UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
Amendment #2
GENERAL FORM FOR REGISTRATION OF SECURITIES
Under Section 12(b) or (g) of the Securities Exchange
Act of 1934
Flexible Solutions International Inc.
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(Exact name of Small Business Issuer as specified in its charter)
Nevada N/A
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(State or other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
2614 Queenswood Drive, Victoria, British Columbia CANADA V8N 1X5
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(Address of principal executive offices)
Issuer's Telephone Number, (250) 477-9969
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Securities to be registered pursuant to Section 12(b) of the Act: None
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Securities to be registered pursuant to Section 12(g) of the Act:
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Common Stock $0.001 par value.
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(Title of Class)
Page 1 of 47
Index to Exhibits on Page 27
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Flexible Solutions International Inc.
Form 10-SB
TABLE OF CONTENTS
PART I
Page
Item 1. Description of Business............................. 3
Item 2. Management's Discussion and Analysis or Plan of
Operation................................ 14
Item 3. Description of Property............................. 19
Item 4. Security Ownership of Certain Beneficial Owners
and Management..................................... 19
Item 5. Directors, Executive Officers, Promoters
and Control Persons................................. 21
Item 6. Executive Compensation.............................. 23
Item 7. Certain Relationships and Related Transactions...... 24
Item 8. Description of Securities........................... 24
PART II
Item 1. Market Price Of And Dividends on the Registrant's
Common Equity and Related Stockholder Matters....... 26
Item 2. Legal Proceedings................................... 26
Item 3. Changes in and Disagreements with Accountants...... 27
Item 4. Recent Sales of Unregistered Securities............ 27
Item 5. Indemnification of Directors and Officers.......... 27
PART F/S
Item 1. Financial Statements................................ 28
PART III
Item 1. Index to Exhibits 29
Item 2. Description of Exhibits
2
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
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Introduction
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Flexible Solutions International Inc. (hereinafter is also referred to as the
"Company" and/or the "Registrant") is involved in the sale of chemicals which
slow down the evaporation of water. Applications include swimming pools where
their use allows the water to retain a higher temperature for a longer period of
time; irrigation canals and reservoirs. The Registrant is still in the
development phase. At the end of its latest fiscal year, 12/31/99, total assets
were $359 thousand; gross revenues were $759 thousand; and, net income was $103
thousand. At the end of Fiscal 1998, ended 12/31/98, the Company had total
assets of $174 thousand, gross revenues of $84; and, a net loss of ($18
thousand). The Registrant also currently relies exclusively on the efforts of
its founder and president Mr. Daniel B. O'Brien. (Note the Risk Factor section
beginning on page ten which discusses this along with other risk factors.) The
Company was incorporated in May 1998 in the state of Nevada.
The shares of the Company began trading on the National Quotation Bureau's "Pink
Sheets" on October 12, 1998. The Pink Sheet Market consists of security firms
who act as market makers in the stocks of, usually very small, companies. The
bid and asked prices are not quoted electronically, but are quoted daily in
"hard copy" which is delivered to firms which subscribe. Stocks which trade in
the Pink Sheets are usually not as liquid as those which trade in electronic
markets and, often time, the difference between the bid and the asked prices are
substantial.
On June 25, 1998 the Company completed the process of acquiring Flexible
Solutions Ltd. Flexible Solutions Ltd. was a company engaged in the development
and marketing of a swimming pool chemical designed to reduce heat loss.
The Company's principal office is located at 2614 Queenswood Drive, Victoria,
British Columbia V8N 1X5. The contact person is Mr. Daniel B. O'Brien, President
and Director. The telephone number is (250) 477-9969; the facsimile number is
(250) 477-9912. The Company currently maintains a website at
www.flexiblesolutions.com.
The Company's authorized capital includes 50,000,000 shares of common stock with
$0.001 par value and 1,000,000 shares of preferred stock with $0.01 par value.
As of the close of the Company's latest fiscal year, December 31, 1999, there
were 9,131,316 shares of common stock outstanding and no shares of preferred
shares outstanding. As of the Company's latest fiscal quarter, ended March 31,
2000, there were 9,131,316 shares of common stock outstanding and no shares of
preferred shares outstanding.
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The Company's common stock trades in the Pink Sheet Market under the symbol
"FXSO".
The information in this Registration Statement is current as of May 20, 2000,
unless otherwise indicated.
Historical Corporate Development
The Company was incorporated in the state of Nevada on May 12, 1998.
The Company acquired Flexible Solutions Ltd. ("Flexible Solutions") on June 25,
1998 in a non-arms length transaction. The Company issued 7,000,000 shares of
its Common Stock in exchange for all of the issued and outstanding stock of
Flexible Solutions. Upon the filing of the Articles of Share Exchange with the
Nevada Secretary of State on June 30, 1998, Flexible Solutions became a
wholly-owned subsidiary of the Company.
The transaction whereby the Company acquired Flexible Solutions is considered to
be a non-arm's length transaction because the valuation of Flexible Solutions
and the determination of the number of shares to be issued to its owners was not
made independently or based on appraisals.
Flexible Solutions was incorporated on January 25, 1991. From its inception
through the fiscal year ended January 31, 1994, Flexible Solutions incurred net
losses as follows: $1,326 in 1992; $1,883 in 1993; and, $3,265 in 1994. From
1994 to 1995, Flexible Solutions generated a net income of $3,440, but suffered
a net loss of $2,454 for the fiscal year ended January 31, 1996. For the 1997
and 1998 fiscal years, Flexible Solutions had net income of $1,679 and $3,154
respectively.
On August 17, 1998, the Company completed an offering of 1,050,000 shares of its
Common Stock at $0.01 per share, raising gross proceeds of $10,500.
ON September 7, 1998, the Completed an offering of 500,000 shares of its Common
Stock at $0.05 per share, raising gross proceeds of $25,000.
On November 13, 1998, the Company completed an offering of 1,000,000 shares of
its Common Stock at $0.25 per share, raising gross proceeds of $145,329 (581,316
shares sold).
The proceeds of all of the above offerings were used for professional fees;
research and development of the tropical fish product; the purchase of machinery
and dies to begin large scale
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production of the tropical fish product; and, general corporate purposes. The
offerees, in addition to Dan O'Brien and Dr. Robert O'Brien, were, in all
instances, friends, family or business associates well know to either Dan
O'Brien or Dr. Robert O'Brien.
In 1999 the Company began renting a 1,000 square foot factory located at 1746
Island Highway, Victoria, British Columbia V9B 1H8. The monthly rent for this
facility is $690 and the Company has not executed a formal lease agreement. All
of the Company's manufacturing functions are now conducted at this location.
BUSINESS
- --------
Flexible Solutions Ltd.
Company Background
- ------------------
The Company manufacturers and markets chemicals and chemical dispensers through
its wholly-owned subsidiary, Flexible Solutions Ltd. The chemicals are designed
to act as energy saving "liquid blankets" which reduce the evaporation of water.
The Company currently manufactures three products: "HEAT$AVER", the "Tropical
Fish" and "WATER$AVER".
The HEAT$AVER Product and the Tropical Fish Product:
Product Description:
The primary product of the Company is HEAT$AVER. This product is a non-toxic
chemical which forms an invisible skin on the surface of water thereby reducing
the amount of evaporation and creating an energy saving device. The Company
estimates that evaporative losses account for between 70% and 95% of pool and
spa energy use.
HEAT$AVER is a mixture of ingredients which are lighter than water so that they
automatically float to the surface. They are attracted to each other so that
they try always to form a very thin layer over the whole pool surface. They are
individually so small that they are 500 times smaller than the spaces in a high
quality filter. After a swimmer stops disturbing the water they rush to reform a
complete layer. Management estimates that the use of HEAT$AVER could achieve
savings in energy costs of up to 40% and that most pool managers and/or owners
will realize energy bill reductions between 17% and 30%.
Management believes that customers associated with outdoor swimming pools use
HEAT$AVER primarily for two reasons, cost
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savings on energy being the primary one. The second reason is that, often times,
pool personnel find it inconvenient to use conventional pool blankets correctly
and consistently and that the ease of use provided by HEAT$AVER results in more
consistent usage.
Users of air-conditioned indoor swimming pools use the HEAT$AVER product because
it also results in savings. The savings occurs because less energy is required
to maintain a pool at the desired temperature and also because there is a
reduced load on the air-conditioning system because less heat and much less
water vapor will have to be removed from the air to maintain the required
comfort. Air-conditioned indoor pools are very high users of energy because the
swimmers and loungers have environmental expectations which require both gas
water heat and electric air cooling to keep both groups happy in the same room.
HEAT$AVER works by slowing the transfer of heat and water vapor from the pool to
the pool room atmosphere.
The British Health Department, the Health Department of Queensland and the
Health Department of New South Wales have concluded that the product, used as
directed, has no adverse effects on humans or animals.
Testing pertaining to the effectiveness of HEAT$AVER has been carried out by the
owners of the following facilities. The following chart summarizes the results
typically achieved by users:
<TABLE>
<CAPTION>
Pool Size Length Savings Humidity Heating Heat$avr Monthly Payback Yearly Net
of Test Measure Drop System Cost per Savings Ratio Savings
Month
- ---------------- ---------- -------- --------- ------------ ---------- ------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Resthaven Indoor 2 40% 30% Elect. $38. $235. 6:2:1 $2364.
Condominium 50'x 20' Months
Pool, Sidney,
B.C.
- ---------------- ---------- -------- --------- ------------ ---------- ------------- ---------- ---------- ------------
Red Lion Hotel Outdoor 2 Weeks 45% 0% Natural $38. $230. 6:1:1 $2304.
#1 Seattle, Wa 50'x25' Gas
- ---------------- ---------- -------- --------- ------------ ---------- ------------- ---------- ---------- ------------
Red Lion Hotel Outdoor 2 Weeks 45% 0% Natural $38. $295. 7:8:1 $3084.
#2 Seattle, Wa 50'x25' Gas
- ---------------- ---------- -------- --------- ------------ ---------- ------------- ---------- ---------- ------------
YWCA Pool, Indoor 2 mths 16.5% 0% Oil $90. $275. 3:1:1 $2220.
Vancouver, B.C. 84'x42'
- ---------------- ---------- -------- --------- ------------ ---------- ------------- ---------- ---------- ------------
Kitsilano Outdoor 2 mths 24% 0% Natural $1420. $2700. 1:9:1 $15,360.
Municipal 480'x70' Gas
Pool,
Vancouver, B.C.
- ---------------- ---------- -------- --------- ------------ ---------- ------------- ---------- ---------- ------------
Vancouver Indoor 2 mths 15.5% 0% Natural $340. $620. 1:8:1 $3,360.
Aquatic Center 165'x80 Gas
Vancouver, B.C.
- ---------------- ---------- -------- --------- ------------ ---------- ------------- ---------- ---------- ------------
Hotel Vancouver Indoor 2 mths 12.5% 0% Steam $28. $150. 5:4:1 $1,464.
Vancouver, B.C.
- ---------------- ---------- -------- --------- ------------ ---------- ------------- ---------- ---------- ------------
Coast Victoria In/Out 2 mths 37.5% 0% Elect. $32. $270. 8:4:1 $2,856.
Hotel
Victoria,
B.C.
- ---------------- ---------- -------- --------- ------------ ---------- ------------- ---------- ---------- ------------
</TABLE>
6
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The company also sells a timer controlled injection pump which automatically
adds the chemical to the pool as needed. Each of these systems is programmable
to fit both the size of the pool and the hours of operation. The reservoir which
holds the HEAT$AVER must be checked and filled once a week instead of daily. The
system is self-contained and needs to be plugged into the main return line of
the pool and then plugged into a 110V AC socket.
There are some disadvantages to using HEAT$AVER and these include the following:
a. The product biodegrades and must be replaced twice per week unless the
timer controlled injection pump or the Tropical Fish dispenser is
utilized;
b. The product reduces evaporative heat loss only and has no effect on
convective and conductive losses;
c. The product is flammable when not mixed with water; and,
d. The product is poisonous, although not fatal, if ingested straight from
the bottle or the dispenser.
The product is manufactured by the Company with components, which are readily
available, and is usually dispensed by the consumer utilizing the Company's
"Tropical Fish" dispenser.
The Tropical Fish dispenser was designed by the Company and requires minimal
effort on the part of the consumer who utilizes it to dispense the product. It
acts like a conventional solar blanket by forming an invisible layer on the
surface of the swimming pool, thus inhibiting water evaporation. It dispenses a
blue liquid, which creates a one molecule thick layer on the surface of the
pool. One Tropical Fish covers an area of 400 square feet and is effective for
about one month.
The Tropical Fish is utilized by opening the fin where indicated and placing the
fish into the pool where it submerges to the bottom and, as the pressure
increases, the HEAT$AVER liquid escapes, rises, and forms an invisible layer on
the surface of the water. The Tropical Fish works effectively for thirty days
and then must be replaced.
Target Market:
The Company currently is selling to clients associated with hotels; municipal
swimming pools; and residential swimming pools. The Heat$avr and Tropical Fish
products are sold in Canada and the United States by the Company's distributor,
Sunsolar Energy Technologies and in Australia by Hydro-Flexible Solutions PTY.
The
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Company also sells Heat$aver directly into the United States to both
wholesale and retail accounts.
The Company estimates that there are approximately 106,000 municipal swimming
pools in its initial target market, which is Australia, Canada, Europe and the
United States. Based on the assumption that energy costs are a large portion of
the total operating costs for municipal pools and that the operators of these
facilities want to lower these costs, the Company anticipates that the operators
may turn to the use of chemicals, such as HEAT$AVER, as an alternative to the
higher cost pool blankets. The Company realizes, however, that the product may
not be used by proprietors of every pool in the target market referred to above.
With regard to hotel pools, the Company estimates that there are approximately
280,000 hotel pools located in its target market. Company management believes
that each hotel which utilizes the HEAT$SAVER product will be able to save
between $2,400 and $6,000 per year on its heating costs throughout the life of
the pool. Again, the Company realizes that the product may not be used by
proprietors of every pool in this category.
Regarding the residential pool market, management believes that there are
approximately 8 million residences in Canada and the United States that have
swimming pools. Management believes that successful market penetration in this
area will require developing sound business relationships with retail swimming
pool stores by creating equitable pricing policies. Management further believes
that the Company's HEAT$AVER product packaged in the Tropical Fish dispenser
will appeal to the residential pool market based on the novelty of the Tropical
Fish dispenser, coupled with the east of use and the low initial cost. The
Company realizes that the product may not be used by proprietors of ever pool in
this category.
The WATER$AVER Product
- ----------------------
The Company also intends to market its core technology in the areas of fresh
water conservation and aquaculture through another product called WATER$AVER.
The WATER$AVER product works in the same way as the HEAT$AVER product.
WATER$AVER has a full time contract salesperson using direct mail, telephone and
internet techniques to market the product in North America. Advertisements have
been started in national farm and water magazines in the United States. The
Company has plans for personnel to make personal visits to introduce the
product. Specific efforts will also be made to identify and attract joint
venture partners and distributors for the product. Hydro-Flexible
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Solutions in Australia is currently actively involved in sales efforts of
WATER$AVER in Australia. These efforts are on-going and will be expanded as
financing permits.
WATER$AVER is a granulated product which is delivered to the customer in a 44
pound weatherproof bag. There are various ways to apply this product ranging
from simple hand dispersal to fully automated scheduled metering using local
weather data to determine timing and dosage quantities. Examples of suitable
applications include the following:
a. Reservoirs
b. Potable water storages
c. Aqueducts and canals
d. Agricultural irrigation canals and ditches
e. Flood water crops
f. Stock watering ponds
This product can be used in any application where water is either standing or
running without rapids.
The Company currently makes available to customers one piece of mechanized
dispersal equipment called the Model PDM-320e WATER$AVER dispensing machine. It
is capable of servicing reservoirs up to 30 acres in size and 100 miles or less
of irrigation canals for six to eight days. It is fully automated and provides
scheduled powder metering using local weather data to determine timing and
dosage quantities. Specifications are:
a. Hopper capacity: 320 lbs.
b. Shoreline swivel mounted on 12 cubic yard abutment or trailer mounted
for mobile deployment
c. Has windproof dispersal pattern skirting
d. Full SCADA compliance ready (custom mounting tabs, bracketing and
enclosures)
e. Full NEMA weather proofing of electronics
f. Data collection storage and transmission with the customer's choice of
variables to be monitored
g. The data may be collected by laptop computer through RS 232 ports
h. Land line, cellular, radio and satellite transmission of real time and
stored data
i. Armored protection of electronics and backup equipment by casting into
abutment
j. Hydro grid powered with a battery backup
k. Battery powered with solar running and recharging capability
l. Antipersonnel-protective fencing-sabotage suppression razor wire
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The Company also has available a basic dispersal machine which is available for
lower tech situations and the Company will build custom models to suite
individual client's requirements.
Competition
The Company does not believe that there are any other companies developing or
producing similar swimming pool chemicals. This belief stems from the fact that
management has been directly involved in the pool and spa industry for ten years
and has kept abreast of the literature in the field. A source has not been
discovered that offers or advertises a competing product for either HEAT$AVER or
the Tropical Fish product or the Water$aver product. However, in general, and
with regard to the swimming pool supply industry, it is anticipated that the
Company will be competing with a wide variety of national, regional and local
companies, many of which have established public images and greater financial
strength and personnel resources than the Company. Further, it is likely that
the Company will also be competing with entities, which have established good
will and market acceptance.
Government Regulation and Legal Uncertainties
The Company anticipates that it will be subject to various governmental
regulations with regard to the chemicals used in HEAT$AVER, WATER$AVER and the
Tropical Fish. In Australia, the Company's operations are subject to health acts
as enacted by the Commonwealth and/or various states within Australia. In
Canada, the Company's operations are subject to health regulations within the
various provinces in Canada. Further, in French speaking provinces such as
Quebec, the Company is required to comply with "French only" regulations such as
the actual wording on its products (no English allowed). In the United States,
the Company's operations are subject to the regulations enacted by the U.S.
Department of Health and possibly the regulations enacted by the Environmental
Protection Agency. Further, the Company anticipates that all ingredients may
have to be approved by the Food and Drug Administration for direct, undiluted
skin contact.
Risk Factors
The Company is almost exclusively dependent on the efforts of its sole officer,
Daniel O'Brien and has no depth of management.
The Company's success is dependent, to a large degree, upon the efforts of its
sole executive officer, Daniel O'Brien. The loss or unavailability of Mr.
O'Brien could have an adverse effect on the Company. At the present time the
Company does not maintain key man life insurance policies for this individual.
Also, the
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continued success and viability of the Company is dependent upon its ability to
attract and retain qualified personnel in all areas of its business, especially
management positions. In the event the Company is unable to attract and retain
qualified personnel, its business may be adversely affected. There are currently
no employment agreements in place.
There can be no guarantee that the Company will experience significant growth
because it has been in operation since 1991 and to date has achieved minimal
results.
The Company has nine years of operating history with minimal results upon which
to base an evaluation of its business and prospects. Operating results for
future periods are subject to numerous uncertainties. These uncertainties
include such critical factors as historically minimal profits and uncertainty as
to actual demand for its products. There can be no assurance that the Company
will achieve or sustain profitability on an annual or quarterly basis. The
Company's prospects must be considered in light of the risks encountered by
companies in the early stage of development, particularly companies in new and
rapidly evolving markets. Future operating results will depend upon many
factors, including the demand for the Company's swimming pool products, the
level of product and price competition, the Company's success in attracting and
retaining motivated and qualified personnel, and in particular, the use of
chemicals to retain heat in swimming pools instead of the historically
successful use of thermal blankets.
There is no assurance that the Company will be able to grow internally to the
level that would be necessary to support a higher level of sales.
Should the Company be successful in the sales and marketing efforts of its water
additive products it will experience significant growth in operations. If this
occurs, management anticipates that additional expansion in the areas of both
personnel and plant and equipment will be required in order to continue product
development and product marketing. It is possible that the Company will not be
able to finance this potential additional expansion. Any expansion of the
Company's business would place further demands on its sole executive,
operational capacity and financial resources. It is possible that the Company's
sole executive will not be able to assume any additional responsibility and that
the current operational capacity of the Company will not be able to accommodate
additional business. The Company realizes that it will need to recruit qualified
personnel in all areas of its operations, including management, sales,
marketing, and product delivery when and if growth occurs. There can be no
assurance that the Company will be effective in attracting and retaining
additional qualified personnel, expanding its operational capacity or otherwise
managing growth. In addition, there can be no assurance that the Company's
current systems, procedures or controls will be adequate to support any
expansion of it's operations. The failure to
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manage growth effectively could result in the failure of the Company.
The Company could experience delays in the delivery of its products in the
future and this delay could result in a loss of customers.
The Company, in the first quarter of Fiscal 1999, ended March 31, 1999,
experienced a cost over-run of $40,000. This resulted in a backlog in the
delivery schedule which was not overcome until May 1999. Delays and cost
overruns such as this could affect the Company's ability to respond to
technological changes, evolving industry standards, competitive developments or
customer requirements thus causing a loss of customers.
The Company markets its products on an international level and, consequently, is
exposed to all of the risks of doing business on a worldwide basis.
The Company markets and sells its products in the United States, Australia and
Canada. As such, it is subject to the normal risks of doing business abroad.
These risks include, but are not limited to, unexpected changes in regulatory
requirements, export and import restrictions, tariffs and trade barriers,
difficulties in staffing and managing foreign operations, longer payment cycles,
problems in collecting accounts receivable, potential adverse tax consequences,
exchange rate fluctuations, increased risks of piracy, discontinuity of the
Company's infrastructures, limitations on fund transfers and other legal and
political risks. Such limitations and interruptions could have a material
adverse effect on the Company's business. The Company does not currently hedge
its foreign currency exposures.
The Company does not pay a cash dividend to shareholders and shareholders and
future shareholders cannot be assured that the Company will pay a dividend in
the future.
The Company does not presently intend to pay cash dividends in the foreseeable
future, as any earnings are expected to be retained for use in developing and
expanding its business. Further, the actual amount of any potential future
dividends received from the Company will remain subject to the discretion of the
Company's Board of Directors.
The Company has a limited cash position and there is no assurance that the
Company will be able to meet its future capital requirements:
The Company currently has limited sources of operating cash flow to fund future
projects or corporate overhead. The Company has limited financial resources, and
there is no assurance that additional funding will be available. The Company's
ability to
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continue to operate will be dependent upon its ability to raise
significant additional funds in the future and.
Dilution could occur to existing and future shareholders because the Company is
authorized to issue up to 1,000,000 shares of preferred stock.
The Company is authorized to issue up to 1,000,000 shares of preferred stock,
$0.01 par value per share. As of the date of this Registration Statement, no
shares of preferred stock have been issued. The Company's preferred stock may
bear such rights and preferences, including dividend and liquidation
preferences, as the board of Directors may fix and determine from time to time.
Any such preferences may operate to the detriment of the rights of the holders
of the Common Stock and would cause dilution to these shareholders.
The securities of the Company are in the "penny stock" classification and there
are risks including, but not limited to, lack of liquidity in the market for the
Company's stock to the shareholders as a result of this classification.
The Company's stock is subject to "penny stock" rules as defined in 1934
Securities and Exchange Act rule 3151-1. The Commission has adopted rules that
regulate broker-dealer practices in connection with transactions in penny
stocks. The Company's common shares are subject to these penny stock rules.
Transaction costs associated with purchases and sales of penny stocks are likely
to be higher than those for other securities. Penny stocks generally are equity
securities with a price of less than U.S. $5.00 (other than securities
registered on certain national securities exchanges or quoted on the NASDAQ
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or system).
The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document that provides information about penny stocks and the nature
and level of risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction,
and monthly account statements showing the market value of each penny stock held
in the customer's account. The bid and offer quotations, and the broker-dealer
and salesperson compensation information, must be given to the customer orally
or in writing prior to effecting the transaction and must be given to the
customer in writing before or with the customer's confirmation.
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In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from such rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for the common shares in the United
States and shareholders may find it more difficult to sell their shares.
Significant Customers and/or Suppliers
- --------------------------------------
The Company has no significant customers and/or suppliers.
Employees
- ---------
As of 5/20/00, the Company has eight employees, including its sole officer,
Daniel B. O'Brien. The Company employs four full-time and two part-time
employees at its factory. In addition, the Company employees a full-time
saleswoman, who works out of her home in San Diego, California, for a monthly
retainer of Cdn$1,000 plus 10% of her net sales of bulk HEAT$AVER.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
- ---------------------------------------------
OR PLAN OF OPERATION
- --------------------
SELECTED FINANCIAL DATA
- -----------------------
The selected financial data in Table No. 1 for Fiscal 1999, ended December 31,
1999, and Fiscal 1998, ended December 31, 1998, was derived from the financial
statements of the Company which were audited by Smythe Ratcliffe independent
Chartered Accountants, as indicated in their report which is included elsewhere
in this Registration Statement. The selected financial data for the fiscal
quarters ended March 31, 2000 and March 31,1999 was derived from the unaudited
financial statements which were prepared by management.
The selected financial data was extracted from the more detailed financial
statements and related notes included herein and should be read in conjunction
with such financial statements and with the information appearing under the
heading, "Management's Discussion and Analysis of Financial Condition and
Results of Operations".
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<TABLE>
Table No. 1
Selected Financial Data
($ in 000, except per share data)
Quarter Ended Quarter Ended Year Ended Year Ended
3/31/00 3/31/99 12/31/99 12/31/98
------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue $260 $50 $759 $84
Net Income (Loss) $41 ($17) $103 ($18)
Earnings (Loss) per Share $0.00 $0.00 $0.01 ($0.01)
Dividends per Share 0 0 0 0
- - -
Wtg. Avg. Shares 9,131,316 9,131,316 4,102,469
Working Capital $234 $118 $206 $139
Long - Term Debt $0 0 $0 $3
Shareholders' Equity $287 $130 $256 $146
Total Assets $417 $145 $359 $174
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
- -----------------------------------------------------------
AND RESULTS OF OPERATION
- ------------------------
The Company was incorporated in the state of Nevada on May 12, 1998 and the
Company's wholly owned subsidiary, Flexible Solutions Ltd., was incorporated on
January 25, 1991 in Victoria, British Columbia Canada.
On June 30, 1998 the Company completed the acquisition of 100% of the shares of
Flexible Solutions Ltd. The acquisition was effected through the issuance of
7,000,000 shares of common stock by the Company with the former shareholders of
the subsidiary receiving 100% of the total shares then issued and outstanding.
The transaction has been accounted for as a reverse take-over.
Since completing the process of acquiring Flexible Solutions Ltd., the Company's
operating activities have related primarily to marketing its swimming pool
chemicals called "HEAT$AVER", the "Tropical Fish" and its fresh water
evaporation control chemical called "WATER$AVER".
Cash Balances
- -------------
The Company maintains its major cash balances at one financial institution,
Toronto Dominion Bank, located in Victoria, British Columbia CANADA. The
balances are insured up to $40,200 or $60,000 (Cdn$) per account by the Canada
Deposit Insurance Corporation. At February 1, 2000, there were no uninsured cash
balances.
15
<PAGE>
Liquidity and Capital Resources
- -------------------------------
Three Months Ended March 31, 2000 and March 31, 1999
- ----------------------------------------------------
Cash used in operating activities for the quarter ended March 31, 2000 totaled
($74,315) as compared to ($37,394) for the quarter ended March 31, 1999,
including the net income of $40,976 for the quarter ended March 31, 2000 as
compared to a loss of ($17,512) for the quarter ended March 31, 1999; the
primary adjusting items for the quarter ended March 31, 2000 were $2,534 in
depreciation, ($115,721) in accounts receivable, ($132,558) in inventory,
$56,806 in accounts payable and $73,648 in income taxes payable. Cash flows from
financing activities were nil.
The primary adjusting items for the quarter ended march 31, 1999 were $507 in
depreciation, ($11,212) in accounts receivable, $1,011 in inventory and
($10,398) in accounts payable.
As of March 31, 2000 the Company had only $3,409 in cash as compared to $116,540
at March 31, 1999. Current assets as of March 31, 2000 were $364,527 as compared
to $132,939 as of March 31, 1999. Accounts receivable at March 31, 2000 were
$215,817 higher than at March 31, 1999 and inventory at March 31, 2000 was
$129,212 higher than at March 31, 1999.
Operating expenses are currently averaging about $23,000 per month and the cost
of sales is about 58% so because of the level of current assets at March 31,
2000, management believes that they can continue the current level of operations
without having to raise additional capital.
Fiscal 1999 and Fiscal 1998, Ended December 31st
- ------------------------------------------------
Cash used in 1999 Operating Activities totaled ($49,152), including the $102,848
net income; the primary adjusting items were $12,764 in depreciation, ($111,308)
in accounts receivable, ($131,225) in inventory, ($520) in prepaid expenses,
$5,444 in accounts payable, $3,559 in accrued liabilities, and $69,286 in income
tax payable. Cash flows from financing activities included a repayment to a
shareholder of ($3,261).
Cash provided by 1998 Operating Activities totaled $1,004, including the
($18,030) net loss; the primary adjusting items were $2,619 in depreciation,
($1,531) in accounts receivable, ($5,335) in inventory, $19,911 in accounts
payable and $3,370 in accrued liabilities. Cash provided 1997 Financing
Activities totaled $169,045.
At the end of Fiscal 1999, the Company had cash of $59,441 and accounts
receivable of $112,839. Operating expenses currently are averaging $14,500 per
month and sales are averaging $63,300 per month. The cost of these sales
averages $34,500 per month. At the current volume of business management
believes that it can sustain operations indefinitely without the addition of any
additional capital. Additional capital will be necessary, however, should the
Company decide to expand operations. If the Company cannot raise additional
capital, expansion will not be possible.
Management currently has no plans to raise additional capital during the next
twelve months.
16
<PAGE>
Results of Operations
- ---------------------
The Quarters Ended March 31, 2000 and March 31, 1999
- ----------------------------------------------------
For the quarter ended March 31, 2000 sales were $210,043 greater than for the
quarter ended March 31, 1999. Gross profit also increased by $104,014 with the
resulting net income going from a net loss of ($17,512) at March 31, 1999 to a
net profit of $40,976 for the quarter ended March 31, 2000.
Operating expenses for the quarter ended March 31, 2000 increased $45,556 as
compared to the quarter ended March 31, 1999; however the increase in gross
profit for the quarter ended March 31, 2000 as compared to the quarter ended
March 31, 1999 more than made up for the increase in operating expenses.
The primary reasons for the higher level of profitability realized for the
quarter ended March 31, 2000 as compared to the quarter ended March 31, 1999 is
that the increase in the sales of the Tropical Fish product which began during
Fiscal 1999, as described below, continued into the first quarter of Fiscal
2000, ended March 31, 2000. The increase in net income realized during the
quarter ended March 31, 2000 as compared to the quarter ended March 31, 1999 was
a result of a reduction in product development costs which began during Fiscal
1999.
Fiscal 1999 and Fiscal 1998, Ended December 31st
- ------------------------------------------------
Operating expenses for the fiscal year ended December 31, 1999 totaled $175,213
and the Company experienced a net profit of $102,848 against revenues of
$769,218. The major expenses during this period were wages of $67,991,
commissions of $20,957, professional fees of $16,465, office expenses of
$15,600, subcontracting fees of $12,801, stock promotion and transfer agent fees
of $8,048, shipping of $7,179, travel of $6,607, and rent, telephone and
depreciation of $19,565.
Operating expenses for the fiscal year ended December 31, 1998 totaled $43,323
and the Company experienced a net loss of ($18,030) against revenues of $84,252.
The major expenses during this period were $25,292 in wages, commissions and
professional fees; $8,175 in office expenses and telephone; $4,207 in travel
expenses; and, $2,2,619 in depreciation.
In Fiscal 1999 income rose because sales of the Tropical Fish product increased
from less that 50,000 units to in excess of 400,000 units. HEAT$AVER sales also
grew, but only by a small amount. The tropical fish increase in sales occurred
primarily because Fiscal 1999 was the Company's first full season of sales for
that product and the beginning of sales into the United States through the
Company's distributor. Net income rose for the same reasons plus the following:
product development on the Tropical Fish product was successfully completed
thereby reducing expenses in that area. Production processes also improved as is
evidenced by the fact that in Fiscal 1998, 37 Tropical Fish were produced by
each employee per hour and during Fiscal 1999 that number grew to 75 Tropical
Fish per employee per hour.
The Tropical Fish product is priced at $1.68, or $2.50(Cdn$) in Canada and $2.00
in the United States. The Company currently offers no rebates, discounts or
promotional prices for the Tropical Fish product.
17
<PAGE>
Income Taxes
- ------------
All tax returns due for the Company have been filed.
Inflation
- ---------
The Company's results of operations have not been affected by inflation and
management does not expect inflation to have a material impact on its operations
in the future.
18
<PAGE>
ITEM 3. DESCRIPTION OF PROPERTY
- -------------------------------
The Company utilizes the residence of its sole officer and director, Mr. Daniel
O'Brien, for offices. No monthly fee is paid to Mr. O'Brien for rent.
The Company also leases a 1,000 square foot factory facility from Rolex Plastics
Ltd. of Victoria, British Columbia. The factory is located at 1746 Island
Highway, Victoria, British Columbia V9B 1H8. The monthly rent for the factory is
$690. The Company rents the facility on a month-to-month basis and has not
executed a formal lease agreement.
The Company also maintains a warehouse facility in Quebec. It is located at 2701
Sabourin Street, and is in St. Laurent, Quebec. The building belongs to the
Company's distributor and is provided by the distributor for no charge because
it saves him $0.05 in shipping on each "Fish" product.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
- ------------------------------------------------------------
MANAGEMENT
----------
The Registrant is a publicly-owned corporation, the shares of which are owned by
United States and Canadian residents. The Registrant is not controlled directly
or indirectly by another corporation or any foreign government.
Table No. 2 lists as of February 20, 2000 all persons/companies the Registrant
is aware of as being the beneficial owner of more
than five percent (5%) of the common stock of the Registrant.
19
<PAGE>
Table No. 2
Five Percent Shareholders
Title Amount and Nature Percent
of of Beneficial of
Class Name of Beneficial Owner Ownership Class #
- ------ ------------------------ ----------------- -------
Common Daniel B. O'Brien (1) 4,650,000 50.0%
Common Robert N. O'Brien (2) 1,750,000 18.3%
Common Beat Aschmann 700,000 7.7%
Common Sundstrand Ltd. 580,000 6.4%
- -----------------------------------------------------------
TOTAL 7,680,000 82.4%(3)
# Based on 9,131,316 shares outstanding as of February 20, 2000 and options to
purchase shares of common stock.
1. 4,550,000 of these shares are restricted pursuant to Rule 144. 50,000
of these shares represent currently exercisable share purchase options
with a strike price of $0.25 and 50,000 of these share represent share
purchase options exercisable after 1/1/01 with a strike price of $0.25.
Mr. O'Brien's address is 2624 Queenswood Drive, Victoria, British
Columbia CANADA V8N 1X5.
2. 1,750,000 of these shares are restricted pursuant to Rule 144. Dr.
O'Brien's address is 2614 Queenswood Drive, Victoria BC V8N 1X5.
3. Does not reflect share purchase options for 60,000 shares of common
stock issued as follows: 20,000 shares with a strike price of $0.25
issued to an employee; 20,000 shares with a strike price of $0.25
issued to another employee; and, 20,000 shares with a strike price of
$0.25 issued to another employee.
Table No. 3 lists as of February 20, 2000 all Directors and Executive Officers
who beneficially own the Registrant's voting securities and the amount of the
Registrant's voting securities owned by the Directors and Executive Officers as
a group.
Table No. 3
Shareholdings of Directors and Executive Officers
Title Amount and Nature Percent
of of Beneficial of
Class Name of Beneficial Owner Ownership Class #
- ------ --------------------------------------- ----------------- -------
Common Daniel B. O'Brien Pres. & Director (1) 4,650,000 50.0%
Common Robert N. O'Brien Director 1,750,000 18.3%
Common John H. Bientjes Director 80,000 1.0%
Total 6,480,000 69.3%
# Based on 9,131,316 shares outstanding as of February 1, 2000.
20
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
- ---------------------------------------------------------------------
Table No. 4 lists as of February 20, 2000 the names of the Directors of the
Company. The Directors have served in their respective capacities since their
election and/or appointment and will serve until the next Annual Shareholders'
Meeting or until a successor is duly elected, unless the office is vacated in
accordance with the Articles/By-Laws of the Company. All Directors are residents
and citizens of Canada.
Table No. 4
Directors
Date First
Elected
Name Age or Appointed
- --------------------- ---- -----------------
Daniel B. O'Brien 43 May 12, 1998
Dr. Robert N. O'Brien 78 February 19, 2000
John H. Bientjes 47 February 19, 2000
Table No. 5 lists, as of February 20, 2000, the names of the Executive Officers
of the Company. The Executive Officers serve at the pleasure of the Board of
Directors. All Executive Officers are residents/citizens of Canada.
Table No. 5
Executive Officers
Name Position Date of Board Approval
- ----------------- --------- ----------------------
Daniel B. O'Brien President May 12, 1998
Business Experience
- -------------------
Daniel B. O'Brien: Mr. O'Brien is President and a Director of the Company. He
has been employed by the Company since May 12, 1998. His responsibilities
include coordinating strategy, planning, and product development. Mr. O'Brien
devotes 100% of his time to the affairs of the Company. He has been involved in
the swimming pool industry since 1991 at which time he founded a private company
called Flexible Solutions Ltd. which was purchased by the Company, through a
share exchange, in August 1998. Prior to his involvement with Flexible Solutions
Ltd., Mr.
21
<PAGE>
O'Brien was a teacher at Brentwood College where he was in charge of Outdoor
Education.
Dr. Robert N. O'Brien: Dr. O'Brien is a member of the Company's Board of
Directors. He was elected to this position on February 19, 2000. Dr. O'Brien
received his Bachelor of Applied Science in Chemical Engineering from the
University of British Columbia in 1951; his Masters of Applied Science in
Metallurgical Engineering from the University of British Columbia in 1952; his
Ph.D. in Metallurgy from the University of Manchester in 1955; and, was a Post
Doctoral Fellow in Pure Chemistry at the University of Ottawa from 1955 through
1957. He has held various academic positions since 1957 at the University of
Alberta, the University of California at Berkley, and the University of
Victoria. Most recently, he was a Professor of Chemistry at the University of
Victoria from 1968 until 1986 at which time he was given the designation of
Professor Emeritus at the University of Victoria. While teaching, Dr. O'Brien
acted as a consultant and served on the British Columbia Research Council. In
1987, Dr. O'Brien founded the Vancouver Island Advanced Technology and Research
Association.
John H. Bientjes: Mr. Bientjes is a member of the Company's Board of Directors.
He was elected to this position on February 19, 2000. Mr. Bientjes attended
Simon Fraser University in Vancouver, British Columbia and graduated in 1976
with a Bachelor of Arts Degree in Economics and Commerce. For the past fifteen
years he has been the manager of the Commercial Aquatic Supplies Division of
D.B. Perks & Associates, Ltd., located in Vancouver, British Columbia, a company
that markets supplies and equipment to commercial pools which are primarily
owned by municipalities. His primary responsibilities at D.B. Perks &
Associates, Ltd. are in the areas of purchasing, sales and customer service.
There have been no events during the last five years that are material to an
evaluation of the ability or integrity of any director, person nominated to
become a director, executive officer, promoter or control person including:
a) any bankruptcy petition filed by or against any business of which such person
was a general partner or executive officer either at the time of the bankruptcy
or within two years prior to that time;
b) any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);
22
<PAGE>
c) being subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
enjoining, barring, suspending or otherwise limiting his/her involvement in any
type of business, securities or banking activities;
d) being found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated.
Family Relationships
- --------------------
Dan O'Brien, the President of the Company is the son of Dr. Robert N. O'Brien, a
Director of the Company. Other than that there are no relationships between any
of the officers or directors of the Company.
Other Relationships/Arrangements
- --------------------------------
There are no arrangements or understandings between any two or more Directors or
Executive Officers, pursuant to which he/she was selected as a Director or
Executive Officer. There are no material arrangements or understandings between
any two or more Directors or Executive Officers.
On April 30, 1998 the Company retained Next Millennium Management Ltd. ("Next
Millennium") as a consultant. Next Millennium was retained to assist the Company
in coordinating its public offering; overseeing the acquisition of other
companies; negotiating agreements; and, general management consulting. Pursuant
to the terms of the Agreement, Next Millennium received a fee of $5,00 which was
paid in full. The agreement between the Company and Next Millennium Management
was terminated on October 12, 1999. The total amount paid to Next Millennium was
$5,000.
ITEM 6. EXECUTIVE COMPENSATION
- -------------------------------
The Company has no formal plan for compensating its Directors for their service
in their capacity as Directors. Directors are entitled to reimbursement for
reasonable travel and other out-of-pocket expenses incurred in connection with
attendance at meetings of the Board of Directors. The Board of Directors may
award special remuneration to any Director undertaking any special services on
behalf of the Company other than services ordinarily required of a Director.
During Fiscal 1999, no Director received and/or accrued any compensation for his
services as a Director, including committee participation and/or special
assignments.
23
<PAGE>
Mr. O'Brien receives a salary of $20,100 and is also reimbursed for reasonable
expenses incurred in the management of the Company's wholly owned subsidiary,
Flexible Solutions Ltd.
The Company has no formal stock option plan which has been approved by
regulatory authorities or other long-term compensation program other than that
described in the preceding paragraph.
During Fiscal 1999, no funds were set aside or accrued by the Company to provide
pension, retirement or similar benefits for Directors or Executive Officers.
The Company has no plans or arrangements in respect of remuneration received or
that may be received by Executive Officers of the Company in Fiscal 2000 to
compensate such officers in the event of termination of employment (as a result
of resignation, retirement, change of control) or a change of responsibilities
following a change of control, where the value of such compensation exceeds
$60,000 per Executive Officer.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------------------------------------------------------
The Company was incorporated for the purpose of acquiring Flexible Solutions
Ltd. The value of Flexible Solutions Ltd. and the determination of the number of
shares to be issued to its owners were not made independently or based on
appraisals. Accordingly, the transactions between the Company and Flexible
Solutions Ltd. cannot be deemed to be an arm's length transaction. By the terms
of the Agreement and Plan of Share Exchange, the Company issued 7,000,000 shares
of its common stock to Flexible Solutions Ltd., a company owned by Daniel
O'Brien, the president of the Company; Dr. Robert N. O'Brien, a Director of the
Company; and, Beat Aschmann.
Other than described above, there have been no transactions since May 12, 1998
(Date of Inception), or proposed transactions, which have materially affected or
will materially affect the Company in which any Director, Executive Officer, or
beneficial holder of more than 10% of the outstanding common stock, or any of
their respective relatives, spouses, associates or affiliates has had or will
have any direct or material indirect interest.
ITEM 8. DESCRIPTION OF SECURITIES
- ----------------------------------
The authorized capital of the Registrant is 50,000,000 shares of common stock
with a par value of $0.001 per share and 1,000,000
24
<PAGE>
shares of preferred stock
with a par value of $0.01 per share. 9,131,316 shares of common stock and no
shares of preferred stock were issued and outstanding at December 31, 1999, the
end of the most recent fiscal year. At February 20, 2000, there were 9,131,316
shares of common stock outstanding and no shares of preferred stock outstanding.
Common Stock:
All shares of the Company's Common Stock have equal voting rights, with one vote
per share, on all matters submitted to the stockholders for their consideration.
The shares of Common Stock do not have cumulative voting rights.
Subject to the prior rights of the holders of any series of preferred stock
which may be issued, holders of Common Stock are entitled to receive dividends,
when and if declared by the Board of Directors, out of funds of the Company
legally available therefor.
Holders of shares of Common Stock do not have any preemptive rights or other
rights to subscribe for additional shares, or any conversion rights. Upon a
liquidation, dissolution, or winding up of the affairs of the Company, holders
of the Common Stock will be entitled to share ratably in the assets available
for distribution to such stockholders after the payment of all liabilities and
after the liquidation preference of any preferred stock outstanding at the time.
There are no sinking fund provisions applicable to the Common Stock.
Preferred Stock:
The Articles of Incorporation authorize the Board of Directors to issue, by
resolution, 1,000,000 shares of preferred stock, in classes, having such
designations, powers, preferences, rights, and limitations and on such terms and
conditions as the Board of Directors may from time to time determine, including
the rights, if any, of the holders of such preferred stock with respect to
voting, dividends, redemptions, liquidation and conversion.
Debt Securities to be Registered. Not applicable.
- --------------------------------
American Depository Receipts. Not applicable.
- ----------------------------
Other Securities to be Registered. Not applicable.
- ---------------------------------
25
<PAGE>
PART II
Item 1. Market Price Of And Dividends on the Registrant's
- ----------------------------------------------------------
Common Equity and Other Shareholder Matters
- ----------------------------------------------------
The Company's common stock trades in the "Pink Sheets" in the United States,
having the trading symbol "FXSO" and CUSIP# 33938T 10 4. Trading volume and
high/low/closing prices, on a monthly basis, since the stock began trading on
the Pink Sheets on October 12, 1999.
Table No. 7
FXSO Stock Trading Activity
---------- ----------- ----------- ----------- -----------
Month High Low Close Volume
---------- ----------- ----------- ----------- -----------
October $0.375 $0.03 $0.375 263,000
---------- ----------- ----------- ----------- -----------
November $0.37 $0.22 $0.29 91,000
---------- ----------------------------------- -----------
December $0.25 $0.12 $0.12 99,000
---------- ----------- ----------- ----------- -----------
January No Trades No Trades No Trades No Trades
---------- ----------- ----------- ----------- -----------
February $0.30 $0.10 $0.20 49,000
---------- ----------- ----------- ----------- -----------
The Company's common stock is issued in registered form. American Securities
Transfer and Trust (located in Denver, Colorado) is the registrar and transfer
agent for the common stock.
On February 3, 2000 the shareholders' list for the Company's common shares
showed forty nine (49) registered shareholders and 9,131,316 shares outstanding.
The Company has not declared any dividends since incorporation and does not
anticipate that it will do so in the foreseeable future. The present policy of
the Company is to retain future earnings for use in its operations and expansion
of its business.
ITEM 2. LEGAL PROCEEDINGS
- --------------------------
The Company knows of no material, active or pending legal proceedings against
them; nor is the Company involved as a plaintiff in any material proceeding or
pending litigation.
The Company knows of no active or pending proceedings against anyone that might
materially adversely affect an interest of the Company.
26
<PAGE>
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
- ------------------------------------------------------
Not Applicable
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
- ------------------------------------------------
On August 17, 1998, the Company completed an offering of 1,050,000 shares of its
Common Stock at $0.01 per share, raising gross proceeds of $10,500.
On September 7, 1998, the Company completed an offering of 500,000 shares of its
Common Stock at $0.05 per share, raising gross proceeds of $25,000.
On November 13, 1998, the Company completed an offering of 1,000,000 shares of
its Common Stock at $0.25 per share, raising gross proceeds of $145,329 (581,316
shares sold).
The shares of common stock in all of the foregoing offerings, were offered
pursuant to an exemption to registration provided under Section 3(b), Regulation
D, Rule 504 of the Securities Act of 1933, as amended and under the exemption to
registration under Section 11-51-308(1)(p) of the Colorado Securities Act.
The claim for exception under Rule 504 of Regulation D was based on the fact
that the Company was not subject to the reporting requirements of section 13 or
15(d) of the Exchange Act; was not an investment company; and was not a
development stage company that had no business plan or purpose or had indicated
that its business plan was to engage in a merger or acquisition. The terms and
conditions of Reg. 230.501 and Reg. 230.502 (a), (c) and (d) were also satisfied
and the aggregate offering did not exceed $1,000,000, less the aggregate
offering price for all securities sold within the twelve months before the start
of and during the offerings.
All investors in the above offerings were unrelated persons, companies and
partnerships; no officers, directors, employees or affiliates participated in
the offerings.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
- --------------------------------------------------
The Company's By-Laws address indemnification under Article VI, Sections 6.1 and
6.1.
To the fullest extent permitted by the laws of the State of Nevada (currently
set forth in NRS 78.751), as the same now exists or may hereafter be amended or
supplemented, the Company shall indemnify its directors and officers, including
payment of expenses as they are incurred and in advance of the final disposition
of any action, suit, or proceeding. Employees, agents, and other persons may be
similarly indemnified by the Company, including advancement of expenses, in such
case or cases and to the extent set forth in a resolution or resolutions adopted
by the Board of Directors. No amendment of this Section shall have any effect on
indemnification or advancement of expenses relating to any event arising prior
to the date of such amendment.
To the fullest extent permitted by the laws of the State of Nevada (currently
set forth in NRS 78.752), as the same now exists or may hereafter be amended or
supplemented, the Company may purchase and maintain insurance and make other
financial arrangements on behalf of any person who is or was a director,
27
<PAGE>
officer, employee, or agent of the Company, or is or was serving at the request
of the Company as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, for any
liability asserted against such person and liability and expense incurred by
such person in its capacity as a director, officer, employee, or agent, or
arising out of such person's status as such, whether or not the Corporation has
the authority to indemnify such person against such liability and expenses.
PART F/S
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
The financial statements and notes thereto as required under ITEM #13 are
attached hereto and found immediately following the text of this Registration
Statement. The audit report of Smythe Ratcliffe, independent Chartered
Accountants, for the audited financial statements for Fiscal 1999, ended
December 31, 1999 and notes thereto is included herein immediately preceding the
audited financial statements.
(A-1) Audited Financial Statements: Fiscal 1999
Auditors' Report, dated January 17, 2000
Consolidated Balance Sheet at 12/31/99 and 12/31/98
Consolidated Statement of Operations for the Year Ended 12/31/99 and 12/31/98
Consolidated Statement of Stockholders' Equity for the Years Ended 12/31/99 and
12/31/98
Consolidated Statement of Cash Flows for the Years Ended 12/31/99 and 12/31/98
Notes to Consolidated Financial Statements
(A-2) Unaudited Financial Statements for the Fiscal Quarter Ended March 31, 2000
Consolidated Balance Sheet at 3/31/00 and 3/31/99
Consolidated Statement of Operations for the Quarters Ended 3/31/00 and 3/31/99
Consolidated Statement of Cash Flows for the Quarters Ended 3/31/00 and 3/31/99
28
<PAGE>
PART III
Item 1. INDEX TO EXHIBITS:
Exhibit Number Description
2 Articles of Share Exchange
3.1 Articles of Incorporation
3.2 Bylaws
4.1 Form D, August 21, 1998
4.2 Form D, September 15, 1998
4.3 Form D, September 17, 1998
10.1 "Tropical Fish" Distribution Agreement
10.2 Executive Compensation Agreement
21 Subsidiaries
27 Financial Data Schedule
29
<PAGE>
SIGNATURE PAGE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant certifies that it meets all of the requirements for filing
on Form 10-SB and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
- -------------------------------------
Registrant
Dated: May 22, 2000 By: /s/ Daniel B. O'Brien, President
-------------- ---------------------------------
<PAGE>
FLEXIBLE SOLUTIONS
INTERNATIONAL INC.
Consolidated Financial Statements
December 31, 1999
(U.S. Dollars)
INDEX Page
Report of Independent Chartered Accountants to
the Board of Directors and Stockholders 1
Financial Statements
Consolidated Balance Sheets 2
Consolidated Statements of Operations 3
Consolidated Statements of Stockholders' Equity 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6-10
<PAGE>
REPORT OF INDEPENDENT CHARTERED ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
OF FLEXIBLE SOLUTIONS INTERNATIONAL INC.
We have audited the consolidated balance sheets of Flexible Solutions
International Inc. as at December 31, 1999 and December 31, 1998 and the
consolidated statements of operations, stockholders' equity and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
in the United States. Those standards require that we plan and perform an audit
to obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the Company as at
December 31, 1999 and December 31, 1998 and the results of their operations and
their cash flows for each of the years then ended in conformity with generally
accepted accounting principles in the United States.
"Smythe Ratcliffe"
Chartered Accountants
Vancouver, British Columbia
January 17, 2000
1
<PAGE>
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
Consolidated Balance Sheets
December 31
(U.S. Dollars)
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Assets
Current
Cash $59,441 $157,210
Accounts receivable (note 3) 112,839 1,531
Inventory 136,560 5,335
Prepaid expenses 520 0
-------- --------
Total Current Assets 309,360 164,076
Property and Equipment (note 4) 49,782 10,137
-------- --------
Total Assets $359,142 $174,213
======== ========
Liabilities
Current
Accounts payable $27,011 $21,567
Accrued liabilities 6,929 3,370
Income tax payable 69,286 0
-------- --------
Total Current Liabilities 103,226 24,937
Due to Stockholder (note 5) 0 3,261
Stockholders' Equity
Capital Stock
Authorized
50,000,000 Common shares with a par value of $0.001 each
1,000,000 Preferred shares with a par value of $0.01 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) 6,677 (376)
Retained Earnings (Deficit) 76,455 (26,393)
-------- --------
255,916 146,015
-------- --------
Total Liabilities and Stockholders' Equity $359,142 $174,213
======== ========
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
Consolidated Statements of Operations
Years Ended December 31
(U.S. Dollars)
1999 1998
---------- ----------
(note 1)
Sales $759,218 $84,252
Cost of Sales (Exclusive of Depreciation) 413,849 58,959
---------- ----------
Gross Profit 345,369 25,293
Operating Expenses
Wages 67,991 5,187
Commission 20,957 15,353
Professional fees 16,465 4,752
Office 15,600 6,267
Subcontracting 12,801 0
Stock promotion and transfer agent fee 8,048 750
Shipping 7,179 2,280
Travel 6,607 4,207
Rent 4,442 0
Telephone 2,359 1,908
Depreciation 12,764 2,619
---------- ----------
175,213 43,323
Income (Loss) Before Income Tax 170,156 (18,030)
Income Tax 67,308 0
---------- ----------
Net Income (Loss) $102,848 $(18,030)
========== ==========
Income (Loss) Per Share $ 0.01 $ (0.01)
========== ==========
Weighted Average Number of Shares 9,131,316 4,102,469
========== ==========
See notes to consolidated financial statements.
3
<PAGE>
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
Consolidated Statement of Stockholders' Equity
Years Ended December 31, 1999 and 1998
(U.S. Dollars)
<TABLE>
<CAPTION>
Capital in Retained Other Total
Excess of Earnings Comprehensive Stockholders'
Shares Par Value Par Value (Deficit) Income (Loss) Equity
- ------------------------------- ----------- ---------- ------------ ------------ ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Shares Issued in Exchange
for 100% of Flexible
Solutions Ltd. 7,000,000 $7,000 $0 $(8,363) $0 $(1,363)
Shares Issued for Cash
(August and October 1998) 2,131,316 2,131 178,698 0 0 180,829
Share Issue Costs 0 0 (15,045) 0 0 (15,045)
Translation Adjustment 0 0 0 0 (376) (376)
Net Loss 0 0 0 (18,030) 0 (18,030)
----------- ---------- ------------ ------------ ------------- --------------
Balance, December 31, 1998 9,131,316 9,131 163,653 (26,393) (376) 146,015
=========== ========== ============ ============ ============= ==============
Translation Adjustment 0 0 0 0 7,053 7,053
Net Income 0 0 0 102,848 0 102,848
----------- ---------- ------------ ------------ ------------- --------------
Balance, December 31, 1999 9,131,316 $9,131 $163,653 $76,455 $6,677 $255,916
=========== ========== ============ ============ ============= ==============
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
Consolidated Statements of Cash Flows
Years Ended December 31
(U.S. Dollars)
<TABLE>
<CAPTION>
1999 1998
--------- ---------
(note 1)
<S> <C> <C>
Cash Flows from Operating Activities
Net income (loss) $102,848 $(18,030)
Adjustments to reconcile net income (loss)
to net cash, provided by (used in) operating activities
Depreciation 12,764 2,619
Changes in Non-Cash Working Capital
Accounts receivable (111,308) (1,531)
Inventory (131,225) (5,335)
Prepaid expenses (520) 0
Accounts payable 5,444 19,911
Accrued liabilities 3,559 3,370
Income tax payable 69,286 0
--------- ---------
Net Cash Flows Provided by (Used in) Operating Activities (49,152) 1,004
Cash Flows (Used in) Investing Activities
Acquisition of equipment (52,409) (12,671)
--------- ---------
Cash Flows from Financing Activities
Advances from (repayment to) shareholder (3,261) 3,261
Issuance of capital stock 0 180,829
Share issue costs 0 (15,045)
--------- ---------
Net Cash Flows Provided (Used in) Financing Activities (3,261) 169,045
--------- ---------
Effect of Exchange Rate Changes on Cash 7,053 (376)
--------- ---------
Inflow (Outflow) of Cash (97,769) 157,002
Cash, Beginning of Year 157,210 208
--------- ---------
Cash, End of Year $59,441 $157,210
========= =========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 1999 and 1998
(U.S. Dollars)
1. OPERATIONS AND BASIS OF PRESENTATION
These financial statements include the accounts of Flexible Solutions
International Inc. and its wholly owned subsidiary Flexible Solutions
Ltd. ("the Company"). All intercompany balances and transactions are
eliminated. The parent company was incorporated May 12, 1998 in the
State of Nevada and had no operations until June 30, 1998 as described
below.
On June 30, 1998 the Company completed the acquisition of 100% of the
shares of Flexible Solutions Ltd. The acquisition was effected through
the issuance of 7,000,000 shares of common stock by the Company with
the former shareholders of the subsidiary receiving 100% of the total
shares then issued and outstanding. The transaction has been accounted
for as a reverse take-over.
Flexible Solutions Ltd. is accounted for as the acquiring party and the
surviving entity. Because Flexible Solutions Ltd. is the accounting
survivor, the consolidated financial statements presented for all
periods are those of Flexible Solutions Ltd. The shares issued by
Flexible Solutions International Inc. pursuant to the 1998 acquisition
have been accounted for as if those shares had been issued upon the
organization of Flexible Solutions Ltd.
The Company is engaged in the development and marketing of a swimming
pool chemical designed as an energy saving liquid pool blanket.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Foreign currency
The functional currency of the Company is the Canadian dollar.
The translation of the Canadian dollar to the reporting
currency of the U.S. dollar, is performed for assets and
liabilities using exchange rates in effect of the balance
sheet date. Revenue and expense transactions are translated
using average exchange rates prevailing during the year.
Translation adjustments arising on conversion of the financial
statements from the Company's functional currency, Canadian
dollars, into the reporting currency, U.S. dollars are
excluded from the determination of income and disclosed as
other comprehensive income (loss) in stockholders' equity.
Foreign exchange gains and losses relating transactions not
denominated in the applicable local currency are included in
the determination of income.
(b) Use of estimates
The preparation of consolidated financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the
date of the consolidated financial statements and the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
(d) Inventory
Inventory is valued at the lower of cost and net realizable
value. Cost is determined on a first-in, first-out basis.
6
<PAGE>
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 1999 and 1998
(U.S. Dollars)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(d) Property and equipment
Property and equipment are recorded at cost and depreciated
using the declining balance method over the following annual
rates:
Manufacturing equipment - 20%
Trailer - 30%
Computer hardware - 30%
Furniture and fixtures - 20%
Office equipment - 20%
(e) Revenue recognition
Revenue from product sales is recognized at the time the
product is shipped. Provisions are made at the time the
related revenue is recognized for estimated product returns.
Since the Company's inception, product returns have been
insignificant; therefore; no provision has been established
for estimated product returns.
(f) Financial instruments
The Company's financial instruments consist of cash, accounts
receivable, accounts payable and accrued liabilities. It is
management's opinion that the Company is not exposed to
significant interest, currency or credit risks arising from
these financial instruments. The fair value of these financial
instruments approximate their carrying values due to their
short maturities.
(g) Income (loss) per share calculation
Income (loss) per share is calculated by dividing net income
(loss) by the weighted average number of shares outstanding.
3. ACCOUNTS RECEIVABLE
No provision has been made for uncollectible accounts as management
considers all accounts receivable are collectible.
7
<PAGE>
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 1999 and 1998
(U.S. Dollars)
4. PROPERTY AND EQUIPMENT
1999
Accumulated Net Book
Cost Depreciation Value
------- ------------ --------
Manufacturing equipment $61,127 $14,313 $46,814
Trailer 1,510 453 1,057
Computer hardware 1,039 312 727
Furniture and fixtures 946 189 757
Office equipment 534 107 427
------- ------- -------
$65,156 $15,374 $49,782
======= ======= =======
1998
Accumulated Net Book
Cost Depreciation Value
------- ------------ --------
Manufacturing equipment $12,671 $2,534 $10,137
======= ======= =======
5. DUE TO STOCKHOLDER
The amount due to the stockholder is without interest or stated terms
of repayment.
6. COMPREHENSIVE INCOME (LOSS)
1999 1998
-------- --------
Net income (loss) $102,848 $(18,030)
Other comprehensive income 7,053 (376)
-------- --------
Comprehensive income (loss) $109,901 $(18,406)
======== ========
8
<PAGE>
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 1999 and 1998
(U.S. Dollars)
7. INCOME TAX
Total income tax expense differs from the amounts computed by applying
the combined Canadian federal and provincial statutory rate of 45.62%
to income before income taxes as a result of the following
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
Expected tax expense (benefit) at statutory rate $77,625 $(8,225)
Increase (decrease) resulting from
Manufacturing and processing deduction (11,911) 0
Deferred income tax asset arising from 0 8,225
operating loss carry forward
Other 1,594 0
------- -------
$67,308 $0
======= =======
The components of the deferred income tax assets are as follows
1999 1998
------- -------
Deferred income tax assets
Operating loss carry forward $0 $2,764
Property, plant and equipment 1,462 979
------- -------
1,462 3,743
Less: valuation allowance (1,462) (3,743)
------- -------
$0 $0
======= =======
</TABLE>
The valuation allowance reflects the Company's estimate that certain
tax deductions arising in the current year may not be realized.
9
<PAGE>
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 1999 and 1998
(U.S. Dollars)
8. EARNINGS PER SHARE
<TABLE>
<CAPTION>
1999
----------------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ----------
<S> <C> <C> <C>
Net Income $102,848 9,131,316 $ 0.01
=========== ============= ==========
1998
----------------------------------------------------
Loss Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ----------
Basic Loss per share
Net Loss $(18,030) 4,102,469 $( 0.01)
=========== ============= ==========
</TABLE>
There were no preferred shares issued and outstanding for the years
ending December 31, 1999 and 1998.
There were no dilutive securities outstanding for the years ended
December 31, 1999 and 1998.
9. SEGMENTED AND SIGNIFICANT CUSTOMER INFORMATION
The Company operates in a single segment, involving the development and
marketing of a swimming pool chemical designed as an energy saving
liquid pool blanket. In 1999, 28.8% of the Company's sales were in
United States, the remainder were earned in Canada. In 1998, 100% of the
Company's sales were in Canada.
All the Company's long-lived assets are located in Canada. The Company
had 1 major customer, Sunsolar Energy Technologies which comprised 90%
and 70% of total sales for the years ended December 31, 1999 and 1998
respectively. There were no significant concentrations of credit risk.
10
<PAGE>
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
Consolidated Financial Statements for the Fiscal Quarter Ended March 31, 2000
(U.S. Dollars)
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEET
QUARTERS ENDED MARCH 31, 2000 AND MARCH 31, 1999
UNAUDITED
2000 1999
-------- --------
Assets
Cash $ 3,409 $116,540
Accounts Receivable 228,560 12,743
Inventory 132,558 3,346
Prepaid Expenses Nil 310
-------- --------
Total Current Assets 364,527 132,939
Property and Equipment 62,959 11,766
-------- --------
Total Assets $427,486 $144,705
======== ========
Liabilities
Accounts Payable $ 56,806 $ 11,169
Accrued Liabilities Nil 3,370
Income Tax Payable 73,648 Nil
-------- --------
Total Current Liabilities 130,454 14,539
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) 6,817 1,287
Retained earnings (deficit) 117,431 (43,905)
-------- --------
Total Stockholders' Equity 297,032 136,166
Total Liabilities and Stockholders' Equity $427,486 $144,705
======== ========
<PAGE>
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
Consolidated Financial Statements for the Fiscal Quarter Ended March 31, 2000
(U.S. Dollars)
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF OPERATIONS
QUARTERS ENDED MARCH 31, 2000 AND MARCH 31, 1999
UNAUDITED
2000 1999
-------- --------
Sales $260,328 $ 50,285
Cost of Sales 152,317 46,378
-------- --------
Gross Profit 107,921 3,907
Operating Expenses:
Wages 26,657 4,543
Shipping 2,839 1,060
Office 870 91
Professional Fees 18,382 436
Misc. 1,914 783
Rent 2,380 139
Subcontracting Fees 7,848 0
Phone 879 473
Travel 2,206 1,255
Entertainment 124 0
Commissions 263 10,386
Service Charges 82 49
Depreciation 2,534 507
Stock Promotion 0 0
-------- --------
Total Operating Expenses 66,975 21,419
Income (Loss) 40,976 (17,512)
Income Tax 13,940 Nil
-------- --------
Net Income $ 27,036 ($ 17,512)
Income per share $0.003 ($0.002)
======== ========
Weighted average number of shares outstanding: 9,131,316
<PAGE>
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
Consolidated Financial Statements for the Fiscal Quarter Ended March 31, 2000
(U.S. Dollars)
FLEXIBLE SOLUTIONS INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
QUARTER ENDED MARCH 31, 2000 AND MARCH 31, 1999
UNAUDITED
2000 1999
-------- --------
Cash Flows from Operating Activities
Net Income (Loss) $ 40,976 ($ 17,512)
Adjustments Nil Nil
Depreciation 2,534 507
Changes in non cash working capital
Accounts Receivable (115,721) (11,212)
Inventory (132,558) 1,011
Prepaid Expenses Nil 210
Accounts Payable 56,806 (10,398)
Accrued liabilities Nil Nil
Income Tax Payable 73,648 Nil
-------- --------
Net cash flows provided by (used in) operating activities (74,315) (37,394)
Cash flows used in investing activities
Acquisition of equipment (12,670) (2,535)
Cash flows flows from financing activities
Issuance of Capital Stock Nil Nil
Share issue costs Nil Nil
Advance from (repayment to) shareholder Nil Nil
-------- --------
Net cash flows provided by (used in) financing activities Nil Nil
Effect of exchange rate changes on cash 10,541 (741)
-------- --------
Inflow (outflow) of cash (76,444) (40,670)
Cash - beginning of quarter 59,441 157,210
Cash - end of quarter $ 3,409 $116,540
======== ========
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Flexible Solutions International Inc. which are included
in its Registration Statement, Form 10-SB for the quarter ended March 31, 2000
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 3,409
<SECURITIES> 0
<RECEIVABLES> 228,560
<ALLOWANCES> 0
<INVENTORY> 132,558
<CURRENT-ASSETS> 364,527
<PP&E> 62,959
<DEPRECIATION> 17,908
<TOTAL-ASSETS> 427,486
<CURRENT-LIABILITIES> 130,454
<BONDS> 0
0
0
<COMMON> 9,131
<OTHER-SE> 287,901
<TOTAL-LIABILITY-AND-EQUITY> 427,486
<SALES> 260,328
<TOTAL-REVENUES> 260,328
<CGS> 152,317
<TOTAL-COSTS> 152,317
<OTHER-EXPENSES> 66,975
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 40,976
<INCOME-TAX> 13,940
<INCOME-CONTINUING> 27,036
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,036
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
