SOURCE: Sub Surface Waste Management of Delaware Inc.

May 05, 2006 09:45 ET

SSWM Second Quarter Revenue Surges Past Prior Year

Revenue and Gross Profit Surge Drives Assets, Cash and Working Capital Higher

CARLSBAD, CA -- (MARKET WIRE) -- May 5, 2006 -- Sub-Surface Waste Management of Delaware, Inc. (OTC BB: SSWM) today announced financial results for the second quarter of fiscal year 2006 ended March 31, 2006. Compared to the second quarter of last fiscal year, revenues surged by 18%, due primarily to the contracts for the State of Puebla, Mexico while net working capital increased 171%, total shareholder equity rose by 99% and operating expenses rose as business development continued in Mexico.

For The Six Months and Three Months Ended March 31, 2006 Compared To The Six and Three Months Ended March 31, 2005.

The Company had revenues of $367,420, and $305,114 during the six months and three months ended March 31, 2006, an increase of 18% and 23%, respectively as compared to $312,462 and $248,381 of revenue for the same period in 2005.

Revenues for the six months and three months ended March 31, 2006 consisted primarily of engineering services, construction, and bio-remediation of hydro-carbons in contaminated soil for projects in Mexico. Gross profit for the six months and three months ended March 31, 2006 was $115,775 and $143,214 or 31% and 46% of sales compared to $138,591 and 132,075 or 44% and 53% of sales for the corresponding period in fiscal 2005. The increase in revenue is due primarily to the contracts for the State of Puebla, Mexico.

Selling, general and administrative ("SG&A") expenses for the six months and three months ended March 31, 2006 totaled $1,216,411 and $761,549 respectively, compared to $747,660, and $360,110 for the same periods in fiscal 2005. SG&A expenses for the six months and three months ended March 31, 2006 consisted of occupancy, payroll, accounting, and consulting services. The 62% increase and the 111% increase in SG&A expenses were attributed to licensing agreement fees, significant increases in consulting expenses due to contract with an affiliate and consulting fees related to projects in Mexico, a $50,000 increase in legal fees, and commission expenses.

The Company incurred a net loss of $1,137,013 and $632,295, for the six months and three months ended March 31, 2006, had negative cash flows from operations of $526,147 for the six months ended March 31, 2006 compared to a net loss of $681,446, and $259,463 for the six months and three months ended March 31, 2005, had negative cash flows from operations of $691,624 for the six months ended March 31, 2005. Basic and diluted net loss per share was $(0.02) and $(0.01) for the six months and three months ended March 31, 2006, respectively, compared to a loss of $(0.02) and $(0.01) for the six months and three months ended March 31, 2005.

As of March 31, 2006, the Company had an accumulated deficit of $ 12,879,089 compared to $10,795,802 as of March 31, 2005. The shareholders equity as of March 31, 2006 was $701,272 compared to $552,965 as of September 30, 2005.

The Company is anticipating that revenues in fiscal 2006 will exceed revenues for fiscal 2005 through expansion of its operations in Mexico. Although based on the current financial condition of the Company, additional capital will be required in order for the Company to maintain its ongoing operations.

Liquidity and Capital Resources.

Cash totaled $155,531 as of March 31, 2006. During the six months ended March 31, 2006, the Company raised $150,000 net of $5,000 placement fees from issuance of 4,150,000 shares of restricted and unrestricted common stock, including the sale of 150,000 shares of unrestricted common stock to Fusion Capital Fund II, LLC.

As of March 31, 2006 the Company had working capital of $528,002, compared to a working capital of $194,594 as of March 31, 2005. Current assets as of March 31, 2006 of $1,287,501 include $670,105 due from affiliates compared to current assets of $1,149,652 including $553,445 due from affiliates for the period ended March 31, 2005.

To date, the Company has financed its operations principally through private placements of equity securities and debt. The Company believes that it will raise sufficient cash to continue its operations through September 30, 2006, and anticipates that cash generated from anticipated private placements and projected revenues during the next quarter of fiscal 2006 will enable it to fulfill cash needs for 2006 operations.

The Company has approximately $5,885.000 remaining to be used on its equity financing agreement with Fusion Capital. However, in order to use this financing, the stock price must be $0.10 or better for a specified period of time.

SSWM CEO Bruce Beattie commented, "We had a great second quarter as our higher gross profit margins helped offset increased business development costs related to future business in Mexico. The Company is undertaking new assessment and remediation contracts in Puebla and Veracruz and is working to complete the contracting paperwork for environmental emergency response centers located throughout the state of Veracruz. With the support of two state governors in Mexico for substantial emergency response and on-going remediation work, we expect to surpass 2005 revenues and look forward to a prosperous year in 2006."

The consolidated financial data below has been derived from the Company's Financial Statements for the period of 3/31/2006, 3/31/2005 and 9/30/2005 as shown. For additional information and a discussion of risk factors, please see the SSWM current 10Q & past 10K reports at www.sec.gov.

                                                               For the 12
                                    For the 6     For the 6      months
                                     months        months        ending
Consolidated Statement of Losses  ending March  ending March    September
                                    31, 2006      31, 2005      30, 2005
                                  (UNAUDITED)   (UNAUDITED)     (AUDITED)
                                  ------------  ------------  ------------
Revenues                          $    367,420  $    312,462  $  1,094,775
Cost of Goods Sold                $    251,645  $    173,871  $    807,683
Gross Profit (Loss)               $    115,775  $    138,591  $    287,092

Operating Expenses - SGA          $  1,216,411  $    747,660  $  1,762,396
Operating Expenses - Depreciation $      9,527  $      4,700  $     13,233
Net Income (Loss) from Operations $ (1,110,163) $   (613,769) $ (1,775,629)
Other Income (expense):
  Interest Income                 $        376  $        158  $      1,845
  Interest Expense                $    (27,226) $    (67,835) $   (141,027)
  Total other Income              $    (26,850) $    (67,677) $   (139,182)
Net Income (loss) before Income
 taxes                            $ (1,137,013) $   (681,446) $ (1,627,719)
Provision for income taxes
Net income (loss)                 $ (1,137,013) $   (681,446) $ (1,627,719)
Net loss per common shares
 outstanding                      $      (0.02) $      (0.02) $      (0.04)
Weighted average shares
 outstanding                      $ 67,437,728  $ 38,116,620  $ 43,249,462



                                      As of         As of         As of
Balance Sheet Items                 3/31/2006     3/31/2005    09/30/2005

Total Current Assets               $  1,287,501  $  1,149,652  $  1,194,608
Total Current Liabilities          $    759,499  $    955,058  $    763,798
Net Working Capital                $    528,002  $    194,594  $    430,810

Total Assets                       $  1,460,771  $  1,308,144  $  1,316,763
Total Liabilities                  $    759,499  $    955,058  $    763,798
Total Shareholder Equity           $    701,272  $    353,086  $    552,965
About Sub-Surface Waste Management

Sub-Surface Waste Management Inc. is a majority owned subsidiary of U.S. Microbics, Inc. (OTC BB: BUGS) and provides comprehensive civil and environmental engineering project management services including specialists to design, permit, build and operate environmental waste clean-up treatment systems using conventional, biological and filtration technologies. SSWM is capitalizing on its patented technologies registered in Mexico with SEMARNAT a Federal regulatory agency overseeing environmental compliance nationwide.

Investors and media contact Bruce Beattie at 760/918-1860, ext. 105 or bbeattie@bugsatwork.com; or learn about the company by visiting its Web site at www.subsurfacewastemanagement.com.

The information contained in this press release includes forward-looking statements. Forward-looking statements usually contain the words "estimate," "anticipate," "believe," "expect" or similar expressions that involve risks and uncertainties. These risks and uncertainties include the company's status as a startup company with uncertain profitability, need for significant capital, uncertainty concerning market acceptance of its products, competition, limited service and manufacturing facilities, dependence on technological developments and protection of its intellectual property. The company's actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences are discussed more fully in the "Risk Factors," "Management's Discussion and Analysis or Plan of Operation" and other sections of the company's Form 10-KSB and other publicly available information regarding the company on file with the Securities and Exchange Commission. The company will provide you with copies of this information upon request.

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