MAPLE SHADE, N.J., July 7, 2004 (PRIMEZONE) -- On June 30, 2004, Harry J. Santoro, the President of Gavella Corp. (OTCBB:GVLA), made the following report to shareholders at Gavella's annual meeting:
We are currently engaged in two lines of business: owning and
operating income producing real estate, and making investments in and
providing consulting services to other businesses.
2003 was a transitional year for our real estate business. We own a
31% controlling interest in a 124-unit apartment complex. We
experienced poor operating results in the first quarter of 2003, and
as a result, changed the management. We invested over $200,000 in
renovations. By July, our operations had improved substantially. Our
occupancy was around 99%, rental rates were raised 5%, and our cash
flow was up significantly, so much so we were able to refinance our
mortgage debt in November. The property was appraised at $5,575,000
allowing us to borrow $4,000,000 from New York Community Bank. The
new first mortgage bears a rate of interest at 4.875% fixed for the
first seven years. We used the proceeds to pay off our first and
second mortgage. The remaining proceeds of $336,776 were used to
reduce other liabilities and to increase our cash reserves.
As a result of the management changes and the refinancing of our debt
at lower rates we expect to report significantly improved operating
results in 2004.
We also invest in and provide consulting services to other companies.
In 2003 we invested approximately $150,000 in cash and provided
consulting services valued in excess of $75,000 to InteliSys Aviation
Systems of America, Inc. (OTCBB:IYSA). In return we received secured
promissory notes totaling in excess of $201,000 and common stock as
additional compensation for the financing provided and for services
rendered. As of June 30, 2004, approximately $115,000 in principal
had been repaid. At year end we owned 685,000 shares of InteliSys
common stock and have options to acquire 155,000 shares of restricted
stock for $.10 per share. InteliSys is in the business of providing
software and services to the aviation industry.
Our plans or the future are as follows:
- Own and operate our apartment complex so as to provide a stable and
predictable cash flow to sustain our operations,
- Take an opportunistic approach by buying, selling or investing in
real estate or other business ventures,
- Manage our capital structure to provide for growth in earnings and
cash flow with sufficient liquidity to take advantage of business
opportunities as they rise.
To further these goals, we shall:
1) Raise additional capital through debt and/or equity offerings to
strengthen our capital structure.
We recently completed the sale of 675,000 shares of common stock
and raised $67,500. We plan to utilize some of the proceeds for
shareholder and investor relations with the balance to be used for
general corporate purposes.
We currently plan to raise $125,000 in new capital for investment
in new businesses.
2) Reinvest some of our internally generated cash flow back into our
real estate business in order to increase our cash flow from
operations and enhance our property's long-term value.
3) Make new investments and/or sell off some or all of our existing
investments with a goal of developing new sources of profits and
cash flow.
We plan to make new investments in or acquire small businesses
where we believe there is a possibility of earning 20% on our
capital investment.
We shall also invest some of our surplus cash on hand in public
companies, leveraged bonds, or structured finance agreements
seeking to earn around 15% on invested capital.
Certain statements made in this Press Release are "forward looking statements". Without limiting the generality of the foregoing, such information can be identified by the use of forward-looking terminology such as "anticipate", "will", "would", "expect", "hope", "intend", "plans to" or "believes", or other variations thereon, or comparable terminology. Actual results, performance or developments may differ materially from those expressed or implied by such forward-looking statements as a result of market uncertainties or industry factors. We believe that the following factors, among others, could affect our future performance and cause our actual results to differ materially from those expressed in or implied by forward-looking statements made by us or on our behalf: (a) changes in interest rates; (b) the rental rate and demand for apartment rental units; (c) fluctuations in the costs to operate our business; (d) uninsurable risks; (e) general economic conditions; (f) acts of terror, and other risks described in periodic reports we file with the Securities and Exchange Commission including Form 10KSB. Gavella Corp. disclaims any obligation or responsibility to update any such forward-looking statements.