Overview

The Company develops, manufactures and markets specialty chemicals that slow the evaporation of water. The Company also manufactures and markets biodegradable polymers which are used in the oil, gas and agriculture industries.

Results of Operations

The Company has two product lines:

Energy and Water Conservation products - The Company's HEAT$AVRŽ product is used in swimming pools and spas. The product forms a thin, transparent layer on the water's surface. The transparent layer slows the evaporation of water, allowing the water to retain a higher temperature for a longer period of time and thereby reducing the energy required to maintain the desired temperature of the water. WATER$AVRŽ, a modified version of HEAT$AVRŽ, can be used in reservoirs, potable water storage tanks, livestock watering ponds, canals, and irrigation ditches.

BCPA products - The Company's second class of products, TPA's (i.e. thermal polyaspartate biopolymers), are biodegradable polymers 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.

Material changes in the Company's Statement of Operations for the three and six months ended June 30, 2012 are discussed below:

Six Months ended June 30, 2012

                         Increase
                          (I) or
                         Decrease
Item                       (D)       Reason

Sales
EWCP products               D        Increased orders in the previous periods
                                     contributed to decreased orders in this
                                     period.

BPCA products               I        Increased sales across all market verticals
                                     due to increased success in sales activity.

Gross Profit, as a %        D        Start of production at Taber plant increased
of sales                             depreciation; high oil prices increased
                                     aspartic acid costs.


Wages                       D        Normal employee attrition replaced by
                                     temporary consultants.

Administrative              I        Increased sales.
salaries and benefits

Insurance                   I        Increased sales.

Consulting                  I        Temporary consultants were used to replace
                                     normal employee attrition.

Professional fess           I        Legal costs to protect the Company's
                                     intellectual property have increased due to
                                     new patent filings and cost of arbitration
                                     proceeding.

Commissions                 I        Increased sales for the period resulted in
                                     higher commissions.

Three months ended June 30, 2012

                         Increase
                          (I) or
                         Decrease
Item                       (D)       Reason

Sales
EWCP products               D        Increased orders in the previous periods
                                     contributed to decreased orders in this
                                     period.

BPCA products               D        The European economic situation pressured
                                     sales for the period.

Gross Profit, as a %        D        Start of production at Taber plant increased
of sales                             depreciation; high oil prices increased as
                                     partic acid costs.

 Wages                      I        Wages were increased in January 2012.

Administrative              I        Salaries were increased in January 2012.
salaries and benefits

Consulting                  I        Temporary consultants were used to replace
                                     normal employee attrition.

Commission                  I        Commissionable sales increased against
                                     uncommissionable sales.

Capital Resources and Liquidity

The Company's sources and (uses) of cash for the six months ended June 30, 2012
and 2011 are shown below:

                                          2012            2011

Cash provided by (used by) operations      65,895       (1,360,996 )
Construction of plant in Taber, AB              -         (593,082 )
Purchases of equipment                    (85,532 )        (26,171 )
Short term line of credit                 225,000          500,000
Repayment of loans                        (63,698 )        (62,466 )
Purchase of common stock                        -       (1,030,349 )
Changes in exchange rates                  (2,663 )          7,262

In February 2011 the Company purchased 792,576 shares of its common stock from unrelated third parties. The shares were acquired in privately negotiated transactions for a total purchase price of $1,030,349. None of the share were acquired in open market transactions.

In 2007, the Company began construction of a plant in Taber Alberta. The plant will be used to manufacture aspartic acid which is the major component of TPAs. Presently the Company buys its aspartic acid from China where the base raw material is oil. The Company's plant in Taber will use sugar as the base raw material. Although the Company expects that it will still import some aspartic acid from China, using aspartic acid manufactured by its plant from sugar will reduce its raw material costs, reduce price fluctuations generated by oil prices and reduce shipping costs.

The Company has sufficient cash resources to meets its future commitments and cash flow requirements for the coming year. As of June 30, 2012 working capital was $3,913,150 (2011 - $3,620,125) and the Company has no substantial commitments that require significant outlays of cash over the coming fiscal year other than repayment of the long-term loans.

The Company is committed to minimum rental payments for property and premises aggregating approximately $212,997 over the term of three leases, the last expiring on July 31, 2014.
Commitments in each of the next three years are approximately as follows:

2012     88,275
2013     77,851
2014     46,871

Other than as disclosed as above, the Company does not anticipate any capital requirements for the twelve months ended December 31, 2012.

Other than as disclosed in this report, the Company does not know of any trends, demands, commitments, events or uncertainties that will result in, or that are reasonably likely to result in, the Company's liquidity increasing or decreasing in any material way.

Other than as disclosed in this report, the Company does not know of any significant changes in its expected sources and uses of cash.

The Company does not have any commitments or arrangements from any person to provide the Company with any sources of equity capital.

See Note 2 to the financial statements included as part of this report for a description of the Company's significant accounting policies and recent accounting pronouncements.