Cann American Corp.

Bioflamex Corporation is engaged in the development, production, and marketing of high-performance fire extinguishing and prevention products based on environmentally friendly and biological formulations. The company aims to establish a leading position within the niche of eco-friendly fire fighting and prevention solutions globally, pursuing both organic growth and strategic acquisitions of complementary companies and patents. The company believes that the increasing emphasis on environmental protection and health hazards associated with conventional chemical-based fire fighting products creates a favorable market for its "greener," non-harmful alternatives. Bioflamex products are water-based, non-toxic, non-corrosive, and biodegradable, offering a clean alternative to traditional dry chemical powder, chemical foam, CO2, or halon-based extinguishers that can harm the environment, pose health hazards, and cause collateral damage.

The company's core business model revolves around developing and marketing proprietary application innovations based on biological extinguishing and retardant formulations from its partner, Hartindo Industries. Bioflamex generates revenue through the sale of these fire extinguishing and prevention products, targeting professional markets, business-to-business markets, and consumer markets. The company also acts as an exclusive partner in the sales and marketing of Hartindo Industries' biological bulk product line.

Bioflamex's product portfolio is divided into two main types: fire extinguishers and fire retardants. The primary focus for 2012 and 2013 is the production and market penetration of its proprietary Bioflamex aerosol extinguishers for everyday consumers. The company's small-scale extinguishers include the Bioflamex aerosol extinguisher, a water-based portable product designed for oil and grease fires, available in 650 ml ¹ for home and professional cooking use and 1000 ml ² for all-round emergency use in boats, cars, and camping. These aerosols utilize a proprietary extinguishing media from Hartindo Industries, composed of water, natural potassium, salt combinations, and plant root extracts with a concentrated foaming agent, propelled by recycled CO2. The 650 ml ³ version is specifically developed for Class F/K fire types, while the 1000 ml ⁴ bottle is suited for engine fires and Class A/B fire types.

For large-scale applications, Bioflamex will enter the market for conventional fire-sized extinguishers (2, 3, and 6 liter EN-3 types) ⁵, using the same Hartindo Industries biological formulations. These are designed for Class A, B, and C fires, targeting businesses, offices, hotels, and public spaces. Bulk extinguishers are tailored for large-scale tasks such as fighting fires on professional equipment, tankers, and in forest fire fighting, chemical compounds, oil and gas installations, and storage facilities. These formulations have demonstrated high efficiency in combating heavy fuel fires, such as diesel oil, petroleum, and jet fuel, reducing fluid consumption and collateral damage.

In the fire retardant category, Bioflamex markets industrial retardants under the SAFIRE® brand, which are 100% biological and designed to inhibit fire in textiles, wood, and insulation materials. These products aim to prevent ignition or slow fire spread and are composed of salt combinations and plant extracts in water. For forest fire prevention, the company promotes Hartindo Industries' biological fire retardant AF31, effective for up to 2-3 months ⁶ after application to vegetation, acting as passive "fire barriers." This product is intended for use by forest fire services to protect high-risk areas and reinforce fire breaks. Additionally, the company is developing residential and business fire detection and suppression concepts utilizing this retardant. Bioflamex has also been appointed as the exclusive distributor covering the EU for PurifyAir smoke escape hoods from CY Holdings, China, which are single-use smoke filters providing 30-60 minutes ⁷ of cleaned air and flame-protected face protection.

For the fiscal year ended February 29, 2012, Bioflamex Corporation generated no revenue ⁸. The company reported operating expenses of $257,872 ⁹, an increase from $45,377 ¹⁰ for the year ended February 28, 2011. This increase was primarily due to consulting fees of $152,979 ¹¹ and compensation expenses of $30,000 ¹² incurred in the most recent fiscal year. The net loss for the year ended February 29, 2012, was $264,581 ¹³, compared to a net loss of $45,377 ¹⁴ in the prior year. As of February 29, 2012, current assets stood at $191 ¹⁵, total assets at $1,191,191 ¹⁶, current liabilities at $243,555 ¹⁷, and total liabilities at $243,555 ¹⁸. The company had a working capital deficit of $243,364 ¹⁹. Operating activities used $53,902 ²⁰ in cash, while financing activities generated $54,034 ²¹, primarily from the sale of common shares for $50,000 ²² and a related party note payable of $4,034 ²³.

Bioflamex Corporation has not yet generated any revenue and is considered a development stage company. The company's primary focus for 2012 and 2013 is the production and market penetration of its proprietary Bioflamex aerosol extinguishers for everyday consumers. The company intends to submit UL and DIN certifications for its products during June-August 2012 ²⁴, which are crucial for sales and deliveries in the U.S., Europe, and selected Asian markets. UL approval for Bioflamex aerosols and bulk extinguishers in the United States is expected to take 3-6 months ²⁵, while DIN and TÜV certification for aerosols in Europe is a faster process, estimated at 2-3 months ²⁶. EN3 certification for standard extinguishers in the EU will also be initiated in collaboration with Hartindo Saudi. Forest Fire certifications and approvals will be obtained gradually, with Spain and Cyprus/Greece being the first focus markets for approvals during Q3/Q4 2012 ²⁷, taking 3-6 months ²⁸ depending on initial demonstration timing.

A major growth area for Bioflamex is the expansion of its product portfolio and intellectual property. The company submitted a patent application for its Bioflamex aerosols in January 2011 ²⁹ and expects more information on the patent process during Q3 2012 ³⁰. It plans to build a solid portfolio of intellectual property within the "clean tech" fire prevention industry. Due to a delay in the Sentinel forest fire detection and suppression system, the patent application for this product is now expected during Q4 2012/Q1 2013 ³¹. The company is also working with Hartindo Industries to create proprietary applications for industrial retardants, which are expected to lead to patent applications in the coming years. New product concepts include fire-protected cardboard boxes and fire-protected wall and ceiling insulation, with patent applications not due before the end of 2012 ³² for the former, as new partners must be identified. Development of a washable fire retardant for textiles is also planned, opening collaboration opportunities with industrial linen service companies.

Operationally, Bioflamex intends to use a number of partners for product development and manufacturing, including Hartindo Saudi/Hartindo Industries Indonesia, Dansoll A/S in Denmark for aerosol production, PL Brandteknik for product development consultancy, Prime Solutions in Spain/US for the Sentinel system, and yet-to-be-determined paper and insulation manufacturers. Exclusive collaboration and production agreements with Hartindo Industries/Hartindo Saudi and Dansoll A/S are in their last stages and are expected to be formalized and signed during Q2 2012 ³³. The agreement with Hartindo Saudi will grant Bioflamex exclusive rights to market the unique Hartindo AF31 bulk products and EN3 type extinguishers in selected EU markets, spurring growth in professional sectors, especially forest fire fighting. The partnership with Dansoll A/S, which manufactures over 3,000,000 aerosols per annum ³⁴, will leverage its advanced proprietary CO2 aerosol production technology, allowing for approximately 15% ³⁵ more product per bottle compared to conventional aerosols, positively impacting material usage and margins. Critical testing will be conducted in collaboration with fire departments in the United States (California, Chicago, and New York initially), Denmark, Spain, and Greece during 2012 ³⁶.

The company plans to use various distribution channels and partners, with verbal agreements already secured with distributors and end-user outlets in the United States, India, UAE, Kuwait, Egypt, and Saudi Arabia. Negotiations have also been initiated with Cardia Europe for key market segments in Denmark, Sweden, Norway, Finland, Austria, Poland, Germany, UK, and the global maritime market. For the consumer/retail segment, the Bioflamex extinguisher is targeted globally, with initial distribution and marketing through automobile owners' associations in the United States (over 50,000,000 members) ³⁷ and EU (over 40,000,000 members) ³⁸. The push for distribution in the United States will focus on New York, California, Illinois, Texas, and Florida. For the business-to-business and professional market, distribution will be through large multinational corporations like TYCO, UTC, ISS (50+ countries) ³⁹, G4S (70+ countries) ⁴⁰, and Würth (40+ countries) ⁴¹, or local/regional partners. The industrial segment will be targeted directly by Bioflamex staff. The company expects sales of PurifyAir smoke escape hoods to compose approximately 10% ⁴² of total sales within the coming 5 years, amounting to $10 million ⁴³. Bioflamex aims to achieve a 10% ⁴⁴ market penetration through professional, business-to-business, and retail distribution/sales partners over a 3-year period.

The company will require a cash injection of $2,000,000 ⁴⁵ to begin operations, launch marketing campaigns, manufacture and deliver products, and increase revenues. On May 14, 2012 ⁴⁶, Bioflamex entered into an Investment Agreement with Dutchess Opportunity Fund, II, LP, committing to purchase up to $10,000,000 ⁴⁷ of common stock over 36 months ⁴⁸. The company may draw up to 5,000,000 shares ⁴⁹ multiplied by the daily volume weighted average price (VWAP) on the day prior to the put date, with the purchase price set at 95% ⁵⁰ of the lowest VWAP during a five-trading-day period. Bioflamex is obligated to file a registration statement within 30 days ⁵¹ to register the resale of 16,000,000 shares ⁵² of common stock. The company's ability to continue as a going concern is dependent upon generating future profitable operations and/or obtaining necessary financing.

Bioflamex Corporation faces substantial doubt about its ability to continue as a going concern, having accumulated losses of $399,164 ⁵³ and a working capital deficit of $243,364 ⁵⁴ since its inception on August 25, 2004 ⁵⁵. The company has not yet achieved profitable operations and expects to incur further losses in the development of its business. Its future operations are dependent upon external funding and its ability to execute its business plan, realize sales, and control expenses. There is no assurance that additional financing will be available on acceptable terms, or at all. Furthermore, the company's disclosure controls and procedures were not effective as of February 29, 2012 ⁵⁶, due to material weaknesses including inadequate segregation of duties, ineffective risk assessment, and insufficient written policies and procedures for accounting and financial reporting. Remediation efforts are largely dependent on securing additional financing, and if unsuccessful, these efforts may be materially adversely affected.

Management's message to shareholders emphasizes the company's strategic focus on developing, producing, and marketing high-performance, environmentally friendly, and biological fire extinguishing and prevention products. They believe the current market environment, with its increased focus on environmental protection and health hazards from conventional chemicals, is opportune for their "greener" solutions. The company's strategic priorities include the production and market penetration of its proprietary Bioflamex aerosol extinguishers for everyday consumers during 2012 and 2013, securing UL and DIN certifications for its products during June-August 2012 ⁵⁷ to enable sales in key markets, and building a solid portfolio of intellectual property within the "clean tech" fire prevention industry. Management also highlights the importance of formalizing exclusive collaboration and production agreements with key partners like Hartindo Industries/Hartindo Saudi and Dansoll A/S during Q2 2012 ⁵⁸. The company expects sales of PurifyAir smoke escape hoods to compose approximately 10% ⁵⁹ of total sales within the coming 5 years, amounting to $10 million ⁶⁰. Management acknowledges the need for a cash injection of $2,000,000 ⁶¹ to commence operations and achieve business goals, and has secured an Investment Agreement for up to $10,000,000 ⁶² in common stock purchases over 36 months ⁶³.