News Release

14 November 2006


VICTORIA, BRITISH COLUMBIA, Nov 14, 2006 – FLEXIBLE SOLUTIONS INTERNATIONAL, INC. (AMEX: FSI, FRANKFURT: FXT), a developer and manufacturer of biodegradable and environmentally safe, water and energy conservation technology, as well as anti-scalant and crop nutrient enhancement products, today announces financial results for the third quarter (Q3) ended Sept 30, 2006.

Mr. Daniel B. O’Brien, CEO, states, “This was a great quarter and 9 months for FSI yielding a better than expected 47% growth in operating revenues and an even larger increase in operating cash flow when compared to Q3, 2005.”

  • GAAP sales in the third quarter (Q3), of $1,913,958, were up 47% when compared to sales, of $1,302,089, in the corresponding period a year ago. The result was an accounting net loss of $502,449, or $0.04 per basic weighted average share for Q3, 2006.
    • Included in Q3, 2006 revenue was a “return of capital” or “Registration rights penalty” from a previous financing, unrelated to on going business, of $326,710. Recent changes to GAAP accounting suggest such an item now be treated as an “Other item” and be expensed rather than treated as a “cost of raising capital” and reducing net proceeds raised as it would customarily be treated. Timing of a “return of capital” is the issue surrounding this change in GAAP.
    • Non-GAAP Q3, 2006 loss before other items and income tax (when $326,710 is added back) (see the financials) was $176,571, or $0.01 per share, versus a loss of $369,434, or $0.03 per share, in Q3, 2005. Basic weighted average shares used in computing per share amounts for the quarters were 12,987,799 and 12,840,446 respectively.
    • Non-GAAP operating cash flow. For the 9 months ending Sept. 30, 2006 net income reflects $1,089,252 of non-cash charges ($641,358 in stock option expense) and, when depreciation and stock option expenses are removed, the Company shows positive operating cash flow of $451,505 or $0.03 per share. This compares with operating cash flow of $222,754, or $0.02 per share, in the corresponding 9 months of 2005.
    • Non-GAAP 9 month, 2006 operating cash flow, when the one time “Other item” (of $326,710) is added back in, would be $778,215, or $0.06, per basic weighted average share, up more than 200% from the previous year’s number of $222,754.

The NanoChem division continues to contribute substantially to sales and cash flow and, significant new opportunities have developed to further increase sales in this division. Also, opportunities to synergistically cross sell the products of all FSI divisions continue to generate leads to new business. The swimming pool and NanoChem divisions are cooperating to increase utilization of the Peru, Illinois factory while decreasing costs for the Company as a whole. Note that NanoChem sales are much less seasonal than those of our WaterSavr and Flexible Solutions Ltd divisions which has lead to less volatility in sales figures quarter over quarter.

* CEO, Dan O’Brien has scheduled a conference call for 11:30am EST, 8:30am PST, Tuesday Nov. 21st to discuss the financials. Call 1 877 393 3856 access code 995 9323. *

The above and following table contains supplemental information regarding income from operations for the 3 months and 9 months ended Sept. 30 2006 and 2005. Adjustments to exclude depreciation, stock option expenses and one time charges are given give. 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 Sept. 30 (9 Months Cash Flow)



  Three months ended Sept. 30
  2006 2005
Revenue $1,913,958 $1,302,089
Net income (loss) GAAP $  (502,449) $  (368,906)
Net income (loss) per common share – basic. GAAP $        (0.04) $        (0.03)
Net income (loss) excluding “Other item” NON-GAAP $  (176,571) $  (369,434)
Net income (loss) per common share excluding “Other item” – basic. NON-GAAP $        (0.01) $        (0.03)
3 month weighted average shares used in computing per share amounts – basic. GAAP 12,987,799 12,840,446
  9 months ended Sept. 30
9 month weighted average shares used in computing per share amounts – basic. GAAP 12,984,028 12,446,647
Operating Cash flow (9 months). NON-GAAP $   451,505 a $   222,754 a
Operating Cash flow per share (9 months) – basic. NON-GAAP $         0.03 a $         0.02 a
Operating Cash flow excluding “Other item” (9 month) – basic. NON-GAAP $   778,215 a $   222,754 a
Operating Cash flow per common share excluding “Other item” (9 month) – basic. NON-GAAP $         0.06 a $         0.02 a
“Registration rights penalty” one time “Other item” adjustment. $    326,710 $         0.00
Non-cash Adjustments (9 month) $ 1,089,252 b $ 1,015,779 b


  1. a) Non-GAAP amounts exclude certain non-cash items, depreciation and stock option expenses. This is a 9 month number as per financials.
    b) Amount represents depreciation and stock option expenses.

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.