HOUSTON, Aug. 12, 2005 (PRIMEZONE) -- Allied Energy Corporation (Pink Sheets:ALNG) ("Allied") is pleased to announce additional information concerning FloodSmart, Inc. ("FloodSmart"), a privately held company, with which they have signed a Letter Of Intent (LOI) whereby FloodSmart(tm) will acquire Allied in a reverse merger transaction.
FloodSmart Inc. is a Texas corporation, with principal offices in Houston, Texas, which engages in flood remediation by elevating structures to a point above the flood plain. Solid Hydraulics Inc. and FloodSmart Real Estate are its two subsidiaries.
Ken Kelso, president of FloodSmart, saw the emotional toll caused by tropical storm Allison in 2001, which uprooted literally thousands of families, most temporarily but many permanently. In some cases, NFIP flood insurance helped to facilitate the rebuilding process, but it is nearly impossible to replace family heirlooms, and the process of rebuilding is long and tedious.
Kelso saw many people who needed to be uplifted, which is exactly what he decided to do. Or at least lift their homes. So he invented and patented a system that uses dynamic concrete hydraulic cylinders to elevate structures above the flood plain elevation so that they can be restored and are no longer subject to flooding.
Prior to FloodSmart, Kelso took the ski industry by storm with the Ski Deck, a carpeted treadmill used to train snow skiers, which seems like an unusual start for a flood remediation specialist, to say the least. In reality he's closer to surfer then skier, so the Ski Deck was an unlikely invention, especially considering the Kelso family tree has its roots deep in Galveston, where his family, mostly concrete contractors, have been fighting hurricanes and floods since before 1900.
Prior to FloodSmart Hydraulic Lift Systems, there were few options. The traditional method has commonly been called the "jack and shimmy" technique, which for a number of reasons is impractical and/or unrealistic, especially considering the cost and inconvenience. By the way, the higher the structure needs to be "jacked and shimmied" the higher the costs go, whereas the FloodSmart Hydraulic Lift Systems can raise a home 10 inches or 10 feet with a reasonable difference in costs, as well as a greatly reduced inconvenience to the occupants.
The current approach to dealing with flooded structures is to restore the structure to its previous condition or to voluntarily condemn the structure and land from use as a building site. Demolition after buyout by FEMA does not reimburse the property owner for the full value of the home or the cost of relocation, excludes the land area from future building, and creates an inventory of government-owned land that is considered unusable.
FloodSmart has been in R&D mode for more than four years. The result is a cost-effective elevation process that avoids the adverse consequences of condemnation, where the property owner loses financially and emotionally, mortgage companies lose revenue streams, and taxing authorities lose tax base.
It's easy to understand the problems related to rebuilding a flooded home. For many, the question becomes why not move the home to higher ground. In essence this is what the process does, but putting aside how difficult it is to sell a repetitive-loss structure, which is usually done at a substantial loss, the purchase of another home is often very difficult. What about condemning the structure? It is not uncommon for flooded properties to be condemned or bought out by FEMA or other regulating agencies, but this often results in a more expensive problem. The end result is checkerboarding, the process of condemning property forever. In addition to the upfront costs of buying a condemned structure, there are the long-term costs of losing part of the local community's tax base and upkeep costs.
The average annual payout for flood insurance claims is $ 867.5 million. The experience is an average of about 37,000 claims each year. These numbers are based on historical statistics over the past five years, which indicate that the number of losses in proportion to the number of covered structures is about 25 percent. From 1978-2002, there were a total of 867,349 paid losses, accounting for more than $11.6 billion in total payments. The average policy cost is $400. (Source: http://www.fema.gov).
In order to reduce the costs associated with condemnation of property, FEMA has earmarked over $200 million in pre-disaster mitigation competitive grant program, falling into two categories: mitigation projects and mitigation planning. The cost-share is, usually 75 percent federal and 25 percent a local match, but can be up to 90 percent for small and impoverished communities.
Federal funding to assist homeowners in flood plains includes primary flood insurance through the National Flood Insurance Program (NFIP). A rider to cover the increased cost of compliance (ICC) to bring homes into local code requirements is included with each such policy. A relatively new program is Pre-Disaster Mitigation funding (PDM), which targets homes with high instances of repeat flooding and repeat NFIP claims. Processes and procedures that are overwhelming and discouraging to many homeowners are often involved in these programs. FloodSmart procedures address this concern and assist homeowners and agencies in streamlining the process.
FloodSmart president, Ken Kelso, stated, "FloodSmart 's long-term plan is to exploit the rights to our technologies relating to flood remediation; enhance the value of those assets and rights through further research and testing; market the process through traditional means and profitable licensing agreements or strategic joint ventures and acquisitions." For further information, visit www.floodsmart.net.
About FloodSmart Inc.
FloodSmart is a pioneer in the field of flood remediation, using patented technology to elevate structures above the defined flood plain certification for repetitive flood loss structures. The company, based in Houston, is dedicated to helping people and communities that are positioned in the floodplain. FloodSmart Hydraulic Lift Systems is a new patented process that can lift structures and occupants out of harm's way. Whether elevation certificate calls for 10 inches or 10 feet, FloodSmart's solutions are superior to the old "jack and shimmy" method. The FloodSmart proprietary process calls for the installation of "dynamically controlled hydraulic concrete pistons and cylinders" at strategic engineered points, and raise the home to a predetermined "safety zone," with the new elevation being above the flood plain.
FloodSmart focuses primarily on offering a solution to the problem of repetitive flood loss by elevating structures at rates, which typically meet the cost-benefit analysis ratios set by FEMA, as opposed to the old "jack and shimmy" method which rarely meets cost-benefit analysis ratios. As of the end of 2002, there was $652.7 billion of flood insurance coverage under the federally sponsored National Flood Insurance Program (NFIP) representing more than 4.5 million structures. Because all are within the floodplain, all are candidates for the FloodSmart structure elevation process. Statistics indicate that about 25 percent of the insured base has experienced flood-related claims. For more information, please contact us or visit www.floodsmart.net.
Safe Harbor:
This release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The risks and uncertainties that may affect the operations, performance development and results of the company's business include but are not limited to fluctuations in financial results, availability and customer acceptance of our products and services, the impact of competitive products, services and pricing, general market trends and conditions, and other risks detailed in the company's SEC reports.