As filed with the Securities and Exchange Commission on August 7, 2009.
Registration No 333-158962
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3/A
AMENDMENT NO. 1
Registration Statement
Under
THE SECURITIES ACT OF 1933
Flexible Solutions International, Inc.
(Exact name of registrant as specified in charter)
Nevada
-----------------------------
(State or other jurisdiction of incorporation)
615 Discovery Street
Victoria, British Columbia
91-1922863 Canada V8T 5G4 (250) 477-9969
----------------------- --------------------------- ----------------
(IRS Employer I.D. Number) (Address of principal executive (Telephone)
offices)
Daniel B. Obrien
615 Discovery Street
Victoria, British Columbia
Canada V8T 5G4 (250) 477-9969
------------------------------------- -----------------------
(Name and address of agent for service) (Telephone)
Copies of all communications, including all communications sent
to the agent for service, should be sent to:
William T. Hart, Esq.
Hart & Trinen
1624 Washington Street
Denver, Colorado 80203
(303) 839-0061
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a registration statement pursuant to General Instruction I.D. or
a post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box. [ ]
If this Form is a post-effective amendment to a registration statement filed
pursuant to General Instruction I.D. filed to register additional securities or
additional classes of securities pursuant to Rule 413(b) under the Securities
Act, check the following box. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
CALCULATION OF REGISTRATION
FEE
Title of each Proposed Proposed
Class of Maximum Maximum
Securities Securities Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Share (1) Price Fee
---------- ---------- --------- --------- --------------
Common stock (2) 1,531,440 $1.55 $2,373,732 $ 133
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(1) Offering price computed in accordance with Rule 457(c).
(2) Shares of common stock to be sold by the selling shareholders.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of l933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
2
PROSPECTUS
FLEXIBLE SOLUTIONS INTERNATIONAL, INC.
1,531,440 shares of Common Stock
By means of this prospectus a number of the shareholders of Flexible
Solutions International, Inc. are offering to sell up to 1,531,440 shares of our
common stock issuable upon the exercise of warrants.
The securities offered by this prospectus are speculative and involve a
high degree of risk and should be purchased only by persons who can afford to
lose their entire investment. Prospective investors should consider certain
important factors described under "Risk Factors" beginning on page 3 of this
prospectus.
These Securities Have Not Been Approved or Disapproved by the Securities
and Exchange Commission Nor Has the Commission Passed Upon the Accuracy or
Adequacy of this Prospectus. Any Representation to the Contrary is a Criminal
Offense.
Our common stock is traded on the NYSE AMEX. On August 6, 2009 the closing
price of our common stock on the NYSE AMEX was $1.21.
The date of this prospectus is August __, 2009
PROSPECTUS SUMMARY
THIS SUMMARY IS QUALIFIED BY THE MORE DETAILED INFORMATION APPEARING ELSEWHERE
IN THIS PROSPECTUS.
Our Business
We develop, manufacture and market specialty chemicals that slow the
evaporation of water.
Our HEAT$AVR(R) product is used in swimming pools and spas. This product
forms a thin, transparent layer on the water's surface. The transparent layer
slows the evaporation of water, allowing the water to retain a higher
temperature for a longer period of time and thereby reducing the energy required
to maintain the desired temperature of the water. Using the same technology, our
WATER$AVR(R) product, can also be used in reservoirs, potable water storage
tanks, livestock watering ponds, canals, and irrigation ditches where its use
slows water loss due to evaporation.
We also manufacture and market TPA's, or biodegradable polymers, which are
used by the petroleum, chemical, utility and mining industries to prevent
corrosion and scaling in water piping. TPA's can also be used in detergents to
increase biodegradability and in agriculture to increase crop yields by
enhancing fertilizer uptake.
The Offering
By means of this prospectus a number of our shareholders are offering to
sell up to 1,455,470 shares of our common stock which are issuable upon the
exercise of warrants. The warrants were sold in private offerings, together with
shares of our common stock, in 2005 and 2007. Each warrant originally permitted
the holder to purchase one share of our common stock at a price of $4.50. On
February 2, 2009 our directors lowered the exercise price of the warrants issued
in 2005 to $4.00. Also included in the shares offered by this prospectus are
75,970 shares issuable upon the exercise of warrants issued to sales agents
participating in the private offerings.
As of July 31, 2009 we had 14,057,567 outstanding shares of common stock.
The number of outstanding shares does not give effect to shares which may be
issued upon the exercise of outstanding warrants or options. See "Comparative
Share Data".
We will not receive any proceeds from the sale of the shares by the
selling shareholders.
The purchase of the securities offered by this prospectus involves a high
degree of risk. Risk factors include our history of losses and the potential
need for additional capital. See the "Risk Factors" section of this prospectus
for additional risk factors.
2
Forward Looking Statements
This prospectus contains various forward-looking statements that are based
on our belief as well as assumptions made by and information currently available
to us. When used in this prospectus, the words "believe", "expect",
"anticipate", "estimate" and similar expressions are intended to identify
forward-looking statements. Such statements may include statements regarding
future revenues, payment of operating expenses, and the like, and are subject to
certain risks, uncertainties and assumptions which could cause actual results to
differ materially from projections or estimates. Factors which could cause
actual results to differ materially are discussed at length under the heading
"Risk Factors". Should one or more of the enumerated risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those anticipated, estimated or projected. Investors
should not place undue reliance on forward-looking statements, all of which
speak only as of the date made.
RISK FACTORS
The following is a discussion of important factors that could affect our
future operations and result in a decline in the market price of our common
stock.
We have incurred significant operating losses since inception and may not
sustain profitability in the future.
We have experienced operating losses and negative cash flow from operations
since our inception and we currently have an accumulated deficit. To the extent
our revenues do not increase, our results of operations and liquidity will be
materially adversely affected. If we experience slower than anticipated revenue
growth or if our operating expenses exceed our expectations, we may not be
profitable. Even if we become profitable in the future, we may not remain
profitable.
Our failure to obtain capital may significantly restrict our operations.
We may need additional capital to fund our operating losses and to expand our
business. We do not know what the terms of any future capital raising may be but
any future sale of our equity securities would dilute the ownership of existing
stockholders and could be at prices substantially below the market price of the
shares of common stock sold in this offering. Our failure to obtain the capital
which we require may result in the slower implementation of our business plan or
our inability to implement our business plan. There can be no assurance that we
will be able to obtain any capital which we will need or how long we can remain
in operation.
We will not receive any proceeds from the sale of the shares offered by this
prospectus.
3
Shares issuable upon the exercise of outstanding options and warrants may
substantially increase the number of shares available for sale in the public
market and may depress the price of our common stock.
We had outstanding options and warrants which, as of July 31, 2009, allowed the
holders to acquire a substantial number of shares of our common stock. Until the
options and warrants expire, the holders will have an opportunity to profit from
any increase in the market price of our common stock without assuming the risks
of ownership. Holders of options and warrants may exercise these securities at a
time when we could obtain additional capital on terms more favorable than those
provided by the options or warrants. The exercise of the options and warrants
will dilute the voting interest of the owners of presently outstanding shares by
adding a substantial number of additional shares of our common stock. See
"Comparative Share Data" for additional information.
By means of this registration statement, as well as other registration
statements filed with the Securities and Exchange Commission, substantially all
of the shares of common stock which are issuable upon the exercise of the
outstanding options and warrants may be sold in the public market. The sale of
common stock issued or issuable upon the exercise of our outstanding options or
warrants, or the perception that such sales could occur, may adversely affect
the market price of our common stock.
Fluctuations in our operating results may cause our stock price to decline.
Given the nature of the markets in which we participate, we cannot reliably
predict future revenues and profitability. Changes in competitive, market and
economic conditions may cause us to adjust our operations. A high proportion of
our costs are fixed, due in part to our sales, research and development and
manufacturing costs. Thus, small declines in revenue could disproportionately
affect our operating results. Factors that may affect our operating results and
the market price of our common stock include:
o demand for and market acceptance of our products;
o competitive pressures resulting in lower selling prices;
o adverse changes in the level of economic activity in regions in which
we do business;
o adverse changes in industries, such as swimming pool construction, on
which we are particularly dependent;
o changes in the portions of our revenue represented by various products
and customers;
o delays or problems in the introduction of new products;
o the announcement or introduction of new products, services or
technological innovations by our competitors;
o variations in our product mix;
o the timing and amount of our expenditures in anticipation of future
sales;
o increased costs of raw materials or supplies; and
o changes in the volume or timing of product orders.
4
Our operations are subject to seasonal fluctuation.
The use of our swimming pool products increases in summer months in most markets
and results in our sales from January to June being greater than in July through
December. Markets for our WATER$AVR(R) product are also seasonal, dependent on
the wet versus dry seasons in particular countries. We attempt to sell into a
variety of countries with different seasons on both sides of the equator in
order to minimize seasonality. Our TPA business is the least seasonal, however
there is a small increase in the spring related to inventory building for the
crop season in the United States and a small slowdown in December as oilfield
customers run down stock in advance of year end, but otherwise, little seasonal
variation. We believe we are able to adequately respond to these seasonal
fluctuations by reducing or increasing production as needed.
Interruptions in our ability to purchase raw materials and components may
adversely affect our profitability.
We purchase certain raw materials and components from third parties pursuant to
purchase orders placed from time to time. Because we do not have guaranteed
long-term supply arrangements with our suppliers, any material interruption in
our ability to purchase necessary raw materials or components could have a
material adverse effect on our business, financial condition and results of
operations.
Our WATER$AVR(R) product has not proven to be a revenue producing product and we
may never recoup the cost associated with its development.
The marketing efforts of our WATER$AVR(R) product may result in continued
losses. We introduced our WATER$AVR(R) product in June 2002 and, to date, we
have delivered quantities for testing by potential customers, but only a few
customers have ordered the product for commercial use. This product can achieve
success only if it is ordered in substantial quantities by commercial customers
who have determined that the water saving benefits of the product exceed the
costs of purchase and deployment of the product. We can offer no assurance that
we will receive sufficient orders of this product to achieve profits or cover
the additional expenses incurred to manufacture and market this product.
If we do not introduce new products in a timely manner, our products could
become obsolete and our operating results would suffer.
Without the timely introduction of new products and enhancements, our products
could become obsolete over time, in which case our revenue and operating results
would suffer. The success of our new product offerings will depend upon several
factors, including our ability to:
o accurately anticipate customer needs;
o innovate and develop new products and applications;
o successfully commercialize new products in a timely manner;
o price our products competitively and manufacture and deliver our
products in sufficient volumes and on time; and
o differentiate our products from our competitors' products.
5
In developing any new product, we may be required to make a substantial
investment before we can determine the commercial viability of the new product.
If we fail to accurately foresee our customers' needs and future activities, we
may invest heavily in research and development of products that do not lead to
significant revenues.
We are dependent upon certain customers.
Among our current customers, we have identified six that are sizable enough that
the loss of any one would be significant. Any such loss of one or more of these
customers could result in a substantial reduction in our revenues. For this
reason, we concentrate on maintaining good sales relations with these customers.
We also try and minimize this risk by seeking out new customers.
Economic, political and other risks associated with international sales and
operations could adversely affect our sales.
Shipments made outside of the United States accounted for approximately 79% of
our revenues during the year ended December 31, 2008 and approximately 79% of
our revenues during the year ended December 31, 2007. Since we sell our products
worldwide, our business is subject to risks associated with doing business
internationally. We anticipate that revenues from international operations will
continue to represent a sizable portion of our total revenue. Accordingly, our
future results could be harmed by a variety of factors, including:
o changes in foreign currency exchange rates;
o changes in a country or region's political or economic conditions,
particularly in developing or emerging markets;
o longer payment cycles of foreign customers and difficulty of
collecting receivables in foreign jurisdictions;
o trade protection measures and import or export licensing requirements;
o differing tax laws and changes in those laws;
o difficulty in staffing and managing widespread operations;
o differing protection of intellectual property and changes in that
protection; and
o differing regulatory requirements and changes in those requirements.
6
We are subject to credit risk and may be subject to substantial write-offs if
one or more of our significant customers default on their payment obligations to
us.
We currently allow our major customers between 30 and 45 days to pay for each
shipment of product we make to them. This practice, while customary, presents an
accounts receivable write-off risk in that if one or more of our significant
customers defaulted on their payment obligations to us, such write-off, if
substantial, would have a material adverse effect on our business and results of
operations. While we have exposure to this type of risk, we are no longer
subject to the concentrated credit risk that we were previously subject to
because of our relationship with Sun Solar. In addition, while our exposure to a
bad debts and write-offs credit risk may increase as we service a larger number
of customers in the swimming pool and personal spa, water evaporation and TPA
industries, the effect of any such bad debts and write-offs will be minimized as
a result of the increase in the numbers of our customers and overall revenues.
Our products can be hazardous if not handled, stored and used properly;
litigation related to the handling, storage and safety of our products would
have a material adverse effect on our business and results of operations.
Some of our products are flammable and must be stored properly to avoid fire
risk. Additionally, some of our products may cause irritation to a person's eyes
if they are exposed to the concentrated product. Although we label our products
to warn of such risks, our sales could be reduced if our products were to be
viewed as being dangerous to use or if they are implicated in causing personal
injury or property damage. We are not currently aware of any circumstances in
which our products have caused harm or property damage to consumers.
Nevertheless, litigation regarding the handling, storage and safety of our
products would have a material adverse effect on our business and results of
operations.
Our failure to comply with environmental regulations may create significant
environmental liabilities and force us to modify our manufacturing processes.
We are subject to various federal, state and local environmental laws,
ordinances and regulations relating to the use, storage, handling and disposal
of certain of our chemical substances. Under such laws, we may become liable for
the costs of removal or remediation of these substances that have been used by
our consumers or in our operations. Such laws may impose liability without
regard to whether we knew of, or caused, the release of such substances. Any
failure by us to comply with present or future regulations could subject us to
the imposition of substantial fines, suspension of production, alteration of
manufacturing processes or cessation of operations, any of which could have a
material adverse effect on our business, financial condition and results of
operations.
7
Our failure to protect our intellectual property could impair our competitive
position.
While we own certain patents and trademarks, some aspects of our business cannot
be protected by patents or trademarks. Accordingly, in these areas there are few
legal barriers that prevent potential competitors from copying certain of our
products, processes and technologies or from otherwise entering into operations
in direct competition with us. In particular, we have been informed that our
former exclusive agent for the sale of our products, Sun Solar, is now competing
with us in the swimming pool and personal spa markets. As a former distributor,
they were given access to many of our sales, marketing and manufacturing
techniques. Accordingly, we are doing all that we can to ensure our proprietary
products and technologies are not used by them (or others) without our
permission.
Our products may infringe on the intellectual property rights of others, and
resulting claims against us could be costly and prevent us from making or
selling certain products.
Third parties may seek to claim that our products and operations infringe their
patent or other intellectual property rights. We may incur significant expense
in any legal proceedings to protect our proprietary rights or to defend
infringement claims by third parties. In addition, claims of third parties
against us could result in awards of substantial damages or court orders that
could effectively prevent us from making, using or selling our products in the
United States or abroad.
A claim for damages could materially and adversely affect our financial
condition and results of operations.
Our business exposes us to potential product liability risks, particularly with
respect to our consumer swimming pool and consumer TPA products. There are many
factors beyond our control that could lead to liability claims, including the
failure of our products to work properly and the chance that consumers will use
our products incorrectly or for purposes for which they were not intended. There
can be no assurance that the amount of product liability insurance that we carry
will be sufficient to protect us from product liability claims. A product
liability claim in excess of the amount of insurance we carry could have a
material adverse effect on our business, financial condition and results of
operations.
Our ongoing success is dependent upon the continued availability of certain key
employees.
Our business would be adversely affected if the executive services of Daniel B.
O'Brien ceased to be available to us because we currently do not have any other
employee with an equivalent level of expertise in and knowledge of our industry.
If Mr. O'Brien no longer served as our President and Chief Executive Officer, we
would have to recruit one or more new executives, with no real assurance that we
would be able to engage a replacement executive with the required skills on
satisfactory terms. The market for skilled employees is highly competitive,
especially for employees in the fields in which we operate. While our
compensation programs are intended to attract and retain the employees required
for it to be successful, there can be no assurance that we will be able to
retain the services of all our key employees or a sufficient number to execute
on our plans, nor can there be any assurances that we will be able to continue
to attract new employees as required.
8
COMPARATIVE SHARE DATA
Number Note
Of Shares Reference
Shares outstanding as of July 31, 2009: 14,057,567
==========
Shares to be sold in this Offering:
Shares issuable upon exercise of warrants
sold to private investors 1,455,470 A
Shares issuable upon exercise of sales agent's
warrants 75,970 A
----------
1,531,440
Other Shares Which May Be Issued:
The following table lists additional shares of our common stock which may
be issued as of July 31, 2009:
Number Note
Of Shares Reference
Shares issuable upon exercise of options granted
to our officers, directors, employees, consultants,
and third parites 1,910,700 B
A. By means of this prospectus a number of our shareholders are offering to sell
up to 1,455,470 shares of our common stock which are issuable upon the exercise
of warrants. The warrants were sold in private offerings, together with shares
of our common stock, in 2005 and 2007. Each warrant originally permitted the
holder to purchase one share of our common stock at a price of $4.50. On
February 2, 2009 our directors lowered the exercise price of the warrants issued
in 2005 to $4.00.
In connection with the private offerings we paid sales commissions to
Capstone Investments ($37,538), FIG Partners, LLC ($14,251), and Barretto
Securities, Inc. ($45,000). We also issued warrants which allow: Capstone
Investments to purchase 54,000 shares of our common stock, FIG Partners to
purchase 5,816 shares of our common stock, and Barretto Securities to purchase
16,154 shares of our common stock.
Summary information concerning these warrants, all of which may be
exercised at any time, is shown below.
9
Shares Issuable Upon Issue Exercise Expiration
Exercise Of Warrants Date Price Date
-------------------- ------ -------- ----------
900,000 April 2005 $4.00 7/31/09
54,000 (1) April 2005 $4.00 7/31/09
87,400 June 2005 $4.00 7/31/09
468,070 May 2007 $4.50 5/30/10
21,970 (1) May 2007 $4.50 5/30/10
-----------
1,531,440
(1) Sales agent warrants.
B. Options are exercisable at prices ranging from $1.40 to $4.55 per share. The
options expire at various dates between July 31, 2009 and May 30, 2010.
The shares referred to in Note A are being offered for sale by means of
this registration statement. See "Selling Shareholders".
The shares referred to in Note B are being offered for sale by means of
separate registration statements which have been filed with the Securities and
Exchange Commission.
MARKET FOR OUR COMMON STOCK
Our common stock is traded on the NYSE AMEX under the symbol "FSI". The
following table shows the range of high and low closing prices on the NYSE AMEX
for our common stock for the periods indicated. The market quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commissions and may
not necessarily represent actual transactions.
High Low
Year Ended December 31, 2007 First Quarter $3.55 $2.25
Second Quarter 4.30 2.45
Third Quarter 3.25 2.50
Fourth Quarter 4.12 2.80
Year Ended December 31, 2008 First Quarter $2.24 $1.43
Second Quarter 2.80 2.09
Third Quarter 2.48 1.59
Fourth Quarter 4.12 2.80
As of May 31, 2009 we had approximately 1,700 shareholders.
10
Our common stock also trades on the Frankfurt stock exchange under the
symbol "FXT."
We have not paid any dividends on our common stock, and it is not
anticipated that any dividends will be paid in the foreseeable future. Our board
of directors intends to follow a policy of retaining earnings, if any, to
finance our growth. The declaration and payment of dividends in the future will
be determined by the board of directors in light of conditions then existing,
including our earnings, financial condition, capital requirements and other
factors.
SELLING SHAREHOLDERS AND PLAN OF DISTRIBUTION
By means of this prospectus a number of our shareholders are offering to
sell up to 1,455,470 shares of our common stock which are issuable upon the
exercise of warrants. The warrants were sold in private offerings, together with
shares of our common stock, in 2005 and 2007. Each warrant originally permitted
the holder to purchase one share of our common stock at a price of $4.50. On
February 2, 2009 our directors lowered the exercise price of the warrants issued
in 2005 to $4.00.
Included in the shares offered by this prospectus are 75,970 shares
issuable upon the exercise of warrants issued to Capstone Investments, FIG
Partners, LLC, and Barretto Securities, all of which were sales agents who
participated in the private offerings.
We will not receive any proceeds from the sale of the shares by the
selling shareholders. We will pay all costs of this offering. The selling
shareholders will pay all sales commissions and other costs relating to the sale
of their shares.
Shares
Issuable Shares to Share
Upon Be Sold Ownership
Shares Exercise in this After
Name Owned of Warrants Offering Offering
----------------------- -------- ----------- -------- --------
SF Capital Partners, Ltd. -- 400,000 400,000 --
Catalina Capital -- 140,000 140,000 --
HSBC Guyerzeller -- 100,000 100,000 --
Perritt Emerging Opportunities Fund -- 100,000 100,000 --
Nite Capital, L.P. -- 70,000 70,000 --
Bluegrass Growth Fund, L.P. -- 34,000 34,000 --
Bluegrass Growth Fund, Ltd. -- 34,000 34,000 --
Alexander Klinkman -- 22,000 22,000 --
Capstone Investments -- 54,000 54,000 --
Rohn and Bodmer Banquiers -- 153,845 153,845 --
Joylen F. Stern -- 38,500 38,500 --
11
William G. Spears -- 38,500 38,500 --
William G. Spears Profit Sharing Plan -- 38,500 38,500 --
Glacier Partners LP -- 115,385 115,385 --
Pictet Asset Management -- 134,200 134,200 --
North Point Partners I LLC -- 36,540 36,540 --
FIG Partners, LLC -- 5,816 5,816 --
Barretto Securities -- 16,154 16,154 --
The controlling person of each selling shareholder, which is not an
individual, is shown below:
Selling Shareholder Controlling Person
SF Capital Partners, Ltd. Brian Davidson
Catalina Capital Mike Baum
HSBC Guyerzeller Robert Loeber
Perritt Emerging Opportunities Fund Michael Corbett
Nite Capital, L.P. Chris Casey
Bluegrass Growth Fund, L.P. Deborah Solomon
Bluegrass Growth Fund, Ltd. Deborah Solomon
Capstone Investments Steve Capozza
William G. Spears Profit Sharing Plan William G. Spears
Glacier Partners LP Peter Castellanos
Pictet Asset Management Philippe Rohner or
Hans Peter Portner
North Point Partners I LLC Peter Imber
FIG Partners, LLC Geoffrey Hodgson
Barretto Securities Landon Barretto
None of the selling shareholders had or ever had, any material
relationship with us or our officers or directors. To our knowledge, none of the
selling shareholders are affiliated with a broker dealer except for Capstone
Investments, FIG Partners, LLC, and Barretto Securities.
All of the selling shareholders acquired the shares they are offering by
means of this prospectus in the ordinary course of business. At the time they
acquired these shares the selling shareholders did not have any agreements or
understandings, directly or indirectly, with any person to distribute their
shares.
Manner of Sale
The shares of common stock to be sold by the selling shareholders may be
offered and sold by means of this prospectus from time to time as market
conditions permit. These shares may be sold by one or more of the following
methods, without limitation:
o a block trade in which a broker or dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
12
o purchases by a broker or dealer as principal and resale by such broker
or dealer for its account pursuant to this prospectus;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o face-to-face transactions between sellers and purchasers without a
broker/dealer.
In competing sales, brokers or dealers engaged by the selling shareholders
may arrange for other brokers or dealers to participate. Brokers or dealers may
receive commissions or discounts from the selling shareholders in amounts to be
negotiated. As to any particular broker-dealer, this compensation might be in
excess of customary commissions. We cannot and the selling shareholders cannot
presently estimate the amount of such compensation. Notwithstanding the above,
no NASD member will charge commissions that exceed 8% of the total proceeds from
the sale.
The selling shareholders and any broker/dealers who act in connection with
the sale of the shares may be deemed to be "underwriters" within the meaning of
ss.2(11) of the Securities Acts of 1933, and any commissions received by them
and any profit on any resale of the shares as principal might be deemed to be
underwriting discounts and commissions under the Securities Act.
If any selling shareholder enters into an agreement to sell its shares to a
broker-dealer as principal, and the broker-dealer is acting as an underwriter,
we will file a post-effective amendment to the registration statement, of which
this prospectus is a part, identifying the broker-dealer, providing required
information concerning the plan of distribution, and otherwise revising the
disclosures in this prospectus as needed. We will also file the agreement
between the selling shareholder and the broker-dealer as an exhibit to the
post-effective amendment to the registration statement.
The selling shareholders may also sell their shares pursuant to Rule 144
under the Securities Act of 1933.
We have has advised the selling shareholders that they, and any securities
broker/dealers or others who may be deemed to be statutory underwriters, will be
subject to the prospectus delivery requirements under the Securities Act of
1933. We have has also advised the selling shareholders that in the event of a
"distribution" of the shares owned by the selling shareholders, the selling
shareholders, any "affiliated purchasers", and any broker/dealer or other person
who participate in the distribution may be subject to Rule 102 of Regulation M
under the Securities Exchange Act of 1934 ("1934 Act") until their participation
in the distribution is completed. Rule 102 makes it unlawful for any person who
is participating in a distribution to bid for or purchase stock of the same
class as is the subject of the distribution. A "distribution" is defined in Rule
102 as an offering of securities "that is distinguished from ordinary trading
transactions by the magnitude of the offering and the presence of special
selling efforts and selling methods". We have has also advised the selling
shareholders that Rule 101 of Regulation M under the 1934 Act prohibits any
"stabilizing bid" or "stabilizing purchase" for the purpose of pegging, fixing
or stabilizing the price of the common stock in connection with this offering.
13
DESCRIPTION OF SECURITIES
Common Stock
We are authorized to issue 50,000,000 shares of common stock. Holders of
common stock are each entitled to cast one vote for each share held of record on
all matters presented to shareholders. Cumulative voting is not allowed; hence,
the holders of a majority of the outstanding common stock can elect all
directors.
Holders of common stock are entitled to receive dividends as may be
declared by our Board of Directors out of funds legally available and, in the
event of liquidation, to share pro rata in any distribution of our assets after
payment of liabilities. Our directors are not obligated to declare a dividend.
It is not anticipated that dividends will be paid in the foreseeable future.
Holders of our common stock do not have preemptive rights to subscribe to
additional shares if issued. There are no conversion, redemption, sinking fund
or similar provisions regarding our common stock. All our outstanding shares are
fully paid and non-assessable.
Preferred Stock
We are authorized to issue 1,000,000 shares of preferred stock. Our
Articles of Incorporation provide that our Board of Directors has the authority
to divide the preferred stock into series and, within the limitations provided
by Nevada law, to fix by resolution the voting power, designations, preferences,
and relative participation, special rights, and the qualifications, limitations
or restrictions of the shares of any series established. As our Board of
Directors has authority to establish the terms of, and to issue, the preferred
stock without shareholder approval, the preferred stock could be issued to
defend against any attempted takeover.
Options and Warrants
See the "Comparative Share Data" section of this prospectus for information
concerning our outstanding options and warants.
Transfer Agent
Computershare Trust Company, Inc., of Golden, Colorado, is the transfer
agent for our common stock.
LEGAL MATTERS
The validity of the securities offered by this prospectus has been passed
upon by Hart & Trinen, Denver, Colorado.
14
INDEMNIFICATION
The Nevada Revised Statutes authorize indemnification of any of our
directors or officers against expenses incurred in connection with any action,
suit, or proceeding to which the director or officer is named a party by reason
of his or her having acted or served in such capacity, except for liabilities
arising from his or her own misconduct or negligence. In addition, a director or
officer who was found liable for misconduct or negligence may obtain such
indemnification if, in view of all the circumstances in the case, a court of
competent jurisdiction determines such person is fairly and reasonably entitled
to indemnification. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to our directors or officers, pursuant
to the foregoing provisions, we have been informed that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
ADDITIONAL INFORMATION
We are subject to the requirements of the Securities Exchange Act of l934
and is required to file reports, proxy statements and other information with the
Securities and Exchange Commission. Copies of any such reports, proxy statements
and other information which we have filed can be read and copied at the
Commission's Public Reference Room at 100 F. Street, N.E., Washington, D.C.
20549. The public may obtain information on the operation of the Public
Reference Room by calling the Commission at 1-800-SEC-0330. The Commission
maintains an Internet site that contains reports, proxy and information
statements, and other information regarding us. The address of that site is
http://www.sec.gov.
We will provide, without charge, to each person to whom a copy of this
prospectus is delivered, including any beneficial owner, upon the written or
oral request of such person, a copy of any or all of the documents incorporated
by reference below (other than exhibits to these documents, unless the exhibits
are specifically incorporated by reference into this prospectus).
Requests should be directed to:
Flexible Solutions International, Inc.
615 Discovery Street
Victoria, British Columbia,
Canada V8T 5G4
(250) 477-9969
The following documents we filed with the Commission (Commission File No.
0-29649) are incorporated by reference into this prospectus:
o Proxy statement relating to June 26, 2008 shareholders' meeting.
15
o Amended report on Form 10-KSB/A for the year ended December 31, 2007
(filed on 1/20/09).
o Amended quarterly report on Form 10-Q/A for the three months ended
September 30, 2008 (filed on 1/21/09).
o Current report on Form 8-K (filed on 1/27/09).
o Current report on Form 8-K (filed on 2/6/09).
o Amended report on Form 10-KSB/A for the year ended December 31, 2007
(filed on 3/4/09).
o Current report on Form 8-K (filed on 3/30/09).
o Annual Report on Form 10-K for the fiscal year ended December 31, 2008
(filed on 3/26/09).
o Report on Form 10-Q for the three months ended March 31, 2009 (filed
on 5/14/09).
o Current report on Form 8-K (filed on 5/20/09).
All documents filed with the Securities and Exchange Commission pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of this prospectus and prior to the termination of this offering shall be deemed
to be incorporated by reference into this prospectus and to be a part of this
prospectus from the date of the filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
shall be deemed to be modified or superseded for the purposes of this prospectus
to the extent that a statement contained in this prospectus or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.
Investors are entitled to rely upon information in this prospectus or
incorporated by reference at the time we use the prospectus to offer and sell
securities, even though that information may be superseded or modified by
information subsequently incorporated by reference into this prospectus.
We have filed with the Securities and Exchange Commission a Registration
Statement under the Securities Act of l933, as amended, with respect to the
securities offered by this prospectus. This prospectus does not contain all of
the information set forth in the Registration Statement. For further
information, reference is made to the Registration Statement and to the exhibits
filed with the Registration Statement. Statements contained in this prospectus
as to the contents of any contract or other documents are summaries which are
not necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. The Registration Statement and related exhibits may also be examined
at the Commission's internet site.
16
No dealer salesman or other person has been authorized to give any
information or to make any representations, other than those contained in this
prospectus. Any information or representation not contained in this prospectus
must not be relied upon as having been authorized by us. This prospectus does
not constitute an offer to sell, or a solicitation of an offer to buy, the
securities offered hereby in any state or other jurisdiction to any person to
whom it is unlawful to make such offer or solicitation. Neither the delivery of
this prospectus nor any sale made hereunder shall, under any circumstances,
create an implication that there has been no change in our affairs since the
date of this prospectus.
TABLE OF CONTENTS
Page
Prospectus Summary..................................................
Risk Factors........................................................
Comparative Share Data..............................................
Market for Our Common Stock ........................................
Selling Shareholders................................................
Description of Securities...........................................
Legal Matters.......................................................
Indemnification ....................................................
Additional Information..............................................
Common stock
FLEXIBLE SOLUTIONS INTERNATIONAL, INC.
PROSPECTUS
PART II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution
SEC Filing Fee $ 133
Legal Fees and Expenses 10,000
Accounting Fees and Expenses 3,000
Miscellaneous Expenses 1,867
-------
TOTAL $15,000
=======
All expenses other than the SEC filing fees are estimated.
Item 15. Indemnification of Directors and Officers.
Section 78.7502 of the Nevada Revised Statutes and the Company's Bylaws
provides that the Company may indemnify its officers or directors, or former
officers or directors, against expenses actually and necessarily incurred by
them in connection with the defense of any legal proceeding or threatened legal
proceeding, except as to matters in which such persons shall be determined to
not have acted in good faith and in the best interest of the Company.
Item 16. Exhibits
3.1 Amended and Restated Certificate of Incorporation (1)
3.2 Bylaws (1)
5. Opinion of Counsel
21.1 Subsidiaries (2)
23(a) Consent of Hart & Trinen
(b) Consent of Cinnamon Jang Willoughby & Company
(1) Incorporated by reference to the same exhibit number filed with the
Company's Registration Statement on Form 10-SB.
(2) Incorporated by reference to the same exhibit filed with the Company's
Registration Statement on Form SB-2 (File No. 333-100129).
1
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement.
(i) To include any prospectus required by Section l0(a)(3) of the
Securities Act of l933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement, including
(but not limited to) any addition or deletion of a managing underwriter.
(2) That, for the purpose of determining any liability under the
Securities Act of l933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(5) That, for the purpose of determining liability under the Securities
Act of 1933 to any purchaser:
(i) If the registrant is relying on Rule 430B:
(A) Each prospectus filed by the registrant pursuant to Rule
424(b)(3) shall be deemed to be part of the registration statement as of the
date the filed prospectus was deemed part of and included in the registration
statement; and
2
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2),
(b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B
relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for
the purpose of providing the information required by section 10(a) of the
Securities Act of 1933 shall be deemed to be part of and included in the
registration statement as of the earlier of the date such form of prospectus is
first used after effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As provided in Rule
430B, for liability purposes of the issuer and any person that is at that date
an underwriter, such date shall be deemed to be a new effective date of the
registration statement relating to the securities in the registration statement
to which that prospectus relates, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof. Provided,
however, that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such effective date, supersede or modify any
statement that was made in the registration statement or prospectus that was
part of the registration statement or made in any such document immediately
prior to such effective date; or
(ii) If the registrant is subject to Rule 430C, each prospectus filed
pursuant to Rule 424(b) as part of a registration statement relating to an
offering, other than registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and
included in the registration statement as of the date it is first used after
effectiveness. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a
document incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such first use, supersede or
modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document
immediately prior to such date of first use.
Insofar as indemnification for liabilities arising under the Securities
Act of l933 may be permitted to directors, officers and controlling persons of
the Registrant, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
3
POWER OF ATTORNEY
The registrant and each person whose signature appears below hereby
authorizes the agent for service named in this Registration Statement, with full
power to act alone, to file one or more amendments (including post-effective
amendments) to this Registration Statement, which amendments may make such
changes in this Registration Statement as such agent for service deems
appropriate, and the Registrant and each such person hereby appoints such agent
for service as attorney-in-fact, with full power to act alone, to execute in the
name and in behalf of the Registrant and any such person, individually and in
each capacity stated below, any such amendments to this Registration Statement.
SIGNATURES
Pursuant to the requirements of the Securities Act of l933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Victoria, British Columbia, Canada on the 30th day of
June 2009.
FLEXIBLE SOLUTIONS INTERNATIONAL, INC.
By: /s/ Daniel O'Brien
-----------------------------------
Daniel O'Brien, President, Chief Executive
Officer and Principal Financial and
Accounting Officer
Pursuant to the requirements of the Securities Act of l933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Daniel B. O'Brien Director, Chief Executive June 30, 2009
-------------------------- Officer, and Principal
Daniel B. O'Brien Financial and Accounting
Officer
/s/ John H. Bientjes
--------------------------
John H. Bientjes Director July 14, 2009
/s/ Robert N. O'Brien
--------------------------
Robert N. O'Brien Director June 30, 2009
/s/ Dale Friend
--------------------------
Dale Friend Director July 22, 2009
/s/ Eric G. Hodges
--------------------------
Eric G. Hodges Director July 14, 2009
FLEXIBLE SOLUTIONS INTERNATIONAL, INC.
REGISTRATION STATEMENT ON
FORM S-3
AMENDMENT NO. 1
EXHIBITS
EXHIBIT 5
HART & TRINEN, LLP
1624 Washington St.
Denver, CO 80203
(303) 839-0061
June 10, 2009
Flexible Solutions International, Inc.
615 Discovery Street
Victoria, British Columbia
Canada V8T 5G4
This letter will constitute an opinion upon the legality of the sale by
certain shareholders of Flexible Solutions International, Inc., a Nevada
corporation, of up to 1,531,440 shares of common stock, all as referred to in
the Registration Statement on Form S-3 filed by Flexible Solutions with the
Securities and Exchange Commission.
We have examined the Articles of Incorporation, the Bylaws and the minutes
of the Board of Directors of Flexible Solutions and the applicable laws of the
State of Nevada, and a copy of the Registration Statement. In our opinion,
Flexible Solutions has duly authorized the issuance of the shares of stock
mentioned above and, when sold in accordance with the terms and conditions set
out in the Registration Statement, such shares of common stock, will be legally
issued, fully paid and non-assessable.
Very truly yours,
HART & TRINEN, L.L.P.
/s/ William T. Hart
-------------------------------------
William T. Hart
EXHIBIT 23(a)
HART & TRINEN, LLP
1624 Washington St.
Denver, CO 80203
(303) 839-0061
CONSENT OF ATTORNEYS
Reference is made to the Registration Statement of Flexible Solutions
International, Inc. on Form S-3 whereby certain shareholders of Flexible
Solutions propose to sell up to 1,531,440 shares of Flexible Solutions' common
stock. Reference is also made to Exhibit 5 included in the Registration
Statement relating to the validity of the securities proposed to be issued and
sold.
We hereby consent to the use of our opinion concerning the validity of the
securities proposed to be issued and sold, and the reference to our firm in the
prospectus as having passed on the legality of the securities being offered.
Very truly yours,
HART & TRINEN, L.L.P.
/s/ William T. Hart
------------------------------
William T. Hart
Denver, Colorado
June 10, 2009
EXHIBIT 23(b)
Consent of Independent Registered Public Accounting Firm
Flexible Solutions International, Inc.
Victoria, British Columbia
We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement of our report dated February 25, 2009, relating to the
consolidated financial statements of Flexible Solutions International, Inc. for
the years ended December 31, 2008 and 2007 which are contained in the
Prospectus.
/s/ Cinnamon Jang Willoughby & Company
Chartered Accountants
Burnaby, British Columbia
August 4, 2009