FSI Announces Second Quarter, 2009 Financial Results

News Release

13 Aug. 09

FSI ANNOUNCES SECOND QUARTER, 2009 FINANCIAL RESULTS

Conference call scheduled for Friday Aug. 14th, 11:00am Eastern time, 8:00am Pacific Time

See dial in number below

VICTORIA, BRITISH COLUMBIA, Aug 13, 2009 – FLEXIBLE SOLUTIONS INTERNATIONAL, INC. (NYSE Amex: FSI, FRANKFURT: FXT), is the developer and manufacturer of biodegradable and environmentally safe, water and energy conservation technologies. The NCS Division, responsible for the majority of FSI’s revenue, produces biodegradable polyaspartic acid for oil field scale control, detergent formulations, water treatment and fertilizer enhancement. Today The Company announces financial results for the Second Quarter (Q2) ended June 30, 2009.

Mr. Daniel B. O’Brien, CEO, states, “The media informs us daily that the global economic slowdown continues. This affects FSI in each of its divisions and market segments. However, despite continued inventory reduction and more aggressive just in time ordering from our customers, we still managed solid revenue and positive operating cash flow in Q2. Reduced volumes at the end of 2008 prevented us from selling all of the high cost raw material inventory that had been converted into finished goods. This resulted in higher than predicted Cost of Goods Sold in First Quarter 2009. The resulting pressure on margins relaxed before the start of Second Quarter resulting in significantly higher margins. Furthermore, the construction of the sugar to aspartic acid factory is accelerating in preparation for a September start-up date. The result is increased spending on the facility where some of this spending is being expensed rather than capitalized to comply with GAAP and in turn reduces FSI’s net income.

Sales in the Second Quarter (Q2), were $2,272,759, down approximately 22% when compared to sales of $2,922,616, in the corresponding period a year ago. The result was a GAAP accounting net loss of $214,844, or $0.02 per share, compared with a net income of $346,086, or $0.02 per share, in Q2, 2008.

Basic weighted average shares used in computing per share amounts in Q2 were 13,994,435 for 2009 and 14,057,467 for 2008.

Non-GAAP operating cash flow: For the 6 months ending June 30, 2009, net income reflects $335,398 of non-cash charges (depreciation and stock option expenses) and $347,249 in new factory construction costs. 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 $254,575, or $0.2 per share. This compares with operating cash flow of $1,380,392, or $0.10 per share, in the corresponding 6 months of 2008 (see the table that follows for details of these calculations).

Mr. O’Brien continues, “ Our sugar to aspartic acid plant in Alberta will begin operation in September. Aspartic acid from Taber Alberta will become part of the raw material stream in Illinois in October. Production from the Alberta and IL plants will allow FSI to supply the only renewably-based poly-aspartic acid in the world. This will allow access to new 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 occur mostly in Q1 and Q2).

* CEO, Dan O’Brien has scheduled a conference call for 11:00am EDT, 8:00am PST, Friday August 14th to discuss the financials. Call 1-480-629-9644. The call title “Second Quarter Financials” may be requested.

(TABLE FOLLOWS)

The above information and following table contain supplemental information regarding income and cash flow from operations for the 3 and 6 months ended June 30, 2009. 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:

FLEXIBLE SOLUTIONS INTERNATIONAL, INC.

Consolidated Statement of Operations

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

(Unaudited)

	3 months ended June 30
	2009	2008
Revenue	$ 2,272,759	$ 2,922,616
Net income (loss) GAAP	$ (214,844)	$ 347,623
Net income (loss) per common share – basic. GAAP	$ (0.02)	$ 0.02
Net income (loss) excluding items not related to current operating activities – NON-GAAP	$ (294,844) a	$ 346,086 b
Net income (loss) per common share (adjusted) – basic. NON-GAAP	$ (0.02) a	$ 0.02 b
3 month weighted average shares used in computing per share amounts – basic. GAAP	13,994,435 h	14,057,567
	6 month Operating Cash Flow Ended June 30
Operating Cash flow (6months). NON-GAAP	$ (12,673) c	$1,051,059 d
Operating Cash flow excluding non-operating items and items not related to current operations (6 months). NON-GAAP	$ 254,576 e	$1,380,392 f
Operating Cash flow per share excluding non-operating items and items not related to current operations (6 months) – basic. NON-GAAP	$ 0.2 e	$ 0.10 f
Non-cash Adjustments (6 month)	$ 335,398 g	$ 393,263 g
Shares (6 month basic weighted average) used in computing per share amounts – basic GAAP	14,028,313 h	14,057,567

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

a) Non-GAAP – amounts exclude certain items not related to current operating activities (recapture of past non-cash expense due to cancellation of 100,000 shares valued at $80,000). See Operating Cash Flow for other adjustments.

b) Non-GAAP – amounts exclude certain items not related to current operating activities (interest income of $1,537). See Operating Cash Flow for other adjustments.

c) Non-GAAP – amounts exclude certain non-cash items (depreciation and stock option expense totaling $335,398)

d) Non-GAAP – amounts exclude certain non-cash items (depreciation, stock option expense totaling $393,263)

e) Non-GAAP – amounts exclude certain non-cash items (depreciation and stock option expense totaling $335,398,) and recapture of past non-cash expense (cancellation of 100,000 shares valued at $80,000) as well as items unrelated to current operating activities (new factory construction costs and related Interest expense totaling $347,249).

f) NON-GAAP amounts exclude certain non-cash items and items not related to operations or current operating activities (depreciation, stock option expense ($393,263), Loss on sale of equipment ($29,026), Write down of equipment ($41,440) and, New factory construction costs ($258,845) and interest income ($2,027).

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

h) significant change due to cancellation of 100,000 shares issued in a previous year. 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.