28 May LETTER TO SHAREHOLDERS May 2020
FOR IMMEDIATE RELEASE: May 22TH 2020
Contact: Joshua Mazin, President
Telephone: (818) 890-1401
Fax: (818) 890-6001
Web Site: http:/www.flamemaster.com
LETTER TO SHAREHOLDERS
This past fiscal year ending September 30, 2019 was a milestone year for Flamemaster Corporation. The Company reported another record year with the highest revenue in its history and a sales increase of 6.3% to $8,942,966 from $8,415,693 in the prior year. Flamemaster also reported a record net income per share (basic) from operations of $0.83 per share vs. $0.82 in the previous year and $0.84 per share (diluted) vs. a loss due to recalculation of earnings after adjusting for convertible notes and restructuring.
The Company entered into a Joint Development Agreement with affiliates of Groupe Socomore to jointly develop, manufacture and commercialize sealants for aircraft and other general purposes, primarily within the aerospace industry.
There were convertible promissory notes that were issued by the Company to SocoFlame (a subsidiary of Groupe Socomore) and Starbiz Corporation on the Company’s Balance Sheet at year end September 30, 2019. These notes were converted into 166,681 Flamemaster common shares to SocoFlame, a 15.73% interest, and 16,668 Flamemaster common shares to Starbiz Corporation, a 1.6% interest. This brings Starbiz Corporation’s total holdings in Flamemaster to approximately 6.5% of the outstanding shares.
The Company’s shareholders were provided an opportunity to sell on a pro-rata basis up to 27.5% of their holdings in Flamemaster at a premium to the market price, while shareholders with 400 or fewer shares were provided the opportunity to sell their entire position.
As Flamemaster entered fiscal 2020 the Company was making progress on the Joint Development products with Groupe Socomore, expanding its customer base and reporting record sales for the six-month period ending March 31, 2020 to $4,946,475 from $4,582,347 in the prior year’s period. However, in March of 2020 the Company experienced a drop off in orders and some cancellations due to the effects from the Coronavirus (COVID-19) pandemic.
Flamemaster Corporation is considered an essential business due to the Government and Military contracts as well as having a priority classification by the DPAS Regulation. Due to the many uncertainties caused by the COVID-19 pandemic and the ability to secure critical raw materials when needed, Management has allocated additional resources to build up inventory levels to accommodate production requirements.
Management also issued COVID-19 Guidelines for all personnel to follow when working at the facility. These are now included as part of the safety meetings which are now being held weekly for the time being.
During these turbulent times, we are experiencing some disruption due to the COVID-19 pandemic, however we are still able to fulfil our customer’s requirements for critical materials in a timely manner. We take pride in boasting the shortest lead times in our industry.
The pandemic has further impacted Flamemaster’s ability to collect on its receivables in accord with estimated customer payment terms. Many customers both big and small are delaying payments due to deteriorating balance sheets and attempting to preserve cash as long as possible. However, we are working very hard to collect unpaid balances and to maintain a strong balance sheet, so we can continue to protect our employees and provide essential maintenance products to industry.
The Board of Directors and Management acknowledge and appreciate the efforts and support of our dedicated employees, our customers, suppliers, shareholders and friends. These are unprecedented times, please stay healthy and safe.
Chairman of the Board
The release herein may contain or identify a forward-looking statement. These statements are based on a number of assumptions and estimates, which are inherently subject to uncertainty and contingencies, many of which are beyond the control of the Company and reflect future business decisions, which are subject to change.