SUN VALLEY, Calif., March 30, 2004 (PRIMEZONE) -- Flamemaster Corporation (Nasdaq:FAME) today reported that it has abandoned the transaction contemplated in the Information Statement mailed on February 25, 2004, and has restructured the transaction with Cyberhotline Inc. to better position the Flamemaster Shareholders in the agreements.
Flamemaster has completed the distribution of Flamemaster Aerospace shares (Aerospace) to its shareholders while retaining a controlling interest of more than 35%. The Aerospace shares were distributed to Flamemaster Shareholders on a ratio of one share of Aerospace for every 50 (fifty) shares of Flamemaster held on the record date of March 2, 2004. The distributed Aerospace stock is restricted bearing a legend. The holders of fewer than 50 (fifty) shares in Flamemaster did not receive shares in Aerospace, but were issued cash in lieu of fractions at the rate of $3.50 (three dollars and fifty cents) per share.
The Flamemaster Aerospace stock will not be registered under the Securities Exchange Act of 1934. This means that we will not file periodic reports with the Securities Exchange Commission including, among other things, annual reports on form 10-KSB and quarterly reports on form 10-QSB and we will not be subject to the SEC's Proxy Rules. In addition, our common stock will not be eligible for trading on the Nasdaq Market.
The Flamemaster Corporation Board of Directors declared a 12.5% stock dividend in the form of a 9 for 8 stock split to be paid on May 7, 2004 to shareholders of record April 15, 2004. No fractional shares will be issued. Fractions will be rounded to the nearest whole share.
Flamemaster revised its agreement with Cyberhotline and will issue non voting convertible preferred stock, convertible into shares of common of approximately 14% of the outstanding on a fully diluted basis, for a convertible note of $2.5 million (two million five hundred thousand dollars) issued by Cyberhotline, which converts into 40% interest in Cyberhotline. The Cyberhotline Note is for an indefinite period of time and allows Flamemaster profit participation rights.
Cyberhotline, Inc. is a privately held Nevada Corporation with its principal place of business in Los Angeles, CA. Its business is primarily that of an Internet Service Provider, offering dial-up Internet access for $8.25 - $10.95 per month. Cyberhotlineinc.com provides Internet access to most locations in the United States and Canada as well as Web Hosting. Its primary source of gaining new customers is radio advertising. For 2003, the Company had $683,016 in gross revenues and $53,348 in net income. These numbers were prepared "in-house" and are un-audited.
The Flamemaster Corporation's current management and Board of Directors will remain unchanged and the Company will continue to consolidate the Aerospace operation for reporting purposes.
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.