SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported):
April 17, 2007
GALES INDUSTRIES INCORPORATED
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 000-29245 20-4458244
-------- --------- ----------
State of Commission IRS Employer
Incorporation File Number I.D. Number
1479 North Clinton Avenue, Bay Shore, NY 11706
----------------------------------------------
Address of principal executive offices
Registrant's telephone number: (631) 968-5000
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 8.01 Other Events.
On April 16, 2007 Gales Industries Incorporated, a Delaware corporation
(the "Company") closed the acquisition (the "Sigma Acquisition") of all of the
issued and outstanding capital stock of Sigma Metals, Inc. Additional
information regarding the Sigma Acquisition can be found in the Company's press
release filed herewith as Exhibit 99.1, as well as the Company's Current Reports
on Form 8-K filed with the Securities and Exchange Commission January 3, 2007
and April 17, 2007.
Item 9.01 Financial Statements and Exhibits.
Exhibits.
Exhibit No. Description
----------- -----------
99.1 Press Release issued by the Company on April 17, 2007
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: April 17, 2007
GALES INDUSTRIES INCORPORATED
By: /s/ Peter Rettaliata
-------------------------
Peter Rettaliata
Chief Executive Officer
3
Exhibit Index
Exhibit No. Description
----------- -----------
99.1 Press Release issued by the Company on April 17, 2007
4
Exhibit 99.1
Gales Industries Completes Acquisition of Sigma Metals
BAY SHORE, NY -- April 17, 2007 -- Gales Industries Incorporated (OTCBB: GLDS)
today announced that it has completed the acquisition of Sigma Metals, Inc., a
strategic metals distributor based in Deer Park, Long Island, NY. Now a
wholly-owned subsidiary, Sigma will operate as a new platform company for Gales.
Sigma had trailing 12-month revenues of approximately $18 million. Sigma will
continue to operate from its existing location and has retained all key
management and personnel in accordance with the purchase agreement.
"We are very pleased to have completed our second acquisition. With the addition
of Sigma Metals, Gales Industries now has combined trailing revenues in excess
of $50 million," stated Peter D. Rettaliata, Gales' President and Chief
Executive Officer. "More important, Sigma Metals brings numerous benefits to
Gales as it relates to our pursuit of growth, margin enhancement, and expanded
services to our customers. Simply, we are both more profitable and more relevant
to our customers. In conjunction with Air Industries Machining Corp., our
primary platform business engaged in the manufacturing of flight safety and
other critical aviation components, Sigma Metals establishes a second platform
for dealing with the supply of a major cost component, specialty metals."
The purchase price to acquire Sigma Metals was $5.0 million plus an amount, yet
to be finalized, equal to Sigma's earnings for the period from January 1, 2006
until the date of closing, April 16, 2007. Approximately $4.3 million of the
purchase price was paid in cash and the balance was paid through a combination
of restricted stock and debt. The debt to the sellers will be adjusted to
include, upon finalization, the amount owed related to Sigma's earnings for the
aforementioned period. At the time of closing, Sigma had approximately $900,000
in institutional debt and $250,000 due for advances from its shareholders. Gales
is in the process of finalizing an expansion of its credit arrangements with PNC
Bank which will become the primary lender to Sigma, replacing its current
institutional lender.
To facilitate the acquisition, Gales raised approximately $4.9 million in gross
proceeds through a private placement of its Series B Convertible Preferred
Stock. This private placement is ongoing and Gales anticipates raising up to an
additional $2.1 million through this private placement. The Series B Convertible
Preferred Stock has not been and will not be registered under the Securities Act
of 1933, and may not be offered or sold in the United States without
registration and applicable exemption from registration requirements.
In connection with the acquisition, Gales Industries entered into employment
agreements with the principals of Sigma Metals. George Elkins will continue to
serve Sigma Metals as its Chief Executive Officer, Carole Tate as its President,
and Joseph Coonan as its Vice President.
Sigma Metals is a specialty distributor of strategic metals, primarily aluminum,
stainless steels of various grades, titanium and other exotic end user specified
materials. Sigma's products are sold to both aerospace/defense contractors as
well as commercial accounts throughout the U.S. and numerous international
markets. Customers include the world's largest aircraft manufacturers,
subcontractors, original equipment manufacturers and various government
agencies.
Legal representation for Gales Industries in this transaction was provided by
Eaton & Van Winkle LLP of New York, NY. Legal representation for Sigma Metals in
this transaction was provided by Berkman, Henoch, Peterson & Peddy, P.C. of
Garden City, NY.
ABOUT GALES INDUSTRIES INCORPORATED
Gales Industries Incorporated (OTCBB: GLDS) is a holding company established to
engage in the consolidation of manufacturers, engineering integrators and
related service providers to the aerospace/defense and commercial aviation
industries. The Company is focused on flight safety and other critical
componentry. The Company's first acquisition was of Air Industries Machining
Corp., a leading aerospace/defense manufacturer and engineering integrator based
in Bay Shore, Long Island, NY. Consolidation opportunities include companies
operating within highly synergistic disciplines of manufacturing, technical
services and strategic products distribution. The Company's strategy and
attendant tactical plan is to execute its consolidation principally amongst Tier
III, IV and V aerospace/defense subcontractors. Gales offers a tailored exit
strategy or management continuity strategy in exchange for qualified
acquisitions, and targets technically superior middle market organizations with
revenues of up to $100 million annually. Information on the Company and its
products may be found online at www.airindmc.com.
# # #
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, firm backlog, projected backlog,
potential future results and acquisitions, 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, projections and forecasts made
by management with respect to the Company's critical accounting policies, firm
backlog, projected backlog, regulatory delays, government funding and budgets,
matters pertaining to potential and pending acquisitions subject to and after
closings, and other factors, including results of financial audits and general
economic conditions, not within the Company's control. Certain of the Company's
forward looking statements, with the projected backlog in particular, are
formulated based on management's extensive industry experience and understanding
and assessment of industry trends, customer requirements, and related government
spending. Projected backlog may be subject to variability and may increase or
decrease at any time based on a variety of factors, including but not limited to
modifications of previously released orders, acceleration of orders under
general purchase agreements, etc. 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 circumstances.
Contact:
Jordan M. Darrow
Darrow Associates, Inc.
631-367-1866
jdarrow@darrowir.com