Flexible Solutions International Inc (FSI)

A. Company Overview

Flexible Solutions International Inc. was originally incorporated as Flexible Solutions Ltd. in British Columbia on January 26, 1991. Following a merger with its Nevada-based counterpart on May 12, 1998, it took on the name of Flexible Solutions International Inc. The company operates mainly in the development and manufacturing of environmentally friendly polymers, particularly Thermal Polyaspartates (TPAs), which are designed to address various industrial and agricultural challenges related to scale and corrosion.

In June 2004, the company expanded its operations substantially by acquiring 52 U.S. and 139 international patents related to water-soluble chemicals from Donlar Corporation. This acquisition included a manufacturing facility of 56,780 square feet located near Chicago, Illinois. The patents enhance products used in multiple sectors such as petroleum, chemicals, utilities, and mining. The company's assets are primarily managed through its wholly owned subsidiary, NanoChem Solutions Inc., which has become a significant revenue source.

B. Subsidiaries and Investments

The company has established a comprehensive structure of subsidiaries to enhance its market reach and operational efficiency. In October 2018, it acquired 65% of ENP Investments, LLC, focused on the manufacturing and distribution of products in the golf, turf, and ornamental agriculture sectors. Subsequently, in January 2019, a 50% stake in a Florida-based LLC involved in international fertilizer sales was purchased, classified as an equity-accounted investment.

In 2019, Flexible Solutions shifted its corporate domicile from Nevada to Alberta, Canada, aligning its operations more closely with its areas of business concentration. The evolution of subsidiaries continued with the formation of ENP Mendota, LLC in January 2020, which owns a building now occupied by the company.

Most notably, ENP Peru Investments, LLC was established in June 2022, with an ownership structure that evolved into complete ownership by NanoChem in 2023, allowing for direct control over the operations and associated assets.

The creation of 317 Mendota LLC in June 2023 marked another expansion in real estate investment, allowing the company to occupy part of the purchased building while planning to lease out the remaining space.

C. Product Portfolio

Flexible Solutions has developed a diverse array of products, primarily focusing on TPAs and water conservation solutions.

Thermal Polyaspartates (TPAs)

TPAs serve various industries and agricultural applications aimed at scale and corrosion inhibition:

• Oilfields: TPAs replace conventional chemicals, such as phosphonates, especially in environments where biodegradability is a regulatory requirement. Their custom formulation allows for tailored applications based on specific water conditions.
• Agricultural Industry: TPAs enhance fertilizer efficiency by reducing crystallization, thereby maximizing nutrient availability for crops. Varied branded products, such as EX-10™ and MAGNET™, target significant crops like corn, wheat, and soybeans.
• Irrigation Use: TPAs help prevent scaling in irrigation systems, offering an environmentally friendly alternative to acid-based solutions. Their application within fertigation systems promotes both yield enhancement and maintenance of equipment.
• Cleaning Products: In the cleaning sector, TPAs act as biodegradable agents that prevent dirt from re-depositing onto cleaned surfaces, serving as an effective substitute for traditional polyacrylates.

Additionally, the company markets nitrogen conservation products like SUN 27™ and N Savr 30™ to enhance nitrogen fertilizer efficiency, addressing the challenge of nutrient loss in agricultural practices.

Energy and Water Conservation

• HEATSAVR®: A chemical product introduced for swimming pools and spas that minimizes water evaporation, allowing energy savings and enhanced maintenance protocols. HEATSAVR® represents a more practical alternative to traditional pool covers.
• WATERSAVR®: Adapted from HEATSAVR technology, WATERSAVR® addresses water conservation needs in reservoirs and agricultural applications. Its flexible usage models allow for ease of deployment, further promoting water efficiency across various sectors.

D. Manufacturing and Supply Chain

Manufacturing occurs within the centralized facility in Peru, Illinois, which specifically produces TPAs. The company sources raw materials globally, with availability stemming primarily from crude oil derivatives. Despite price volatility concerns linked to oil markets, the company has not faced significant supply shortages.

Both HEATSAVR® products and WATERSAVR® products are manufactured through established relationships with third-party producers, allowing for flexibility and scalability. The company has maintained consistent access to the necessary components without lengthy contracts.

E. Regulatory Environment

The company ensures compliance with various governmental regulations across its product range. All TPAs utilized in industrial and agricultural markets have secured government approvals, and similar compliance is in place for nitrogen conservation products. Regulatory frameworks influence packaging, labeling, and safety standards for products such as HEATSAVR® and WATERSAVR®, but no major obstacles to marketing operations are anticipated.

F. Intellectual Property and Research

Flexible Solutions International Inc. heavily invests in safeguarding its proprietary technology through patents, copyrights, trademarks, and trade secrets. The success hinges on maintaining a robust intellectual property portfolio, with ongoing efforts to apply for additional patents.

Research and development efforts have been a priority, with expenditures focused on expanding the capabilities of conservation products and enhancing existing solutions. The company allocated funds towards R&D in both 2022 and 2023, underpinning its commitment to innovation.

G. Workforce

As of the end of 2023, Flexible Solutions employed 46 individuals across various roles, including manufacturing personnel, sales, and customer support. The workforce currently operates without union representation, maintaining a stable employment structure that has not experienced disruptions.