0001004878-13-000241.txt : 20130816 0001004878-13-000241.hdr.sgml : 20130816 20130816123649 ACCESSION NUMBER: 0001004878-13-000241 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20130814 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20130816 DATE AS OF CHANGE: 20130816 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: 131044444 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 form8kitem202aug-13.txt 8-K RE FINANCIAL 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, 2013 FLEXIBLE SOLUTIONS INTERNATIONAL INC. ------------------------------------- (Exact name of Registrant as specified in its charter) Nevada 001-31540 91-1922863 ----------------------- ----------------- --------------- (State or other jurisdiction (Commission File No.) (IRS Employer of incorporation) Identification No.) 615 Discovery Street Victoria, British Columbia V8T 5G4 ----------------------------------------------- (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 appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below) [] 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)) Item 2.02 Results of Operations and Financial Condition On August 14, 2013 the Company issued a press release announcing the Company's financial results for the three months ended June 30, 2013. Item 7.01 Regulation FD Disclosure On August 15, 2013 the Company held a conference call to discuss its financial results for the three months ended June 30, 2013, as well as other information regarding the Company. Item 9.01 Exhibits Exhibit Number Description of Document ------ ----------------------- 99.1 August 14, 2013 Press Release 99.2 Conference Call Speech 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: August 15, 2013 FLEXIBLE SOLUTIONS INTERNATIONAL INC. By:/s/ Daniel B. O'Brien ---------------------------------------- Daniel B. O'Brien, President and Chief Executive Officer EX-99 2 form8kitem202ex991aug-13.txt EXH. 99.1 - PRESS RELEASE EXHIBIT 99.1 FLEXIBLE SOLUTIONS (a) (b) (c) NEWS RELEASE a August 14, 2013 (d) FSI ANNOUNCES SECOND QUARTER, 2013 FINANCIAL RESULTS Conference call scheduled for Thursday August 15th, 11:00am Eastern time, 8:00am Pacific Time See dial in number below VICTORIA, BRITISH COLUMBIA, August 14, 2013 - 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, 2013. Mr. Daniel B. O'Brien, CEO, states, "We are pleased with the second quarter results. Year over year revenue growth was positively affected by agricultural sales made in Q2 that would have been booked in Q1 had the planting season been on time." Mr. O'Brien continues, "It is worthwhile mentioning that as a result of our January 1st, 2013 change in accounting for Taber, AB operations and its historical losses, our taxable income is greatly reduced. Until all the historical losses are applied against future income, we suggest that reviewing changes in current assets, liabilities and long term debt will help interpret the forward momentum of the Company." o Sales in the second quarter (Q2) were $4,884,629, up approximately 30% when compared to sales of $3,761,729 in the corresponding period a year ago. The financials give a Q2, 2013 accounting net income of $70,169, or $0.01 per share compared to an accounting net loss of $465,995, or $0.04 per share in Q2, 2012. o Basic weighted average shares used in computing per share amounts in Q2 were 13,169,991 for both 2013 and 2012. o Non-GAAP operating cash flow: For the 6 months ending June 30, 2013, net income reflects $715, 986 of non-cash charges (depreciation and stock option expenses), as well as net income tax ($70,000), interest expense ($55,880) and other minor items ($2,057) not related to operating or current operating activities. When these items are removed the Company shows operating cash flow of $975,138, or $0.07 per share. This compares with operating cash flow of $1,171,923, or $0.09 per share, in the corresponding 6 months of 2012 (see the table that follows for details of these calculations). * CEO, Dan O'Brien has scheduled a conference call for 11:00am EST, 8:00am PST, Wednesday August 15th to discuss the financials. Call 1-877-941-9205 (or 480-629-9771). The conference call title, "Second Quarter Financials," may be requested.* The above information and following table contain supplemental information regarding income and cash flow from operations for the 6 months ended June 30, 2013. 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: 1 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 2013 2012 -------------------------------- Revenue $4,884,629 $ 3,761,729 Income before income tax - GAAP $ 82,169 $ (345,995) Net income (loss) - GAAP $ 70,169 a $ (465,995)a Net income (loss) per common share - basic - GAAP $ 0.01 a $ (0.04)a 3 month weighted average shares used in computing per share amounts - basic - GAAP 13,169,991 13,169,991 6 month Operating Cash Flow Ended June 30 -------------------------------- Operating Cash flow (6 months). NON-GAAP $ 975,138 b $1,171,923 b Operating Cash flow per share excluding non- operating items and items not related to current operations (6 months) - basic - NON-GAAP $ 0.07 b $ 0.09 b Non-cash Adjustments (6 month) NON-GAAP $ 715,986 c $ 676,426 c Shares (6 month basic weighted average)in computing per share amounts - basic GAAP 13,169,991 13,169,991 Notes: certain items not related to "operations" of the Company have been excluded from net income as follows. a) Non-GAAP - as of January 2013 the accumulated loss and expenses resulting from the Alberta division can now be used to reduce taxable income from the Illinois division. b) Non-GAAP - amounts exclude certain non-cash items: depreciation and stock option expense (2013 = $715,986, 2012 = $676,426), interest expense (2013 = $55,880, 2012 = $61,414), net income tax (2013 = $70,000, 2012 = $680,000), gain on the sale of equipment(2013 = $2,057, 2012= $2,217) and interest income(2013 = $0, 2012= $361). See Operating Cash Flow for other adjustments. c) Non-GAAP - amounts represent depreciation, stock option 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 615 Discovery Street, Victoria, BC V8T 5G4 CANADA Jason Bloom Tel: 250 477 9969 Toll Free: 800 661 3560 Fax: 250 477 9912 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: alishap@flexiblesolutions.com To find out more information about Flexible Solutions and our products, please visit www.flexiblesolutions.com. EX-99 3 form8kitem202ex992aug-13.txt EXH. 99.2 - MEETING SCRIPT EXHIBIT 99.2 Q2 2013 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 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. Welcome to the FSI conference call for second quarter 2013. Prior to commenting specifically on the financials, I'd like to speak about where we are in our major projects and what we expect for the next quarters. Revenue was up substantially in second quarter 2013 compared to 2012 and up for the half year as well. We believe this is caused by continued growth in our NanoChem division market verticals combined with agricultural sales delayed from Q1. A cold, late spring after a drought in 2012 appears to have shifted some sales this year. The NanoChem division represents most of the revenue of FSI. This division makes poly-aspartic acid called TPA for short, a biodegradable protein with many valuable uses. Our sugar to aspartic acid plant, in Alberta, is now in operation. Our corporate policy is not to provide volume information or details of production. However, revenue is ongoing, we are depreciating the factory and the Taber production team is focused on continuous increases in quantity, efficiency and quality. Aspartic acid from the Taber plant is shipped to our Peru IL plant where it is converted to polyaspartic acid for onward sale to our customers. TPA is used in agriculture to increase crop yield. The method of action is through limiting crystal embryo growth between fertilizer ions in the soil. When embryonic crystals are prevented from transforming into fully crystalline form by TPA, the fertilizer remains available to plants further into the growing season. The firm but light attraction between the TPA and the fertilizer ions also prevents fertilizer run-off. Keeping fertilizer easily available to crops results in better yield with the same level of fertilization. In North America alone, the wholesale market is estimated at over $2 billion a year and most crops are able to use TPA profitably. Sales into agriculture grew quickly in 2012 and that strength has carried forward into 2013 but with a dip in the growth rate we attribute to weather conditions in 2012 and early 2013. Our internal sales team is focused on supporting our best distributors, helping the others improve their performance and identifying additional distribution opportunities. TPA in agriculture is a unique economic situation for all links in the sales to end user chain. With many products the economic value is good for all but one party, most commonly the farmer - who is asked to accept a soft value such as convenience instead of the cash profit accruing to the other parties. Not so for TPA: FSI earns a fair profit on manufacturing, distribution earns a strong profit selling to dealers, dealers make good profits selling to growers, yet the 1 grower still earns a great profit from the extra crops he produces with the same land and fertilizer program. More than 300 trials over the last 15 years have demonstrated that investing $20 per acre in TPA can payback $60 to $100 or more. We believe this is an excellent basis for long-term growth in sales. 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 growing steadily but can be subject to temporary reductions when production is cut back or when platforms are shut down for reconditioning. Industrially, TPA is used in high quality dish and laundry detergents that wish to be as biodegradable as possible. TPA is also an excellent choice for water treatment processes but customers need to accept a small cost premium compared to poly-acrylates. We have recently identified 2 additional industrial uses with significant volume potential and will be conducting trials and beginning sales over the next 6 - 8 quarters. Q3, Q4 and the start of 2014 We are optimistic. Our products are best in their class and there appears to be less volatility in world economic conditions compared to last year. We are not able to provide specific growth predictions because, even with loyal, growing customers and new sales opportunities in multiple markets, our sales are purchase order by purchase order rather than long term uptake contracts. It is unrealistic to give numerical guidance under these conditions. We are comfortable predicting that full year 2013 revenue will be higher than 2012. Our best estimate is that Q3 will resemble the year earlier period but with some growth and that in Q4 we may see faster year over year growth due to pre-ordering of agricultural TPA for the 2014 season. In 2014 we expect additional growth in revenue with the usual lumpy quarterly numbers because of customer behavior, weather, crop pricing and the other variables of our business. Highlights of the financial results: Sales for the quarter increased 30% to $4.88 million compared with $3.76 million for Q2 2012. The result is a gain of $70 thousand or $0.01 per share in the 13 period, compared to a loss of $466 thousand or $0.04 per share, in 2012. Now that Alberta factory is operating, a biomass expense is no longer given in the news release. Instead, due to the generation of revenue from that facility, expenses are included in operations. In addition, depreciation of the factory has begun and is being applied against income from all divisions. Working capital is very adequate. FSI's sales tend to be larger during the first half of the year, resulting in higher accounts receivable, lower cash and lower inventory. The Company's growth is supported by its mostly unused, $6.4 million line of credit with a Chicago based bank. Because of the out-size effects of depreciation, stock option expenses and one-time items on the financials of small companies, FSI also provides a non-GAAP measure useful for judging year over year success. "Operating cash flow" is arrived at by removing depreciation, 2 option expenses and one-time items from the statement of operations. For first half 2013, operating cash flow was $975 thousand, 7 cents per share compared to $1.17 million and 9 cents per share in 2012. Detailed information on how to reconcile GAAP with non-GAAP numbers is included in our news release of August 14th. Net income and income tax: As a result of our January 1st, 2013 change in accounting for Taber, AB operations and its historical losses, our taxable income is greatly reduced. Until all the historical losses from Taber are applied against future income, we suggest that reviewing the quarterly and annual changes in current assets, current liabilities and long term debt will help show the forward momentum of the Company. Last, our other product lines, Watersavr and swimming pools are being emphasized less than the NanoChem division while maintaining the long-term opportunities and limiting cash and management costs. Swimming pool sales are steady and we think that a new distributor in Western Europe will have a significant upward effect on pool division revenue over the next year. Watersavr sales are more difficult to predict. We are continuing our efforts in Turkey, Morocco, Chile, Senegal, parts of East-Asia and Australia. Small sales are expected at intervals through the year. The drought last summer has continued in the Colorado River Basin resulting in several small sales and dozens of inquiries; some with quite large potential. The successful trial in 2012 on Lake Sahara in Las Vegas has provided concrete evidence that Watersavr works safely in the US southwest and saves water at low cost to the water owner. The text of this speech will be available on our website by Friday Aug. 16th and email copies can be requested from Jason Bloom at 1800 661 3560. [Jason@flexiblesolutions.com] Thank you, the floor is open for questions 3