0001004878-21-000035.txt : 20210402 0001004878-21-000035.hdr.sgml : 20210402 20210401174752 ACCESSION NUMBER: 0001004878-21-000035 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20210331 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20210402 DATE AS OF CHANGE: 20210401 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: 21799549 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 form8k202yrend4-21.txt 8-K RE 2020 YEAR END 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): March 31, 2021 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: Name of exchange Title of each class Trading Symbol 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 March 31, 2021, the Company issued a press release announcing its financial results for the year ended December 31, 2020. Item 8.01 Other Events On April 1, 2021 the Company held a conference call to discuss its financial results for the year ended December 31, 2020, as well as other information regarding the Company. Item 9.01 Exhibits Exhibit Number Description of Document ------- ------------------------- 99.1 March 31, 2021 Press Release 99.2 Text of conference call speech by Dan O'Brien/April 1, 2021. 2 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: April 1, 2021 FLEXIBLE SOLUTIONS INTERNATIONAL INC. By: /s/ Daniel B. O'Brien ---------------------------------------- Daniel B. O'Brien, President and Chief Executive Officer 3 EX-99 2 form8kyrendex9914-21.txt EXH 99.1 PRESS RELEASE EXHIBIT 99.1 FLEXIBLE SOLUTIONS INTERNATIONAL, INC. NEWS RELEASE March 31, 2021 FSI ANNOUNCES Full Year, 2020 FINANCIAL RESULTS: NET PROFIT up 50% A Conference call is scheduled for Thursday April 1st, 2021, 11:00am Eastern time, 8:00am Pacific Time See dial in number and explanation below VICTORIA, BRITISH COLUMBIA, March 31, 2021 - 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 full year ended December 31, 2020. Mr. Daniel B. O'Brien, CEO, states, "We are very pleased with the increase in revenue, profits and cash flow in 2020, especially considering the constraints of operating during the pandemic." Mr. O'Brien continues, "We plan to continue our growth as vaccines are distributed and the economy opens." o Sales for the Full Year were $31,407,454, up approximately 14% when compared to sales of $27,440,110 in the corresponding period a year ago. The financials show a Full Year, 2020 net profit of $2,977,050, or $0.24 per share, compared to a net income of $1,912,392, or $0.16 per share, in Full Year, 2019. Note: the financials do not take into account potential tariff rebates that are currently being applied for. The tariffs were charged on some raw materials used to manufacture products that were shipped in both 2019 and 2020. o Basic weighted average shares used in computing earnings per share amounts were 12,240,641 and 11,945,636 for full year, 2020 and full year, 2019 respectively. o Non-GAAP operating cash flow: For the 12 months ending December 31, 2020, net income reflects $1,007,684 of non-cash charges (depreciation, stock option expenses), as well as gain (loss) on disposition of equipment, gain(loss) on investment, interest expense, interest income, write down of inventory, Income tax expense/recovery, and pre tax Net income attributable to non-controlling interests. These are items not related to current operating activities. When these items are removed, the financials show operating cash flow of $4,514,182 or $0.37 per share. This compares with operating cash flow of $2,619,040, or $0.22 per share in the corresponding 12 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. 1 Conference call A conference call has been scheduled for 11:00 am Eastern Time, 8:00 am Pacific Time, on Thursday April 1st, 2021 . CEO, Dan O'Brien will be presenting and answering questions on the conference call. To participate in this call please dial 1-877-876-9177 (or 1-785-424-1672) just prior to the scheduled call time. To join the call participants will be requested to give their name and company affiliation. The conference ID: SOLUTIONS and or call title "Fourth quarter 2020 Financial Results," will be requested more... The above information and following table contain supplemental information regarding income and cash flow from operations for the period ended December 31, 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 12 Months Ended December 31 (12 Months Operating Cash Flow) (Unaudited) ------------------------------------------------------------------------------- 12 months ended December 31 2020 2019 -------------------------------- Revenue $ 31,407,454 $27,440,110 Income (loss) before income tax - GAAP $ 5,190,975 $ 2,314,621 Provision for Income tax - net - GAAP $a(1,607,441) $ (17,436) Net income (loss) - GAAP $ 2,977,050 $ 1,912,392 Net income (loss) per common share - basic. - GAAP $ 0.24 $ 0.16 12 month weighted average shares used in computing per share amounts - basic.- GAAP 12,240,641 11,945,636 12 month Operating Cash Flow Ended December 31 --------------------------------- Operating Cash Flow (12 months). NON-GAAP $4,514,182 a,b,c $2,619,040a,b,c Operating Cash Flow per share excluding $ 0.37 a,b,c $ 0.22a,b,c non-operating items and items not related to 0.37a,b,c current operations (12 months) - basic - NON-GAAP Non-cash Adjustments (12 month) - GAAP $1,007,684 d $ 866,708 d Shares (12 month basic weighted average) used in computing per share amounts - basic GAAP 12,240,641 11,945,636 -------------------------------------------------------------------------------- Notes: certain items not related to "operations" of the Company's net income are listed below. a) Non-GAAP - Flexible Solutions International purchased 65% of ENP in 4th quarter, 2018 (October 2018). Therefore Operating Cash Flow is adjusted by the pre-tax Net income or loss of the non-controlling interest in ENP. An adjustment to 2019 Operating cash flow has been made to account for the use of a pre-tax amount versus an after tax amount which was originally used in that year. 2 b) Non-GAAP - amounts exclude certain cash and non-cash items: depreciation and stock compensation expense (2020 = $1,007,684, 2019 = $866,708), interest expense (2020 = $260,657, 2019 = $428,371), interest income (2020 = $53,101, 2019 = $80,731), gain on investment (2020 = $877,358, 2019 = $323,824), gain on sale of equipment (2020 = 9,490, 2019 = $2,312), Gain on acquisition of ENP Realty (2020 = $133,341, 2019 = N/A), Deferred income tax recovery (expense) (2020 = (409,553), 2019 = $602,421), Income tax (2020 = $1,197,888, 2019 = $619,857), and pre-tax Net income attributable to non-controlling interests (2020 = $871,844, 2019 = $583,793). *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 (2020 = $877,358, and 2019 = $323,824), including those from 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. 3 EX-99 3 form8kyrendex9924-21.txt EXH. 99.2 CONF. CALL SPEECH EXHIBIT 99.2 Full Year 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 FY 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 even if restrictions are reinstated. Production and sales are continuing to meet customer orders. We reduced our inventory and increased our cash position in 2020 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. 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. 1 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. FY 2020 growth in both revenue and profit was good. ENP expects the level of growth in in 2021 to be similar to 2020. The Florida LLC investment: This investment was profitable as usual. The LLC increased its revenue nearly 30%. This had the effect of increasing our NCS division sales to them and our share of the LLC profits substantially. 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 FY 2021 except that the LLC management expects continued growth. For Q1 2021 some customers have made their spring orders so late that shipments will occur in Q2. No revenue loss is anticipated but recognition will be in Q2 rather than Q1. Strategic investment in Lygos: In December, FSI invested $500,000 in Lygos in return for equity. Lygos is using the investment to continue development of a microbial route to aspartic acid using corn sugar as a feedstock. FSI would be the major user of aspartic acid derived this way and believes that sustainable aspartic acid would allow us to obtain large new customers and develop valuable new products. Lygos' scientific team have already successfully developed other organic acids from sustainable feedstock and are recognized as one of the world leaders in synthetic biology by their peers in the industry and academia. We have high confidence in their ability to achieve sustainable aspartic acid through a fermentation route. Q1 2021 TPA, SUN 27(TM) and N Savr 30(TM) for agricultural use have peak uptake in Q1 and Q2. As we suspected, ordering in 2021 is not the same as in 2020 and some orders are early while others are later than usual. We expect that some Q1 orders will ship in Q2 and be recognized in the Q they ship in. Oil, gas and industrial sales of TPA are expected to be flat to slightly up in Q1 2021. Like agriculture, our sales to cleaning products and water treatment are considered essential, leaving only O&G as a market vertical at risk from covid. The risk in O&G is declining as the vaccines are distributed and economies prepare to open. Tariffs: Since Sept 30, 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 now exceeds $1 MM 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 2020 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 2020. 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 did not receive rebates in 2020. We received a request for small changes to our application in early January and responded in 24 hours. We are still waiting for the government's response to our changes. 2 Shipping and Inventory: Ocean shipping and land transport in the US are taking much longer than usual. 6 weeks from PO to receipt of product has become 3 months in some cases. The Suez Canal problem will exacerbate this for a few weeks. We are doing our best to cope with shipping issues by ordering far ahead but we warn that some disruption will be unavoidable. New Equipment: 2.5 years ago, we began the purchase and installation of new equipment that will allow us to make additional products and increase sales. The machinery went live in December and will contribute to sales and profits in 2021 and onward. Revenue from this equipment is expected to be significant by early 2022. Highlights of the financial results: Sales for the year increased 14% to $31.4 million, compared with $27.4 million for FY 2019. Profits: The result is a gain of $2.98 million or 24 cents per share in 2020, compared to a gain of $1.91 million or 16 cents per share, in 2019. We attribute the improvement to increased sales and lower costs for travel and professional fees along with no bad debt charge. Operating Cash Flow: This non-GAAP number is useful to show our progress with non-cash items removed for clarity. For 2020 it was $4.51 million or 37 cents per share compared to $2.62 million or 22 cents per share. Long term debt: We repaid the $500 thousand convertible note with cash in April 2020 and reduced our principal on our historic loans by more than $1 MM during the year. We took on $500 thousand in PPP loans and $450 thousand in a mortgage for the land and factory owned through ENP realty. Although it looks like we ended the year with similar long-term debt, once the new asset is accounted for and the PPP is forgiven our improved position is obvious. Working capital is adequate for all our purposes and is increasing continuously as we book retained profit from sales. 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, as noted above, the remainder was paid back in cash. The LLC investment in January 2019 was made with cash on hand provided by FSL, our Canadian operating company. The equity investment in Lygos was funded with cash on hand from the same source. The text of this speech will be available as an 8K filing on www.sec.gov by Monday, April 4th. Email or fax copies can be requested from Jason Bloom at Jason@flexiblesolutions.com. Thank you, the floor is open for questions. 3