A Track Record & Plan for Growth

Launched in 1989 as a startup with no sales, AirBoss of America Corp. has grown to be a $300-million+ company. Through the years, we have been consistently profitable, providing our investors with a steady rate of return, including a reliable dividend.

Behind our financial results are these core strengths:

Conservative Financial Management
We are financially strong and prudently managed. Before the acquisition of Flexible Products, debt had been reduced dramatically and our working capital ratio was 3.22:1. After the acquisition, which was entirely debt financed with no dilution of share value, working capital remains at strong 2.09:1. Net debt to EBITDA is 2.52. Our dividend in 2013 was $0.20 per share.

High Insider Ownership
Top managers at AirBoss own approximately 27% of the outstanding shares, thus there is significant incentive to grow the business and improve the share value. We take this company personally.

Operational Efficiencies & Lean Manufacturing
Since 2006, AirBoss has applied AME/Lean manufacturing principles at our compounding facilities. Waste is systematically eliminated. Market feedback and well-documented problem-solving techniques drive continuous improvement. Automation is significantly more sophisticated than at most of our competitors. The results: Excellent “first-pass yield” performance. Very little room for error or contamination. Significant cost reductions. Freed-up cash flow. These high-quality/low-cost manufacturing techniques have since been leveraged across the company and will be applied at Flexible Products over the coming year and beyond.

A Strong Commitment to Science and R&D
We are specialists in converting valuable commodities into indispensable products. In our compounding and defence businesses a deep commitment to science has been a distinct competitive advantage. AirBoss chemists have created more than 1,000 different un-vulcanized custom compounds for industrial customers throughout North America. In our defense business, AirBoss controls every aspect of production, from formulation of compounds and polymers to rigorous testing to injection technologies. We also have strong relationships with government testing facilities that leverage our own investments.

High Product Consistency
In rubber compounding, AirBoss is renowned for consistency and quality control. We test relentlessly and provide historical data from every step of our processes. AirBoss Defense wins major military contracts worldwide based on quality and reliability in markets where the most exacting specifications are mandatory.

Market Leadership
AirBoss Rubber Compounding is the second-largest rubber compound manufacturer in North America (with a 250-million-pound annual capacity). AirBoss Defense is the world leader in CBRN protective gloves and boots, including being the sole supplier to the U.S. military. Flexible Products is a leading supplier of anti-vibration solutions to the North American automotive market.

Diversification
Our acquisition of Flexible Products is a major diversifying step for AirBoss, extending our customer base into automotive OEM markets. Concurrently, we are diversifying and growing organically with new rubber compounding opportunities in the oil and gas industry.

A New Platform for Growth

The acquisition of Flexible Products and the hiring of Tim Toppen as President & COO create new growth opportunities for AirBoss that we expect will transform our company.

The acquisition immediately raises revenues by 44% from $216,857 to $312,889 and, more importantly it raises EBITDA, by 72% from $14,983 to $25,720.

Tim is a seasoned veteran of the rubber industry and an experienced executive accustomed to managing for growth. He has led two billion-dollar enterprises by driving global growth and profitability. His goal is to lift AirBoss to the next level of our potential.

We are integrating Flexible Products to achieve operational efficiencies.

For AirBoss, Flexible Products was the right acquisition at the right time. We expect immediate accretive growth and predictable added growth through 2016. Between 2010 and 2012, Flexible experienced a Compound Annual Growth Rate (CAGR) of 25%. We expect approximately 12% between 2012 and 2016.

There are multiple synergies. Global sourcing is a good example. AirBoss Compounding, through our own full-time purchasing office in Asia, sources polymers across Asian markets to achieve guaranteed supply lines at the lowest possible prices. Flexible Products will take advantage of those savings and extend that buying leverage into other purchasing opportunities, such as metal components.

We are developing new products for growth markets based on our core competencies.

Our strategy is to add value to vital commodities like rubber and polymers. We do it through innovation and proprietary science.

In anticipation of military contracts, AirBoss Defense has invested in several years of intense R&D to extend its product line of protective CRBN gloves, footwear, and gas masks. A next-generation Low Burden Glove and Low Burden Mask are close to completion, as well as a carbon monolith filter that improves the performance of all stand-designed gas masks.

AirBoss Compounding innovates new compounds continually. Prospective customers request new, proprietary compounds that could give them a competitive edge (global tire makers, for example). Our own staff of chemists is always looking for formulas to enhance durability, abrasion resistance, temperature performance, and dozens of other qualities that make rubber and polymer compounds more valuable.

A substantial percentage of those efforts at AirBoss Compounding are being focused on market expansion with new formulas and injection-moulded products designed for large industrial sectors we have yet to tap.

At Flexible Products, the development pipeline is even more impressive. In 2013, more than 50 new moulded products were commercialized. Another 30 are in development.

We intend to grow globally.

Since 2012, AirBoss Defense has significantly expanded international marketing efforts to non-U.S. companies. We have hired sales staff and agents in several international markets to increase sales of our protective equipment to both military and first-response forces worldwide.

From an acquisition standpoint, we are seeking complementary companies that can help our company grow to the $1-billion range within three years. Syndicated credit facilities are in place to finance our strategy.