CHICAGO, April 27, 2017 /PRNewswire/ --
Board of Directors
Ironclad Performance Wear Corporation
1920 Hutton Court Suite 300
Farmers Branch, TX 75234
To the Board of Directors of Ironclad Performance Wear Corporation:
As your records reflect, I am one of, if not the largest, shareholder of Ironclad Performance Wear Corporation ("ICPW, "Ironclad", or the "Company"). I have reviewed the Ironclad results for 2016 as well as 2014, and 2015 which are the years that the current Directors and management team have been in place. I have, periodically, discussed these results with other dissatisfied non-affiliated shareholders. Actually, there cannot be any satisfied shareholders, given the failure to enhance shareholder value. I have concluded that the time has arrived that all strategic alternatives must be pursued by the Board of Directors, because it is clear the continued dismal results are absolutely unacceptable.
I have studied Ironclad's financial press releases and SEC Filings which describe management undertakings and financial results since this Board of Directors brought in the current management team to begin executing on its' plan to turnaround the Company. Regrettably, the results described are individually and collectively a painful disappointment with respect to delivering value for Ironclad shareholders. There has been a stream of over-promising and under-performing which always leads to a lack of credibility and a hit to valuation.
EBITDA has gone from a positive $234,000 in 2014, to a small loss of $11,000 in 2015, and to an even more substantial loss of $962,000 in 2016. Revenues are up by $703,000 from 2014 to 2016 or 2.9% while total operating expenses are up $1,811,000 or 22.5% for the same period. Clearly, these operating expenses are going in the wrong direction given the failure to deliver the necessary revenue growth to support the increased level of expenses. And, as expected with these results, according to Morningstar's analysis, the company continues to deliver negative free cash flow of ($1,148,000) in 2014, then ($832,000) in 2015, and in 2016 ($1,135,000). The company's stock is basically ignored in the market, and justifiably so, considering the aforesaid lackluster financial performance.
This Board and its management team have taken no effective action to deliver results that have been talked about, but not achieved. The public markets have recognized this underperformance, resulting in a very illiquid security. The average daily volume is very irregular, and there are many days when ICPW does not trade at all.
The Board of Directors and executive management, if they have any confidence in achieving results in the future, should be active buyers of Ironclad and/or holders of Ironclad at levels consistent with their compensation and responsibility, and yet with one exception, they have not invested in the company during 2015 and 2016 at all based on Ironclad's SEC filings. And, why should public shareholders buy if ICPW Directors and Officers are not active buyers?
I believe it is time to act on these facts. Ironclad has demonstrated that it cannot, and will not, reach its potential independently. It is clear that this Board of Directors has become captive to the many promises and failed plans of its' executive managers. It is time for the Directors to be reminded that they represent shareholders that have an expectation of a return of their investment.
As a result of this sustained dismal performance, I have retained Michael Rose, Chairman and CEO of Metropolitan Capital Investment Banc of Chicago as an investment banker to pursue all strategic alternatives that will maximize shareholder value that has so long been neglected and/or ignored by this Board of Directors. I have the expectation that this Board will cooperate fully with Mr. Rose, and provide him with the necessary support that will facilitate engaging with potential acquirers, in fulfillment of your fiduciary responsibilities to all shareholders.
Ronald L. Chez
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SOURCE Ronald L. Chez