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FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of November, 1999
Fantom Technologies Inc.
(Registrant's name)
1110 Hansler Road
Welland, Ontario, Canada L3B 5S1
(905) 734-7476
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F:
Form 20-F Form 40-F X
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Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
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Documents Included as Part of this Report
No. Document
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1. First Quarter Report to Shareholders for the three months ended
September 30, 1999.
2
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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.
Date: November 24, 1999
FANTOM TECHNOLOGIES INC.
By: "Walter J. Palmer"
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Name: Walter J. Palmer
Title: Secretary
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TO OUR SHAREHOLDERS
FANTOM TECHNOLOGIES INC.
We are pleased to report that revenue and net income for the three months ended
September 30, 1999 were the highest ever for a first quarter of our fiscal
year. Sales reached $57.0 million, up from $55.1 million for the first quarter
last year. Net income was $3.4 million or $0.38 per share (based on 9,046,119
shares outstanding) compared with $3.3 million or $0.36 per share (based on
8,972,809 shares outstanding) for the year-earlier period.
On October 19, 1999 the Board of Directors declared a quarterly cash dividend of
5 cents per share payable on January 1, 2000 to shareholders of record at the
close of business on November 30, 1999.
The Company is continuing to expand retail distribution for its products. At the
end of September, we made our first shipments to Wal-Mart Stores, Inc. in the
United States. FANTOM(R) vacuums are currently being tested in several hundred
of the largest Wal-Mart stores and we are optimistic the test will be expanded.
We are also continuing to receive acclaim from the United States advertising
industry. On October 19, 1999 the FANTOM(R) CYCLONE XT(R) 30-minute direct-
response TV show was awarded "Best Infomercial Production Over $150,000" by
the Electronic Retailing Association at its annual awards presentation. This
marks the seventeenth award Fantom has won in the U.S. for advertising
excellence -- twelve in the past two years alone.
The Company's intensive new product development efforts are progressing
according to plan. We are on target to introduce a new line of innovative
floor-care products, designed to create a new market segment, in the summer of
2000. We are also on target to introduce our first household water-treatment
product -- a counter-top microbiological water purifier -- in that same time
period. This new entry, designed to combat the microbiological threat head-on,
is the first of a line of water-treatment products planned for Fantom.
In addition, research is advancing in another field designed to open up a
further range of opportunities in diverse consumer product markets. We hope to
be in a position to release more information about this initiative within the
next few months, following the building and testing of prototypes. As of the
date of this report, fifty-three utility patent applications have been filed
for technologies Fantom is either acquiring or exclusively licensing through
its association with Omachron Technologies, Inc.
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On October 27, 1999 the Board of Directors announced the appointment of Rikki
Meggeson as Chair of the Board effective November 1, 1999. Ms. Meggeson first
became a Director of Fantom in 1989. Her significant contributions to the
Company include the authorship of the name "Fantom" for the Company's products.
Ms. Meggeson succeeds Ken Kelman who continues as a Director of Fantom. Mr.
Kelman assumed the Chair of Fantom in 1989. Under his tenure, the Company grew
fifteen times in size, with all of the growth generated internally. All of us
at Fantom thank Ken for his very capable leadership during this period of rapid
expansion.
The Company is continuing to take reasonable measures to ensure that all of its
internal systems, as well as those of its significant business partners, are
year-2000 ready. The Company expects that its year-2000 plans will be completed
on time and is not aware of a critical weakness in the preparedness of any of
its significant suppliers, customers, or business partners. However, this does
not ensure that an unanticipated problem will not occur before, at the onset
of, or after the year 2000, which could have a material adverse impact on the
operations of the Company.
The foregoing information includes certain statements relating to the Company
which are forward-looking statements under Section 21E of the United States
Securities Exchange Act of 1934. The words "plan", "target", "expects" and
similar expressions, as they relate to the Company or its management, are
intended to identify forward-looking statements. Such statements are based on
assumptions made by, and information available to, the Company. However, there
are important factors that could cause actual results to differ materially from
those in such forward-looking statements including, among others, the
contingencies arising from the uncertainties which are inherent in the
development of new technology and the unanticipated costs and time delays which
often arise in the process of developing new products based on innovative
technology. The Company does not intend, and assumes no obligation, to update
the forward-looking statements to reflect actual results, changes in
assumptions or changes in other factors affecting such statements.
On behalf of the Board,
Rikki Meggeson Allan D. Millman
Chair of the Board President and Chief Executive Officer
November 5, 1999
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Consolidated Statements of
Income and Retained Earnings
FANTOM TECHNOLOGIES INC.
Three Months Ended
September 30 (Unaudited)
1999 1998
Sales $ 57,044,537 $ 55,114,160
Cost of goods sold 35,764,199 36,168,204
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21,280,338 18,945,956
Expenses:
Selling, general and administrative 15,155,355 13,606,074
Research and development 784,374 324,758
Finance charges (64,921) (99,932)
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15,874,808 13,830,900
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Income before income taxes 5,405,530 5,115,056
Income taxes 2,000,000 1,842,000
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Net income 3,405,530 3,273,056
Retained earnings
at beginning of period 31,116,910 18,015,632
Dividends (451,900) (270,093)
Retained earnings
at end of period $ 34,070,540 $ 21,018,595
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Net income per share - Basic * $ 0.38 $ 0.36
- Fully Diluted $ 0.36 $ 0.35
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*Basic Net income per share has been calculated using the weighted average
number of common shares outstanding during the respective periods. These were
9,046,119 shares for 1999 and 8,972,809 shares for 1998.
Certain comparative figures have been reclassified to conform with the financial
statement presentation adopted in the current year.
Financial information in this report is expressed in Canadian Dollars, unless
otherwise noted.
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CONSOLIDATED BALANCE SHEETS
FANTOM TECHNOLOGIES INC.
September 30
(Unaudited)
1999 1998
ASSETS
Current assets:
Cash and short term deposits $ 7,513,003 $ 2,086,587
Trade accounts receivable 38,297,211 40,242,126
Other receivables 2,219,173 1,253,465
Inventories 20,757,965 17,769,684
Prepaid expenses 2,873,402 2,804,150
Deferred income taxes 1,347,344 259,000
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73,008,098 64,415,012
Deferred development costs,
net of amortization 2,128,044 1,320,046
Property, plant and equipment,
at cost 38,731,211 28,298,147
Less accumulated depreciation (8,369,311) (5,520,072)
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30,361,900 22,778,075
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$ 105,498,042 $ 88,513,133
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LIABILITIES AND SHARHOLDERS' EQUITY
Current liabilities:
Trade accounts payable 26,252,447 27,089,836
Other payables and accruals 8,690,416 7,414,870
Currency hedging exchange gains 3,545,642 682,530
Current portion of capital
lease obligations 11,552 163,353
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38,500,057 35,350,589
Capital lease obligations,
Less current portions -- 7,739
Currency hedging exchange gains 1,451,573 968,059
Deferred income taxes 2,852,564 3,331,114
Shareholders' equity:
Share capital 28,623,308 27,837,037
Retained earnings 34,070,540 21,018,595
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62,693,848 48,855,632
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$ 105,498,042 $ 88,513,133
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CONSOLIDATED STATEMENTS OF
CASH FLOWS
FANTOM TECHNOLOGIES INC.
Three Months Ended
September 30 (Unaudited)
1999 1998
CASH PROVIDED BY (USED FOR):
Operations:
Net income $ 3,405,530 $ 3,273,056
Items not requiring cash:
Depreciation 882,906 525,171
Deferred taxes 148,840 562,881
Amortization of deferred
development costs 87,321 25,525
Change in non-cash
operating working capital (3,393,770) (4,772,669)
Increase (decrease) in currency
hedging exchange gains (996,406) 968,059
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134,421 582,023
Financing:
Payments on capital leases (10,304) (68,381)
Issuance of common
shares and warrants 674,021 839,447
Dividends paid (451,900) (270,093)
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211,817 500,973
Investments:
Additions to property,
plant and equipment (2,119,253) (3,114,873)
Additions to deferred
development costs (153,188) (491,334)
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(2,272,441) (3,606,207)
Decrease in cash position (1,926,203) (2,523,211)
Cash position at
beginning of period 9,439,206 4,609,798
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Cash position at
end of period $ 7,513,003 $ 2,086,587
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