Flexible Solutions International (FSI) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Presents the unaudited condensed interim consolidated financial statements and management's discussion and analysis for the period ended June 30, 2025 Financial Statements 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 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) 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] Consolidated Statements of Operations (Six Months) 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 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 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] - The company paid dividends of $1,274,753 during the first six months of 2025[18] Notes to Financial Statements 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] - Revenue from research and development services is recognized over time as contractual performance obligations are satisfied[29] - 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] Management's Discussion and Analysis (MD&A) 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][78][79] - 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] Results of Operations 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][83] Capital Resources and Liquidity 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] - The company does not anticipate any significant capital requirements for the twelve months ending June 30, 2026[87] Controls and Procedures 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] - 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] PART II. OTHER INFORMATION AND EXHIBITS Presents other required information and a list of exhibits filed as part of the Form 10-Q report Other Information 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] Exhibits 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 |