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 nine months ended September 30, 2012 are discussed below:

Nine Months ended September 30, 2012

                   Increase
                    (I) or
                   Decrease
Item                 (D)      Reason

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

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

Gross Profit, as      D       Start of production at Taber
a % of sales                  plant increased 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          I       Legal costs to protect the
fess                          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 September 30, 2012

                           Increase
                            (I) or
                           Decrease
Item                         (D)       Reason

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

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

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

Administrative  salaries      I        Salaries increased in January 2012.
and benefits

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

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

Commission                    I        Commissionable sales increased
                                       against sales with no commissions.

Capital Resources and Liquidity

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

                                          2012            2011
Cash provided by (used by) operations     303,834       (2,077,108 )
Construction of plant in Taber, AB              -         (675,313 )
Purchases of equipment                    (93,007 )        (65,503 )
Short term line of credit                 225,000        1,500,000
Repayment of loans                        (94,164 )        (96,464 )
Purchase of common stock                        -       (1,030,349 )
Changes in exchange rates                   2,876           (1,677 )

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 is being used to manufacture aspartic acid which is the major component of TPAs. Presently the Company buys most of its aspartic acid from China, where the base raw material is oil and supplements from the Taber facility. The Company's plant in Taber uses 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 September 30, 2012 working capital was $3,562,822 (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 $246,804 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      42,021
2013     156,247
2014      48,536

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.