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ENVIROKARE COMPOSITE CORP. CHAIRMAN’S LETTER TO SHAREHOLDERS
Las Vegas, Nevada – April 23, 2014 - ENVIROKARE COMPOSITE CORP. (a private company, www.envirokare.com).
Dear Shareholders and Friends of Envirokare Composite Corp.:
On behalf of Envirokare Composite Corp.’s (ECC, or the Company) board of directors, we are pleased to update you on recent activities at both ECC and LRM Industries International, Inc. (LRM). In a prior communication to ECC shareholders, we provided the basic details of the February 26, 2010 sale of Envirokare Tech, Inc.’s (ECC’s former parent) trading shell which resulted in a spin-off of all shares of ECC to Envirokare Tech, Inc. shareholders of record on January 29, 2010. Envirokare Tech, Inc. also communicated directly with its shareholders regarding this transaction. As a result of the spin-off completed in 2010, ECC retained a 10.09 percent interest in LRM through its now private company. Since completion of the spin-off, LRM has conducted two subsequent financings, namely: 1) a 2010 financing, wherein all ECC shareholders were offered an opportunity to participate in the offering (for ECC shareholders, the percentage holdings of ECC in LRM was 7.96 percent after completion this offering, on a fully-diluted basis) and 2) a December 2013 financing, wherein the percentage holdings of ECC shareholders in LRM after completion of this offering is approximately 7.56 percent, on a fully-diluted basis.
Presently and after implementation of many cost saving measures, ECC has reduced its operating footprint to approximately $6,000 per annum. ECC supports its operations through borrowings realized by issuance of promissory notes due to contributors. Shareholders interested in learning more about these promissory notes should contact Rob Davidson at the Company (702-724-2631).
The ECC Board is composed of three members including Mr. Steve Pappas, Dr. John Verbicky and myself, Dr. Nicholas Pappas. As shareholders and Board members, our hopes and expectations remain with LRM’s continued progress and development.
In our current update regarding LRM, we are pleased to report on the continued progress and growth being made in commercializing the unique TPF Thermoplastic Flowforming™ and Sheetless Thermoforming™ molding technologies, in protecting and enlarging the scope of the technology with additional patents and in adding significant productive capacity. Commercialization includes material growth in sales and significant development of new applications.
With growth in both in-house branded products and in products produced for others, LRM has incrementally expanded its sales over the past two years. LRM now has three TPF™ and one STF™ lines available for production. In addition, options to expand plant capacity that are anticipated within the next 12 to 18 months are currently under consideration with additional production and storage space having been procured very near the current operations center. This growth has resulted in the addition of a number of new jobs at the Rockledge facility since 2005 and LRM currently has an experienced human resource pool from which to draw as operational needs dictate and customer order files grow.
As a result of successful marketing efforts and growth towards expanding production capacity, LRM currently is operating on a seven-day-per-week basis in order to meet both current customer production and its own branded product requests.
The primary focus for LRM is to meet current customers’ needs, expand its customer base, and deliver additional sales to its operations while working towards maximizing shareholder value. LRM expects to finalize a longer-term manufacturing and supply agreement with one of its primary customers (a heavy industrial and ground protection mat supplier) gaining LRM the customer’s commitment to purchase from LRM a minimum annual quantity of product and thus promoting stability and base-line for business growth. This current year of operations has started well, and all indications are that revenue streams will continue to expand throughout this year and into future years.
LRM has broadened its customer base and seeks to add licensing customers to its client foundation creating an outlook for growth and increased profitability beyond 2014. Proprietary in-house products have been developed and introduced including HydroDome™ storm water chambers, ValuStair™ stairways and SolaSprire™ solar water heaters. Orders have been received and are being filled for certain of LRM’s in-house products.
Intellectual Property Protection
A core strength of LRM derives from the value of its suite of patents relating to both the TPF Thermoplastic Flowforming™ and Sheetless Thermoforming™ processes and technologies and the products that can and are being made with these processes. LRM now holds use rights to 22 United States Patent and Trademark Office issued patents and additional patent applications are pending. Additionally, LRM holds 23 international issued patents and has filed for several others thereby further extending its technology protections into various foreign jurisdictions. The patent portfolio is reevaluated on an ongoing basis and the company believes that it maintains a proprietary suite of patents that support the company today and will do so into the future.
Development of Business Systems and Safety Culture
LRM has a primary operating focus that is committed to employee safety and promoting a company-wide culture of safety. The LRM management team is committed to safe, efficient and quality manufacturing in all its operations. This commitment includes a determination to protect their employees, contractors, customers and the community through effective safety and environmental management programs. We are very pleased to report that a number of operational improvements that enhance plant safety have been made at the Rockledge, Florida facility during the past year.
Executive Management Team
Since our last shareholder update, LRM has experienced changes to its management team. Richard Cochrane resigned his position as President and Chief Executive Officer with the Company to return to the environmental services industry. Current LRM Chairman, E. Gary Cook, was appointed to and assumed the offices of President and Chief Executive Officer. Christine Nowak resigned as Chief Financial Officer to seek opportunities in the construction industry; LRM’s senior accountant, Joy-Lyn Painter, was promoted to Finance Manager and has assumed the critical day-to-day tasks of the finance department. The balance of the management team consists of: Scott G. Hornby, General Counsel and Human Resource Director; Robert Jones, Vice President of Business Development; and, Paul Siebert, Vice President of Technology and Director of Operations.
We are encouraged by the progress at LRM and the prospects for future additional growth, yet we recognize that the true challenge of project success rests on the ability to convert your investments into bottom line success.
We remain committed to that end. We thank you for your continued support and interest in Envirokare Composite Corp.
Envirokare Composite Corp.
Nicholas Pappas; Board Chairman
John Verbicky; President and Director
Steve Pappas; Secretary, Treasurer and Director
Envirokare Spin-off Transaction Notice
Envirokare Tech, Inc. (ENVK) recently conducted a spin-off of its wholly-owned subsidiary, Envirokare Composite Corp. (ECC, a private company). The spin-off included a share distribution of ECC common stock to Envirokare Tech, Inc. shareholders of record on January 25, 2010. The distribution was conducted on a 1:1 basis meaning that for each share of ENVK common stock owned as of the record date, one share of ECC stock was issued to that shareholder. The stock distribution was conducted on a tax-free basis, and the value of the stock distributed was calculated at $.02 per share (rounded). ECC recommends that ECC shareholders consult their respective tax advisors for advice on applicable tax treatment of this ECC stock distribution.