<PAGE>
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 February, 2000
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
-----
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
-----
<PAGE>
Documents Included as Part of this Report
No. Document
--- --------
1. Second Quarter Report to Shareholders for the six months ended
December 31, 1999.
2. Press release dated January 21, 2000.
3. Press release dated October 27, 1999.
4. Press release dated October 19, 1999.
2
<PAGE>
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: February 29, 2000
FANTOM TECHNOLOGIES INC.
By: "Walter J. Palmer"
------------------
Name: Walter J. Palmer
Title: Secretary
<PAGE>
[LOGO]
February 17, 2000
<TABLE>
<CAPTION>
<S> <C>
Nova Scotia Securities Commission Securities Division (NFLD)
Alberta Securities Commission Saskatchewan Securities Commission
The Manitoba Securities Commission New Brunswick Securities Commission
The Toronto Stock Exchange Ontario Securities Commission
British Columbia Securities Commission Prince Edward Island Securities Commission
</TABLE>
Dear Sirs:
RE: FANTOM TECHNOLOGIES INC.
The following items (Files) were sent by prepaid mail to all shareholders of the
above-mentioned Company on February 16, 2000.
X Second Interim Report Proxy
for the Six Months Period
ended December 31, 1999
Annual Report Proxy Information Circular
Annual Financial Statement MD & A
Press Release Other
However, we have not mailed material to Shareholders in cases where on three
consecutive occasions, notices or other documents have been returned undelivered
by the Post Office.
The above disclosure document/files are filed with you as Agent for the Company
in compliance with the regulations.
Yours very truly,
CIBC MELLON TRUST COMPANY
Carol Pineda
Client Relations Co-ordinator
Direct Dial: (416) 643-5564
Sedar
CM_Fantm.doc
- --------------------------------------------------------------------------------
<PAGE>
NEWS RELEASE
- --------------------------------------------------------------------------------
Second Quarter Results Reported By
Fantom Technologies Inc.
~Also Declare Dividend
TORONTO, January 21, 2000 - Second quarter results were announced today by
Fantom Technologies Inc. (TSE: FTM; NASDAQ: FTMTF). For the three months ended
December 31, 1999 net income was $3.5 million or $0.39 per share (based on
9,098,008 shares outstanding) compared with $3.6 million or $0.40 per share
(based on 9,003,108 shares outstanding) for the year-earlier period. Sales were
$60.9 million compared with $60.0 million for the year-earlier period.
For the six months ended December 31, 1999 net income was $6.9 million or $0.76
per share (based on 9,072,063 shares outstanding) compared with $6.9 million or
$0.76 per share (based on 8,991,763 shares outstanding) for the year-earlier
period. Sales were $118.0 million compared with $115.1 million for the year-
earlier period.
Commenting on the Company's results, Fantom Technologies' President & CEO Allan
Millman said, "While the market for `bagless' vacuum cleaners has become
increasingly competitive, we believe our new product development efforts are
positioning us well for significant growth. Over the summer 2000 timeframe, we
plan to introduce our first household water-treatment appliance - a counter-top
microbiological water purifier - followed by a major new floor-care product."
Mr. Millman went on to say that he was pleased with a recent test of FANTOM(R)
vacuums at Wal-Mart Stores, Inc. in the United States, and was optimistic about
the potential for future sales with this key retailer.
Fantom Technologies also announced today that its Board of Directors declared a
quarterly cash dividend of 5 cents per share payable on March 31, 2000 to
shareholders of record at the close of business on February 29, 2000.
The Company further announced the appointments of James D. Meekison and Joseph
H. Wright III as Directors, bringing the number of Board members to eight. Mr.
Meekison is Chairman of Trimin Enterprises Inc.,
<PAGE>
and Trimin Capital Corp., publicly traded management companies, and Tritech
Precision Inc. and Haley Industries Limited, publicly traded manufacturing
companies. He is a past and current member of several Boards and brings
extensive experience and expertise in the financial and manufacturing sectors.
Mr. Wright III is currently Managing Partner of Crosbie & Company Inc., a
specialty investment-banking firm. He has over 30 years of in-depth experience
managing and transacting in investment and corporate banking in Canada, the
United States and Switzerland, and has served on numerous Boards.
About Fantom Technologies
Fantom Technologies Inc. of Ontario, Canada is a growth-oriented, household-
appliance company, seeking the best ideas in technology that will make daily
living better for consumers. Over the past five years, Fantom has changed the
face of the vacuum cleaner industry in North America with its line of dual-
cyclonic vacuums. The Company is developing several new products based on
proprietary technology and has aggressive plans to expand the markets and
geographic territories in which it competes. Since May 1998, sixty-three utility
patent applications have been filed for technologies the Company is either
acquiring or exclusively licensing through its association with Omachron
Technologies, Inc.
For more information about Fantom Technologies, visit the Company's web site at
www.fantom.com.
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 "believe", "plan", 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.
<PAGE>
Financial Highlights
(Unaudited, in Canadian Dollars)
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------------
Consolidated Statements of Income
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------- ----------------------------------------- -----------------------------------------
Six Months Ended Three Months Ended
- --------------------------------------------- --------------------- ------------------- --------------------- -------------------
December 31 1999 1998 1999 1998
- --------------------------------------------- --------------------- ------------------- --------------------- -------------------
Sales $117,964,689 $115,119,510 $60,920,152 $60,005,350
- --------------------------------------------- --------------------- ------------------- --------------------- -------------------
Cost of Goods Sold $74,155,615 $73,165,695 $38,391,416 $36,997,491
- --------------------------------------------- --------------------- ------------------- --------------------- -------------------
Gross Margin $43,809,074 $41,953,815 $22,528,736 $23,007,859
- --------------------------------------------- --------------------- ------------------- --------------------- -------------------
Selling, General & Administrative $32,055,471 $30,287,407 $16,900,116 $16,693,394
- --------------------------------------------- --------------------- ------------------- --------------------- -------------------
Research and Development Expense $936,303 $997,560 $151,929 $660,741
- --------------------------------------------- --------------------- ------------------- --------------------- -------------------
Finance Charges ($152,111) ($65,331) ($87,190) $34,601
- --------------------------------------------- --------------------- ------------------- --------------------- -------------------
Income Before Taxes $10,969,411 $10,734,179 $5,563,881 $5,619,123
- --------------------------------------------- --------------------- ------------------- --------------------- -------------------
Tax Provisions $4,059,206 $3,866,000 $2,059,206 $2,024,000
- --------------------------------------------- --------------------- ------------------- --------------------- -------------------
Net Income $6,910,205 $6,868,179 $3,504,675 $3,595,123
- --------------------------------------------- --------------------- ------------------- --------------------- -------------------
Earnings Per Share (Basic) $0.76 $0.76 $0.39 $0.40
- --------------------------------------------- --------------------- ------------------- --------------------- -------------------
Average # of Shares Outstanding 9,072,063 8,991,763 9,098,008 9,003,108
- --------------------------------------------- --------------------- ------------------- --------------------- -------------------
Earnings Per Share (Fully-Diluted) $0.73 $0.73 $0.37 $0.38
- --------------------------------------------- --------------------- ------------------- --------------------- -------------------
</TABLE>
<PAGE>
Financial Highlights
(Unaudited, in Canadian Dollars)
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Consolidated Balance Sheets
- ------------------------------------------------------------------------------------------------------------------------------
December 31 1999 1998
- ----------------------------------------------------------------------------- -------------------------- ---------------------
Cash $7,198,478 $1,317
- ----------------------------------------------------------------------------- -------------------------- ---------------------
Other Current Assets $64,425,413 $57,594,223
- ----------------------------------------------------------------------------- -------------------------- ---------------------
Deferred Development Costs, Net of Amortization $2,549,941 $1,558,028
- ----------------------------------------------------------------------------- -------------------------- ---------------------
Property, Plant & Equipment at Cost $41,954,289 $30,518,893
- ----------------------------------------------------------------------------- -------------------------- ---------------------
Less Accumulated Depreciation ($9,271,601) ($6,082,677)
- ----------------------------------------------------------------------------- -------------------------- ---------------------
Net Fixed Assets $32,682,688 $24,436,216
- ----------------------------------------------------------------------------- -------------------------- ---------------------
Total Assets $106,856,520 $83,589,784
- ----------------------------------------------------------------------------- -------------------------- ---------------------
Bank Indebtedness $0 $0
- ----------------------------------------------------------------------------- -------------------------- ---------------------
Other Current Liabilities $37,682,025 $27,266,749
- ----------------------------------------------------------------------------- -------------------------- ---------------------
Capital Lease Obligations, Less Current Portions $0 $0
- ----------------------------------------------------------------------------- -------------------------- ---------------------
Deferred Income Taxes $3,072,297 $3,174,314
- ----------------------------------------------------------------------------- -------------------------- ---------------------
Deferred Currency-Hedging Exchange Gains $357,171 $968,059
- ----------------------------------------------------------------------------- -------------------------- ---------------------
Share Capital $28,623,307 $27,837,037
- ----------------------------------------------------------------------------- -------------------------- ---------------------
Retained Earnings $37,121,720 $24,343,625
- ----------------------------------------------------------------------------- -------------------------- ---------------------
Total Liabilities & Shareholders' Equity $106,856,520 $83,589,784
- ----------------------------------------------------------------------------- -------------------------- ---------------------
</TABLE>
-30-
For more information, please contact:
Allan Millman Steve Doorey
President & CEO Vice President, CFO
416-622-9740 Ext. 232 905-734-7476 Ext. 281
<PAGE>
NEWS RELEASE
- --------------------------------------------------------------------------------
Fantom Technologies Inc. Announces
Appointments
TORONTO, October 27, 1999 - The Board of Directors of Fantom Technologies Inc.
(TSE: FTM; NASDAQ: FTMTF) has appointed Rikki Meggeson as Chair of the Board and
Alan Hussey as Senior Vice President & General Manager. Both appointments are
effective November 1, 1999.
Ms. Meggeson has made numerous contributions to the success of Fantom since
joining the Board as a Director in 1989. She is credited with being the
originator of the idea of using the name "Fantom" for the Company's products.
Ms. Meggeson succeeds Kenneth Kelman. According to Mr. Kelman, "Rikki is well-
positioned to lead the Board as we enter a new era for Fantom."
Mr. Kelman, who will continue to serve as a Director of Fantom, has been Chair
of Fantom since 1989. Under his stewardship, the Company grew fifteen times in
size, with all of the growth generated internally. Ms. Meggeson thanked Mr.
Kelman for his leadership and dedication to the role of Board Chair saying, "Ken
has guided us capably during this period of rapid expansion. We're pleased that
he will continue to serve the Board as a Director."
Mr. Hussey joined Fantom in 1995 as Vice President, Manufacturing and has played
an instrumental role in the Company's growth and success. In his new capacity,
he will assume responsibility for a new line of products that will incorporate
technologies being developed through the Company's association with Omachron
Technologies, Inc. The Company expects to announce further details of this
initiative early in the new year. Mr. Hussey will continue to oversee
manufacturing operations at the Company's Welland, Ontario and West Columbia,
South Carolina facilities until a successor for his current position is
appointed.
<PAGE>
About Fantom Technologies
Fantom Technologies Inc. of Ontario, Canada is a growth-oriented, household-
appliance company, seeking the best ideas in technology that will make daily
living better for consumers. In the past five years, Fantom has changed the face
of the vacuum cleaner industry in North America with its line of dual-cyclonic
vacuums. The Company is developing several new products based on proprietary
technology and has aggressive plans to expand the markets and geographic
territories in which it competes. Since May 1998, fifty-three utility patent
applications have been filed for technologies the Company is either acquiring or
exclusively licensing through its association with Omachron Technologies, Inc.
For more information about Fantom Technologies, visit the Company's web site at
www.fantom.com.
For more information about this news release, please contact:
Allan Millman
President & CEO
416-622-9740 Ext. 232
Steve Doorey
Vice President, CFO
905-734-7476 Ext. 281
-30-
<PAGE>
NEWS RELEASE
- --------------------------------------------------------------------------------
First Quarter Results Reported By
Fantom Technologies Inc.
~Also Declare Dividend
TORONTO, October 19, 1999 - First quarter results were announced today by Fantom
Technologies Inc. (TSE: FTM; NASDAQ: FTMTF). Net income for the three months
ended September 30, 1999 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. Sales were $57.0
million compared with $55.1 million for the year-earlier period.
Commenting on the Company's results, Fantom Technologies' President & CEO Allan
Millman said, "Our revenue and net income for the quarter were the highest ever
for the July - September period. Importantly, our distribution is continuing to
expand. At the end of September, we made our first shipments to Wal-Mart Stores,
Inc. in the United States. Our vacuums are currently being tested in several
hundred of the largest Wal-Mart stores, and we are optimistic about the
potential this increased distribution represents." Mr. Millman went on to say,
"Our new product development efforts are progressing well. We are on target to
launch a new line of floor-care products, as well as our first household water-
treatment product - a counter-top microbiological water purifier - in the summer
of 2000."
Fantom Technologies also announced today that its 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.
About Fantom Technologies
Fantom Technologies Inc. of Ontario, Canada is a growth-oriented, household-
appliance company, seeking the best ideas in technology that will make daily
living better for consumers. In the past five years, Fantom has changed the face
of the vacuum cleaner industry in North America with its line of dual-cyclonic
vacuums. The Company is developing several new
1
<PAGE>
products based on proprietary technology and has aggressive plans to expand the
markets and geographic territories in which it competes. Since May 1998, fifty-
three utility patent applications have been filed for technologies the Company
is either acquiring or exclusively licensing through its association with
Omachron Technologies, Inc.
For more information about Fantom Technologies, visit the Company's web site at
www.fantom.com.
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 word "plans", "target" 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.
For more information, please contact:
Allan Millman
President & CEO
416-622-9740 Ext. 232
Steve Doorey
Vice President, CFO
905-734-7476 Ext. 281
2
<PAGE>
Financial Highlights
(Unaudited, in Canadian Dollars)
- -----------------------------------------------------------------------------
Consolidated Statements of Income
- -----------------------------------------------------------------------------
Three Months Ended
- -----------------------------------------------------------------------------
September 30 1999 1998
- -----------------------------------------------------------------------------
Sales $57,044,537 $55,114,160
- -----------------------------------------------------------------------------
Cost of Goods Sold $35,764,199 $36,168,204
- -----------------------------------------------------------------------------
Gross Margin $21,280,338 $18,945,956
- -----------------------------------------------------------------------------
Selling, General & Administrative $15,155,355 $13,606,074
- -----------------------------------------------------------------------------
Research and Development Expense $ 784,374 $ 324,758
- -----------------------------------------------------------------------------
Finance Charges ($64,921) ($99,932)
- -----------------------------------------------------------------------------
Income Before Taxes $ 5,405,530 $ 5,115,056
- -----------------------------------------------------------------------------
Tax Provisions $ 2,000,000 $ 1,842,000
- -----------------------------------------------------------------------------
Net Income $ 3,405,530 $ 3,273,056
- -----------------------------------------------------------------------------
Earnings Per Share (Basic) $ 0.38 $ 0.36
- -----------------------------------------------------------------------------
Average # of Shares Outstanding 9,046,119 8,972,809
- -----------------------------------------------------------------------------
Earnings Per Share (Fully-Diluted) $ 0.36 $ 0.35
- -----------------------------------------------------------------------------
3
<PAGE>
Financial Highlights
(Unaudited, in Canadian Dollars)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Consolidated Balance Sheets
- -------------------------------------------------------------------------------------------------------------
September 30 1999 1998
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash $ 7,513,003 $ 2,086,587
- -------------------------------------------------------------------------------------------------------------
Other Current Assets $ 65,495,095 $ 62,328,425
- -------------------------------------------------------------------------------------------------------------
Deferred Development Costs, Net of Amortization $ 2,128,044 $ 1,320,046
- -------------------------------------------------------------------------------------------------------------
Property, Plant & Equipment at Cost $ 38,731,211 $ 28,298,147
- -------------------------------------------------------------------------------------------------------------
Less Accumulated Depreciation ($8,369,311) ($5,520,072)
- -------------------------------------------------------------------------------------------------------------
Net Fixed Assets $ 30,361,900 $ 22,778,075
- -------------------------------------------------------------------------------------------------------------
Total Assets $105,498,042 $ 88,513,133
- -------------------------------------------------------------------------------------------------------------
Bank Indebtedness $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------
Other Current Liabilities $ 38,500,057 $ 35,350,589
- -------------------------------------------------------------------------------------------------------------
Capital Lease Obligations, Less Current Portions $ 0 $ 7,739
- -------------------------------------------------------------------------------------------------------------
Deferred Income Taxes $ 2,852,564 $ 3,331,114
- -------------------------------------------------------------------------------------------------------------
Deferred Currency-Hedging Exchange Gains $ 1,451,573 $ 968,059
- -------------------------------------------------------------------------------------------------------------
Share Capital $ 28,623,308 $ 27,837,037
- -------------------------------------------------------------------------------------------------------------
Retained Earnings $ 34,070,540 $ 21,018,595
- -------------------------------------------------------------------------------------------------------------
Total Liabilities & Shareholders' Equity $105,498,042 $ 88,513,133
- -------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
CONSOLIDATED STATEMENTS OF
CASH FLOWS
- --------------------------------------------------------------------------------
FANTOM TECHNOLOGIES INC.
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
December 31 (Unaudited) December 31 (Unaudited)
1999 1998 1999 1998
CASH PROVIDED BY (USED FOR):
<S> <C> <C> <C> <C>
Operations:
Net income $ 6,910,205 $ 6,868,179 $ 3,504,675 $ 3,595,123
Items not
requiring cash:
Depreciation 1,785,196 1,087,776 902,290 562,605
Deferred taxes 601,573 436,881 452,733 (126,000)
Amortization of deferred
development costs 174,643 51,049 87,322 25,524
Change in non-cash
operating working
capital (3,633,938) (8,649,321) (240,168) (4,844,711)
Increase (decrease)
in currency hedging
exchange gains (2,625,191) 968,059 (1,628,785) 968,059
- ----------------------------------------------------------------------------------------
3,212,488 762,623 3,078,067 180,600
Financing:
Payments on
capital leases (13,898) (138,265) (3,594) (69,884)
Issuance of common
shares and warrants 674,021 839,447 -- --
Dividends paid (905,395) (270,093) (453,495) --
- ----------------------------------------------------------------------------------------
(245,272) 431,089 (457,089) (69,884)
Investments:
Additions to property,
plant and equipment (4,545,536) (5,047,353) (2,426,283) (1,932,480)
Additions to deferred
development costs (662,407) (754,840) (509,219) (263,506)
- ----------------------------------------------------------------------------------------
(5,207,943) (5,802,193) (2,935,502) (2,195,986)
Decrease in cash
position (2,240,727) (4,608,481) (314,524) (2,085,270)
Cash position at
beginning of period 9,439,206 4,609,798 7,513,003 2,086,587
- ----------------------------------------------------------------------------------------
Cash position
at end of period $ 7,198,479 $ 1,317 $ 7,198,479 $ 1,317
- ----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
WHAT MAKES
US FANTOM?
DON'T FOLLOW
WHERE THE PATH
MAY LEAD.
GO WHERE THERE
IS NO PATH AND
LEAVE A TRAIL
<PAGE>
[LOGO OF FANTOM(R)]
FANTOM TECHNOLOGIES INC.
Head office and Canadian manufacturing facility:
1110 Hansler Road, P.O. Box 1004
Welland, Ontario L3B 5S1
Voice: (905) 734-7476 Fax: (905) 734-9955
United States manufacturing facility:
102 Corporate Blvd., Carolina Center Business Park
West Columbia, South Carolina 29169
Voice: (803) 739-1151 Fax: (803) 939-0730
Toronto sales office:
Suite 414, 1 Eva Road, Toronto, Ontario M9C 4Z5
Voice: (416) 622-9740 Fax: (416) 626-0674
Toronto Stock Exchange: FTM NASDAQ: FTMTF
Website: www.fantom.com E-mail: [email protected]
Transfer Agent & Registrar:
CIBC Mellon Trust Company
320 Bay Street, P.O. Box 1, Toronto, Ontario M5H 4A1
FANTOM(R) is a trademark of FANTOM TECHNOLOGIES INC.
<PAGE>
[GRAPHIC]
SECOND QUARTER
REPORT TO
SHAREHOLDERS
FOR THE SIX MONTHS
ENDED DECEMBER 31, 1999
[LOGO OF FANTOM(R)]
<PAGE>
TO OUR SHAREHOLDERS
- --------------------------------------------------------------------------------
FANTOM TECHNOLOGIES INC.
For the three months ended December 31, 1999 (Q2 fiscal 2000), revenue increased
to $60.9 million from $60.0 million for the year-earlier period. Net income was
$3.5 million or $0.39 per share (based on 9,098,008 shares outstanding)
compared with $3.6 million or $0.40 per share (based on 9,003,108 shares
outstanding) for the year-earlier period.
For the six months ended December 31, 1999, revenue increased to $118.0 million
from $115.1 million for the same period in the previous year. Net income was
$6.9 million or $0.76 per share (based on 9,072,063 shares outstanding)
compared with $6.9 million or $0.76 per share (based on 8,991,763 shares
outstanding) for the year-earlier period.
While our revenue for the first half of the current fiscal year represented a
record performance, our rate of growth slowed due to the increasingly
competitive environment for "bagless" vacuums.
During the most recently completed quarter, the Company's FANTOM(R) vacuums were
tested in several hundred of the largest Wal-Mart stores in the United States.
We are very pleased with the results of this test and are optimistic about the
potential for future sales with this key retailer.
On January 20, 2000 the Board of Directors declared a quarterly cash dividend of
5 cents per share payable on March 31, 2000 to shareholders of record at the
close of business on February 29, 2000.
The Company continued to make excellent progress during the quarter in
developing its "next-generation" products. We believe these efforts are
positioning us well for significant growth. In mid- January, our new
microbiological water-treatment system was displayed to major retailers and
trade media from the United States and Canada at the International Housewares
Show in Chicago. It received a very enthusiastic response. This innovative
counter-top appliance - scheduled for introduction in summer 2000 - utilizes
activated oxygen, known as ozone, to kill micro-organisms. This same process is
used in more than 3,000 state-of-the-art municipal water-treatment systems
around the world, including over 200 in the United States.
The Company also plans to launch a major new floor-care product, designed to
create a new market segment, shortly following the introduction of its water-
treatment entry. This breakthrough development has been exposed to key
retailers on a confidential basis and is being regarded with much excitement.
Since May 1998, sixty-three utility patent applications have been filed for
technologies the Company is either acquiring or exclusively licensing through
its association with Omachron Technologies, Inc.
<PAGE>
The Company is also pleased to advise of the appointments of James D. Meekison
and Joseph H. Wright III as Directors, bringing the number of Board members to
eight. Mr. Meekison is Chairman of Trimin Enterprises Inc. and Trimin Capital
Corp., publicly-traded management companies, and Tritech Precision Inc. and
Haley Industries Limited, publicly-traded manufacturing companies. He is a past
and current member of several Boards and brings extensive experience and
expertise in the financial and manufacturing sectors. Mr. Wright is currently
Managing Partner of Crosbie & Company Inc., a specialty investment-banking
firm. He has over 30 years of in-depth experience managing and transacting in
investment and corporate banking in Canada, the United States and Switzerland,
and has served on numerous Boards.
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 "believe", "scheduled", "plans", 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,
/s/ Rikki Meggeson /s/ Allan D. Millman
Rikki Meggeson Allan D. Millman,
Chair of the Board President and Chief Executive Officer
February 7, 2000
<PAGE>
CONSOLIDATED STATEMENTS OF
INCOME AND RETAINED EARNINGS
- --------------------------------------------------------------------------------
FANTOM TECHNOLOGIES INC.
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
December 31 (Unaudited) December 31 (Unaudited)
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Sales $117,964,689 $115,119,510 $60,920,152 $60,005,350
Cost of goods sold 74,155,615 73,165,695 38,391,416 36,997,491
- ------------------------------------------------------------------------------------
43,809,074 41,953,815 22,528,736 23,007,859
Expenses:
Selling,
general and
administrative 32,055,471 30,287,407 16,900,116 16,693,394
Research and
development 936,303 997,560 151,929 660,741
Finance charges (152,111) (65,331) (87,190) 34,601
- ------------------------------------------------------------------------------------
32,839,663 31,219,636 16,964,855 17,388,736
Income before
income taxes 10,969,411 10,734,179 5,563,881 5,619,123
Income taxes 4,059,206 3,866,000 2,059,206 2,024,000
- ------------------------------------------------------------------------------------
Net income 6,910,205 6,868,179 3,504,675 3,595,123
Retained earnings
at beginning
of period 31,116,910 18,015,632 34,070,540 21,018,595
Dividends (905,395) (540,186) (453,495) (270,093)
Retained earnings
at end of period $ 37,121,720 $ 24,343,625 $37,121,720 $24,343,625
- ------------------------------------------------------------------------------------
Net income
per share
- Basic* $ 0.76 $ 0.76 $ 0.39 $ 0.40
- Fully Diluted $ 0.73 $ 0.73 $ 0.37 $ 0.38
- ------------------------------------------------------------------------------------
</TABLE>
*Basic net income per share has been calculated using the weighted average
number of common shares outstanding during the respective periods. For the six
months ended December 31, these were 9,072,063 shares for 1999 and 8,991,763
shares for 1998. For the three months ended December 31, these were 9,098,008
shares for 1999 and 9,003,108 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.
<PAGE>
CONSOLIDATED BALANCE SHEETS
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FANTOM TECHNOLOGIES INC.
December 31
(Unaudited)
1999 1998
ASSETS
Current assets:
Cash and short term deposits $ 7,198,478 $ 1,317
Trade accounts receivable 34,220,461 34,340,706
Other receivables 3,447,271 2,133,455
Inventories 22,647,781 17,840,036
Prepaid expenses 2,995,556 3,051,826
Deferred income taxes 1,114,344 228,200
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71,623,891 57,595,540
Deferred development costs,
net of amortization 2,549,941 1,558,028
Property, plant and equipment,
at cost 41,954,289 30,518,893
Less accumulated depreciation (9,271,601) (6,082,677)
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32,682,688 24,436,216
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$106,856,520 $83,589,784
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 25,709,320 $17,889,951
Other payables and accruals 8,953,488 8,675,060
Currency hedging exchange gains 3,011,259 600,528
Current portion of capital
lease obligations 7,958 101,210
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37,682,025 27,266,749
Currency hedging exchange gains 357,171 968,059
Deferred income taxes 3,072,297 3,174,314
Shareholders' equity:
Share capital 28,623,307 27,837,037
Retained earnings 37,121,720 24,343,625
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65,745,027 52,180,662
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$106,856,520 $83,589,784
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