UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30th 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from___________ to ________
Commission file number 000-29649
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
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(Exact name of small business issuer as specified in its charter)
NEVADA NONE
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(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
2614 Queenswood Dr. Victoria BC Canada V8N 1X5
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(Address of principal executive offices)
( 250 )477-9969
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(Issuer's telephone number)
(Former name, former address and former fiscal year if changed since last
report)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12,13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes[ ] No[ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: Common stock $.001 par value
9,131,136 shares as of September 30th 2000.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.
Attached hereto and incorporated herein by reference.
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following information contains certain forward looking statements that
anticipate future trends or events. These statements are based on certain
assumptions that may prove to be erroneous and are subject to certain risks
including but not limited to the risks of increased competition in the Company's
industry and other risks detailed in the Company's Securities and Exchange
Commission filings. Accordingly, actual results may differ, possibly materially,
from the predictions contained herein.
During the three months ended September 30th 2000, the Company experienced a net
after tax loss of $25,241 as compared to income of $68,047 for the three months
ended September 30th 1999. The loss was a result of three factors. Most
significant was the poor summer weather in northeastern Canada and the USA. This
resulted in a shortened season for outdoor pools and an earlier production
slowdown compared to the previous year. Sales to the area were much higher than
the year earlier period but higher production rates in second quarter 2000
caused the Company to fill demand in fewer months. Secondly, the Company engaged
in research and development of a new consumer product (custom printed cold
packs) in a pro-active effort to have a sideline product available in the event
of future poor weather in our summer markets. Finally, more capital was expended
to continue the development of "Water$avr" in order to speed entry into that
market.
RESULTS OF OPERATIONS
Reference is made to Item 2, "Management's Discussion and Analysis" included in
the Company's registration statement on Form 10-SB for the year ended December
31st 1999, as amended, on file with the Securities and Exchange Commission. The
following analysis and discussion pertains to the Company's results of
operations for the three month and nine month periods ended September 30th 2000,
compared to the results of operations for the three month and nine month periods
ended September 30th 1999, and to changes in the Company's financial condition
from December 31st 1999 to September 30th 2000.
THREE MONTHS ENDED September 30th 2000 and 1999
For the third quarter of the current fiscal year ending September 30th 2000,
sales were $143,102 compared to $357,531 for the same quarter of the previous
year. The decrease in sales were as a result of the bad weather in the
northeastern USA and Canada, our main market during this quarter.
<PAGE>
Operating expenses were $61,819 for the third quarter, up from $46,033 for the
third quarter of last year. This is as a result of increased spending on
research and development for Water$avr and cold packs. The largest increases
were in the areas of wages ($34,171), and sub-contracting fees ($7880). The net
loss for the quarter was $25,241 which represents a substantial decrease from
third quarter last year when the net income was $68,047. The decrease in income
was a result of decreased sales and higher operating expenses.
The earnings per share (fully diluted) was $0.00 for the three months ended
September 30th 2000 compared to $0.01 for the three months ended September 30th
1999.
NINE MONTHS ENDED September 30th 2000
Sales in the first nine months ended September 30th 2000 were $943,288 compared
to $667,101 for the nine months ended September 30th 1999. As was the case for
the six months ended June 30th 2000 the increase in sales were a result of
increased numbers of customers and increased sales per customer.
Operating expenses for the Company were $220,317 for the six months ended
September 30th 2000 up from $105,302 for the nine months ended September 30th
1999. The increase in operating expenses in virtually every category are a
result of greatly increased production and sales by the Company and increased
research and product development costs.
The net income for the nine months ended September 30th 2000 was $185,468
compared to a net income of $117,337 for the nine months ended September 30th
1999. The increase in income was due to the increase in sales compared to the
year earlier period.
The earnings per share (fully diluted) was $0.02 for the nine month period ended
September 30th 2000 compared to $0.01 for the nine month period ended September
30th 1999.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has financed it's cash flow requirements through
retained earnings from sales. Cash provided by net earnings which occurred
during the nine months ended September 30th was $185,468. This resulted in a
total cash and cash equivalent position of $475,502 at the end of the period.
As of September 30th 2000 the Company had working capital of $475,502 which
represented an increase of $203,279 as compared to the working capital of
September 30th 1999. The increase was a result of retained earnings from the
fourth quarter of 1999 and the nine month period ending June 30th 2000.
The Company has no external sources of liquidity in the form of credit lines
from banks. Management believes that its available cash will be sufficient to
fund the Company's working capital requirements through December 31st 2000.
Management further believes that available cash will be sufficient to implement
the Company's expansion plans. No investment banking agreements are in place and
there is no guarantee that the Company will be able to raise capital in the
future should that become necessary.
IMPACT OF THE YEAR 2000 ISSUE
The year 2000 issue arises because many computerized systems use two digits
rather than four to identify a year. Date sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. Although the change in date has occurred, it is not possible to conclude
that all aspects of the year 2000 issue that may affect the company including
those related to customers, suppliers, or other third parties, have been fully
resolved.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS:
The Company does not have any derivative financial instruments as of September
30th 2000. However, the Company is exposed to interest rate risk.
The Company's interest income and expense are most sensitive to changes in the
general level of U.S. and Canadian interest rates. In this regard, changes in
U.S. and Canadian interest rates affect the interest paid on the Company's cash
equivalents as well as the interest paid on debt.
FOREIGN CURRENCY RISK
The Company operates primarily in Canada. Therefore, the Company's business and
financial condition is sensitive to currency exchange rates or any other
restriction imposed on its currency.
<PAGE>
Part II - OTHER INFORMATION
Item 1. Legal proceedings - None
Item 2. Changes in Securities - None
Item 3. Default upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Securities Holders - None
Item 5. Other Information - None
Item 6.(a) Exhibit 27 - Financial Data Schedule
Item 6.(b) Reports on Form 8-K - None
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, thereunto duly authorized.
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
(Registrant)
Dated: November 11 2000 /s/ Dan O'Brien, President and Director
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<PAGE>
<TABLE>
<CAPTION>
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEET
QUARTERS ENDED SEPT. 30TH 2000 AND 1999 UNAUDITED
2000 1999
Assets --------- ---------
Current
<S> <C> <C>
Cash $228,986 $55,865
Accounts receivable 138,332 87,990
Inventory 105,484 127,809
Prepaid expenses 1,700 359
Assets --------- ---------
Total Current Assets 475,502 272,023
Property and Equipment 50,011 39,421
--------- ---------
Total Assets $524,513 $311,444
========= =========
Liabilities
Current
Accounts payable $ 16,001 $ 0
Sales Taxes Payable 5,200 (8,679)
Accrued Liabilities 0 0
Income tax payable 58,080 35,054
--------- ---------
Total current liabilities 79,281 26,375
Stockholders' Equity
Capital Stock
Authorized 50 000 000 Common shares; par value - .001 each
1 000 000 Preferred shares; par value - .01 each
Issued
9 131 316 Common shares 9,131 9,131
Capital in excess of par value 163,653 163,653
Other comprehensive income (loss) 10,822 (2,537)
Retained earnings (deficit) 261,626 114,822
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Total Stockholders Equity 445,232 285,069
--------- ---------
Total Liabilities and Stockholders' Equity $524,513 $311,444
========= =========
</TABLE>
See accompanying notes to financial statements
<PAGE>
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF OPERATIONS
QUARTERS ENDED SEPT. 30TH 2000 AND 1999 UNAUDITED
2000 1999
-------- --------
Sales $143,102 $357,531
Cost of Sales 106,526 208,134
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Gross Profit 36,576 149,134
Operating Expenses
Wages 34,171 20,384
Shipping 3,297 3,956
Office 1,055 882
Professional Fees 1,161 1,046
Misc. 533 1,902
Rent 3,037 1,088
Subcontracting Fees 7,880 3,720
Phone 1,065 414
Travel 5,735 1,182
Entertainment 277 0
Commissions 283 10,300
Service Charges 773 114
Depreciation 2,552 1,045
Stock Promotion 0 0
-------- --------
Total Operating Expenses 61,819 46,033
Gross Income (25,241) 103,101
Income Tax 0 35,054
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Net Income (loss) $(25,241) $ 68,047
======== ========
Income per share $ 0.00 $ 0.01
======== ========
Weighted average number of shares outstanding 9,131,316 9,131,316
See accompanying notes to financial statements
<PAGE>
FLEXIBLE SOLUTIONS INTERNATIONAL INC
CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPT. 30TH 2000 AND 1999 UNAUDITED
2000 1999
-------- --------
Sales $943,288 $667,101
Cost of Sales 441,959 383,915
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Gross Profit 501,329 283,186
Operating Expenses
Wages 101,717 37,802
Shipping 10,806 6,327
Office 4,834 1,572
Professional Fees 34,885 8,517
Misc. 5,960 4,217
Rent 9,157 2,350
Subcontracting Fees 27,943 5,740
Phone 3,466 1,716
Travel 10,739 3,569
Entertainment 597 0
Commissions 1,514 31,079
Service Charges 939 273
Depreciation 7,760 2,140
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Total Operating Expenses 220,317 105,302
Gross Income 281,012 177,844
Income Tax 95,544 60,467
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Net Income $185,468 $117,377
======== ========
Income per Share $ 0.02 $ 0.01
======== ========
Weighted Average Number of Shares Outstanding 9,131,316 9,131,316
See accompanying notes to financial statements
<PAGE>
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
QUARTER ENDED SEPT. 30th 2000 AND SEPT. 30th 1999 UNAUDITED
2000 1999
-------- --------
Cash Flows from Operating Activities
Net Income (loss) $(25,241) $68,047
Adjustments 0 0
Depreciation 2,552 1,045
Changes in non cash working capital
Accounts receivable (163,505) (5,066)
Inventory 53,546 (74,263)
Prepaid expenses 1,058 (185)
Accounts payable 3,023 (2,731)
Sales tax payable 14,880 8,679
Income tax payable 46,035 (35,054)
-------- --------
Net cash flows provided by (used in) operating activities ( 67,652) (39,528)
Cash flows used in investing activities
Acquisition of equipment (2,286) (20,212)
Cash flows from financing activities
Issuance of Capital Stock 0 0
Share issue costs 0 0
Advance from (repayment to) shareholder 0 0
-------- --------
Net cash flows provided by (used in) financing activities 0 0
Effect of exchange rate changes on cash (2,991) (1,249)
-------- --------
Inflow (outflow) of cash 72,929 (60,989)
Cash - beginning of quarter 156,057 116,854
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Cash - end of quarter $228,986 $ 55,865
======== ========
See accompanying notes to financial statements
<PAGE>
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
Notes to Financial Statements:
Foreign Currency - Flexible Solutions functions using the Canadian
dollar. Translation to US dollars for reporting is done at the
average exchange rates during the year. Losses and gains
arising from currency translation are disclosed as other
comprehensive income (loss) in shareholders equity.
Estimates- The preparation of consolidated financial statements
requires management to make estimates that affect the reported
assets and liabilities at the date of the statements. Actual
results could differ.
Inventory- Inventory is valued at the lower of cost or net realizable
value. Cost is determined on a first in-first out basis.
Property and Equipment - Property and equipment are recorded at cost
and depreciated using the declining balance with the following
annual rates:
Manufacturing equipment 20%
Trailer 30%
Computer hardware 30%
Furniture and Fixtures 20%
Office equipment 20%
Revenue Recognition - Revenue is recognized when product is shipped.
Returns have been insignificant since the Company's inception,
therefore no allowance has been established for product
returns.
Financial instruments - The Company's instruments consist of cash,
accounts receivable, accounts payable and accrued liabilities.
Management opines that there are no significant currency or
credit risks from these instruments.
Income (loss) per share calculation - Calculated by dividing net
income by the weighted average number of shares outstanding.
Accounts Receivable - No provision has been made for uncollectible
accounts. Management believes all are collectible.
