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): April 1, 2011
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
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(Exact name of Registrant as specified in its charter)
Nevada 000-29649 91-1922863
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(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
615 Discovery Street
Victoria, British Columbia V8T 5G4
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(Address of principal executive offices, including Zip Code)
Registrant's telephone number, including area code: (250) 477-9969
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N/A
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(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 March 31, 2011 the Company issued a press release announcing the
Company's third quarter financial results.
Item 7.01 Regulation FD Disclosure
On April 1, 2011 the Company held a conference call to discuss its
financial results for the year ended December 31, 2010 and other information
regarding the Company.
Item 9.01 Exhibits
Exhibit
Number Description of Document
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99.1 Press Release issued March 31, 2011
99.2 Conference call information
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 6, 2011
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
By: /s/ Daniel B. O'Brien
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Daniel B. O'Brien, President and Chief
Executive Officer
EXHIBIT 99.1
NEWS RELEASE March 31, 2011
FLEXIBLE SOLUTIONS ANNOUNCES FULL YEAR, 2010 FINANCIAL RESULTS
Conference call is scheduled for April 1, 2011. See the time and dial in
number below.
VICTORIA, BRITISH COLUMBIA, Mar 31, 2011 - FLEXIBLE SOLUTIONS INTERNATIONAL,
INC. (NYSE Amex: FSI, FRANKFURT: FXT), a developer and manufacturer of
biodegradable and environmentally safe, water and energy conservation
technology, as well as anti-scalant and crop nutrient enhancement products,
today announces financial results for the full year ended December 31, 2010.
Mr. Daniel B. O'Brien, CEO, states, "We are very pleased to announce record
revenue, significantly higher than even 2008, before the recession slowed our
growth."
o Sales for the full year 2010 were $11,491,401, up 17%, when compared to
$9,783,496 for full year 2009. The result was an after tax GAAP accounting
net loss of $0.01 per weighted average share compared net loss of $0.05
per weighted average share in full year 2009.
o Non-GAAP operating cash flow: (for details see table below). For the 12
months ending Dec. 31, 2010 net income (loss) reflects $538,029 of
non-cash charges, net Income Taxes of $690,180 and New Factory
Construction Costs of $870,236 (total =$2,098,445). When non-cash charges,
income tax and other items, not related to current operations of the
Company, are removed, the Company shows positive operating cash flow of
$1,908,365 or $0.14 per share. This compares with 2009 operating cash flow
of $956,322, or $0.07 per share.
o FSI's NanoChem Division (a U.S. division) had significant taxable revenue
in 2010, resulting in $770,180 income tax paid compared to $394,983 in
2009. At the same time expensing of certain construction costs from the
biomass factory in Canada resulted in a loss carry forward for that
division. These expenses will be very valuable to the Canadian division in
the near future, to reduce taxable revenue as the biomass factory in
Alberta comes on line.
o The biomass factory is very close to achieving commercial levels of
production. We hope to announce this milestone in the second quarter and
begin providing naturally sourced, polyaspartic acid to our current and
future customers.
The NanoChem division continues to be the dominant source of revenue and cash
flow for the Company. New opportunities continue to unfold in detergent, oil
field extraction and fertilizer use to further increase sales in this division.
In past years, the NanoChem Division sales have been less volatile quarter over
quarter than FSI's other divisions. However, due to increasing sales into
agriculture, seasonality may be more apparent in future quarters. Mr. O'Brien
continues, "I want to stress how hard our employees have worked as FSI survived
the recession and returned to impressive levels of growth. Processes have been
improved, our aspartic acid factory reached completion and new products have
been developed that will drive our growth for years to come. I look forward to
reporting more record quarters and years to the shareholders as well as the
achievement of other important milestones."
More below
Conference call
** CEO, Dan O'Brien has scheduled a conference call for 11:00 am EST, 8:00 am
PST, Friday April 1, 2011 to discuss the financials. To attend this call, dial
1-877-941-2333 (or 1-480-629-9723). The conference call title, `Fourth Quarter
Financials' may be requested **
The above information and following table contain supplemental information
regarding income and cash flow from operations for the 3 & 12 months
respectively ended Dec. 31, 2010 and 2009. 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 & 12 Months Ended Dec. 31 (12 Months Operating Cash Flow)
(12 month audited / 3 month unaudited)
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3 and 12 month revenue ended
Dec. 31
2010 2009
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3 month 3 month
revenue
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Revenue $ 2,596,082 $ 2,402,195
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12 month
revenue
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12 month Revenue $ 11,491,401 $ 9,783,496
Net income (loss) GAAP $ (190,080) $ (743,442)
Net income (loss) per share GAAP $ (0.01) $ (0.05)
Net income (loss) Excludes "net income tax as
indicated and as listed below" NON-GAAP $ 500,100 a $ (467,459)a
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Net income (loss) per share excluding "income
tax" NON-GAAP $ 0.04 a $ (0.03)a
12 month weighted average shares used in
computing per share amounts - basic GAAP $ 13,962,567 $14,020,375
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12 month Operating Cash Flow
The following calculations begin with: Net ended Dec. 31
income (loss) GAAP
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Operating cash flow (12 month). NON-GAAP -
Excludes: a and b as indicated and as listed
below $ 1,038,129 a,b $ 131,859a,b
Operating cash flow (12 month). NON-GAAP - $1 ,908,365 $ 956,322
Excludes: a.b and c as indicated and as listed a,b,c a,b,c
below
Operating Cash flow per share (12 months) -
basic. NON-GAAP - Excludes: items "a,b and c" as $ 0.14 $ 0.07 a,b,c
indicated and as listed below. a,b,c
Non-cash Adjustments (as per 12 month Statement $ 538,029 b $599,317 b
of Cash Flow)
Adjustments - other (as listed below) $ 1,560,416 a,c $1,100,446a,c
12 month basic weighted average shares used in
computing per share amounts - basic GAAP 13,962,567 14,020,375
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Notes: certain items not related to "operations" of the Company have been
excluded as follows.
a) NON-GAAP- "income tax (Net Income Tax: 2010 =$690,180, 2009 = $275,983)
b) NON-GAAP- Non-cash Adjustments for 2010 and 2009, "depreciation, stock
compensation expenses, write down of investment and inventory, loss on sale
of equipment, interest expense, other expenses, and shares for service (see
- Consolidated Statement of Cash Flow).
c) NON-GAAP- Other Non-operating adjustments - add "New factory construction
costs (2010 = $870,236, 2009 =$824,463), deduct interest income (interest
income: 2010 = $0, 2009 = $0) which are unrelated to the "current
operations" of the Company.
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
Company Contacts
Flexible Solutions International - Head Office
Jason Bloom
Tel: 250-477-9969
Tel: 800.661.3560
Email: 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: laura@flxiblesolutions.com
To find out more information about Flexible Solutions and our products, please
visit www.flexiblesolutions.com
EXHIBIT 99.2
Conference Call Speech Full Year 2010
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 full year 2010.
Before concentrating on the numbers, I'd like review what we have
accomplished in the last year and our estimates looking forward. 2010 was a good
year for FSI and I'm extremely proud of how our team performed. Our dedication
to lean operations, low leverage and sales into multiple market verticals has
served us well. Last year, for instance agriculture maintained our top line
revenue growth when oilfield business was constrained by contract renewal
activities at Norwegian oil service companies.
Among our significant achievements for 2010:
We returned to historical growth levels higher than 15% per year
compounded.
We achieved record sales of 11.5 million, exceeding the 2008 record by
over a million dollars.
We increased distribution of agricultural products leading to very strong
revenue growth in this market vertical.
We recovered the oilfield and detergent volumes lost during the recession
and even increased total sales in both market verticals.
In the first part of 2011, we completed projects started in 2010 to
strengthen our balance sheet and increase shareholder value.
First, we reduced the issued and fully diluted share count very
substantially through an attractively priced buyback and option expiry
respectively.
Second, we obtained a revolving line of credit at excellent terms that can
be used to fund our growth without issuing equity.
I want to speak about the biomass factory in Alberta, Canada. The equipment
we have waited so long for has been delivered and is almost ready for testing.
The Alberta steam inspector has asked for additional data before we can run the
equipment. We believe we can supply the data in days, not weeks and proceed to
testing and then production. This plant is designed to supply our Chicago
operations with most of the aspartic acid that they use for making poly-aspartic
acid. By using sugar in Alberta, we de-link our raw material supply from oil,
our current source, shorten our supply line by several weeks and thousands of
miles and dramatically improve the sustainable content of our finished products.
Production from sugar will result in reduced costs and the opportunity to gain
customers who insist on renewable-based materials. As the financials show, the
Alberta plant is not needed for a strong and growing company but it is wanted to
improve our products and reduce our costs and risks.
The NanoChem Division:
This division makes polyaspartic acid [TPA] a biodegradable protein with
many valuable uses. It now represents 90% of revenue and is the main sales and
profit driver of our company. In the detergent market we continue to proceed
toward our first sale to one of the biggest world manufacturers. Our samples of
polyaspartates made entirely from sugar have been provided to this potential
customer and we have received confirmation that they work as well as our oil
based products. The market for our product in detergent is estimated as greater
than 350 million dollars per year.
TPA is used in agriculture to increase crop yield. In North America alone,
the wholesale market is over 2 billion a year and most crops are able to use TPA
profitably. 2010 was a good year for fertilizers and additives. The market
vertical saw excellent growth. A new distributor, signed in late 2009 has grown
sales faster than any group we have worked with. Based on their stellar 2010
performance, we hope to see good growth for TPA in agriculture in 2011 and even
more in 2012 when yet another motivated new distributor is expected to generate
significant sales.
TPA is a biodegradable way of treating oilfield water to prevent pipes
from plugging with mineral scale. Our sales into this market are strong and oil
companies in the Nordic countries must use TPA as part of environmental
regulation. In 2010 oilfield TPA sales returned as predicted and total oilfield
sales are expected to increase again in 2011 and 2012.
Q1 AND REST OF 2011:
Revenue in the first 2.5 months of 2011 has been stronger than 2010.
Agriculture has led the way and swimming pool revenue has surprised on the
upside. The peak in pool revenue straddles Q1 and Q2 so it is too early to
predict the full year in that division. Oilfield sales are also tracking higher
than 2010 with the growth driven by both new contracts for our standard products
and new uses of our improved TPA's that have been developed and proven over the
last several years. The last 12 months have seen an increased willingness by
detergent manufacturers to consider biodegradable compounds and we have added
new detergent customers as well as increasing sales to existing companies.
We are reasonably confident that revenue growth will continue through 2011
and 2012, likely at a rate of 15% or higher, but variable from quarter to
quarter as is usual for small companies.
Highlights of the financial results:
Sales for the year increased 17% to $11.5 million compared with $9.78
million for 2009. The result was a loss of $190 thousand or $0.01 per share in
the 2010 period, compared to a loss of $743 thousand or $0.05 per share, in
2009.
Sales in Q4 were 2.6 million, up 8% compared to 2.4 million in the year
earlier period. We do not believe that the lower % growth in Q4 is indicative;
rather we think future growth should mimic the full year data.
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, option expenses, income tax and
one-time items from the statement of operations.
For full year 2010, operating cash flow was $1.91 million, 14 cents per
share compared to $956 thousand and 7 cents per share in 2009. We are very
pleased with this result. The Alberta plant is close to operation and we expect
that once it begins covering its expenses with production, the company as a
whole will show significant net profits. Detailed information on how to
reconcile GAAP with non-GAAP numbers is included in our news release of March
31st.
Income taxes: Our financials include $770 thousand in income tax paid. The
Canadian division, Flexible Solutions Ltd, is accumulating losses as the Alberta
factory is expensed and, soon, depreciated. This is a planned, short-term
situation since the Alberta plant will generate significant profit once it
begins selling aspartic acid to the NanoChem division in the US. The NanoChem
division, of course, must remit taxes to the US government based on its income
as a separate US company.
Finally, our other product lines, Watersavr has had many more inquiries
over the last several months. At least one large prospect is close to ordering.
We are continuing our efforts in Turkey, Morocco, parts of the far-east,
Australia and Spain. Swimming pools will be managed to optimize cash flow for
support to other divisions. By providing a small portion of our Alberta factory
to the Pool Division, we have reduced lease costs by $120 thousand a year, cash
that can be used to drive other projects forward. The Swimming pool products,
Ecosavr and Heatsavr, do continue to gain customers and the business is a good
one - just not as fast growing as our other divisions. Our prospective partner
for the BTI product has declined to continue citing too many other
opportunities. We will look for alternative partners.
The text of this speech will be available on our website by Monday April
4th and email copies can be requested from Jason Bloom at 1800 661 3560.
[Jason@flexiblesolutions.com]
Thank you, the floor is open for questions.