0001004878-20-000166.txt : 20201117
0001004878-20-000166.hdr.sgml : 20201117
20201116175420
ACCESSION NUMBER: 0001004878-20-000166
CONFORMED SUBMISSION TYPE: 8-K
PUBLIC DOCUMENT COUNT: 3
CONFORMED PERIOD OF REPORT: 20201116
ITEM INFORMATION: Results of Operations and Financial Condition
ITEM INFORMATION: Other Events
ITEM INFORMATION: Financial Statements and Exhibits
FILED AS OF DATE: 20201117
DATE AS OF CHANGE: 20201116
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: 201318701
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
form8k2023qresults11-20.txt
8-K 3RD QUARTER 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): November 16, 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 November 13, 2020, the Company issued a press release announcing its
financial results for the period ended September 30, 2020.
Item 8.01 Other Events
On November 16, 2020 the Company held a conference call to discuss its
financial results for the three months ended September 30, 2020, as well as
other information regarding the Company.
Item 9.01 Exhibits
Exhibit
Number Description of Document
------- ------------------------
99.1 November 13, 2020 Press Release
99.2 Text of opening remarks by Dan O'Brien/ November 16, 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: November 16, 2020
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
By: /s/ Daniel B. O'Brien
----------------------------------------
Daniel B. O'Brien, President and Chief
Executive Officer
EX-99
2
form8k3qpr11-20.txt
EXH. 99.1 PRESS RELEASE
NEWS RELEASE
November 13, 2020
FSI ANNOUNCES Third Quarter, 2020 FINANCIAL RESULTS
A Conference call is scheduled for Monday November 16th, 11:00am
Eastern time, 8:00am Pacific Time See dial in
numbers below
VICTORIA, BRITISH COLUMBIA, November 13, 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 third quarter (Q3) ended September 30, 2020.
Mr. Daniel B. O'Brien, CEO, states, "We continue to generate growth and
profitability in tough and uncertain times. This is driven by the hard work and
flexibility of our employees." Mr. O'Brien continues, "As conditions change, we
will react and do our best to continue our success."
o Sales in the Third quarter (Q3) were $8,112,930, up approximately 10%
when compared to sales of $7,403,492 in the corresponding period a
year ago. The financials show a Q3, 2020 net profit of $582,369, or
$0.05 per share, compared to a net profit of $412,048, or $0.03 per
share, in Q3, 2019.
o Basic weighted average shares used in computing earnings per share
amounts in Q3 were 12,240,545 and 12,108,110 for Q3, 2020 and Q3, 2019
respectively.
o Non-GAAP operating cash flow: For the 9 months ending September 30,
2020, net income reflects $534,333 of non-cash charges (depreciation,
stock option expenses), as well as gain (loss) on disposition of
equipment, gain on investment, interest expense, interest income,
write down of inventory, and income tax. Net income attributable to
non-controlling interests (minority interest) is removed from the cash
flow calculation. These are items not related to operating or current
operating activities. When these items are removed, the Company shows
operating cash flow of $4,082,754, or $0.33 per share. This compares
with operating cash flow of $2,534,644, or $0.21 per share, in the
corresponding 9 months of 2019 (see the table that follows for details
of these calculations).
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.
Conference call
A conference call has been scheduled for 11:00 am Eastern Time, 8:00 am Pacific
Time, on Monday, November 16th. CEO, Dan O'Brien will be presenting and
answering questions on the conference call. To participate in this call please
dial 1 877-876-9173 (or 1 785-424-1667) just prior to the scheduled call time.
The conference call title, "FSI Third Quarter 2020 Financial Results," may be
requested.
The above information and following table contain supplemental information
regarding income and cash flow from operations for the period ended September
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 September 30 (9 Months Operating Cash Flow)
(Unaudited)
-------------------------------------------------------------------------------
3 months ended September 30
2020 2019
---------------------------------
Revenue $8,112,930 $ 7,403,492
Income (loss) before income tax - GAAP $1,311,803 $ 915,802
Provision for Income tax (expense)/
recovery - GAAP $ (370,203) $ (213,771)
Net income (loss) - GAAP $ 582,369 $ 412,048
Net income (loss) per common share -
basic. - GAAP $ 0.05 $ 0.03
3 month weighted average shares used in
computing per share amounts - basic.- GAAP 12,240,545 12,108,110
9 month Operating Cash Flow
Ended September 30
--------------------------------
Operating Cash flow (9 months). NON-GAAP $4,082,754a,b,c $ 2,534,644a,b,c
Operating Cash flow per share excluding
non-operating items and items not
related to current operations (9 months)
- basic. NON-GAAP $ 0.33a,b,c $ 0.21a,b,c
Non-cash Adjustments (9 month) GAAP $ 534,333d $ 591,472d
Shares (9 month basic weighted average)
used in computing per share amounts - basic
GAAP $ 12,239,633 $11,862,484
-------------------------------------------------------------------------------
Notes: certain items not related to "operations" of the Company have been
excluded from net income as follows.
a) Non-GAAP -:: Flexible Solutions International purchased 65% of ENP in 4th
quarter, 2018 (October 2018).
b) Non-GAAP - amounts exclude certain cash and non-cash items: depreciation
and stock compensation expense (2020 = $534,333, 2019 = $591,472), interest
expense (2020 = $199,947, 2019 = $341,791), interest income (2020 =
$26,197, 2019 = $69,154), gain on sale of asset (2020 = $9,490, 2019 =
N/A), gain on investment (2020 = $660,601, 2019 = $342,248), write down of
inventory (2020 = N/A, 2019 = N/A), deferred income tax recovery (2020 =
N/A, 2019 = $125,999), and Income tax (2020 = $1,064,851, 2019 = $743,317).
Net income attributable to non-controlling interests (minority interest) is
removed from the cash flow calculation (2020 = $558,324, 2019 = $527,778).
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
gains from all investments, including that of the Florida LLC, are 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 statement 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
form8k3qspeech11-20.txt
EXH. 99.2 SPEECH
Q3 2020
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 Q3 2020.
Prior to discussion of our financials, I'd like to update 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 and Q3 by ordering less inventory than we consumed. This
tactic was 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. It acts 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 can be lost 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 Division: 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. Q3 was very strong. ENP expects moderate year over year growth in Q4
2020 with the caution that Q4 early buy orders could be affected if the virus
causes customers to keep inventory very low. Q1 2021is still unclear at this
time.
The Florida LLC investment: This investment was profitable, as usual. The
company we invested in has sold more to date in 2020 than it did in the first 9
months of 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 Q4
2020 and Q1 2021 other than continued growth at a moderate rate is likely.
Q4 2020 and early 2021
TPA, SUN 27(TM) and N Savr 30(TM) for agricultural use had peak uptake in Q1 and
Q2. Early buy orders in Q4 could be reduced if our customers decide to use just
in time strategies. However, recent strong increases in corn and soybean prices
may counteract customer worries.
Oil, gas and industrial sales of TPA are expected to be flat in Q4 compared to
the previous year while predictions regarding 2021 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
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.
Changes in customs categories in Q3 2020 have resulted in another of our raw
materials being added to the tariff list increasing the strain on us. 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 Q1 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 had been no response from the government
except an excuse that "employees are not in the office". In September, we were
told that they had lost our file and instructed us to refile. Because files are
examined in order of receipt and there is a 30-day payment delay even after
approval, we no longer expect rebates in Q4.
Highlights of the financial results:
Sales for the quarter increased 10% to $8.11 million, compared with $7.40
million for Q3 2019. The result is a gain of 582 thousand or 5 cents per share
in the 2020 period, compared to a gain of 412 thousand or 3 cents per share, in
2019. We attribute the improvement to increased sales.
It is not obvious why revenue similar to Q2 would result in significantly lower
profit in Q3. Reason 1 is product mix: Q3 historically sees a lower margin
product mix. Reason 2 is the addition of another of our raw materials to the
tariff regime resulting in additional costs until rebates arrive. Reason 3 is
the relative strength of the ENP division whose revenue is fully consolidated.
However, 35% of ENP's profit is backed out to ENP's minority shareholder. ENP
had an excellent Q3 which transformed our average Q into a good one. We feel
that this is further validation of our ENP acquisition.
Working capital is adequate for all our purposes and is increasing during 2020
as we book retained profit from sales. Continuous effort will be made to
optimize inventory and accounts receivable while increasing cash until the
effects of the virus become more predictable. We also have a line of credit with
Midland States Bank. 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 [now carried by Midland] 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 of this year. The term
loan is now more than half repaid. 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
Tuesday, November 17th. Email or fax copies can be requested from Jason Bloom at
Jason@flexiblesolutions.com.
Thank you, the floor is open for questions.