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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Flexible Solutions International Inc | AMEX:FSI | AMEX | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.03 | 1.45% | 2.10 | 2.14 | 2.06 | 2.09 | 7,133 | 21:00:02 |
Nevada
|
|
91-1922863
|
(State or other
jurisdiction of incorporation
or
organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
6001 54
Ave.
|
|
|
Taber, Alberta,
Canada
|
|
T1G
1X4
|
(Address of
Issuer's Principal Executive Offices)
|
|
(Zip
Code)
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
Non-accelerated
filer
|
☐ (Do
not check if a smaller reporting company)
|
Smaller reporting company
|
☒
|
|
|
Emerging growth
company
|
☐
|
Class of
Stock
|
No. Shares
Outstanding
|
Date
|
Common
|
11,522,991
|
November 14,
2017
|
PART I.
|
FINANCIAL INFORMATION
|
4
|
|
|
|
|
|
Item
1.
|
Financial
Statements.
|
4
|
|
|
|
|
|
|
(
a)
|
Unaudited
Interim Condensed Consolidated Balance Sheets at September 30, 2017
and December 31, 2016.
|
4
|
|
|
|
|
|
(
b)
|
Unaudited
Interim Condensed Consolidated Statements of Operations for the
Three Months Ended September 30, 2017 and 2016.
|
5
|
|
|
|
|
|
(c)
|
Unaudited
Interim Condensed Consolidated Statements of Operations for the
Nine Months Ended September 30, 2017 and 2016.
|
6
|
|
|
|
|
|
(d
)
|
Unaudited
Interim Condensed Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 2017 and 2016.
|
7
|
|
|
|
|
|
(e)
|
Notes to Unaudited
Interim Condensed
Consolidated Financial Statements
for the
Period Ended September 30, 2017.
|
8
|
|
|
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition
and Results of Operation
.
|
20
|
|
|
|
|
|
Item
4.
|
Controls
and Procedures.
|
23
|
|
|
|
|
|
PART II.
|
OTHER INFORMATION
|
24
|
|
|
|
|
|
Item 6.
|
Exhibits.
|
24
|
|
|
|
|
|
SIGNATURES
|
|
25
|
|
September
30,
2017
|
December
31,
2016
|
Assets
|
|
|
Current
|
|
|
Cash
and cash equivalents
|
$
6,317,564
|
$
2,470,066
|
Accounts
receivable (see Note 3)
|
2,923,381
|
3,008,153
|
Inventory
(see Note 4)
|
4,418,600
|
3,786,093
|
Prepaid
expenses
|
157,868
|
228,699
|
Total
current assets
|
13,817,413
|
9,493,011
|
Property,
plant and equipment (see Note 5)
|
1,656,754
|
3,393,944
|
Patents
(see Note 6)
|
83,562
|
95,890
|
Long
term deposits (see Note 7)
|
26,833
|
26,163
|
Investment
(see Note 8)
|
103,730
|
122,480
|
Deferred
tax asset
|
2,622,464
|
2,026,999
|
Total
Assets
|
$
18,310,756
|
$
15,158,487
|
Liabilities
|
|
|
Current
|
|
|
Accounts
payable and accrued liabilities
|
$
962,223
|
$
902,037
|
Deferred
revenue
|
2,703
|
95,308
|
Taxes
payable
|
325,898
|
893,867
|
Line of
credit (see Note 9)
|
250,000
|
250,000
|
Current
portion of long term debt (see Note 10)
|
201,193
|
201,193
|
Total
current liabilities
|
1,742,017
|
2,342,405
|
Long
term debt (see Note 10)
|
201,194
|
352,089
|
Total
Liabilities
|
1,943,211
|
2,694,494
|
|
|
|
Stockholders’
Equity
|
|
|
Capital
stock
|
|
|
Authorized
|
|
|
50,000,000
Common shares with a par value of $0.001 each
|
|
|
1,000,000
Preferred shares with a par value of $0.01 each
|
|
|
Issued and
outstanding
|
|
|
11,507,991
(December 31, 2016: 11,457,991) common shares
|
11,508
|
11,458
|
Capital
in excess of par value
|
14,967,142
|
14,842,863
|
Accumulated
other comprehensive loss
|
(555,351
)
|
(1,087,208
)
|
Retained
earnings (Deficit)
|
1,944,246
|
(1,303,120
)
|
Total
Stockholders’ Equity
|
16,367,545
|
12,463,993
|
Total
Liabilities and Stockholders’ Equity
|
$
18,310,756
|
$
15,158,487
|
|
Three Months
Ended
September
30,
|
|
|
2017
|
2016
|
Sales
|
$
3,269,386
|
$
3,117,034
|
Cost
of sales
|
2,274,150
|
1,997,597
|
|
|
|
Gross
profit
|
995,236
|
1,119,437
|
|
|
|
Operating
expenses
|
|
|
Wages
|
428,335
|
370,613
|
Administrative
salaries and benefits
|
256,676
|
209,256
|
Advertising
and promotion
|
2,192
|
5,902
|
Investor
relations and transfer agent fee
|
37,403
|
32,806
|
Office
and miscellaneous
|
84,809
|
67,026
|
Insurance
|
81,124
|
79,522
|
Interest
expense
|
11,402
|
11,318
|
Rent
|
62,630
|
23,060
|
Consulting
|
32,771
|
32,981
|
Professional
fees
|
52,290
|
77,151
|
Travel
|
21,506
|
22,420
|
Telecommunications
|
5,707
|
6,145
|
Shipping
|
4,262
|
2,424
|
Research
|
38,691
|
13,865
|
Commissions
|
5,816
|
5,351
|
Currency
exchange
|
47,606
|
(14,740
)
|
Utilities
|
4,466
|
3,231
|
|
|
|
Total operating
expenses
|
1,177,686
|
948,331
|
|
|
|
Income
(loss) before other items and income tax
|
(182,450
)
|
171,106
|
Gain
(loss) on sale of equipment
|
-
|
4,934
|
Loss
on involuntary disposition (net of tax)
|
(307,432
)
|
-
|
Interest
income
|
241
|
2,161
|
Income
(loss) before income tax
|
(489,641
)
|
178,201
|
|
|
|
Provision
for income taxes
|
(210,717
)
|
92,237
|
Net
income (loss)
|
(278,924
)
|
85,964
|
|
|
|
Other
comprehensive income
|
305,428
|
196,503
|
Comprehensive
income
|
26,504
|
282,467
|
Net
income (loss) per share (basic and diluted)
|
$
(0.02
)
|
$
0.01
|
Weighted
average number of common shares - basic
|
11,498,491
|
11,434,187
|
Weighted
average number of common shares – diluted
|
11,769,792
|
11,694,530
|
|
Nine Months
Ended
September
30,
|
|
|
2017
|
2016
|
|
|
|
Sales
|
$
12,655,460
|
$
12,162,852
|
Cost
of sales
|
7,684,828
|
6,821,554
|
|
|
|
Gross
profit
|
4,970,632
|
5,341,298
|
|
|
|
Operating
expenses
|
|
|
Wages
|
1,225,037
|
1,119,031
|
Administrative
salaries and benefits
|
752,879
|
632,773
|
Advertising
and promotion
|
15,487
|
17,228
|
Investor
relations and transfer agent fee
|
111,480
|
96,544
|
Office
and miscellaneous
|
190,258
|
215,455
|
Insurance
|
218,661
|
228,695
|
Interest
expense
|
35,698
|
33,876
|
Rent
|
183,638
|
69,261
|
Consulting
|
100,717
|
93,814
|
Professional
fees
|
168,215
|
145,838
|
Travel
|
94,668
|
106,939
|
Telecommunications
|
19,093
|
18,070
|
Shipping
|
13,035
|
12,056
|
Research
|
70,229
|
77,870
|
Commissions
|
59,983
|
65,078
|
Bad
debt expense
|
1,191
|
-
|
Currency
exchange
|
89,350
|
(3,760
)
|
Utilities
|
15,976
|
12,131
|
|
3,365,595
|
2,940,899
|
|
|
|
Income
before other items and income tax
|
1,605,037
|
2,400,399
|
Gain
on sale of equipment
|
-
|
6,848
|
Gain
on involuntary disposition (net of tax)
|
1,938,286
|
-
|
Write
down of inventory
|
(51,346
)
|
-
|
Interest
income
|
323
|
2,161
|
Income
before income tax
|
3,492,300
|
2,409,408
|
|
|
|
Deferred
tax expense
|
23,404
|
-
|
Provision
for income taxes
|
221,530
|
1,020,413
|
Net
income
|
3,247,366
|
1,388,995
|
|
|
|
Other
comprehensive income
|
531,857
|
130,933
|
Comprehensive
income
|
3,779,223
|
1,519,928
|
Net
income per share (basic and diluted)
|
$
0.28
|
$
0.12
|
Weighted
average number of common shares - basic
|
11,470,196
|
11,468,392
|
Weighted
average number of common shares – diluted
|
11,715,934
|
11,616,265
|
|
Nine Months
Ended
September
30,
|
|
|
2017
|
2016
|
|
|
|
Operating
activities
|
|
|
Net
income
|
$
3,247,366
|
$
1,388,995
|
Stock
compensation expense
|
68,750
|
31,923
|
Depreciation
|
189,513
|
405,186
|
Decrease
in deferred tax asset
|
17,512
|
133,572
|
Gain on
involuntary disposition
|
(1,938,286
)
|
-
|
Changes in non-cash
working capital items:
|
|
|
(Increase)
Decrease in accounts receivable
|
95,318
|
(277,579
)
|
(Increase)
Decrease in inventory
|
(664,985
)
|
141,995
|
(Increase)
Decrease in prepaid expenses
|
73,351
|
(38,213
)
|
Increase
(Decrease) in accounts payable
|
(341,517
)
|
(36,959
)
|
Increase
(Decrease) in taxes payable
|
(612,236
)
|
434,444
|
Increase
(Decrease) in deferred revenue
|
(95,400
)
|
-
|
|
|
|
Cash
provided by operating activities
|
39,386
|
2,183,364
|
|
|
|
Investing
activities
|
|
|
Long
term deposits
|
-
|
(350
)
|
Investment
|
18,750
|
-
|
Proceeds
from insurance
|
3,419,610
|
-
|
Sale
(purchase) of property and equipment
|
(57,876
)
|
(101,762
)
|
|
|
|
Cash
provided by (used in) investing activities
|
3,380,484
|
(102,112
)
|
|
|
|
Financing
activities
|
|
|
Short
term line of credit
|
-
|
50,000
|
Loan
repayment
|
(150,895
)
|
(150,895
)
|
Repurchase
of common stock
|
-
|
(1,575,000
)
|
Proceeds
from issuance of common stock
|
55,580
|
26,080
|
|
|
|
Cash
(used in) financing activities
|
(95,315
)
|
(1,649,815
)
|
|
|
|
Effect of exchange
rate changes on cash
|
522,943
|
(7,937
)
|
|
|
|
Inflow
of cash
|
3,847,498
|
423,500
|
Cash and cash
equivalents, beginning
|
2,470,066
|
2,498,738
|
|
|
|
Cash
and cash equivalents, ending
|
$
6,317,564
|
$
2,922,238
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
Income taxes
paid
|
$
833,766
|
$
452,654
|
Interest
paid
|
$
34,107
|
$
33,876
|
Computer
hardware
|
|
30%
Declining balance
|
Furniture
and fixtures
|
|
20%
Declining balance
|
Manufacturing
equipment
|
|
20%
Declining balance
|
Office
equipment
|
|
20%
Declining balance
|
Boat
|
|
20%
Declining balance
|
Building
and improvements
|
|
10%
Declining balance
|
Technology
|
|
20%
Declining balance
|
Leasehold
improvements
|
|
Straight-line
over lease term
|
|
September
30,
2017
|
December
31,
2016
|
Accounts
receivable
|
$
2,963,925
|
$
3,044,652
|
Allowances for
doubtful accounts
|
(40,544
)
|
(36,499
)
|
|
$
2,923,381
|
$
3,008,153
|
|
September
30,
2017
|
December
31,
2016
|
Completed
goods
|
$
1,761,747
|
$
1,646,465
|
Work in
progress
|
206,110
|
2,572
|
Raw
materials
|
2,450,743
|
2,137,056
|
|
$
4,418,600
|
$
3,786,093
|
|
September 30,
2017
|
Accumulated
|
September 30,
2017
|
|
Cost
|
Depreciation
|
Net
|
Buildings
|
$
3,164,847
|
$
2,376,064
|
$
788,783
|
Computer
hardware
|
40,904
|
39,236
|
1,668
|
Furniture and
fixtures
|
17,673
|
10,748
|
6,925
|
Office
equipment
|
435
|
32
|
403
|
Manufacturing
equipment
|
2,451,018
|
2,050,644
|
400,374
|
Trailer
|
9,613
|
1,082
|
8,531
|
Boat
|
34,400
|
13,347
|
21,053
|
Leasehold
improvements
|
85,432
|
28,235
|
57,197
|
Land
|
371,820
|
-
|
371,820
|
|
$
6,176,142
|
$
4,519,388
|
$
1,656,754
|
|
December 31,
2016
|
Accumulated
|
December 31,
2016
|
|
Cost
|
Depreciation
|
Net
|
Buildings
|
$
4,762,094
|
$
2,967,370
|
$
1,794,724
|
Computer
hardware
|
89,480
|
85,784
|
3,696
|
Furniture and
fixtures
|
32,439
|
23,142
|
9,297
|
Office
equipment
|
17,745
|
16,788
|
957
|
Manufacturing
equipment
|
5,236,404
|
4,102,635
|
1,133,769
|
Trailer
|
12,859
|
12,250
|
609
|
Boat
|
34,400
|
9,632
|
24,768
|
Leasehold
improvements
|
85,432
|
15,419
|
70,013
|
Technology
|
101,748
|
101,748
|
-
|
Land
|
356,111
|
-
|
356,111
|
|
$
10,728,712
|
$
7,334,768
|
$
3,393,944
|
|
September
30,
2017
Cost
|
Accumulated
Amortization
|
September
30,
2017
Net
|
Patents
|
$
212,426
|
$
128,864
|
$
83,562
|
|
December 31,
2016
Cost
|
Accumulated
Amortization
|
December 31,
2
016
Net
|
Patents
|
$
197,448
|
$
101,558
|
$
95,890
|
2017
|
$
16,438
|
2018
|
16,438
|
2019
|
16,438
|
2020
|
16,438
|
2021
|
16,438
|
|
September
30,
2017
|
December
31,
2016
|
Long term
deposits
|
$
26,833
|
$
26,163
|
Balance, January 1,
2016
|
-
|
Capital
contributions
|
$
150,066
|
Return of
equity
|
(12,500
)
|
Loss in equity
method investment
|
(15,086
)
|
Balance, December
31, 2016
|
$
122,480
|
Return of
equity
|
(18,750
)
|
Balance, September
30, 2017
|
$
103,730
|
2017
|
$
50,299
|
2018
|
$
201,193
|
2019
|
$
150,895
|
|
S
eptember 30, 2017
|
December 31,
2016
|
Continuity
|
|
|
$
553,282
|
$
754,475
|
|
Plus:
Proceeds from loans
|
--
|
-
|
Less:
Payments on loan
|
150,895
|
201,193
|
Balance,
end of period
|
$
402,387
|
$
553,282
|
Outstanding
balance at:
|
|
|
Long term debt
– Harris
|
402,387
|
553,282
|
Long term
debt
|
$
402,387
|
$
553,282
|
Less: current
portion
|
(201,193
)
|
(201,193
)
|
Balance
|
$
201,194
|
$
352,089
|
|
2016
|
|
|
Expected life -
years
|
3.0
|
Interest
rate
|
1.37
%
|
Volatility
|
75.64
%
|
Dividend
yield
|
--
%
|
Weighted average
fair value of options granted
|
$
0.7073
|
Date
Issued
|
Number
of
Shares
Issued
|
March 10,
2017
|
3,000
|
June 6,
2017
|
5,000
|
June 15,
2017
|
20,000
|
July 7,
2017
|
10,000
|
September 5,
2017
|
12,000
|
Date
Issued
|
Number
of
Shares
Issued
|
August 11,
2016
|
9,000
|
September 22,
2016
|
15,000
|
|
EWCP
|
BPCA
|
Total
|
|
|
|
|
Revenue
|
$
606,476
|
$
12,048,984
|
$
12,655,460
|
Interest
revenue
|
183
|
140
|
323
|
Interest
expense
|
54
|
35,644
|
35,698
|
Depreciation and
amortization
|
44,302
|
145,211
|
189,513
|
Segment profit
(loss)
|
1,980,968
|
1,266,398
|
3,247,366
|
Segment
assets
|
354,851
|
1,385,465
|
1,740,316
|
Expenditures for
segment assets
|
(50,470
)
|
(7,406
)
|
(57,876
)
|
|
EWCP
|
BPCA
|
Total
|
|
|
|
|
Revenue
|
$
750,415
|
$
11,412,437
|
$
12,162,852
|
Interest
revenue
|
1
|
2,160
|
2,161
|
Interest
expense
|
59
|
33,817
|
33,876
|
Depreciation and
amortization
|
244,644
|
160,542
|
405,186
|
Segment profit
(loss)
|
(492,829
)
|
1,881,824
|
1,388,995
|
Segment
assets
|
2,097,841
|
1,614,891
|
3,712,732
|
Expenditures for
segment assets
|
(6,130
)
|
(95,632
)
|
(101,762
)
|
|
Nine Months
Ended
September 30,
2017
|
Nine Months
Ended
September 30,
2016
|
Canada
|
$
265,175
|
$
361,683
|
United States and
abroad
|
12,390,285
|
11,801,169
|
Total
|
$
12,655,460
|
$
12,162,852
|
|
September 30,
2017
|
December 31,
2016
|
Canada
|
$
354,851
|
$
1,966,564
|
United
States
|
1,385,465
|
1,523,270
|
Total
|
$
1,740,316
|
$
3,489,834
|
2017
|
$
49,855
|
2018
|
$
201,840
|
2019
|
$
205,580
|
2020
|
$
209,400
|
2021
|
$
111,100
|
Item
|
|
Increase (I)
or
Decrease
(D)
|
|
Reason
|
Sales
EWCP
products
|
|
D
|
|
Loss of Taber, AB manufacturing facility to fire.
|
BPCA
products
|
|
I
|
|
Increased
sales across all market verticals due to increased success in sales
activity.
|
Gross
Profit, as a %
of
sales
|
|
D
|
|
Temporary
increase in costs after loss of the EWCP manufacturing plant to
fire along with increased aspartic acid costs
|
Wages
|
|
I
|
|
Increased
wages to retain employees.
|
Administrative
salaries
and
benefits
|
|
I
|
|
Increased
wages to retain employees.
|
Rent
|
|
I
|
|
Additional
storage and capacity space for BCPS products.
|
Professional
fess
|
|
I
|
|
Increased legal
fees related to IP and general legal representation along with
increased accounting costs.
|
|
|
|
|
|
Commissions
|
|
D
|
|
Uncommissionable
sales increased against commissionable sales.
|
Item
|
|
Increase (I) or
Decrease (D)
|
|
Reason
|
Sales
BPCA
products
|
|
I
|
|
Increased
sales across all market verticals due to increased success in sales
activity.
|
Gross
Profit, as a %
of
sales
|
|
D
|
|
Temporary
increase in costs after loss of the EWCP manufacturing plant to
fire along with increased aspartic acid costs.
|
Wages
|
|
I
|
|
Increased
wages to retain employees.
|
Administrative
salaries
and
benefits
|
|
I
|
|
Increased wages to retain employees
.
|
Rent
|
|
I
|
|
Additional
storage and capacity space for BCPS products.
|
Professional
fess
|
|
D
|
|
Reduced
litigation resulted in reduced professional fees.
|
Research
|
|
I
|
|
Increase
costs associated with regulatory compliance.
|
|
2017
|
2016
|
|
|
|
Cash provided by
(used by) operations
|
39,386
|
2,183,364
|
Long term
deposits
|
-
|
(350
)
|
Investment
|
18,750
|
-
|
Insurance proceeds
from fire loss
|
3,419,610
|
-
|
Sales (purchases)
of equipment
|
(57,876
)
|
(101,762
)
|
Advances from
(repayments of) short term line of credit
|
-
|
50,000
|
Repayment of
loans
|
(150,895
)
|
(150,895
)
|
Repurchase of
common stock
|
-
|
(1,575,000
)
|
Proceeds from
issuance of common stock
|
55,580
|
26,080
|
Changes in exchange
rates
|
522,943
|
(7,937
)
|
2017
|
$
49,855
|
2018
|
$
201,840
|
2019
|
$
205,580
|
2020
|
$
209,400
|
2021
|
$
111,100
|
Number
|
|
Description
|
|
Amended
and Restated Certificate of Incorporation of the registrant.
(1)
|
|
|
Bylaws
of the registrant. (1)
|
|
|
Certification
of Principal Executive Officer Pursuant to §302 of the
Sarbanes-Oxley Act of 2002.*
|
|
|
Certification
of Principal Financial Officer Pursuant to §302 of the
Sarbanes-Oxley Act of 2002.*
|
|
|
Certification
of Principal Executive and Financial Officer Pursuant to 18 U.S.C.
§1350 and §906 of the Sarbanes-Oxley Act of
2002.*
|
|
Flexible
Solutions International, Inc.
|
|
|
|
|
|
|
November 14,
2017
|
By:
|
/s/
Daniel
B. O’Brien
|
|
|
Name:
|
Daniel B.
O’Brien
|
|
|
Title:
|
President and
Principal Executive Officer
|
|
|
By:
|
/s/
Daniel
B. O’Brien
|
|
|
Name:
|
Daniel B.
O’Brien
|
|
|
Title:
|
Principal Financial
and Accounting Officer
|
|
1 Year Flexible Solutions Chart |
1 Month Flexible Solutions Chart |
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