SOURCE: Flame Seal Products, Inc.

November 11, 2013 08:30 ET

Flame Seal Products, Inc. Releases Third Quarter Progress Report

HOUSTON, TX--(Marketwired - Nov 11, 2013) - FLAME SEAL PRODUCTS, INC. (OTC Pink: 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: Third Quarter Progress Report

Overview

Flame Seal Products, Inc. has completed the first vital stage of its restructuring process. The Board has appointed two sub-committees to focus on improving Corporate Governance and establishing policies to provide oversight and improve the management of the Company. The primary focus is now on improving operational performance, efficient utilization of existing resources and developing new and sustainable markets for our products. 

The Board notes that the intense focus since May on restructuring has required almost all of the time and effort of senior management on operational and balance sheet issues. As these issues are resolved, efforts will focus on increasing sales and develop new markets. 

The Board also recognizes the necessity of raising additional capital to invest in both R&D and additional certification testing as well as securing the financial security to benefit shareholders and assure a stable future. 

This report will review progress through the 3rd quarter.

Financial Review

Fixed Cost

The Board continues to monitor expenses and review costs, with the goal of reducing the cost of operations, lowering our breakeven point and improving cash flow. Overall fixed expenses have been reduced by over 44% since May 1st and a number of long and short-term loans originated in earlier years have been retired or re-negotiated.

EBITDA

EBITDA results have also improved. The dramatic actions taken since May 1 have for the first time in company history resulted in achieving a positive EBITDA in the September 30 quarter.

2013 quarter by quarter comparison:
Q1 $(67,078)
Q2 $(67,286)
Q3 $33,656 -- a $100,942 improvement over Q2

Net Cash Flow

Net Cash Flow has improved each of the last two quarters and it is expected that this trend will continue.

Balance Sheet

We have optimized our cash flow and are working to repair the balance sheet. Improving our Balance Sheet will allow us to be more responsive to customers and key suppliers. Note below compares the current assets vs. liabilities for the first 3 quarters of 2013:

Current Assets Q1   $ 55,043   Q2   $ 89,454   Q3   $ 179,113
Current Liabilities     $ 300,137       $ 233,792       $ 219,534
  • Current Assets have increased by over $124,000.
  • Current Liabilities have been reduced by over $80,000. 
  • The Balance Sheet's current position has been improved by over $204,000.

The balance sheet continues to be dominated by significant financial obligations, incurred in prior years. Improvements in this part of the balance sheet will take additional time and effort because the company is devoting cash flow to issues that support sales, marketing programs and new product developments.

Sales and Technology Review

Sales

Sales for the first nine months of 2013 were $1,535,957 versus sales of $1,001,937 for the same period in 2012. The represents a year over year increase of 53%. Sales for the 3rd quarter were $403,452 versus sales of $372,831 for the 3rd quarter in 2012. This represents a year over year increase of 8%. Sales continue to be on pace with our internal projections.

On that note, sales for the Leather Segment continue to be strong. The company has developed and is testing a new promising resin-based product. 

The Company continues to focus on the Thermal Barrier market as these segments continue to expand. Additional test certifications have been achieved with a new SPF manufacturer. Certification testing is also underway in other markets.

Efforts continue to establish new business in overseas markets. We have achieved new product certifications for wood, textile in Canada and for wood, textile and FX-100 coating in India.

The company is also working on establishing sales in the Wildfire Protection Industry. Currently, several organizations are experimenting with our Intumescent Technology for application and viability testing.

Technology

As previously reported the company has secured all Intellectual Property Rights, the Technology and all Testing Certifications. We are working on several modifications and adaptations of our technology.  Research efforts are focused on improving existing technology and identifying and/or developing applications for the technology. Testing is currently underway with an improved version of the core Intumescent technology.

Flame Seal Products remains a technology company competing in the Fire Safety arena. The application of our science will determine our success. The ability to find solutions to fire retardant related problems will define the nature of our growth. The company is working diligently to improve existing products, develop new products, and define markets where the technology is applicable.

The technical team is constantly looking for ways to make the products and technology more effective, easier to apply and less expensive for our market partners. 

Financing Alternatives

The company would like to accelerate our R&D and Certification efforts for the reasons stated above but our current financial condition constrains that activity. The Board continues to evaluate financing options. If we seek additional financing some the funds will be used to make additional repairs to our balance sheet which will reduce our breakeven point. The balance of the funds obtained will be used to increase our R&D efforts and secure certifications in new markets and for new products. Some of the resulting increased cash flow will be used to enhance our marketing efforts. 

The Board continues to review the possibility of issuing Preferred Stock and/or making a Rights Offering. If the Board proceeds, the issue(s) will be first offered to existing shareholders and then to outside investors only if existing shareholders do not fully subscribe to the offering.

Summary

Flame Seal Products, Inc. has made extraordinary progress since May 1st. There is still much to be done. We emphasize that now we can focus solely on building the business. Flame Seal Board of Directors remains extremely confident and convinced of our potential. We intend to improve every aspect of company performance and to build it to substantial growth and solid profitability. Thank for your trust and patience.

Respectfully Submitted By the Board of Directors

Craig Keyser
Mike Kiser
Romeo Laurel
Bruce Rutherford

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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