SUN VALLEY, Calif., Oct. 7, 2004 (PRIMEZONE) -- Flamemaster Corporation (Nasdaq:FAME) today reported that it has entered into a letter of intent with Best Holdings Acquisition Company LLC and Aries Capital Partners LLC to merge their holding of 100% of the outstanding shares of Capital Stock of Best Candy & Tobacco Co., an Arizona Corporation, into Flamemaster. For the year ended December 31, 2003, Best Candy & Tobacco Co. recorded sales of $51,453,214 and net income before income taxes of $346,622. On the closing date pursuant to a signed and executed definitive merger agreement by and between the parties, Flamemaster will acquire 100% of the Best shares.
Flamemaster will continue to proceed with the previously announced 1 for 10 reverse stock split which will become effective October 26, 2004. In addition, prior to the closing date of the transactions contemplated by the merger agreement discussed above, and with the consent of a majority of the outstanding Flamemaster Common Stock, Flamemaster shall dividend and distribute to all Stockholders of record on the dividend date 100% of the Capital Stock (the "Dividend Shares") of Flamemaster Aerospace Corporation a wholly-owned subsidiary of Flamemaster. The Flamemaster Aerospace Corporation (as at the date of such stock dividend) shall operate all the businesses operated by Flamemaster and its subsidiaries and own all of the assets and assume all of the business as the same are in effect immediately prior to the date of the stock dividend. As a result, immediately prior to the closing date of the merger and share exchange, Flamemaster shall have no operating businesses and no assets or liabilities. In sole consideration for the Best Group Equity, Flamemaster shall issue to Aries or its affiliates, that number of shares of Flamemaster Common stock as shall equal ninety percent (90%) of the aggregate issued and outstanding shares of Flamemaster Common stock on the closing date (merger agreement) on a fully diluted basis giving effect to the 1 for 10 reverse stock split referred to above. It is anticipated that on the effective date approximately 1,620,000 Flamemaster shares shall be issued to Aries in consideration for the Best Group Equity.
On September 14, 2004 Flamemaster announced its intention to file a Form 15 with the Securities and Exchange Commission (SEC) to deregister Flamemaster as a reporting company under the Securities Exchange Act of 1934 as amended. In conjunction with the proposed merger agreement discussed above, Flamemaster withdraws its announced notice of intention to file a form 15 and deregister.
The letter of intent discussed above is intended only as a preliminary indication of the parties' mutual interest in proceeding towards the transactions outlined. The transactions are subject to further due diligence and approval of a majority of the Flamemaster outstanding Common Shares. There can be no assurance that the transaction will be finalized and executed as outlined or otherwise. It is the intent of the Flamemaster management to proceed with the filing of the Form 15 and to deregister The Company, if the merger with the Best Group cannot be completed.
The Board of Directors and Management of the Flamemaster Corporation regard this potential merger as an opportunity to enhance shareholder value, and thus worth the effort required to proceed to a definitive agreement.
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.