FLEXIBLE SOLUTIONS INTERNATIONAL, INC. (AMEX: FSI, FRANKFURT: FXT), is the developer and manufacturer of biodegradable and environmentally safe water and energy conservation technologies, as well as oil field anti-scalant, detergent, water and agricultural technologies. Today the Company announces financial results for the second quarter (Q2) ended June 30, 2011.

Mr. Daniel B. O’Brien, CEO, states, “This quarter was significant for the Company in demonstrating our continued strong growth. Quarter over quarter sales are expected to track higher for the rest of the year. It is important to note that FSI has attained a $1.5million revolving line of credit (LOC) at 4%. The availability of this LOC for working capital purposes is not evident in the ‘Cash and cash equivalent’ section of the balance sheet.”
  • Sales in Q2 were $3,930,075, up approximately 39% when compared to sales of $2,833,552, in the corresponding period a year ago. The result was a GAAP net profit of $174,734, or $0.01 per share, compared with a net loss of $133,590, or $0.01 per share, in Q2, 2010. See the financial statements regarding the significant increase in income tax expense taken in Q2.
  • Basic weighted average shares used in computing per share amounts in Q2 were 13,169,991 for 2011 and 13,962,567 for 2010. See note ‘h’ attached to the table on the following page with respect to change in shares outstanding.
  • Non-GAAP operating cash flow: For the 6 months ending June 30, 2011, net income reflects $235,266 of non-cash charges (depreciation and stock option expenses), $615,000 of income tax, as well as $443,488 in new factory development costs and interest expense. These items are either non-cash items or items not related to operations or current operating activities of the Company. When these items are removed, the Company shows operating cash flow of $1,826,595, or $0.14 per share. This compares with operating cash flow of $1,519,523, or $0.11 per share, in the corresponding 6 months of 2010 (see the table that follows for details of these calculations).

Mr. O’Brien continues, “The Company will continue to update the progress of the sugar to aspartic acid plant in Alberta, on a timely basis. Production from the Alberta plant will allow FSI to supply the only renewably-based poly-aspartic acid in the world. This will allow access to customers who demand this level of environmentally sound behavior as well as insulating the company from future oil price shocks.”

The NanoChem division continues to contribute most of our sales and cash flow, and new opportunities are unfolding to further increase sales in this division. NanoChem sales have been less seasonal than those of our WaterSavr and Flexible Solutions Ltd divisions. This has lead to less volatility in total revenue figures quarter over quarter. However, in the future, Q1 and Q2 sales may be much larger than sales in Q3 and Q4. This is largely due to potential growth in agricultural product sales (sales which tend to be larger in Q1 and Q2).

* CEO, Dan O’Brien has scheduled a conference call for 11:00am EST, 8:00am PST, Tuesday August 16th to discuss the financials. Call 1-877-941-0844 (or 1-480-629-9835 ). The conference call title, “Second Quarter Financials,” may be requested. *


The above information and following table contain supplemental information regarding income and cash flow from operations for the 6 months ended June 30, 2010 and June 30, 2011. Adjustments to exclude depreciation, stock option expenses and one time charges are given. This financial information is a Non-GAAP financial measure as defined by SEC regulation G. The GAAP financial measure most directly comparable is net income . The reconciliation of each of the Non-GAAP financial measures is as follows:


Consolidated Statement of Operations

For 3 Months Ended June 30 (6 Months Operating Cash Flow)


3 months ended June 30
  2011       2010    
Revenue $ 3,930,075 $ 2,833,552
Net income (loss) before income tax – GAAP $ 469,734 $ 279,490
Income tax $ 295,000




Net income (loss) - GAAP $ 174,734 $ (133,590 )
Net income (loss) per common share – basic. - GAAP $ 0.01 $ (0.01 )
3 month weighted average shares outstanding – basic. GAAP  





6 month Operating Cash Flow

Ended June 30
Operating Cash flow (6months). NON-GAAP






Operating Cash flow excluding certain non-operating
items and items not related to current operations
(6 months). NON-GAAP $ 1,826,595 e $ 1,519,523 f
Operating Cash flow per share excluding
non-operating items and items not related to
current operations (6 months) – basic. NON-GAAP $ 0.14 e $ 0.11 f
Non-cash Adjustments (6 month)






Shares (6 month basic weighted average) used in
computing per share amounts – basic GAAP 13,353,904 h 13,962,567 h

Notes : certain items not related to “operations” of the Company have been excluded from net income as follows.

a) Income tax – accounting adjustment to second quarter income tax. Income during the first six months was higher than expected resulting in higher income tax expense.

b) See the financials for diluted earnings per share.

c) Non-GAAP - amounts exclude certain non-cash items (depreciation and stock option expense totaling $235,266)

d) Non-GAAP - amounts exclude certain non-cash items (depreciation and stock option expense totaling $241,179)

e) NON-GAAP amounts exclude certain non-cash items and items not related to operations or current operating activities (depreciation, stock option expense ($235,266), income tax of $615,000, and new factory construction costs ($443,488).

f) Non-GAAP - amounts exclude certain non-cash items and items not related to operations or current operating activities (depreciation, stock option expense ($241,179), income tax of $482,080, and new factory construction costs ($414,182).

g) Non-GAAP – amounts represent depreciation and stock option expense

h) Significant change in 2011 shares outstanding was due to repurchase and cancellation of 792,576 shares. See the Consolidated Balance Sheet for shares outstanding.

Safe Harbor Provision

The Private Securities Litigation Reform Act of 1995 provides a "Safe Harbor" for forward-looking statements. Certain of the statements contained herein, which are not historical facts, are forward looking statement with respect to events, the occurrence of which involve risks and uncertainties. These forward-looking statements may be impacted, either positively or negatively, by various factors. Information concerning potential factors that could affect the company is detailed from time to time in the company's reports filed with the Securities and Exchange Commission.

Flexible Solutions International 615 Discovery Street, Victoria, BC V8T 5G4 CANADA

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