[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Presents the unaudited condensed interim consolidated financial statements and management's discussion and analysis for the period ended June 30, 2025 [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements.) Presents unaudited condensed interim consolidated financial statements for Flexible Solutions International, Inc. as of June 30, 2025, and for the three and six-month periods then ended [Condensed Interim Consolidated Balance Sheets](index=5&type=section&id=%28a%29%20Unaudited%20Condensed%20Interim%20Consolidated%20Balance%20Sheets%20at%20June%2030%2C%202025%20and%20December%2031%2C%202024.) Total assets slightly decreased to $58.2 million, while total liabilities decreased to $15.7 million, leading to increased stockholders' equity Consolidated Balance Sheet Summary (in USD) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $31,092,253 | $34,575,857 | | **Total Assets** | $58,234,048 | $59,968,579 | | **Total Current Liabilities** | $9,151,454 | $11,861,667 | | **Total Liabilities** | $15,654,667 | $18,602,553 | | **Total Stockholders' Equity** | $42,579,381 | $41,366,026 | [Consolidated Statements of Operations (Three Months)](index=6&type=section&id=%28b%29%20Unaudited%20Condensed%20Interim%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29%20for%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024.) Q2 2025 sales increased to $11.4 million, driven by new R&D services revenue, resulting in higher net income and diluted EPS Q2 Financial Performance (in USD) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total Sales | $11,367,132 | $10,528,739 | | Gross Profit | $5,385,266 | $3,939,095 | | Operating Income | $3,297,114 | $1,970,912 | | Net Income (attributable to FSI) | $2,028,912 | $1,289,796 | | Diluted EPS | $0.15 | $0.10 | - A new revenue stream from research and development services contributed **$2.5 million** in sales for Q2 2025, which was not present in Q2 2024[15](index=15&type=chunk) [Consolidated Statements of Operations (Six Months)](index=7&type=section&id=%28c%29%20Unaudited%20Condensed%20Interim%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024.) H1 2025 sales decreased to $18.8 million, but gross profit increased, with net income remaining stable at $1.75 million First Half Financial Performance (in USD) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Total Sales | $18,840,824 | $19,753,611 | | Gross Profit | $7,336,830 | $6,759,462 | | Operating Income | $3,227,957 | $2,736,743 | | Net Income (attributable to FSI) | $1,751,178 | $1,747,022 | | Diluted EPS | $0.13 | $0.14 | [Consolidated Statements of Cash Flows](index=8&type=section&id=%28d%29%20Unaudited%20Condensed%20Interim%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024.) Cash from operations decreased to $4.7 million in H1 2025, with funds primarily used for capital expenditures, debt repayment, and dividends Cash Flow Summary for Six Months Ended June 30 (in USD) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash from Operating Activities | $4,738,637 | $5,309,855 | | Net cash from Investing Activities | ($1,331,042) | ($1,236,697) | | Net cash from Financing Activities | ($3,709,588) | ($2,633,885) | | **Net Change in Cash** | **($32,639)** | **$1,501,614** | [Consolidated Statements of Stockholders' Equity](index=9&type=section&id=%28e%29%20Unaudited%20Condensed%20Interim%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024.) Stockholders' equity increased to $42.6 million by June 30, 2025, driven by net income and stock option exercises, offset by dividends - Total stockholders' equity increased to **$42,579,381** at June 30, 2025, up from **$41,366,026** at December 31, 2024[18](index=18&type=chunk) - The company paid dividends of **$1,274,753** during the first six months of 2025[18](index=18&type=chunk) [Notes to Financial Statements](index=11&type=section&id=%28f%29%20Notes%20to%20Unaudited%20Condensed%20Interim%20Consolidated%20Financial%20Statements%20for%20the%20Period%20Ended%20June%2030%2C%202025.) Provides detailed explanations of accounting policies, financial figures, and segment reporting for the interim consolidated financial statements - The company's business involves manufacturing and marketing specialty chemicals for water evaporation control (HEATSAVR®, WATERSAVR®) and thermal polyaspartate biopolymers (TPAs) for industrial and agricultural applications[23](index=23&type=chunk) - Revenue from research and development services is recognized over time as contractual performance obligations are satisfied[29](index=29&type=chunk) - The company's three primary customers accounted for **47%** of sales in the first six months of 2025, down from **50%** in the same period of 2024, with a single customer for R&D services accounting for **13%** of total sales[31](index=31&type=chunk) [Management's Discussion and Analysis (MD&A)](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operation.) Management discusses financial results for Q2 and H1 2025, covering sales performance, expenses, liquidity, and capital resources - The company operates through two main divisions: Energy and water conservation products (EWCP) and Biodegradable polymers (BCPA), which also includes nitrogen conservation products and R&D services[77](index=77&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk) - Key factors expected to affect future results include crude oil prices, oil and gas industry activity, drought conditions for agricultural sales, and potential tariffs on materials from China[86](index=86&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Product sales decreased in H1 2025, offset by new R&D services revenue, leading to increased gross profit percentage and mixed operating expenses Key Changes in Operations (Six Months Ended June 30, 2025 vs 2024) | Item | Change | Reason | | :--- | :--- | :--- | | EWCP & BCPA Product Sales | Decrease | Decreased customer orders | | R&D Services Sales | Increase | Successful project completed in 2025 | | Gross Profit % | Increase | Higher margin on R&D sales | | Consulting Expense | Decrease | Decreased reliance on consultants | | Professional Fees | Increase | Higher accounting and audit fees due to growth | | Interest Expense | Increase | Increased debt levels | - Customer concentration remains significant, with three customers accounting for **47%** of product sales in the first half of 2025, and a new R&D services customer (Company E) becoming a major revenue source[82](index=82&type=chunk)[83](index=83&type=chunk) [Capital Resources and Liquidity](index=26&type=section&id=Capital%20Resources%20and%20Liquidity) The company maintains strong liquidity with $21.9 million in working capital, primarily funding operations, capital expenditures, debt, and dividends Sources and Uses of Cash (Six Months Ended June 30) | Item (in USD) | 2025 | 2024 | | :--- | :--- | :--- | | Cash from operating activities | 4,738,637 | 5,309,855 | | Purchase of property and equipment | (1,331,042) | (1,663,697) | | Repayment of debt (net) | (2,576,556) | (1,039,438) | | Dividends paid | (1,274,753) | (1,255,053) | - Working capital was **$21,940,799** as of June 30, 2025, compared to **$22,714,190** at December 31, 2024[85](index=85&type=chunk) - The company does not anticipate any significant capital requirements for the twelve months ending June 30, 2026[87](index=87&type=chunk) [Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control - Based on an evaluation as of June 30, 2025, the Principal Executive and Financial Officer concluded that the company's disclosure controls and procedures are effective[89](index=89&type=chunk) - No changes occurred in the company's internal control over financial reporting during the three months ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, these controls[90](index=90&type=chunk) [PART II. OTHER INFORMATION AND EXHIBITS](index=28&type=section&id=PART%20II.%20OTHER%20INFORMATION%20AND%20EXHIBITS) Presents other required information and a list of exhibits filed as part of the Form 10-Q report [Other Information](index=28&type=section&id=Item%205.%20Other%20Information.) No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025 - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[92](index=92&type=chunk) [Exhibits](index=28&type=section&id=Item%206.%20Exhibits.) Lists certifications by executive and financial officers, along with Inline XBRL data files, as part of the Form 10-Q report List of Exhibits | Number | Description | | :--- | :--- | | 31.1 | Certification of Principal Executive Officer (Sarbanes-Oxley Act §302) | | 31.2 | Certification of Principal Financial Officer (Sarbanes-Oxley Act §302) | | 32.1 | Certification of Principal Executive and Financial Officer (Sarbanes-Oxley Act §906) | | 101 | Inline XBRL Documents | | 104 | Cover Page Interactive Data File |

Core Insights - Flexible Solutions International, Inc. has signed a significant food grade contract that is expected to generate annual revenue between $6.5 million and $13 million, with production scaling up immediately [2][3] - The contract includes a five-year term, optional expansion to over $25 million in annual revenue, and provisions for tariff and inflation protection [3] - The CEO stated that combined with a previous contract, the new food grade production could exceed $50 million per year by 2027, with potential to double overall revenue in the next 18 months [4] Company Overview - Flexible Solutions International, Inc. specializes in biodegradable polymers for various applications including oil extraction, detergents, water treatment, and crop nutrients [1][5] - The company has entered the food and nutrition supplement manufacturing market, having obtained FDA food grade approval for its Illinois plant in 2022 [5] - The company's subsidiary, NanoChem Solutions Inc., focuses on biodegradable, water-soluble products made from thermal polyaspartate (TPA) biopolymers [5]

Company Overview - Flexible Solutions International Inc. (FSI) shares increased by 13% to close at $5.4, following a notable trading volume that exceeded typical levels, contrasting with a 3.4% loss over the past four weeks [1] - The company reported second-quarter revenues of $11.212 million, reflecting a year-over-year increase of approximately 6.5%, primarily driven by a $2.5 million payment for food grade product development [2] Earnings Expectations - FSI is projected to report quarterly earnings of $0.06 per share, indicating a year-over-year decline of 40%, while revenues are expected to reach $11.61 million, representing a 10.3% increase from the previous year [3] - The consensus EPS estimate for FSI has remained unchanged over the last 30 days, suggesting that stock price movements may not sustain without trends in earnings estimate revisions [4] Industry Context - FSI operates within the Zacks Chemical - Specialty industry, which includes other companies such as Mativ Holdings (MATV), whose shares closed at $7.56, down 0.1% in the last trading session, but have returned 8.5% over the past month [5] - Mativ Holdings has a consensus EPS estimate of $0.18 for its upcoming report, reflecting a 47.1% decrease from the previous year, and also holds a Zacks Rank of 3 (Hold) [6]

Core Viewpoint - Flexible Solutions International, Inc. reported a revenue increase in Q2 2025, driven by a significant payment for food grade product development, despite facing challenges from historical customers due to economic conditions and inventory reductions [2][3]. Financial Performance - Q2 2025 revenue reached $11.212 million, up from $10.529 million in Q2 2024, marking an approximate 6.5% year-over-year increase [2]. - The CEO noted that a $2.5 million payment for food grade product development positively impacted Q2 revenue [3]. Business Strategy - The company is shifting focus towards food grade operations in response to volatility in its base business [3]. - The CEO expressed optimism for growth in the second half of 2025, contingent on economic conditions not deteriorating further [3]. Company Overview - Flexible Solutions International specializes in biodegradable polymers for various applications, including oil extraction, detergents, and water treatment [1][4]. - The company has expanded into the food and nutrition supplement manufacturing markets, having obtained FDA food grade approval for its Peru IL plant in 2022 [4].

Core Insights - Flexible Solutions International Inc. (FSI) specializes in biodegradable polymers for various applications including oil extraction, detergents, water treatment, and agriculture, and is expanding into food and nutritional supplement manufacturing [1] - FSI received a payment of $2.5 million on July 1, 2025, to support the development of a new food-grade product, with potential for additional payments in the coming quarters [2][8] - The company is optimistic about securing long-term production partnerships for its completed food-grade product [3] Financial Performance - FSI's shares have increased by 165.4% over the past year, significantly outperforming its industry, which saw a rise of only 4.2% [5] Market Position - FSI currently holds a Zacks Rank of 5 (Strong Sell), indicating a less favorable market position compared to better-ranked stocks in the basic materials sector [6] - Competitors such as Carpenter Technology Corporation, Centrus Energy Corp., and Avino Silver & Gold Mines Ltd. have higher Zacks Ranks, with notable share price increases over the past year [7][9]

Core Insights - Flexible Solutions International, Inc. (FSI) has received a payment of US$2.5 million for its assistance in developing a new food-grade product, indicating successful R&D efforts [1][2][3] - The company is expanding its presence in the food and nutrition supplement manufacturing markets, having obtained FDA food grade approval for its Peru IL plant in 2022 [3] Financial Highlights - The payment of US$2.5 million was received on July 1, 2025, with potential for additional payments in the future related to the product development assistance [2] - Future business opportunities may arise for FSI's NCS division in manufacturing the new food-grade product, although any announcements regarding this will occur at a later date [2] Company Overview - FSI specializes in biodegradable polymers for various applications, including oil extraction, detergents, water treatment, and crop nutrient availability [1] - The company's NanoChem Solutions Inc. subsidiary focuses on biodegradable, water-soluble products made from thermal polyaspartate (TPA) biopolymers, which have diverse applications [3] - FSI also manufactures energy and water conservation products for multiple markets, including drinking water, agriculture, and industrial sectors [3]

Core Viewpoint - Flexible Solutions International, Inc. (FSI) reported a loss of 2 cents per share for Q1 2025, a decline from earnings of 4 cents per share in the same quarter last year, missing the Zacks Consensus Estimate of 5 cents [1] - Revenues for the quarter were approximately $7.5 million, down about 19% year over year, also falling short of the Zacks Consensus Estimate of $10.2 million [1] Segment Highlights - Sales from FSI's Energy and Water Conservation products decreased roughly 3% year over year to around $0.04 million, impacted by lower customer orders [2] - Sales of Biodegradable Polymers fell approximately 19% year over year to around $7.4 million due to reduced customer orders [2] Financials - FSI ended the quarter with cash of approximately $9.6 million, an increase of around 26% from the prior quarter [3] - Long-term debt was roughly $6.5 million, down about 2% sequentially [3] Outlook - FSI indicated that customers who adjusted inventory in Q1 returned to normal order patterns in April [4] - The company noted new opportunities in various applications, including detergent, oil field extraction, and water treatment, which are expected to boost sales in the NanoChem division and the ENP subsidiary [4] - FSI expects its cash resources to be sufficient to meet cash flow requirements and future commitments [4] Stock Performance - Shares of Flexible Solutions have increased by 102.4% over the past year, contrasting with a 0.6% decline in the Zacks Chemicals Specialty industry [5]

Financial Data and Key Metrics Changes - Sales for Q1 2025 decreased by 19% compared to Q1 2024, amounting to $7.47 million versus $9.22 million [18] - Profits in Q1 2025 resulted in a loss of $278,000 or $0.02 per share, compared to a gain of $457,000 or $0.04 per share in Q1 2024 [19] - Operating cash flow for Q1 2025 was $480,000 or $0.04 per share, down from $1.38 million or $0.11 per share in 2024 [20] Business Line Data and Key Metrics Changes - The NanoChem division (NCS) accounts for approximately 70% of total revenue, focusing on biodegradable polymers and nitrogen conservation products [4] - The E and P division, which targets greenhouse turf and golf markets, experienced reduced sales compared to the previous year [19] - The food division's sales are projected to grow in 2025, contingent on the production timeline of a new food-grade product [13] Market Data and Key Metrics Changes - Agricultural products in the US are under pressure, with crop prices not increasing at the rate of inflation, leading to uncertainty due to tariff changes [12] - Current tariffs on imports from China range between 30% to 58.5%, affecting raw material costs [13] Company Strategy and Development Direction - The company is developing a new agriculture and polymer factory in Panama to enhance international sales and reduce tariff exposure [14][15] - The strategy includes optimizing food-grade production in the US while transitioning agriculture and polymer production to Panama [16] - The company aims to achieve significant revenue growth from the new food-grade contract, with a target of $30 million per year in revenue over the next four to six quarters [9] Management's Comments on Operating Environment and Future Outlook - Management expects growth to continue in 2025, particularly in the second half of the year [11] - The company anticipates that challenges from inventory reductions by large customers will resolve in Q2 [19] - Management expressed confidence in the ability to execute plans with existing capital and no need for additional financing [21] Other Important Information - The company is investing approximately $4 million in capital expenditures for equipment and plant improvements related to the new food-grade product [8] - Long-term debt is being paid down according to loan terms, with significant cash flow expected to be freed up by the end of 2025 [21] Q&A Session Summary Question: Financial responsibility for the clean room for the new contract - The company is solely responsible for the clean room costs, while the client contributes to equipment expenses [24] Question: Expectations on margins for the new food business - Margins are expected to be stable and tied to inflation, with a set pricing equation in place [25] Question: Impact of high tariff products on margins - The company does not expect significant margin hits from high tariff products [31] Question: Future capital or operating expenses after expansions - Continuous cost increases are anticipated, particularly for accounting and software upgrades due to new complex products [33] Question: Dividend policy considerations - The company may consider a more formalized dividend policy but emphasizes flexibility [36] Question: Expectations for Q2 results - Management expects Q2 results to be better than Q1 [39] Question: Risks to making the new contract work - Risks include equipment, clean room, and timing, but the probability of failure is considered low [40] Question: Future food deals in the pipeline - Potential deals exist, but specifics cannot be disclosed due to contractual constraints [50] Question: Impact of declining oil prices on business - Lower oil prices could reduce raw material and shipping costs, potentially increasing margins [52] Question: Competitors in TPA domain - The company is a leader in food-grade TPA, with no direct competitors in the food sector [58]

Financial Data and Key Metrics Changes - Sales for Q1 2025 decreased by 19% compared to Q1 2024, amounting to $7.47 million versus $9.22 million [18] - Q1 2025 profits resulted in a loss of $278,000 or $0.02 per share, compared to a gain of $457,000 or $0.04 per share in Q1 2024 [19] - Operating cash flow for Q1 2025 was $480,000 or $0.04 per share, down from $1.38 million or $0.11 per share in 2024 [20] Business Line Data and Key Metrics Changes - The NanoChem division (NCS) accounts for approximately 70% of total revenue, focusing on biodegradable polymers and nitrogen conservation products [4] - The E and P division, which targets greenhouse turf and golf markets, is expected to see growth in the second half of 2025 [11] - The food division's sales are projected to grow in 2025, contingent on the production timeline of a new food-grade product [13] Market Data and Key Metrics Changes - Agricultural products in the US are under pressure, with crop prices not increasing at the rate of inflation, leading to uncertainty due to tariff changes [12] - Current tariffs on imports of raw materials from China range between 30% to 58.5%, impacting cost structures [13] Company Strategy and Development Direction - The company is developing a duplicate agriculture and polymer factory in Panama to reduce exposure to US tariffs and improve shipping efficiency [14][15] - The strategy includes moving most agriculture and polymer production to Panama, allowing the Illinois plant to focus on food-grade production [16] - The company aims to achieve significant revenue from the new food-grade contract, with a target of $30 million per year in the next four to six quarters [9] Management's Comments on Operating Environment and Future Outlook - Management expects Q2 2025 results to improve compared to Q1 2025, with anticipated resolution of inventory reductions by large customers [19][35] - The company is cautious about the impact of rising costs and low crop prices on sales, particularly due to political actions and tariffs [12] - Management believes that lower oil prices could positively affect raw material and shipping costs, potentially increasing margins [49] Other Important Information - The company has sufficient cash flow and working capital to execute its plans without the need for debt or equity financing [21][22] - Long-term debt is being paid down, with significant cash flow expected to be freed up in the coming years [21] Q&A Session Summary Question: Financial responsibility for clean room construction - The company is solely responsible for the clean room capital expenditures, while the client contributes to equipment costs [24] Question: Expectations on margins for new food business - Margins are expected to be stable and tied to inflation, with a set pricing equation agreed upon with the client [25][26] Question: Impact of high tariff products on margins - The company did not purchase high tariff raw materials, mitigating potential margin hits [29] Question: Expectations for sustained operating expenses post-expansion - Continuous cost increases are anticipated, particularly for accounting and software upgrades due to new complex products [31] Question: Future dividend policy - A regular dividend is possible but would be small to ensure sustainability during uncertain events [33] Question: Anticipated improvements in Q2 results - Management expects Q2 results to be better than Q1 [35] Question: Risks associated with new contract execution - Risks include equipment and clean room timing, but management is confident in execution capabilities [36] Question: Rationale for shifting manufacturing to Panama - The decision was influenced by previous tariff impacts and the need for a competitive international production site [39][40] Question: Potential food deals in the pipeline - The company has potential deals but cannot disclose details due to contractual constraints [47] Question: Relationship between oil prices and business - Lower oil prices could lead to reduced raw material and shipping costs, potentially benefiting margins [49]

分组1 - Flexible Solutions International Inc. (FSI) reported a quarterly loss of $0.02 per share, missing the Zacks Consensus Estimate of $0.05, and compared to earnings of $0.04 per share a year ago, representing an earnings surprise of -140% [1] - The company posted revenues of $7.47 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 26.73%, and down from year-ago revenues of $9.23 million [2] - Over the last four quarters, FSI has surpassed consensus EPS estimates just once and topped consensus revenue estimates only once [2] 分组2 - The stock has gained approximately 19.9% since the beginning of the year, outperforming the S&P 500's gain of 0.2% [3] - The current consensus EPS estimate for the coming quarter is $0.07 on revenues of $11.61 million, and for the current fiscal year, it is $0.30 on revenues of $48.78 million [7] - The Zacks Industry Rank for Chemical - Specialty is currently in the bottom 42% of over 250 Zacks industries, indicating potential underperformance compared to the top 50% of ranked industries [8]