SOURCE: National Storm Management, Inc.

January 09, 2007 08:00 ET

National Storm Management Reports Third Quarter Results

CHICAGO, IL -- (MARKET WIRE) -- January 9, 2007 -- National Storm Management, Inc. (PINKSHEETS: NSMG) reported today results for its third quarter ended September 30, 2006. Revenues for the third quarter increased 37 percent or $811,000 to $3.0 million, compared to $2.2 million in the second quarter ended June 30, 2006.

The company posted a net loss of $694,153 or $0.01 per share based on 66.7 million shares compared to a net loss of 481,848, or $0.01 per share based on 61.2 million shares in the previous quarter. During the third quarter the company incurred significant non-recurring professional fees related to the filing of a Form SB-2 registration statement with the SEC and hiring a new chief financial officer. After accounting for these fees, the third quarter loss is consistent with the second quarter results.

As was the case in the second quarter, third quarter losses are attributed to unforeseen market conditions related to cost of materials and lack of supply on previously contracted projects in Florida, the company's largest operating location. This backlog of projects in Florida was eliminated in the beginning of the fourth quarter and the company expects to restore gross margins to previous levels going forward.

"We remain focused on upgrading our accounting system and significantly improving our financial reporting efficiency," said Scott Knoll, chief financial officer.

About National Storm Management, Inc.

National Storm Management (PINKSHEETS: NSMG) is a national construction company headquartered in Glen Ellyn, Illinois and provides storm restoration services in six states. Its operating affiliates include: ABC Exteriors (Illinois and Indiana); Pinnacle Roofing (Florida and Louisiana); WRS, Inc. (Minnesota); and First Class Roofing and Siding (Ohio). The company and its affiliates are recognized by all major insurance companies such as State Farm, Allstate, Farmers and others for storm related claims. The company is a member of the National Roofing Contractors Association (NRCA) and the Better Business Bureau. More information is available at www.nationalstorm.com.

Forward-Looking Statements

Certain statements included in this press release may constitute forward-looking statements. These forward-looking statements relate to, among other things, the expectation of gross margins to return to previous levels, statements about future market conditions, supply and demand conditions, and other expectations, intentions and plans contained in this press release that are not historical fact. When used in this press release, the words "plan," "expect," "believe," and similar expressions generally identify forward-looking statements. These statements reflect our current expectations and actual results may materially differ from such expectations based on a large number of risks and uncertainties, including, but not limited to, weather, the company's ability to successfully implement its growth strategy, the company's ability to maintain adequate liquidity and work out arrangements with creditors on advantageous terms, supply shortages in labor or materials, and general economic conditions in the geographic regions of the United States where the company does business. The company assumes no duty to update any forward-looking statements.


                    National Storm Management, Inc.
                      CONSOLIDATED BALANCE SHEET
                         September 30, 2006


                                                Unaudited       Audited
                                              -------------  -------------
                                                  2006           2005
                                              September 30,  December 31,
                                              -------------  -------------
ASSETS
Current assets :
         Cash                                 $     243,888  $      41,150
         Accounts receivable (less respective
          allowances)                               825,461        664,984
         Inventories                                133,777        165,076
         Management & Salesman Advances              40,719         70,010
         Cost in excess of billings                 374,401        554,410
         Prepaid Expenses                            48,621         45,223
         Other current assets                       171,634        180,114
                                              -------------  -------------
           Total current assets               $   1,838,501  $   1,720,967

Property, plant and equipment                 $     470,780  $     467,788
         Less: Accumulated depreciation and
          amortization                              232,187        159,836
                                              -------------  -------------
           Property, plant and equipment - net      238,593        307,952

Goodwill                                              5,000          5,000
Deferred tax asset - net of valuation
 allowance                                          848,727        587,727
Other                                                62,674         97,004
                                              -------------  -------------
           Total assets                       $   2,993,495  $   2,718,650
                                              -------------  -------------


LIABILITIES AND STOCKHOLDER EQUITY
Current liabilities :
         Current maturities of long-term debt $   2,060,908  $   1,118,275
         Accounts payable - trade                 1,175,923      1,654,689
         Other current liabilities                   50,679         76,254
         Billings in excess of costs                609,892        789,281
                                              -------------  -------------
           Total current liabilities          $   3,897,402  $   3,638,499

Non-current Liabilities :
         Term loan, net of current portion    $      21,885  $      34,891
         Other long-term obligations                107,500              -
                                              -------------  -------------
           Total long-term debt               $     129,385  $      34,891

Long-term deferred tax liability              $           -  $           -
Commitments and contingencies                             -              -
           Total liabilities                  $   4,026,787  $   3,673,390
                                              -------------  -------------

Stockholders' Equity :

Common Stock 66,692,194 and 49,113,903 issued
 and outstanding                                     66,692         49,114
Additional paid-in capital                        2,835,180      1,142,484
Retained earnings (deficit)                      (3,935,164)    (2,146,338)
           Total Liabilities and
            Stockholders' Equity              $   2,993,495  $   2,718,650
                                              -------------  -------------


*These financial statements and notes thereto present fairly, in all
material respects, the financial position of the company and the results of
its operations and cash flows for the periods presented, in conformity with
accounting principles generally.



                    National Storm Management, Inc.
                 CONSOLIDATED STATEMENT OF OPERATIONS
                         September 30, 2006
                             Unaudited


                        Three Months Ended          Nine Months Ended
                           September 30,               September 30,
                        2006          2005          2006          2005
REVENUES:
Net trade sales     $  3,011,186  $  3,864,564  $  7,505,748  $ 12,710,295
Other Revenue                  0  $          -             0             0
                    ------------  ------------  ------------  ------------
                    $  3,011,186  $  3,864,564  $  7,505,748  $ 12,710,295
                    ------------  ------------  ------------  ------------

OPERATING COST AND
 EXPENSES:
Cost of product
 sold               $  2,078,709  $  2,578,563  $  4,580,143  $  8,155,086
Selling,
 administrative,
 and general        $  1,583,366  $  1,946,103     4,827,210     5,435,548
Depreciation and
 amortization       $     25,509  $     27,433  $     78,178  $    157,954
                    ------------  ------------  ------------  ------------
                    $  3,687,584  $  4,552,099  $  9,485,531  $ 13,748,588
                    ------------  ------------  ------------  ------------

INCOME (LOSS) FROM
 OPERATIONS         $   (676,398) $   (687,535) $ (1,979,783) $ (1,038,293)

Interest expense    $    (20,435) $     (9,966)      (71,463)       (2,381)
Costs associated
 with reorganization
 and merger                    -             -             -             -
Other income (loss) $      2,755  $          -  $      3,139  $    (12,664)
                    ------------  ------------  ------------  ------------

Income (loss)
 before income
 taxes and
 extraordinary gain $   (694,078) $   (697,501) $ (2,048,107) $ (1,053,338)
Provision (Benefit)
 for income taxes   $         75  $          -  $   (259,282) $          -
                    ------------  ------------  ------------  ------------

NET INCOME (LOSS)   $   (694,153) $   (697,501) $ (1,788,825) $ (1,053,338)
                    ============  ============  ============  ============

Basic Earnings per
 Share:
Weighted average
 shares             $      (0.02) $      (0.01) $      (0.03) $      (0.01)
Effective of
 dilutive shares            0.00             -          0.01             -
                    ------------  ------------  ------------  ------------
Net earnings (loss) $      (0.01) $      (0.01) $      (0.02) $      (0.01)
                    ============  ============  ============  ============


*These financial statements and notes thereto present fairly, in all
material respects, the financial position of the company and the results of
its operations and cash flows for the periods presented, in conformity with
accounting principles generally.



                    National Storm Management, Inc.
            CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                         September 30, 2006
                             Unaudited

                                                              Additional
                                             Common Stock      Paid-in
                                  Shares       Par Value       Capital
                              ============== ============== ==============
Balance, January 1, 2004           2,575,160 $       25,752
       Net income
       Dividends paid - owners
        discretionary draw
       Common stock issued
        in connections with
        new entities               8,248,330          8,248
                              ============== ============== ==============
Balance, December 31, 2004        10,823,490 $       34,000
       Issuance of stock
        options for
        professional fees          6,800,000          6,800        746,200
       Acquisition of assets
        of N.S.M. Inc.             6,000,000          6,000         (1,000)
       Common stock issued         2,313,903          2,314        397,284
       Net income (loss)
                              ============== ============== ==============
Balance, December 31, 2005        25,937,393 $       49,114 $    1,142,484
       Issuance of stock
        options for
        professional fees                  -              -              -
       Common stock issued        17,578,291         17,578      1,692,696
       Net income (loss)
                              ============== ============== ==============
Balance, September 30, 2006       43,515,684 $       66,692 $    2,835,180



                                 Retained     Stockholders'
                                 Earnings        Equity
                               =============  =============
Balance, January 1, 2004       $    (314,052) $    (288,300)
       Net income                     65,952         65,952
       Dividends paid - owners
        discretionary draw          (247,915)      (247,915)
       Common stock issued
        in connections with
        new entities                  (8,248)             -
                               =============  =============
Balance, December 31, 2004     $    (504,263) $    (470,263)
       Issuance of stock
        options for
        professional fees                           753,000
       Acquisition of assets
        of N.S.M. Inc                      -          5,000
       Common stock issued                 -        399,598
       Net income (loss)          (1,642,075)    (1,642,075)
                               =============  =============
Balance, December 31, 2005     $  (2,146,338) $    (954,740)
       Issuance of stock
        options for
        professional fees                  -              -
       Common stock issued                 -      1,710,274
       Net income (loss)          (1,788,825)    (1,788,825)
                               =============  =============
Balance, September 30, 2006    $  (3,935,163) $  (1,033,291)


*These financial statements and notes thereto present fairly, in all
material respects, the financial position of the company and the results of
its operations and cash flows for the periods presented, in conformity with
accounting principles generally.



                   National Storm Management, Inc.
                CONSOLIDATED STATEMENT OF CASHFLOWS
                        September 30, 2006
                             Unaudited


                                                     Nine Month Ended
                                                       September 30,
                                                --------------------------
                                                    2006          2005
                                                ------------  ------------
CASH FLOWS FROM OPERATING ACTIVITIES :
Net income (loss)                               $ (1,788,825) $ (1,022,248)

Adjustments to reconcile net income (loss) to
 net cash provided by (used for) operating
 activities :
    Depreciation, and amortization                    78,178       157,954
    Allowance for doubtful accounts                        -             -
    Deferred tax benefit                            (261,000)            -
    Loss (Gain) on sale of capital equipment           4,649
    Stock and stock options issued for
     professional fees                                18,175       253,000
    Forfeiture of security deposits                   40,309
Changes in components of working capital :
    (Increase) decrease in accounts receivable -
     net                                            (160,477)      422,217
    (Increase) decrease in inventories                31,299       279,523
    (Increase) decrease in advances                   29,291      (117,605)
    Increase (decrease) in cost in uncompleted
     contracts                                           620    (1,024,814)
    (Increase) decrease in other current assets        5,082      (110,586)
    Increase (decrease) in accounts payable         (478,766)      264,652
    Increase (decrease) in other current
     liabilities                                     (25,575)       29,633
    Other, net                                                           -
                                                              ------------
          Net cash provided by (used for)
           operating activities                 $ (2,507,040) $   (868,274)
                                                ------------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES :
    Capital expenditures                        $    (26,218) $    (50,513)
    Proceeds from dispositions of property,
     plant and equipment                              12,750             -
    Increase in security deposits                     (5,980)
    Increase (decrease) in other long-term
     liabilities                                     107,500      (500,000)
    Business acquisition                                   -      (100,000)
                                                ------------  ------------
          Net cash provided by (used in)
           investing activities                 $     88,052  $   (650,513)
                                                ------------  ------------

CASH FLOWS FROM FINANCING ACTIVITIES :
    Distributions paid owner                    $          -  $          -
    Increase (decrease) in current portion of
     notes payable                              $    (57,367)
    Issuance of common stock                       1,692,099       569,120
    Proceeds from term loan                        1,000,000
    Increase (decrease) in term loan                 (13,006)      (24,155)
    Increase (decrease) in Note payable                    -     1,000,000
                                                ------------  ------------
          Net cash provided by (used in)
           financing activities                 $  2,621,726  $  1,544,965
                                                ------------  ------------

NET INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS                                    $    202,738  $     26,178
Cash and cash equivalents, beginning of period        41,150        72,643
                                                ------------  ------------
Cash and cash equivalents, end of period             243,888        98,821
                                                ============  ============

Cash interest paid for the periods presented :  $     71,463  $     12,347
                                                ============  ============
Cash taxes paid for the periods presented :     $          -  $          -


*These financial statements and notes thereto present fairly, in all
material respects, the financial position of the company and the results of
its operations and cash flows for the periods presented, in conformity with
accounting principles generally.

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