EX-99 5 ex-99.htm

 

EXHIBIT 99

 

FLEXIBLE SOLUTIONS INTERNATIONAL, INC.

 

Common Stock

 

THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE “RISK FACTORS”.

 

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

This Prospectus relates to shares of common stock of the Company which may be issued pursuant to a Stock Incentive Plan adopted by the Company. The Stock Incentive Plan provides for the grant to selected employees of the Company and other persons of shares of the Company’s common stock and options to purchase shares of the Company’s common stock. Persons who received shares of common stock pursuant to the Stock Incentive Plan and who are offering such shares to the public by means of this Prospectus are referred to as the “Selling Shareholders”.

 

In some cases the Stock Incentive Plan is referred to as the “Plan”. The terms and conditions of any stock grants and the terms and conditions of any options, including the price of the shares of Common Stock issuable on the exercise of options, are governed by the provisions of the Plan and any particular agreements between the Company and the plan participants.

 

The Selling Shareholders may offer the shares of common stock from time to time in negotiated transactions through the NYSE American Stock Exchange at fixed prices which may be changed from time to time, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. The Selling Shareholders may effect such transactions by selling the shares to or through securities broker/dealers, and such broker/dealers may receive compensation in the form of discounts, concessions, or commissions from the Selling Shareholders and/or the purchasers of the shares for whom such broker/dealers may act as agent or to whom they sell as principal, or both (which compensation as to a particular broker/dealer might be in excess of customary commissions). See “Selling Shareholders” and “Plan of Distribution”.

 

None of the proceeds from the sale of the shares by the Selling Shareholders will be received by the Company. The Company has agreed to bear all expenses (other than underwriting discounts, selling commissions and fees and expenses of counsel and other advisers to the Selling Shareholders).

 

The purchase of the securities offered by this prospectus involves a degree of risk. See “Risk Factors” beginning on page 7 of this prospectus.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or has passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 

The date of this Prospectus is March __, 2023.

 

1

 

 

AVAILABLE INFORMATION

 

The Company is subject to the information requirements of the Securities Exchange Act of 1934 (the “Exchange Act”) and in accordance therewith, files reports and other information with the Securities and Exchange Commission (the “Commission”). Certain information concerning the Company is available at the Internet Web Site maintained by the Securities and Exchange Commission at www.sec.gov. This Prospectus does not contain all information set forth in the Registration Statement of which this Prospectus forms a part and exhibits thereto which the Company has filed with the Commission under the Securities Act and to which reference is hereby made.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

The following documents filed with the Commission by Flexible Solutions International, Inc. (Commission File No. 001-31540) are incorporated by reference into this prospectus:

 

our Annual Report on Form 10-K for the fiscal year ended December 31, 2021;
   
our Quarterly Reports on Form 10-Q for the periods ended March 31, 2022, June 30, 2022 and September 30, 2022;
   
our Current Reports on Form 8-K filed with the SEC on April 1, 2022, April 12, 2022, April 18, 2022 (three reports), May 17, 2022, July 26, 2022 (two reports), August 16, 2022 September 30, 2022, November 15, 2022, and November 22, 2022;
   
our Proxy Statement relating to our November 18, 2022 Annual Meeting of Shareholders; and
   
the description of our common stock contained in our Registration Statement on Form 8-A filed with the SEC on November 12, 2002 and all amendments and reports updating that description

 

The Company will provide, without charge, to each person to whom a copy of this Prospectus is delivered, including any beneficial owner, upon the written or oral request of such person, a copy of any or all of the documents incorporated by reference herein (other than exhibits to such documents, unless such exhibits are specifically incorporated by reference into this Prospectus). Requests should be directed to:

 

Flexible Solutions International, Inc.

6001 54 Ave.

Taber, Alberta, Canada T1G 1X4

(403) 223-2995

Attention: Daniel B. O’Brien

 

2

 

 

All documents filed with the Commission by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this prospectus and prior to the termination of this offering shall be deemed to be incorporated by reference into this prospectus and to be a part of this prospectus from the date of the filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference shall be deemed to be modified or superseded for the purposes of this prospectus to the extent that a statement contained in this prospectus or in any subsequently filed document which also is or is deemed to be incorporated by reference in this prospectus modifies or supersedes such statement. Such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.

 

Investors are entitled to rely upon information in this prospectus or incorporated by reference at the time it is used by the Company even though that information may be superseded or modified by information subsequently incorporated by reference into this prospectus.

 

The Company has filed with the Securities and Exchange Commission a Registration Statement under the Securities Act of l933, as amended, with respect to the securities offered by this prospectus. This prospectus does not contain all of the information set forth in the Registration Statement. For further information with respect to the Company and such securities, reference is made to the Registration Statement and to the exhibits filed with the Registration Statement. Statements contained in this prospectus as to the contents of any contract or other documents are summaries which are not necessarily complete, and in each instance reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement, each such statement being qualified in all respects by such reference. The Registration Statement and related exhibits may be examined at the Commission’s internet site (www.sec.gov).

 

3

 

 

TABLE OF CONTENTS

 

 

  PAGE
   
FORWARD LOOKING STATEMENTS 5
THE COMPANY 5
RISK FACTORS 7
DILUTION 7
USE OF PROCEEDS 7
SUMMARY INFORMATION REGARDING THE PLAN 7
SELLING SHAREHOLDERS 10
PLAN OF DISTRIBUTION 10
DESCRIPTION OF SECURITIES 11
INDEMNIFICATION 12
GENERAL 12

 

4

 

 

FORWARD LOOKING STATEMENTS

 

This prospectus contains forward-looking statements that involve risks and uncertainties. When used in this prospectus, the words “plan,” “target,” “anticipate,” “believe,” “estimate,” “intend,” “expect” and similar expressions are intended to identify such forward-looking statements. Forward-looking statements include, without limitation, the statements regarding our future plans, future expenses and costs, and future liquidity and capital resources. All forward-looking statements in this prospectus are based upon information available to us on the date of this prospectus, and we assume no obligation to update any such forward-looking statements. Forward looking statements involve a number of risks and uncertainties and there can be no assurance that such statements will prove to be accurate.

 

THE COMPANY

 

We manufacture Thermal Polyaspartates (“TPAs”) in our Peru, Illinois plant using a thermal polymerizing process. The multiple variants produced are optimized for individual market verticals and sold for end use or through distribution.

 

TPAs for Oilfields. TPAs are used to reduce scale and corrosion in various “topside” water systems. They are used in place of traditional phosphonate and other products when biodegradability is required by environmental regulations. We have the ability to custom manufacture TPAs depending on the specific water conditions associated with any oil well. TPAs are also used in fracking fluids to reduce the toxicity while maintaining equal function.

 

TPAs for the Agricultural Industry. TPAs have the ability to reduce fertilizer crystallization before, during and after application and can also delay crystal formation between fertilizer and minerals present in the soil. Once crystallized, fertilizer and soil minerals are not able to provide plant nourishment. As a result, in select conditions the use of TPAs either blended with fertilizer or applied directly to crops can increase yields significantly. TPAs are designated for crop nutrient management programs and should not be confused with crop protection and pesticides or other agricultural chemical applications. Depending on the application, TPA products are marketed under a variety of brands including EX-10TM, AmisorbTM, LYNXTM, MAGNETTM, AmGroTM and VOLTTM. Markets of significance include corn, wheat, soybeans, rice, potatoes, sugar beets, cotton, tomatoes, almonds and other high value per acre crops.

 

TPAs for Irrigation. The crystallization prevention ability of TPAs can also be useful in select irrigation conditions. By reducing calcium carbonate scale propagation, TPAs can prevent early plugging of drip irrigation ports, reduce maintenance costs and lengthen the life of equipment. TPAs compete with acid type scale removers, but have the advantage of a positive yield effect on the plant, as well as an easier deployment formulation with liquid fertilizers when used as part of a “fertigation” program. Our TPAs for drip irrigation scale prevention are marketed and sold through the same channels as TPAs used by the agricultural industry.

 

TPAs in Cleaning Products. TPA can replace polyacrylates in cleaning products which is valuable because TPA is biodegradable while polyacrylates are not. In a cleaning product formulation, TPA prevents the re-deposition of dirt onto the surfaces to be cleaned allowing dirt to be rinsed away.

 

5

 

 

Nitrogen conservation products for agriculture. We manufacture and sell two conservation products and mixtures used for slowing nitrogen loss from fields. One significant loss route for nitrogen fertilizer is enzymatic degradation by bacteria naturally present in soil. Our product, SUN 27TM inhibits the bacterial action and keeps the nitrogen fertilizer available for plant growth. The second significant nitrogen loss mechanism is de-nitrification. This is also caused by bacterial activity in soil resulting in oxygen being stripped from the fertilizer leaving nitrogen gas. The gas can’t be used by the plants and escapes into the atmosphere. Our N Savr 30TM product uses the most effective active ingredients available to combat this cause of fertilizer loss. We sell SUN 27TM and N Savr 30TM through distributors in North and South America under our trade names and under private labels.

 

HEATSAVR®

 

Our studies indicate that approximately 70% of the energy lost from a swimming pool occurs through water evaporation. HEATSAVR® is a chemical product for use in swimming pools and spas that forms a thin, transparent layer on the water’s surface. The transparent layer slows the evaporation of water, allowing the water to retain a higher temperature for a longer period of time and thereby reducing the energy required to maintain the desired temperature of the water. We have received reports from our commercial customers documenting energy savings of between $2,400 and $6,000 per year when using HEATSAVR®.

 

In outdoor pools, the HEATSAVR® also provides convenience compared to pool blankets. It is often inconvenient to use conventional pool blankets since a pool blanket must be removed and stored before the pool can be used. Pool blankets do not provide any energy savings when not on the pool. Conversely, HEATSAVR® eliminates the need to install, remove and store the blanket and works 24 hours a day. In addition, the use of HEATSAVR® in an indoor pool results in even greater energy savings since indoor pool locations use energy not only to heat the pool water, but also to air condition the pool environment. By slowing the transfer of heat and water vapor from the pool to the atmosphere of the pool enclosure, less energy is required to maintain a pool at the desired temperature and there is a reduced load on the air-conditioning system. We also manufacture and sell products which automatically dispense HEATSAVR® into commercial size swimming pools or spas at the rate of one ounce per 400 sq. ft. of water surface per day.

 

WATERSAVR®

 

This product utilizes a patented variation of our HEATSAVR technology to reduce water evaporation in reservoirs, potable water storage tanks, livestock watering ponds, aqueducts, canals and irrigation ditches. WATERSAVR may also be used for lawn and turf care and potted and bedding plants.

 

6

 

 

WATERSAVR® is sold in granulated form and can be applied by hand, by fully automated scheduled metering, or by an automatic dispenser.

 

Tests have indicated that WATERSAVR®:

 

  Reduces daily water evaporation as much as 54%;
  Reduces monthly water evaporation as much as 37%;
  Is odorless;
  Has no effect on invertebrates or vertebrates;
  Has no anticipated effect on any current drinking water treatment processes; and
  Is biodegradable.

 

We have one part-time employee involved in the sales and marketing of WATERSAVR®.

 

RISK FACTORS

 

Investment in our common stock offered pursuant to this prospectus involves risks. You should carefully consider the risk factors in our most recent Annual Report on Form 10-K and all other information contained or incorporated by reference into this prospectus, as updated by our subsequent filings under the Securities Exchange Act of 1934 before acquiring any of our common stock. The occurrence of any of these risks might cause you to lose all or part of your investment in our common stock.

 

DILUTION

 

As of September 30, 2022, the Company’s net book value was $2.62 per share. If the price paid for shares in this offering is greater than $2.62 per share, an investor will suffer dilution equal in amount to the difference between the price paid for the shares and the Company’s net tangible book value at the time of purchase.

 

USE OF PROCEEDS

 

All of the shares offered by this prospectus are being offered by certain owners of the Company’s common stock (the Selling Shareholders) and were issued by the Company in connection with the Company’s Stock Incentive Plan. None of the proceeds from this offering will be received by the Company. Expenses expected to be incurred by the Company in connection with this offering are estimated to be approximately $10,000. The Selling Shareholders have agreed to pay all commissions and other compensation to any securities broker/dealers through which they sell any of the Shares.

 

SUMMARY INFORMATION REGARDING THE PLAN

 

The Stock Incentive Plan (the “Plan”) reserves 1,500,000 shares of common stock for issuance to plan participants in the form of incentive and non-qualified stock options and stock grants. Each stock option awarded allows the holder to purchase one share of our common stock.

 

The Plan is administered by our Board of Directors (or any committee subsequently appointed by the Board) and is vested with the authority to interpret the provisions of the Plan and supervise the administration of the Plan. In addition, the Board is empowered to select those persons who will participate in the Plan, to determine the number of shares subject to each award and to determine when, and upon what conditions, awards granted under the Plan will vest, terminate, or otherwise be subject to forfeiture and cancellation. The terms and conditions of any awards issued, including the price of the shares underlying each award are governed by the provisions of the Plan and any agreements with the Plan participants.

 

7

 

 

Incentive Stock Options

 

All of our employees are eligible to be granted incentive stock options pursuant to the Plan. Options granted pursuant to the Plan terminate at such time as may be specified when the option is granted.

 

The exercise price of each option cannot be less than 100% of the fair market value of our common stock at the time of the granting of the option provided, however, if the optionee, at the time the option is granted, owns stock possessing more than 10% of the total combined voting power of all classes of our stock, the purchase price of the option shall not be less than 110% of the fair market value of the stock at the time of the granting of the option.

 

The total fair market value of the shares of common stock (determined at the time of the grant of the option) for which any employee may be granted options which are first exercisable in any calendar year may not exceed $100,000.

 

At the discretion of the Board of Directors, options granted pursuant to the Plan may include installment exercise terms for any option such that the option becomes fully exercisable in a series of cumulating portions. The Board may also accelerate the date upon which any option (or any part of any option) is first exercisable. However, no option, or any portion thereof may be exercisable until one year following the date of grant. In no event shall an option granted to an employee then owning more than 10% of our common stock be exercisable by its terms after the expiration of five years from the date of grant, nor shall any other option granted pursuant to the Plans be exercisable by its terms after the expiration of ten years from the date of grant.

 

Non-Qualified Stock Options

 

Our employees, directors and officers, and consultants or advisors are eligible to receive non-qualified stock options pursuant to the Plan, provided however that bona fide services must be rendered by such consultants or advisors and such services must not be in connection with a capital-raising transaction or promoting our common stock.

 

At the discretion of our Board of Directors options granted pursuant to the Plan may include installment exercise terms for any option such that the option becomes fully exercisable in a series of cumulating portions. The Board may also accelerate the date upon which any option (or any part of any option) is first exercisable.

 

8

 

 

Stock Grants

 

A stock grant gives the participant the right to receive a specified number of shares of common stock. Restrictions imposed at the time of grant may limit the participant’s ability to transfer the stock and subject the stock to a substantial risk of forfeiture until specific conditions or goals are met. Any restrictions will lapse in accordance with a schedule or other conditions as determined by the Board, which might include the achievement of specified performance targets and/or continued employment of the participant until a specified date. As a general rule, if a participant terminates employment when the stock is subject to restrictions, the participant forfeits the unvested stock.

 

Other Information Regarding the Plan

 

In the discretion of the Board, any option granted pursuant to the Plan may include installment exercise terms such that the option becomes fully exercisable in a series of cumulating portions. The Board may also accelerate the date upon which any option (or any part of any options) is first exercisable. Any shares issued pursuant to the Plan and any options granted pursuant to the Plan or will be forfeited if the “vesting” schedule established by the Board administering the Plan at the time of the grant is not met. For this purpose, vesting means the period during which the employee must remain as our employee or the period of time a non-employee must provide services to us. At the time an employee ceases working for us (or at the time a non-employee ceases to perform services for us), any shares or options not fully vested will be forfeited and cancelled. At the discretion of the Board payment for the shares of common stock underlying options may be paid through the delivery of shares of our common stock having an aggregate fair market value equal to the option price, provided such shares have been owned by the option holder for at least one year prior to such exercise. The exercise may be made through a “cashless” exercise or a combination of cash and shares of common stock at the discretion of the Board.

 

Awards are generally non-transferable except upon death of the recipient. Shares issued pursuant to the Plan will generally not be transferable until the person receiving the shares satisfies the vesting requirements imposed by the Board when the shares were issued.

 

Our Board of Directors may at any time, and from time to time, amend, terminate, or suspend the Plan in any manner it deems appropriate, provided that such amendment, termination or suspension will not adversely affect rights or obligations with respect to shares or options previously granted.

 

The following lists, as of March __, 2023, the options and shares granted pursuant to the Stock Incentive Plan. Each option represents the right to purchase one share of the Company’s common stock.

 

Total   Shares         
Shares   Reserved for   Shares   Remaining 
Reserved   Outstanding   Issued as   Options/Shares 
Under Plan   Options   Stock Bonus   Under Plan 
 1,500,000    976,000        524,000 

 

9

 

 

SELLING SHAREHOLDERS

 

The Company has issued (or may in the future issue) shares of its common stock to various persons pursuant to the Stock Incentive Plan. The Stock Incentive Plan provides for the grant or issuance to selected employees of the Company and other persons of shares of the Company’s common stock and options to purchase shares of the Company’s common stock.

 

The Company’s officers and directors who may acquire shares of common stock pursuant to the Plan, and who are offering these shares of common stock to the public by means of this Prospectus, are referred to as the “Selling Shareholders”.

 

The following table provides certain information as of March __, 2023 concerning the share ownership of the Selling Shareholders and the shares offered by the Selling Shareholders by means of this Prospectus. All of the Selling Shareholders are officers and/or directors of the Company.

 

           Number of     
           Shares to be     
Name of      Number of   Owned on   Percent 
Selling  Number of   Shares Being   Completion of   of 
Shareholder  Shares Owned   Offered (1)   Offering   Class 
                 
Daniel O’Brien   4,474,706    400,000    4,474,706    36%
Robert Helina   25,000    5,000    25,000    * 

 

* Less than 1%

 

(1)Represents shares issuable upon the exercise of options. The Company has filed with the Commission under the Securities Act of 1933 a Form S-8 registration statement, of which this Prospectus forms a part, with respect to the resale of the shares owned by the Selling Shareholders from time to time in the public market or in privately negotiated transactions.

 

PLAN OF DISTRIBUTION

 

The Selling Shareholders may sell the Shares offered by this Prospectus from time to time in negotiated transactions in the public market at fixed prices which may be changed from time to time, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. The Selling Shareholders may effect such transactions by selling the Shares to or through broker/dealers, and such broker/dealers may receive compensation in the form of discounts, concessions, or commissions from the Selling Shareholders and/or the purchasers of the Shares for which such broker/dealers may act as agent or to whom they may sell, as principal, or both (which compensation as to a particular broker/dealer may be in excess of customary compensation).

 

The Selling Shareholders and any broker/dealers who act in connection with the sale of the Shares hereunder may be deemed to be “underwriters” within the meaning of Section 2(11) of the Securities Acts of 1933, and any commissions received by them and profit on any resale of the Shares as principal might be deemed to be underwriting discounts and commissions under the Securities Act.

 

10

 

 

The Company has advised the Selling Shareholders that they and any securities broker/dealers or others who may be deemed to be statutory underwriters will be subject to the prospectus delivery requirements under the Securities Act of 1933. The Company has also advised each Selling Shareholder that in the event of a “distribution” of the shares owned by the Selling Shareholder, such Selling Shareholder, any “affiliated purchasers”, and any broker/ dealer or other person who participates in such distribution may be subject to Rule 102 under the Securities Exchange Act of 1934 (“1934 Act”) until their participation in that distribution is completed. A “distribution” is defined in Rule 102 as an offering of securities “that is distinguished from ordinary trading transactions by the magnitude of the offering and the presence of special selling efforts and selling methods”. The Company has also advised the Selling Shareholders that Rule 101 under the 1934 Act prohibits any “stabilizing bid” or “stabilizing purchase” for the purpose of pegging, fixing or stabilizing the price of the common stock in connection with the sale of the Shares by any Selling Shareholder.

 

DESCRIPTION OF SECURITIES

 

Common Shares

 

The Company is authorized to issue an unlimited number of common shares. Holders of the Company’s common shares are each entitled to cast one vote for each share held of record on all matters presented to the shareholders. Cumulative voting is not allowed; hence, the holders of a majority of the Company’s outstanding common shares can elect all directors.

 

Subject to the rights of holders of preferred shares, if any, holders of the Company’s common shares are entitled to receive such dividends as may be declared by the Company’s board of directors out of funds legally available and, in the event of liquidation, to share pro rata in any distribution of our assets after payment of liabilities. The Company’s board of directors is not obligated to declare a dividend. It is not anticipated that dividends will be paid in the foreseeable future.

 

Holders of the Company common shares do not have preemptive rights to subscribe to additional shares if issued. There is no conversion, redemption, sinking fund or similar provisions regarding the common shares. All outstanding common shares are fully paid and non-assessable.

 

Preferred Stock

 

The Company is authorized to issue an unlimited number of preferred shares of preferred stock in one or more series. Subject to the Alberta provisions of the Business Corporations Act, the Company’s directors may, by resolution, establish the designations, powers, rights, preferences, qualifications, restrictions and limitations of any series of preferred shares. As of the date of this Prospectus, no preferred shares were outstanding.

 

Transfer Agent

 

Computershare, Inc., of Denver, Colorado, is the transfer agent for the Company’s common stock.

 

11

 

 

INDEMNIFICATION

 

Our directors and officers are indemnified as provided by the Alberta Business Corporation Act and our Bylaws. We have agreed to indemnify each of our directors and certain officers against certain liabilities, including liabilities under the Securities Act of 1933. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the provisions described above, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

GENERAL

 

No dealer, salesman, or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus in connection with this offering and, if given or made, such information or representations must not be relied upon as having been authorized by the Company or the selling shareholders. This prospectus does not constitute an offer to sell, or a solicitation of any offer to buy, the securities offered in any jurisdiction to any person to whom it is unlawful to make an offer or solicitation. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create an implication that there has not been any change in the affairs of the Company since the date hereof or that any information contained herein is correct as to any time subsequent to its date.

 

All dealers effecting transactions in the registered securities, whether or not participating in this distribution, may be required to deliver a prospectus. This is an addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

 

12