HOUSTON, TX – March 31, 2014 -- FLAME SEAL PRODUCTS, INC. (OTC Pink: FLMP) (PINKSHEETS: FLMP), a leading provider of Specialty Chemicals for the Passive Fire Protection Market, today issues the following update to its Stockholders.
From: The Board of Directors
Subject: 2013 Progress and Financial Report
In the spring of 2013 the Board of Directors recognized and acted upon the immediate need to take decisive action to insure the Company's viability and future success.
In the second half of 2013, Flame Seal Products, Inc. significantly improved its 2013 operational and management processes. As stated in November, 2013 the primary focus for the future is to improve operational performance, optimizing utilization of existing resources; and building sustainable, recurring revenue for our products. Management will focus on increasing sales and building positive cash flow while emphasizing the development of next generation technology. The transition progresses in 2014 to become a technology and market-driven company.
Bruce Rutherford, Chairman of The Board of Directors is pleased to announce the appointment of Darryl A. Schroeder to Flame Seal's Board of Directors.
Darryl is a prominent Houston businessman with interests in energy services and real estate and is a notable contributor to community charities. Darryl is a University of Houston graduate. He is the CEO of several successful companies including: Lone Star Energy Fabrication and Lone Star Construction.
Lone Star Energy Fabrication (www.lsenergyfabrication.com) constructs drilling rigs and living quarters for the energy industry and recently completed two of the largest offshore drilling rigs ever built for Shell's "Olympus" and Chevron's "Bigfoot" platforms. Lone Star Construction (www.lonestarconstructiontx.com) owns and manages many industrial facilities including the Company's current building. Mr. Rutherford states "Darryl has made a significant investment in Flame Seal and is already making strategic contributions to our marketing and product development plans. His investment and participation on our Board of Directors is an important vote of confidence in the future of Flame Seal.
Flame Seal's research and development and marketing programs have to date been constrained by limited working capital, To address this constraint, Flame Seal will soon be offering a convertible preferred stock issue paying a 5% dividend. The Preferred shares will be offered first to our shareholders, and if not fully subscribed by existing shareholders, to third parties.
Proceeds from the issue will be used to increase research and development, secure certifications in new markets, increase our marketing budget to increase sales and to further repair our balance sheet, which will reduce our breakeven point.
2013 Financial Review
Fixed Cost and Expenses
The Board continues to scrutinize expenses and fixed costs in order to lower the cost of operations and add to cash flow. Overall fixed expenses have been reduced 40% since May 1. Debt renegotiation and retirement efforts continue.
The Company has amended its financial reporting to properly reflect, in accordance with generally accepted accounting standards, the monthly allocation of interest and depreciation charges. These reports may be found under the symbol FLMP at www.otcmarkets.com. As a result of this more accurate reporting, the timing recognition of interest expenses, depreciation, rents, cost of goods sold and other expense have changed and our quarterly EBITDA results have been restated accordingly.
Management's actions taken since May 1 have significantly improved EBITDA. Further work is still required but the Company has its costs under control and is focused on growing the top-line to continue improving financial performance. Especially noteworthy is the $129,472 positive improvement in EBITDA in the second half of 2013 over the first half of the year.
Earnings on an Accrual Basis:
For the year 2013 FLMP lost $632,428. As stated above, losses were reduced significantly in the second half of the year. In fact, many expenses have been permanently eliminated from the income statement. If our loss for 2013 is adjusted and reduced for these non-recurring items, our accrued loss for the year would have been reduced to $294,669. The nonrecurring expenses include payroll reductions and the elimination of a significant portion of interest expense. These represents a permanent reduction in our operation costs and burdens.
The balance sheet is still significantly burdened by previously incurred financial obligations. Beginning May 1, 2013 the Board of Directors (BOD) addressed an untenable financial condition. Remedying this condition will take additional time, in part, because the BOD decided to devote available cash flow to support sales, marketing programs and new product developments.
The company is making progress in this effort. Improvements in the balance sheet will allow us to be more responsive to large customers and more attractive to key suppliers. These effects will improve sales and margins and reduce cost of goods sold. An improved balance sheet will also help us take advantage of new opportunities and to pursue innovative ideas.
- Since the first quarter, Current Assets have increased by $140,582 in 2013 while Current Liabilities have increased by $83,888
- Over the course of 2013 our Current Position has improved to 37.4%
Sales and Technology Review
Sales for 2013 were $1,913,017 versus sales of $1,381,407 for 2012. The represents a year over year increase of 38%.
New products launches and purchase commitments from new customers could significantly boost revenue this year. Management is concentrating on developing long-term customer relationships with steady, recurring order flow.
The Company also is focusing on the expanding Thermal Barrier market as this segment continues to present the opportunity for increased sales. To this end, more testing and certifications are planned for 2014.
As stated in our last release, efforts continue to establish new business in overseas markets. During the second half of 2013 we achieved new product certifications for wood and textiles in Canada and for wood, textiles and FX-100 coatings in India. These certifications are requisite to expand sales into these markets.
The Company is pursuing significant sales in the wildfire protection industry. Successful evaluations have been conducted on our intumescent technology and other of our passive fire protection products. At this writing, the company has reached a distribution agreement in principle with a well-established fire protection service organization in the wildfire protection industry. A major factor in establishing this new relationship is that Flame Seal's products are not only extremely effective, but also environmentally friendly.
At this writing 2014 sales are meeting internal projections.
Full financial reports in table form are available on OTC Markets - www.otcmarkets.com - under the FLMP symbol.
Work continues on several modifications and adaptations of our technology. Research efforts are focused on improving existing technology and identifying and/or developing new applications for the technology. Testing is underway with an improved version of our core intumescent technology. Recent tests at independent laboratories have resulted in a new Certification in the Thermal Barrier market. These positive results and additional testing with spray foam market leaders will enable the company to expand sales.
Flame Seal has effected vital and positive change in 2013. This year the Company intends to improve all performance metrics and to focus on building a profitable and sustainable business that will reward our Shareholders. The Board is committed and confident of our potential. Thank for your continued trust.
The content of this release contains repetition of some November, 2013 information which we believe warrants repeating. The format of our releases will closely follow this prior release with incremental and up-to-date financial reports. Unaudited financial statements are prepared by an independent accountant. Audited statements will be made available when we accumulate adequate surplus and more pressing priorities have been met. The objective is clarity, transparency, consistency and timely factual reporting for our owners, the shareholders.
Respectfully Submitted By the Board of Directors
ABOUT FLAME SEAL
Flame Seal Products, Inc., manufacturer of the world's number one fire prevention technology, was founded in 1992 as a research and development company focused on the investigation and application of passive Fire Prevention Technologies. FLAME SEAL PRODUCTS, INC. (FLMP) began trading its common stock on March 27, 2000. Flame Seal Products, Inc. is also the Transfer Agent of record. The company offers a wide variety of Code Driven solutions for a number of diverse applications and industries, and has developed three passive fire prevention technologies which are the basis for the company's products. For more information, go to: http://flameseal.com
SAFE HARBOR STATEMENT
Certain statements in this release may be "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. Such statements are subject to numerous risks and uncertainties. Actual results may vary significantly from the results expressed or implied in such statements. Factors that could cause actual results to materially differ from forward-looking statements include, but are not limited to, the Company's ability to meet the terms and conditions required to obtain its project financing, risks and delays associated with product development, risk of market acceptance of new products, risk of technology or product obsolescence, competitive risks, reliance on development partners and the need for additional capital. Flame Seal takes no obligation to update or correct forward-looking statements, and also takes no obligation to update or correct information prepared by third parties that are not paid for by Flame Seal.
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SOURCE: Flame Seal Products, Inc.