9. LONG TERM DEBT

6 Months Ended

Jun. 30, 2014

Notes to Financial Statements

Note 9. LONG TERM DEBT

(a)Flexible Solutions Ltd. has received a non-interest bearing, unsecured loan from the Department of Agriculture and Agri-Food Canada (“AAFC”).  Eligible for up to $1,000,000 in Canadian funds,  the Company had borrowed $910,801in Canadian funds (US$853,603) as of June 30, 2014 on an unsecured basis (December 31, 2013 – CDN$910,801; US$856,335).  The balance owing at June 30, 2014 was $364,320 in Canadian funds (US$341,441); (December 31, 2013 - $364,320CDN; US$342,534).  The repayment schedule is as follows:

Amount Due (in CDN funds)		Payment Due Date
$	182,160	December  31, 2014
$	182,160	December  31, 2015

(b)           Flexible Solutions Ltd. has also received a 5% simple interest loan from Agriculture Financial Services Corp. (“AFSC”).  Eligible for up to $2,000,000 in Canadian funds, the Company had originally borrowed $1,491,000 in Canadian funds.  The Company was required to make interest payments until May 1, 2010 and then started to pay down the principal in equal payments until April 1, 2015.  The borrowing balance at June 30, 2014 was $945,426 in Canadian funds (US$886,053).  The borrowing balance at December 31, 2013 was $1,016,056 in Canadian funds (US$955,296).  The Company has pledged the assets of the Taber, AB building, including equipment, inventory and accounts receivable (see Notes 3 and 5) as collateral, as well as signed a promissory note guaranteeing the amount of the loan.

The Company has committed to the following repayments:

2014	$	89,007
2015	$	870,362

As of June 30, 2014, the Company was in compliance with all loan covenants.

	June 30, 2014			December 31, 2013
Continuity
Balance, beginning of period	$	1,297,830		$	1,726,050
Less:  Payments on loan		32,592			307,833
Effect of exchange rate		(37,744	)		(120,387	)
Balance, end of period	$	1,227,494		$	1,297,830

Outstanding balance at:
a) Long term debt – AAFC	$	341,441		$	342,534
b)Long term debt – AFSC		886,053			955,296
Long term debt	$	1,227,494		$	1,297,830
Less: current portion		(1,068,506	)		(304,556	)
Balance	$	158,988		$	993,274