0001004878-20-000115.txt : 20200819
0001004878-20-000115.hdr.sgml : 20200819
20200818173410
ACCESSION NUMBER: 0001004878-20-000115
CONFORMED SUBMISSION TYPE: 8-K
PUBLIC DOCUMENT COUNT: 3
CONFORMED PERIOD OF REPORT: 20200818
ITEM INFORMATION: Results of Operations and Financial Condition
ITEM INFORMATION: Other Events
ITEM INFORMATION: Financial Statements and Exhibits
FILED AS OF DATE: 20200819
DATE AS OF CHANGE: 20200818
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: FLEXIBLE SOLUTIONS INTERNATIONAL INC
CENTRAL INDEX KEY: 0001069394
STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS CHEMICAL PRODUCTS [2890]
IRS NUMBER: 911922863
STATE OF INCORPORATION: NV
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 8-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-31540
FILM NUMBER: 201114695
BUSINESS ADDRESS:
STREET 1: 2614 QUEENSWOOD DR
CITY: VICTORIA B C
STATE: A1
ZIP: V8N 1X5
BUSINESS PHONE: 2504779969
MAIL ADDRESS:
STREET 1: 2614 QUEENSWOOD DR
CITY: VICTORIA BC CANADA
STATE: A1
ZIP: V8N 1X5
8-K
1
form8k2022dqresults8-20.txt
8-K 2D Q RESULTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): August 14, 2020
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
-------------------------------------
(Exact name of Registrant as specified in its charter)
Alberta 001-31540 71 163 0889
--------------------- --------------- ------------------
(State or other jurisdiction (Commission File No.) (Employer
of incorporation) Identification No.)
6001 54 Ave. Taber, Alberta, Canada T1G 1X4
(Address of principal executive offices, including Zip Code)
Registrant's telephone number, including area code:
(250) 477-9969
N/A
---------------------------------- ----
(Former name or former address if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligations of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-14(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of exchange on which registered
-------------------------------------------------------------------------------
Common Stock FSI NYSE American
-------------------------------------------------------------------------------
Indicate by check mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 (ss.203.405 of this chapter)
or Rule 12b-2 of the Securities Exchange Act of 1934 (ss.204.12b-2 of this
chapter.
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has
elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act. [ ]
Item 2.02. Results of Operations and Financial Condition
On August 14, 2020, the Company issued a press release announcing its
financial results for the period ended June 30, 2020.
Item 8.01 Other Events
On August 17, 2020 the Company held a conference call to discuss its
financial results for the period ended June 30, 2020, as well as other
information regarding the Company.
Item 9.01 Exhibits
Exhibit
Number Description of Document
99.1 August 14, 2020 Press Release
99.2 Text of opening remarks by Dan O'Brien/ August 17, 2020 conference call
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: August 18, 2020
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
By: /s/ Daniel O'Brien
----------------------------------
Daniel B. O'Brien, President and Chief Executive
Officer
EX-99
2
form8k202ex9918-20.txt
EXH. 99.1 PRESS RELEASE
EXHIBIT 99.1
NEWS RELEASE
August 14, 2020
FSI ANNOUNCES SECOND QUARTER, 2020 FINANCIAL RESULTS
Conference call scheduled for Monday August 17th, 2020, 11:00am Eastern time,
8:00 am
Pacific Time
See dial in number below
VICTORIA, BRITISH COLUMBIA, August 14, 2020 - FLEXIBLE SOLUTIONS INTERNATIONAL,
INC. (NYSE Amex: FSI, FRANKFURT: FXT), is the developer and manufacturer of
biodegradable polymers for oil extraction, detergent ingredients and water
treatment as well as crop nutrient availability chemistry. Flexible Solutions
also manufactures biodegradable and environmentally safe water and energy
conservation technologies. Today the Company announces financial results for the
second quarter (Q2) ended June 30, 2020.
Mr. Dan O'Brien, CEO comments, "Our divisions were busy all quarter making
products for essential services in agriculture and cleaning products. Combined
with normal operations and organic growth, this resulted in a very strong Q2."
Mr. O'Brien continues, "We are happy to be doing what we can to help during the
crisis and will do our best until normal life resumes."
o Sales for the second quarter (Q2), 2020 were up approximately 14% to
$7,709,607 when compared to sales of $6,770,440 for Q2, 2019. The result
was an after tax GAAP accounting net income of $1,132,867, or $0.09 per
weighted average share for Q2, 2020, compared to an after tax GAAP
accounting net loss of $27,733, or $0.00 per weighted average share for Q2,
2019. See 2019 past bad debt expense ($231,696) recognized in Q2, 2019.
This number is not related to Q2, 2019 operating income and if removed
would result in higher net income recognized in Q2, 2019.
o Basic weighted average shares used in computing earnings per share amounts
for the quarter were: 12,240,545 and 11,769,635 for Q2, 2020 and Q2, 2019
respectively.
o Non-GAAP operating cash flow: For the 6 months ending June 30, 2020, net
income reflects $348,191 of non-cash charges (depreciation and stock option
expenses), loss/gain on involuntary disposition, interest income, interest
expense, (gain)/loss on investment, write down of inventory, deferred tax
expense, and income tax. These items are items not related to operating or
current operating activities. When these items are removed, the Company
shows operating cash flow of $3,044,425 or $0.25 per share. This compares
with operating cash flow of $1,692,740 or $0.14 per share, in the
corresponding 6 months of 2019 (See the table that follows for details of
these calculations. Anticipated tariff rebates are not included in the
operating cash flow number).
The NanoChem division continues to be the dominant source of revenue and cash
flow for the Company. New opportunities continue to unfold in detergent, water
treatment, oil field extraction and agricultural use to further increase sales
in this division..
* a conference call has been scheduled for 11:00 am Eastern Time, 8:00 am
Pacific Time, on Monday, August 17th, 2020. CEO, Dan O'Brien will be
presenting and answering questions on the conference call. To participate
in this call please dial toll free 1-800-309-1256 (or 1-856-344-9308) just
prior to the scheduled call time.
Participation Passcode 345292 will be requested. The conference call title,
"Second Quarter 2020 Financial Results," may also be requested.
The above information and following table contain supplemental information
regarding income and cash flow from operations for the period ended June 30,
2020. Adjustments to exclude depreciation, stock option expenses and one time
charges are given. This financial information is a Non-GAAP financial measure as
defined by SEC regulation G. The GAAP financial measure most directly comparable
is net income. The reconciliation of each of the Non-GAAP financial measures is
as follows:
FLEXIBLE SOLUTIONS INTERNATIONAL, INC.
Consolidated Statement of Operations
For 3 Months Ended June 30 (6 Months Operating Cash Flow)
(Unaudited)
3 months ended June 30
2020 2019
---------------------------------
Revenue $ 7,709,607 $ 6,770,440
Income (loss) before income tax - GAAP $ 1,524,605 $ 331,264
Provision for Income tax net - GAAP $ (259,660) $ (150,466)
Net income (loss) - Controlling interest-
- GAAP $ 1,132,867 $ (27,733)
Net income (loss) per share controlling
interest - basic. - GAAP $ 0.09 $ 0.00
3 month weighted average shares used in
computing per share amounts - basic.- GAAP 12,240,545 11,769,635
6 month Operating Cash Flow
Ended June 30
-----------------------------------
Operating Cash Flow (6 months). NON-GAAP $3,044,425 b,c $1,692,740 b,c
Operating Cash flow per share excluding $ 0.25 b,c $ 0.14 b,c
non-operating items and items not related to
current operations (6 months) - basic.
NON-GAAP
Non-cash Adjustments (6 month) GAAP $ 348,141 d $ 373,351 d
Shares (6 month basic weighted average)
used 11,737,635 in computing per share
amounts - basic GAAP 12,239,171 11,737,635
Notes: certain items not related to "operations" of the Company have been
excluded from net income as follows.
a) Non-GAAP - For 2019 - Provision for Income tax less Deferred income tax
recovery = $529,546 less $125,999. See the financials for these numbers.
b) Non-GAAP - amounts exclude certain cash and non-cash items: depreciation
and stock option expense (2020 = $348,191, 2019 = $373,351), Gain on
investment (2020 = $539,417, 2019 = $259,514), net gain/(loss) on
involuntary disposition of equipment (2020 = N/A, 2019 = N/A), write down
of inventory (2019 = N/A, 2018 = N/A), interest income (2020 = $12,614,
2019 = $55,533), Interest expense (2020 = $156,075, 2019 = $247,472)
deferred tax (expense)/recovery (2020 = N/A, 2019 = $125,999), and Income
tax expense(2020 = $694,648, 2019 = $529,546). See the financial statements
for all adjustments.
c) The revenue and gain from the 50% investment in the private Florida LLC
announced in January 2019 is not treated as revenue or profit from
operations by Flexible Solutions given the Company only purchased 50% of
the LLC. The profit is treated as investment income and therefore occurs
below Operating income in the Statement of Operations. As a result the gain
from Flexible Solutions share in the LLC is removed from the calculation to
arrive at Operating Cash Flow.
d) Non-GAAP - amounts represent depreciation and stock compensation expense.
Safe Harbor Provision
The Private Securities Litigation Reform Act of 1995 provides a "Safe Harbor"
for forward-looking statements. Certain of the statements contained herein,
which are not historical facts, are forward looking statements with respect to
events, the occurrence of which involve risks and uncertainties. These
forward-looking statements may be impacted, either positively or negatively, by
various factors. Information concerning potential factors that could affect the
company is detailed from time to time in the company's reports filed with the
Securities and Exchange Commission.
Flexible Solutions International 6001 54th
Ave, Taber, Alberta, CANADA T1G 1X4
Company Contacts
Jason Bloom Toll Free: 800 661 3560
Fax: 403 223 2905
E-mail: info@flexiblesolutions.com
If you have received this news release by mistake or if you would like to be
removed from our update list please reply to:
info@flexiblesolutions.com
To find out more information about Flexible Solutions and our products, please
visit www.flexiblesolutions.com.
EX-99
3
form8k202ex9928-20.txt
EXH. 99.2 OBRIEN SPEECH
EXHIBIT 99.2
Q2 2020 speech
Good morning. I'm Dan O'Brien, CEO of Flexible Solutions.
Safe Harbor provision:
The Private Securities Litigation Reform Act of 1995 provides a "Safe Harbor"
for forward-looking statements. Certain of the statements contained herein,
which are not historical facts, are forward looking statements with respect to
events, the occurrence of which involve risks and uncertainties. These
forward-looking statements may be impacted, either positively or negatively, by
various factors. Information concerning potential factors that could affect the
company is detailed from time to time in the company's reports filed with the
Securities and Exchange Commission.
Welcome to the FSI conference call for Q2 2020.
Prior to addressing our financials, I'd like to talk about our corporate
condition and product lines along with what, in our opinion might occur over the
next two quarters.
Covid virus: The NanoChem Subsidiary, the ENP Subsidiary and the Florida LLC
investment are all engaged in producing for the agriculture and/or the cleaning
products sectors. Therefore, we are considered essential services and are likely
to remain so if restrictions are reinstated. Production and sales are continuing
to meet customer orders. We continued to shrink our inventory and increase our
cash position in Q2 by ordering less inventory than we consumed. This tactic has
been successful and we feel that we now have the right level of inventory to
suit the risks of covid while still having the ability to service our customers.
Our NanoChem division: NCS represents more than 1/2 of the revenue of FSI. This
division makes thermal poly-aspartic acid, called TPA for short, a biodegradable
polymer with many valuable uses. NCS also manufactures SUN 27(TM) and N Savr
30(TM) which are used to reduce nitrogen fertilizer loss from soil.
TPA is used in agriculture to significantly increase crop yield. The method of
action is by slowing crystal growth between fertilizer ions and other ions in
the soil resulting in the fertilizer remaining available longer for the plants
to use.
TPA is also a biodegradable way of treating oilfield water to prevent pipes from
plugging with mineral scale. Our sales into this market are well established and
normally grow steadily but slowly. A simple explanation of TPA's effect is that
it prevents the scaling out of minerals that are part of the water fraction of
oil as it exits the rock formation. Scale must be prevented to keep the oil
recovery pipes from clogging.
SUN 27(TM) and N Savr 30(TM) are our nitrogen conservation products. Nitrogen is
a critical fertilizer but it is subject to loss through bacterial breakdown,
evaporation and soil runoff.
SUN 27(TM) is used to conserve nitrogen from attack by soil bacterial enzymes
while N Savr 30(TM) is directed toward reducing nitrogen loss through leaching
and evaporation.
ENP, the October 2018 acquisition: ENP is focused on sales into the greenhouse,
turf and golf markets, while, our NCS sales are into row crop agriculture - two
very distinct markets. The strong quarters for ENP are 2 and 3 to match the US
spring and summer. Q1 2020 was stronger than the year earlier period and Q2
repeated the feat. ENP expects moderate growth in the second half 2020 with the
caution that Q4 early buy orders could be affected if the virus causes customers
to keep inventory very low.
Effect of the LLC investment announced in January 2019: This investment was
profitable, as usual. The company we invested in sold more in Q2 2020 than it
did in Q2 2019. The Company is focused on international sales into multiple
countries all of which are facing different covid issues and responding in
varied ways. The large number of variables prevents any useful prediction for
second half 2020 other than results similar to 2019.
Q3 2020 and the rest of the year
TPA, SUN 27(TM) and N Savr 30(TM) for agricultural use had peak uptake in Q1 and
Q2 with Q2 showing quite strongly. Early buy orders in Q4 could be reduced if
our customers decide to use just in time strategies.
Oil, gas and industrial sales of TPA are expected to be flat or mildly down in
Q3 compared to the previous year while predictions regarding Q4 are not possible
under the circumstances. Like agriculture, our sales to cleaning products and
water treatment are considered essential leaving only O&G as a market vertical
at significant risk. The risk in O&G is not permanent loss of business, rather,
it is the possibility of some wells shutting down for maintenance while oil
prices are low.
Tariffs: Since Sept 30th 2018, many of our raw materials imported from China
have included a 10% additional tariff which rose to 25% in 2019. US customers
received price increases from us as this inventory entered production.
International customers are not charged the tariffs because we are applying for
the export rebates available to recover the tariffs. As a result, the
accumulating tariff payments to the Government are affecting our cost of goods,
our cash flow and our profits negatively until the rebates are received. Rebates
are very complicated to apply for and can take many months to arrive. The total
dollar amount due back to us has become significant and continues to increase.
The rebates will increase profitability and cash flow while decreasing cost of
goods for the future quarters in which the rebates are received. In my last
speech I expressed comfort that we would begin to see rebates in Q2 or early in
Q3. I based this on the fact that we filed our template and request for our
first rebate in mid-May. As of Aug 14, there has been no response from the
government except an excuse that "employees are not in the office". Because
there is a 30 day payment delay even after approval, we no longer expect rebates
in Q3.
Highlights of the financial results:
Sales for the quarter increased 14% to $7.71 million, compared with $6.77
million for Q2 2019. The result is a gain of 1.13 MM or 9 cents per share in the
2020 period, compared to a loss of 28 thousand or 0 cents per share, in 2019. We
attribute the improvement to A] increased sales, B] reduced expenses, C] better
product mix and D] no repeat of the bad debt recognized in Q2 2019. Working
capital is adequate for all our purposes and is increasing during 2020 as we
book retained profit from sales. Effort will be made to minimize inventory and
accounts receivable while increasing cash until the effects of the virus become
more predictable. We also have a line of credit with BMO Harris Bank of Chicago.
We are confident that we can execute our plans with our existing capital. The
purchase of ENP in 2018 was funded by a term loan from Harris bank and a $1 MM
convertible debenture taken by the seller. One half the debenture was converted
to 200,000 FSI shares in 2019 while the remaining 500,000 was retired for cash
in Q2. The term loan is approaching half repayment. The LLC investment in
January 2019 was made with cash on hand provided by FSL, our Canadian operating
company.
The text of this speech will be available as an 8K filing on www.sec.gov by
Monday, August 17th. Email or fax copies can be requested from Jason Bloom at
Jason@flexiblesolutions.com.
Thank you, the floor is open for questions.