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.