8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (date of earliest event reported): March 29, 2024

FLEXIBLE SOLUTIONS INTERNATIONAL INC.

(Exact name of Registrant as specified in its charter)

Alberta	001-31540	71-1630889
(State or other jurisdiction	(Commission	(Employer
of incorporation)	File No.)	Identification No.)

6001 54 Ave.

Taber, Alberta, Canada T1G 1X4

(Address of principal executive offices, including Zip Code)

Registrant’s telephone number, including area code: (250) 477-9969

N/A

(Former name or former address if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-14(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of exchange on which registered
Common Stock	FSI	NYSE American

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§203.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§204.12b-2 of this chapter.

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 8.01 Other Events

On March 29, 2023, the Company issued a press release announcing its financial results for the full year ended December 31, 2023.

On April 3, 2023 the Company held a conference call to discuss its financial results for the full year ended December 31, 2023, as well as other information regarding the Company.

Item 9.01 Exhibits

Exhibit Number	Description of Document
99.1	March 29, 2024 Press Release
99.2	Text of remarks by Dan O’Brien – April 3, 2024 conference call
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: April 3, 2024	FLEXIBLE SOLUTIONS INTERNATIONAL INC.
	By:	/s/ Daniel B. O’Brien
		Daniel B. O’Brien, President and Chief Executive Officer

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EX-99.1

EXHIBIT 99.1

NEWS RELEASE

March 29, 2024

FSI ANNOUNCES FULL YEAR, 2023 FINANCIAL RESULTS

A Conference call is scheduled for Wednesday April 3rd, 2024, 11:00am Eastern Time

See dial in number below

VICTORIA, BRITISH COLUMBIA, March 29, 2024 – FLEXIBLE SOLUTIONS INTERNATIONAL, INC. (NYSE Amex: FSI), is the developer and manufacturer of biodegradable polymers for oil extraction, detergent ingredients and water treatment as well as crop nutrient availability chemistry. Flexible Solutions also manufactures biodegradable and environmentally safe water and energy conservation technologies. Today the Company announces financial results for full year ended December 31, 2023.

Mr. Daniel B. O’Brien, CEO, states, “2023 was a difficult year to navigate. Residual inventory at high base and shipping costs collided with our ability to set prices to customers. Given these circumstances, the results were reasonable though not what we hoped for.” Mr. O’Brien continues, “There will be some residual effects of the 2023 conditions present in Q1 2024 but, we hope the rest of the year will see a return to growth, some expansion in margins and increased food division sales.”

● Sales for the Full Year were $38,324,806, down approximately 16% when compared to sales of $45,840,469 in the corresponding period a year ago.

● Full Year, 2023 net income was $2,775,864, or $0.22 per share, compared to a net income of $7,021,604, or $0.57 per share, in Full Year, 2022.

● Basic weighted average shares used in computing earnings per share amounts were 12,434,886 and 12,379,316 for full year, 2023 and full year, 2022 respectively.

● 2023 Non-GAAP operating cash flow: The Company shows 12 months operating cash flow of $4,598,698, or $0.37 per share. This compares with operating cash flow of $8,442,735, or $0.68 per share, in the corresponding 12 months of 2022 (see the table that follows for details of these calculations).

The NanoChem division and ENP subsidiary continue to be the dominant sources of revenue and cash flow for the Company. New opportunities continue to unfold in detergent, water treatment, oil field extraction, turf, ornamental and agricultural use to further increase sales in these divisions.

Conference call

Due to business travel obligations a conference call has been scheduled for 11:00 am Eastern Time, 8:00 am Pacific Time, on Wednesday April 3rd, 2024. CEO, Dan O’Brien will be presenting and answering questions on the conference call. To participate in this call please dial 1-800-445-7795 (or 1-785-424-1699) just prior to the scheduled call time. To join the call participants will be requested to give their name and company affiliation. The conference ID: SOLUTIONS and/or call title Flexible Solutions International - Full Year 2023 Financials may be requested

The above information and following table contain supplemental information regarding income and cash flow from operations for the period ended December 31, 2023. 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 Non-GAAP financial measure is as follows:

FLEXIBLE SOLUTIONS INTERNATIONAL, INC.

Consolidated Statement of Operations

For Full Year Ended December 31 (12 Months Operating Cash Flow)

(Unaudited)

	12 months ended December 31
	2023		2022
Revenue	$	38,324,806	$	45,840,469
Income (loss) before income tax – GAAP	$	3,623,250	$	7,859,085
Provision for Income tax – net - GAAP	$	132,735	$	(145,856	)
Net income (loss) - GAAP	$	2,775,864	$	7,021,604
Net income (loss) per common share – basic. – GAAP	$	0.22	$	0.57
12 month weighted average shares used in computing per share amounts – basic.- GAAP		12,434,886		12,379,316

	12 month Operating Cash Flow Ended December 31
Operating Cash Flow (12 months). NON-GAAP	$	4,598,698	a,b,c	$	8,442,735	a,b,c
Operating Cash Flow per share excluding non-operating items and items not related to current operations (12 months) – basic. -NON-GAAP	$	0.37	a,b,c	$	0.68	a,b,c
Non-cash Adjustments (12 month) -GAAP	$	2,081,399	d	$	1,676,579	d
Shares (12 month basic weighted average) used in computing per share amounts – basic -GAAP		12,484,336			12,379,316

Notes: certain items not related to “operations” of the Company’s net income are listed below.

a) Non-GAAP – Flexible Solutions International owns 65% of ENP and 80% of 317 Mendota. Therefore Operating Cash Flow is adjusted by the pre-tax Net income or loss of the non-controlling interest (minority interest) in both entities. The 2022 number given in the financials is after tax figure. A pretax minority interest number now appears in the financials for full year 2023 and future years.

b) Non-GAAP – amounts exclude certain cash and non-cash items: Depreciation and Stock compensation expense (2023 = $2,081,399, 2022 = $1,676,579), Interest expense (2023 = $498,666, 2022 = $292,949), Interest income (2023 = $113,809, 2022 = $132,233), Gain on investment (2023 = 506,098, 2022 = $341,424), gain on sale of asset (2023 = 4,589, 2022 = N/A), Gain on previously held equity interest - acquisition of ENP Peru (2023 = N/A, 2022 = $335,051), Deferred income tax recovery (expense) (2023 = $250,917, 2022 = $71,295), Income tax (2023 = 118,182, 2022 = 217,151), and pretax Net income attributable to non-controlling interests (2023 = $980,121, 2022 = $995,144). Also, the legal and accounting costs associated with the attempted merger of FSI and Lygos (2023 = N/A, 2022 = $417,974(see news releases)) are removed to arrive at Operating Cash Flow. Although included in operating expenses these onetime expenditures were not related to operations of FSI. *See the financial statements for all adjustments.

c) The revenue and gain from the 50% investment in the private Florida LLC announced in January 2019 are not treated as revenue or profit from operations by Flexible Solutions given the Company only purchased 50% of the LLC. The profit is treated as investment income and therefore occurs below Operating income in the Statement of Operations. As a result, the gains from all investments (2023 = $506,098, 2022 = $341,424), including those from the Florida LLC, are removed from the calculation to arrive at Operating Cash Flow.

d) Non-GAAP – amounts represent depreciation and stock compensation expense.

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

6001 54^th Ave, Taber, Alberta, CANADA T1G 1X4

Company Contacts

Jason Bloom

Toll Free: 800 661 3560

Fax: 403 223 2905

E-mail: info@flexiblesolutions.com

If you have received this news release by mistake or if you would like to be removed from our update list please reply to: info@flexiblesolutions.com

To find out more information about Flexible Solutions and our products, please visit www.flexiblesolutions.com.

EX-99.2

EXHIBIT 99.2

Good morning. I’m Dan O’Brien, CEO of Flexible Solutions.

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 statements 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.

Welcome to the FSI conference call for Full Year 2023.

To start, I would like to discuss our Company condition and our product lines along with what we think might occur in 2024. I will comment on our financials afterward.

NanoChem division: NCS represents approximately 70% of FSI’s revenue. This division makes thermal poly-aspartic acid, called TPA for short, a biodegradable polymer with many valuable uses. NCS also manufactures SUN 27™ and N Savr 30™ which are used to reduce nitrogen fertilizer loss from soil. In 2022, NCS started food grade toll operations using the spray dryer we installed over the last several years.

TPA is used in agriculture to significantly increase crop yield. It acts by slowing crystal growth between fertilizer ions and other ions in the soil resulting in the fertilizer remaining available longer for the plants to use.

TPA is also a biodegradable way of treating oilfield water to prevent pipes from plugging with mineral scale. TPA’s effect is prevention of mineral scale from minerals that are part of the water fraction of oil as it exits the rock formation. Preventing scale keeps the oil recovery pipes from clogging.

TPA is also sold as a biodegradable ingredient in cleaning products, in our food division as a stability aid and as a water treatment chemical.

SUN 27™ and N Savr 30™ are nitrogen conservation products. Nitrogen is a critical fertilizer that can be lost through bacterial breakdown, evaporation and soil runoff.

SUN 27™ is used to conserve nitrogen from attack by soil bacterial enzymes that cause evaporation while N Savr 30™ is effective at reducing nitrogen loss from leaching.

Food products: Our IL plant is food grade qualified and we have received our FDA number. We have commercialized one food product based on polyaspartates that was developed fully in house. We have a pipeline of additional products in development that are either our ideas, toll production of outside ideas or a mixture where an outside idea is being optimized by our team. NCS will focus on food products equally with our other market verticals because we have determined that this is an area with large markets that we are skilled in servicing and where we can obtain good margins. We did not receive the food product orders we had hoped for in 2023. We are still convinced that this is an excellent business and we expect to obtain significant sales in 2024.

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ENP Division: ENP represents most of our other revenue. ENP is focused on sales into the greenhouse, turf and golf markets, while, NCS sells into row crop agriculture. We expect some ENP revenue growth in 2024 with the growth concentrated in Q3 and Q4.

The Florida LLC investment: The LLC was profitable all four quarters in 2023 and was one area where some revenue growth occurred. The Company is focused on international sales into multiple countries all of which face different issues and respond in varied ways. Also, the LLC remains exposed to high costs of goods while experiencing difficulty passing all the costs to its customers. As a result, margins are compressed and earnings may not reach historical levels for some time. Regardless, we expect sales of the LLC to grow again in 2024 leading to a larger profit on our investment.

2024

Agricultural products were not as strong in 2023 as they were in 2022. As a result, total revenue for the year was well below the previous year period. Agriculture customers are showing resistance to spending on inputs when crop prices are not increasing at the rate of inflation. We think that growth in 2024 is probable but most of it will be through the Florida LLC.

Oil, gas and industrial sales of TPA were lower in 2023 than in 2022 and this is likely to continue into 2024. The possibility of reduced hydrocarbon demand in 2024 could slow sales but the most likely outcome is a flat 2024 in this market vertical.

Tariffs: Since 2019, several of our raw materials imported from China have included a 25% tariff. International customers are not charged the tariffs because we have applied for the export rebates available to recover the tariffs. The tariffs are affecting our cost of goods, our cash flow and our profits negatively. Rebates are extremely difficult to obtain even though we are entitled to them. We submitted our initial applications more than 5 years ago. The total dollar amount due back to us is well in excess of $1 MM and grows each quarter. We will persevere until we succeed in recovering our funds.

Shipping and Inventory: Shipping prices are stable but higher than prior to covid. Shipping times are reasonable on the routes we use. None of our products or raw materials ship through the Red Sea area.

Raw material prices do not appear to be reverting to historic levels. Instead, they are stable at a new base level that increases with inflation. Passing price increases, even small inflation related ones, along to customers always takes several months, is not always possible and will probably result in margins not as high as we prefer until inflation is back at the 2% level or lower.

We believe that the sum of the issues we faced during 2023 which resulted in lower revenue, lower cash flow and lower profits for the full year have partly resolved. Therefore, we expect that growth will resume in all three categories during 2024

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Highlights of the financial results:

We are not happy with the results for 2023. Year over year revenue, profits and operating cash flow were down. Profits were negatively affected by product mix, cost of goods, margin reduction and reduced sales volume. It is important to mention that 2022 profits included a 16-cent positive tax adjustment and several more cents from covid loan forgiveness. We think an adjusted profit of 44 cents a share in 2022 should be used in place of the 57-cent published number when comparing 2022 and 2023. Even so, our 2023 profit compares badly with 2022 and we will work to return to our historic peak earnings during 2024.

The financials show that our costs increased as the year progressed. Wages have gone up substantially over the last 2 years to retain staff. Raw material prices have dropped from the highest levels but the new normal level is higher than in the past. Volume is down. We were unable to raise prices sufficiently to cover cost increases and maintain our margin goals. Our plans to enter the food industry were delayed into 2024. Higher interest rates on our debt are consuming more of our funds.

FSI and its subsidiaries will continue to examine all our costs and economize where possible. Even more critical is increasing sales in our existing businesses and obtaining sales in the food industry to ensure that our wage and other base costs are spread over more revenue dollars. We expect to show incremental success in all of these areas during the course of the 2024 year.

Sales for the year decreased 16% to 38.3 million, compared with 45.8 million for 2022.

Profits: 2023 shows a profit of $2.78 million or $0.22 per share, compared to a profit of $7.02 million, or $0.57 per share, in 2022.

Operating Cash Flow: This non-GAAP number is useful to show our progress with non-cash items removed for clarity. For 2023, it was $4.60 million or 37 cents per share down from $8.44 million or 68 cents per share in 2022.

Long term debt: We continue to pay down our long-term debt according to the terms of the loans. However, we have consolidated all our debt for ENP and NCS with Stock Yards Bank. This has resulted in increased lines of credit with lower interest rates and reduced interest rates on our long-term debt. At the same time, we bought all the units we did not already own in ENP Peru Investments LLC and guaranteed the mortgage held by the LLC. The LLC owns the 5 acres and 60,000 square feet of building in Peru IL on the SW corner of our property. This action returns full ownership of the 20-acre parcel and 120,000 square feet of buildings to FSI with a mortgage at favorable terms.

Additional factory space in Illinois: In the second quarter 2023 we invested to acquire 80% of an LLC called 317 Mendota that in turn purchased a large building on 37 acres of land in Mendota IL. We have determined that 240,000 square feet is available for our use or for rental. The ENP division has moved all operations to 60,000 square feet of this building. The remaining 180,000 square feet will be rented as suitable tenants are found. The NCS division will recover the use of 30,000 sq. ft. in Peru IL from ENP making room for potential growth.

Working capital is adequate for all our purposes. We have lines of credit with Stock Yards Bank for the ENP and NCS subsidiaries. We are confident that we can execute our plans with our existing capital.

The text of this speech will be available as an 8K filing on www.sec.gov by Friday April 5th. Email or fax copies can be requested from Jason Bloom at Jason@flexiblesolutions.com.

Thank you, the floor is open for questions.

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Cover [Abstract]
Document Type	8-K
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Entity Registrant Name	FLEXIBLE SOLUTIONS INTERNATIONAL INC.
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Entity Incorporation, State or Country Code	A0
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Title of 12(b) Security	Common Stock
Trading Symbol	FSI
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Entity Emerging Growth Company	false