HOUSTON, TX (ACCESSWIRE) 8/21/2013 8:00:00 AM - Flame Seal Products, Inc. (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: Progress Report on Restructuring
Flame Seal Products, Inc. continues its process of restructuring. The new Board members consist of Bruce Rutherford (Chairman of the Board) Craig Keyser (COO Interim CEO), Romeo Laurel, and Mike Kiser (Chief Science Officer). Mr. Kiser has recovered from a serious illness that was diagnosed earlier in the year. The office of the Presidency has been vacated. This Board is made up of some of the largest stockholders in Flame Seal Products and is focused on making the company a success. The Board appointed a Steering Committee to manage the day-to-day operations of Flame Seal Products, Inc. The short-term goal was to assess the state of Flame Seal Products, Inc. and develop an action plan to ensure the viability and success of the company. This report details some of the key activities and results over the past two months.
The biographies of the Board Members can be reviewed in the last press release issued on May 28th of this year. The Flame Seal Board of Directors will issue all communication and press releases.
Cost Reductions and Cash Flow
The Board immediately appointed Craig Keyser as interim CEO, and formed a subcommittee of Board members and shareholders for the purpose of reducing costs and improving cash flow. Monthly costs have been reduced by over $60,000 per month. We have also been able to end the practice of factoring our accounts receivable. As result, Flame Seal Products, Inc. has achieved a positive cash flow in July for the first in many years. While there is no guarantee that we will be cash flow positive for the balance of the year we are optimistic that we can continue to operate the company with net revenue while growing our overall business and improving our margins.
For the months of January to June the company experienced a negative cash flow of $219,561 on sales of $1,137,806. However, the July results yielded a positive cash flow of $65,182 on sales of $185,889.
Sales and Marketing
Sales through the first 7 (seven) months of the year are on plan and 158% ahead of last year's actual sales. We are optimistic that product enhancements and new marketing efforts will increase sales relative to plan in the last five months of the year. The principals we adhere to in pursuing sales are:
1. To be code and certification driven and customer friendly
2. To be the most cost effective product available in the market place inclusive of application costs
3. Be true to our mission to "Save Lives and Property"
The Balance Sheet
The balance sheet is still a concern as we have financial obligations originated during the earlier periods of negative cash flows that are a serious drag on our overall profitability and current cash flows.
The Board made a decision to stop payments on all nonessential expenditures and loans in order to focus all our resources on producing products for customers and covering all key expenses. Payables to all essential suppliers are now current and we are for the first time in FLMP history manufacturing to inventory instead of manufacturing to order. This has significantly reduced product delivery times and improved customer satisfaction. A one-time infusion of $350,000 of equity would be enough to pay all outstanding payables.
To date we have funded negative cash flows by borrowing and selling restricted common stock to current and new shareholders. Absent dramatic increases in sales this year we will still need to raise additional capital to repair our balance sheet and prepare the company for new growth by January. The Board is investigating the issuance of Preferred Shares that will earn a dividend and be convertible to 5 (five) shares FLMP common restricted for 2 (two) years. If the preferred security is authorized by the Board of Directors, we make the subscription available to existing shareholders for a period of time before offering it to new investors. It is an objective of the Board to stop issuing new common and/or preferred shares as soon as our balance sheet is in order and the company is self- sustaining as to cash flow. Once we are self-sustaining, our margins on existing products are such that we expect to finance expansions and research and development from cash flow.
Technology and Intellectual Property
The Board has taken actions in the last sixty days to address questions as to the ownership of FLMP's intellectual property and to secure, for Flame Seal Products, Inc., all intellectual property rights related to the products, the technology and all testing certifications. Our technology continues to impress industry experts. Our technology and our certification are our most valuable assets. We are currently developing market driven enhancements to our current products and developing a program to achieve new certifications for existing products. It is expected that these improvements and the resulting testing certifications will significantly expand our market share in key segments and create new markets into which we can sell our products. An additional objective is to expand our product line to reduce our dependence on any one product and diversify our sources of cash flow.
During the last ninety days Flame Seal Products, Inc. has been restructured and placed on a path to sustainable profitability and positive cash flow. The Board remains convinced that FLMP has the potential to eventually achieve very rewarding sales growth. Achieving our growth potential will take place in many steps; it will not happen quickly. But we are committed to show significant and sustained progress each year. We are also planning to schedule a shareholder's meeting as soon as our financial situation improves and we can prudently cover the cost of the meeting.
The Board appreciates your confidence in, and patience with Flame Seal Products, Inc. We are determined to see that you are richly rewarded for that trust.
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.
Flame Seal Products (FLMP)
SOURCE: Flame Seal Products, Inc.