include cash, receivables, notes receivable, marketable securities, short-term payables and notes payable. The carrying amounts of cash, receivables, and short-term payables approximate fair value due to their short-term nature. Marketable equity securities' fair values are estimates based on quoted market prices or approximate fair values. The carrying amounts of notes receivable and payable approximate fair value based on interest rates currently available.
Share-Based Compensation
The Company recognizes expense for its share-based compensation based on the fair value of awards that are granted in accordance with Statement of Financial Accounting Standards No. 123R, Share-Based Payments. The fair value of common stock options is estimated at the date of grant using the Black-Scholes-Merton option valuation model which was developed for use in estimating the fair value of exchange-traded stock options that have no vesting restrictions and are fully transferable, and takes into consideration several criteria, including volatility, expected term, dividend yield, and risk-free rate of return. Option valuation methods require the input of highly subjective assumptions, including the expected stock price volatility. The measured compensation cost is recognized ratably over the vesting period of the related share-based compensation award.
Income Taxes
The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes ("SFAS No. 109"). SFAS No. 109 requires the recognition of deferred tax assets and liabilities for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In addition, SFAS No. 109 requires the recognition of future tax benefits, such as net operating loss carry-forwards, to the extent that realization of such benefits is more likely than not. The amount of deferred tax liabilities or assets is calculated using tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts more likely than not to be realized.
-------------------------------------------------------------------------------- In determining the quarterly provision for income taxes, the Company uses an annual effective tax rate based on expected annual income and statutory tax rates. Significant discreet items are separately recognized in the income tax provision in the quarter in which they occur. The determination of the Company's provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items.
Net Income (Loss) Per Common Share
The Company computes net income (loss) per share in accordance with SFAS No. 128, Earnings per Share and SEC Staff Accounting Bulletin No. 98 ("SAB 98"). Under the provisions of SFAS No. 128 and SAB 98, basic net income (loss) per share is calculated by dividing net income (loss) available to common shareholders for the period by the weighted average number of common shares outstanding during the period.
Property and Equipment
Property and equipment are stated at cost, net of accumulated depreciation and amortization. Property and equipment are depreciated using straight-line and accelerated methods over the estimated useful lives of the assets, which range from five to thirty nine years.
Changes from the Prior Period
We have not made any material changes to our critical accounting estimates or assumptions or the judgments affecting the application of those estimates or assumptions.
Results of Operations
Comparison of 2nd Quarter 2008 and 2007
Revenues. Revenues decreased from $14,434,376 for the three months ended June 30, 2007, to $13,265,926 for the three months ended June 30, 2008, which represents a decrease of 8.1%. We had no revenues for emergency services in either of the second quarters of 2008 or 2007. Our emergency services revenues are significantly affected by the presence or absence of natural disaster related work such as tornados, hurricanes and other windstorms.
Operating Expenses. Operating expenses for the three months ended June 30, 2008, were $15,790,101, or 119% of revenue, compared to $15,447,348, or 107% of revenue, for the three months ended June 30, 2007. Cost of sales for the three months ended June 30, 2008 as a percentage of revenue increased from 83% of revenues to 100% of revenues due to increases in the cost of fuel, materials, and subcontractor expenses. Selling, general and administrative expenses decreased to $2,507,128 in the second quarter of 2008 compared to $3,343,658 in the second quarter of 2007 primarily as a result of cost control initiatives and a reduction in manpower, corporate overhead, and travel expenses associated with the corporate aircraft.
Income (Loss) before Provision for Income Taxes. Operating income (loss) before taxes for the quarter ended June 30, 2008, was $(2,481,421) compared to $(899,073) for the quarter ended June 30, 2007. The decrease in our 2008 operating income was attributable to higher operating expenses of $15,790,101 and lower sales volume.
Net Income (Loss). The net loss for the quarter ended June 30, 2008, was $(1,886,921), compared to a net loss of $(743,319) for the quarter ended June 30, 2007. These results were influenced by the factors identified above under Revenues and Operating Expenses.
-------------------------------------------------------------------------------- Comparison of six months ended June 30, 2008 and 2007 Revenues. Revenues decreased from $24,386,618 for the six months ended June 30, 2007 to $24,151,450 for the six months ended June 30, 2008, which represents a decrease of 0.1%. We had no revenues for emergency services in either the first half of 2008 or 2007. Our emergency services revenues are significantly affected by the presence or absence of natural disaster related work such as tornados, hurricanes and other windstorms.
Operating Expenses. Operating expenses for the six months ended June 30, 2008, were $28,431,758, or 118% of revenue, compared to $28,546,346, or 117% of revenue, for the six months ended June 30, 2007. Cost of sales for the six months ended June 30, 2008 as a percentage of revenue increased from 86% of revenues to 93% of revenues due to increases in the cost of fuel, materials, and subcontractors. Selling, general and administrative expenses decreased to $5,939,788 in the first six months of 2008 compared to $7,445,057 in the first six months of 2007 primarily as a result of a decrease in corporate overhead, manpower, and operating and travel expense associated with the corporate aircraft.
Income (Loss) before Provision for Income Taxes. Operating income (loss) before taxes for the six months ended June 30, 2008, was $(4,225,440) compared to $(4,016,115) for the six months ended June 30, 2007. The decrease in our 2008 operating income was attributable to higher cost of sales and lower sales volume partially offset by lower selling, general, and administrative expenses of $5,939,788.
Net Income (Loss). The net loss for the six months ended June 30, 2008, was $(3,078,854), compared to a net loss of $(3,359,211) for the six months ended June 30, 2007. These results were influenced by the factors identified above under Revenues and Operating Expenses.
Off-Balance Sheet Arrangements
We have operating leases and guaranties that are not accrued on the balance sheet. The payments due under the leases are disclosed in footnote 16 of our consolidated financial statements, and the contingent loan guaranty is disclosed below and in footnote 17 of our consolidated financial statements. Other than the lease and note guaranty, we have no contractual commitments that do not appear on the balance sheet as of June 30, 2008.
Seasonality
The construction industry, including the roofing industry, is influenced by seasonal factors, as construction activities are usually lower during winter months than other periods. We attempt to increase winter productivity by concentrating our business in the southern half of the United States and by expanding our sales and marketing efforts to control project scheduling. Nevertheless, our revenues and operating results potentially will be lower in the first and fourth quarters.
The roofing industry is also affected by natural disasters, such as tornadoes, hurricanes and other windstorms. Because of the need for immediate repairs and since the costs of repair are typically covered by insurance, the margins are higher on disaster-related work than on discretionary work. Since disaster-related work requires an immediate response, we maintain a capacity that is scalable to respond to these needs. The absence of natural disasters will result in lower revenues and higher relative administrative expenses per revenue dollar.
Commitments and Contingencies
In regard to the sale of assets and liquidation of Zenex Communications in 2002, we are a guarantor on notes with an outstanding balance of $128,278 at June 30, 2008, with approximately $6,353 in monthly principal and interest payments. The purchaser is currently in default on the required payment obligations.
We warrant our work in the normal course of business. In management's opinion, there were no outstanding claims which would have a material effect on our operations or financial position.
Information regarding our legal proceedings are discussed later in this document under, "Part II, Item 1. Legal Proceedings".
-------------------------------------------------------------------------------- Liquidity and Capital Resources Total assets increased from $32,906,610 to $33,234,627, total liabilities increased from $28,925,422 to $32,473,845, and shareholders' equity decreased from $3,981,188 to $760,782 from December 31, 2007, to June 30, 2008. The increase in assets comes from higher receivables and a deferred tax asset along with higher prepaid expenses. The increase in liabilities results primarily from an increase in our accounts and subcontract payables, advances on line of credit, accrued liabilities, and a long-term payable to Tim Aduddell.
Our net cash at June 30, 2008, is $(10,189). We are primarily using funds provided by operations and working capital to finance our operations along with some additional capital that was generated through advances on new lines of credit. For the six months ended June 30, 2008, net cash used by operating activities was $2,897,484 compared to $499,022 provided by operations for the six months ended June 30, 2007. Net cash used by investing activities during this period was $102,149 compared to $462,555 used by investing activities for the six months ended June 30, 2007. Net cash provided by financing activities during this period was $1,977,698 compared to $36,467 used by financing activities for the six months ended June 30, 2007. At June 30, 2008, we had negative working capital of $11,907,945 compared to a negative working capital at December 31, 2007 of $9,628,097.
We have a $10,000,000 revolving line of credit that matured on December 15, 2007. The Company is in default on this primary line of credit loan and is operating under a temporary forbearance agreement through August 15, 2008. The line bears interest at 3.375% over the published LIBOR Rate and is secured by all accounts, property and equipment. At June 30, 2008, the advance on the line of credit was $8,988,201 compared to an advance of $9,151,283 at December 31, 2007.
We have a $1,005,363 revolving line of credit. The line bears interest at 1% over Wall Street Journal prime (currently 6%) and is secured by real estate owned by Aduddell Holdings, Inc., a corporation wholly-owned by Tim Aduddell, a majority shareholder. The line matures on September 19, 2008, and the outstanding balance at June 30, 2008 was $1,005,363 compared to a balance of $0 at December 31, 2007.
We also have an additional $1,000,000 revolving line of credit. The line bears interest at 5.59% and is secured by certificates of deposit owned by Tim Aduddell. The line matures on July 27, 2008, and the outstanding balance at June 30, 2008 was $450,000 compared to no balance at December 31, 2007.
The promissory note and two revolving lines of credit issued to us by Tim Aduddell are attached as exhibits to this report, and their terms are incorporated herein by reference.
At June 30, 2008, we had $2,022,519 of long-term debt as compared to $1,199,527 of long-term debt at December 31, 2007. The increase in the amount of long-term debt outstanding was due to an increase of a long-term payable due to Tim Aduddell.
Adequacy of Current Liquidity
We presently meet all of our funding needs for ongoing operations with internally generated cash flows from operations, existing cash and short-term investment balances, lines of credit, and additional privately-placed term debt or equity. We are unable to draw on our primary existing line of credit at the present time and are presently operating under a temporary forbearance agreement through August 15, 2008. We continue to actively pursue alternative financing plans to meet our requirements that include, but are not limited to, additional equity sales or debt financing under appropriate market conditions, allegiances or partnership agreements, or other business transactions which could generate adequate working capital. To date, the only sources of capital available to us have been loans made by Tim Aduddell, the Company's President and Chief Executive Officer. There is no guarantee that we will receive sufficient funding in the near future to either (i) sustain operations and implement any future business plans, or (ii) have sufficient funds to pay off our primary line of credit when our forbearance agreement terminates on August 15, 2008 or any other line of credit at maturity. If we cannot timely find alternative sources of financing, we may be forced to seek protection under Federal bankruptcy laws.
Posts: 274 | From: Germantown, MD | Registered: Sep 2005
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posted
Andreas, plus I've been in this game long enough to understand the dynamics of hype and the penny stock market. Fundamentals mean nothing, all that matters is the hype, and ADDL is pefectly positioned for the hype and run. The contracts they will receive from Gustav and Hannah are no joke. Katrina got them 100M in contracts
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Doesn't seem to be too much hype with the two tropical storms/ hurricanes projected to hit the States in the next coming weeks.
Posts: 234 | From: Poughkeepsie NY | Registered: Jun 2004
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