**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**









**FORM
      10-QSB**





(Mark
                one)ý
            Quarterly
                Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934**For
                the quarterly period ended September 30, 2007.**o
            Transition
                Report Under Section 13 or 15(d) of the Securities Exchange Act of
                1934For
                the transition period from _________________ to
                _________________.Commission
                File Number 000-29649





**FLEXIBLE
                SOLUTIONS INTERNATIONAL, INC.**(Name
                of Small Business Issuer as Specified in Its
                Charter)





**Nevada**
            
            **91-1922863**(State
                of Incorporation)
            
            (IRS
                Employer Identification No.)**615
                Discovery Street**
              **Victoria,
                British Columbia, CANADA**
            
            **V8T
                5G4**(Address
                of Principal Executive Offices)
            
            (Zip
                Code)**(250)
                477-9969**(Issuer’s
                Telephone Number, Including Area
                Code)







Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days.   Yes **ý**   No
      **o**




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).     Yes **o**   No
      **ý**




**APPLICABLE
      ONLY TO CORPORATE ISSUERS**




State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date:  The Company had 14,157,567 shares
      of Common Stock, par value $0.001 per share, outstanding as of November 12,
      2007.




Transitional
      Small Business Disclosure Format (check one):     Yes
**o**   No
      **ý**




**Index**


**FORM
      10-QSB**






Index




**PART
                I.**
            **FINANCIAL
                INFORMATION**Item
                1.
            Financial
                Statements.
            1(a)
            Unaudited
                Consolidated Balance Sheets at September 30,
                2007 and December 31, 2006.
            1(b)
            Unaudited
                Consolidated Statements of Operations for the
                Nine Months Ended
              September
                30, 2007 and 2006.
            2(c)
            Unaudited
                Consolidated Statements of Cash Flows for the
                Nine Months Ended
              September
                30, 2007 and 2006.
            3(d)
            Notes
                to Unaudited Consolidated Financial Statements for the
                Period Ended
              September
                30, 2007.
            4Item
                2.
            Management’s
                Discussion and Analysis or Plan of
                Operation.
            16Item
                3.
            Controls
                and Procedures.
            17**PART
                II.**
            **OTHER
                INFORMATION**Item
                6.
            Exhibits.
            18**SIGNATURES**
            
            19






i
 **Index**


**CAUTIONARY
      NOTE REGARDING FORWARD-LOOKING STATEMENTS**




This
      document contains “forward-looking statements” within the meaning of the Private
      Securities Litigation Reform Act of 1995.  All statements other than
      statements of historical fact are “forward-looking statements” for the purposes
      of the federal and state securities laws, including, but not limited to any
      projections of earnings, revenue or other financials items; any statements
      of
      the plans, strategies and objectives of management for future operations; any
      statements concerning proposed new services or developments; any statements
      regarding future economic conditions or performance; any statements regarding
      future economic conditions or performance; any statements of belief; and any
      statements of assumptions underlying any of the foregoing.




Forward-looking
      statements may include the words “may,” “could,” “will,” “estimate,” “intend,”
“continue,” “believe,” “expect” or “anticipate” or other similar
      words.  These forward-looking statements present our estimates and
      assumptions only as of the date of this report.  Except for our
      ongoing obligation to disclose material information as required by the federal
      securities laws, we do not intend, and undertake no obligation, to update any
      forward-looking statement.




Although
      we believe that the expectations reflected in any of our forward-looking
      statements are reasonable, actual results could differ materially from those
      projected or assumed in any of our forward-looking statements.  Our
      future financial condition and results of operations, as well as any
      forward-looking statements, are subject to change and inherent risks and
      uncertainties.  The factors impacting these risks and uncertainties
      include but are not limited to:


- Increased
          competitive pressures from existing competitors and new
          entrants;

- Increases
          in interest rate or our cost of borrowing or a default under any material
          debt
          agreement;

- Deterioration
          in general or regional economic conditions;

- Adverse
          state or federal legislation or regulation that increases the costs of
          compliance, or adverse findings by a regulator with respect to existing
          operations;

- Loss
          of
          customers or sales weakness;

- Inability
          to achieve future sales levels or other operating
          results;

- The
          unavailability of funds for capital expenditures; and

- Operational
          inefficiencies in distribution or other systems.

For
      a
      detailed description of these and other factors that could cause actual results
      to differ materially from those expressed in any forward-looking statement,
      please see “Risk Factors” in our Annual Report on Form 10-KSB for the year ended
      December 31, 2006.




ii
 **Index**




**PART
                I**
            **FINANCIAL
                INFORMATION**




**Item
                1.**
            **Financial
                Statements.**




**FLEXIBLE
      SOLUTIONS INTERNATIONAL, INC.**


**CONSOLIDATED
      BALANCE SHEETS**


**At
      September 30, 2007**


**(U.S.
      Dollars)**




**September
                30,**
              **2007**
              **(Unaudited)**
            
            
            **December
                31,**
              **2006****Assets****Current**Cash
                and cash equivalents
            
            $
            4,209,185
            
            
            $
            450,759Accounts
                receivable
            
            
            909,861
            
            
            
            1,319,575Inventory
            
            
            2,289,619
            
            
            
            1,904,315Prepaid
                expenses
            
            
            135,777
            
            
            
            124,3607,544,442
            
            
            
            3,799,009**Property,
                equipment and leaseholds**
            
            
            3,552,938
            
            
            
            4,100,553**Patents**
            
            
            222,944
            
            
            
            169,758**Investment**
            
            
            369,000
            
            
            
            369,000**Long
                term deposits**
            
            
            47,838
            
            
            
            47,220$
            11,737,162
            
            
            $
            8,485,540**Liabilities****Current**Accounts
                payable and accrued liabilities
            
            $
            239,571
            
            
            $
            423,030Deferred
                revenue
            
            
            9,734
            
            
            
            20,559249,305
            
            
            
            443,589**Stockholders’
                Equity****Capital
                stock**Authorized50,000,000
                Common shares with a par value of $0.001 each1,000,000
                Preferred shares with a par value of $0.01 eachIssued
                and outstanding14,157,567
                (2006: 13,058,427) common shares
            
            
            14,158
            
            
            
            13,058**Capital
                in excess of par value**
            
            
            15,953,775
            
            
            
            12,370,418**Other
                comprehensive income**
            
            
            393,107
            
            
            
            131,002**Deficit**
            
            
            (4,873,183
            )
            
            
            (4,472,527
            )**Total
                Stockholders’ Equity**
            
            
            11,487,857
            
            
            
            8,041,951**Total
                Liabilities and Stockholders’ Equity**
            
            $
            11,737,162
            
            
            $
            8,485,540**Commitments,
                Contingencies and Subsequent events (Notes 12, 13 &
                14)**






**1**
 **Index**


**FLEXIBLE
      SOLUTIONS INTERNATIONAL, INC.**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**For
      the Nine Months Ended September 30, 2007 and 2006**


**(U.S.
      Dollars -- Unaudited)**




**Nine
                Months Ended September 30,****2007**
            
            
            **2006****Sales**
            
            $
            5,730,432
            
            
            $
            6,672,791**Cost
                of sales**
            
            
            3,637,590
            
            
            
            4,425,543**Gross
                profit**
            
            
            2,092,842
            
            
            
            2,427,248**Operating
                expenses**Wages
            
            
            800,436
            
            
            
            851,744Administrative
                salaries and benefits
            
            
            376,080
            
            
            
            475,982Advertising
                and promotion
            
            
            41,771
            
            
            
            35,834Investor
                relations and transfer agent fee
            
            
            252,083
            
            
            
            146,009Office
                and miscellaneous
            
            
            135,375
            
            
            
            127,706Insurance
            
            
            167,979
            
            
            
            161,050Interest
                expense
            
            
            2,874
            
            
            
            1,974Rent
            
            
            170,218
            
            
            
            176,978Consulting
            
            
            188,490
            
            
            
            290,859Professional
                fees
            
            
            131,509
            
            
            
            212,438Travel
            
            
            98,063
            
            
            
            78,217Telecommunications
            
            
            27,280
            
            
            
            24,442Shipping
            
            
            31,301
            
            
            
            33,835Research
            
            
            78,785
            
            
            
            102,059Commissions
            
            
            88,533
            
            
            
            130,196Bad
                debt expense (recovery)
            
            
            2,061
            
            
            
            190Currency
                exchange
            
            
            69,549
            
            
            
            5,277Utilities
            
            
            14,897
            
            
            
            13,2582,677,284
            
            
            
            2,868,048**Income
                (loss) before other items and income tax**
            
            
            (584,442
            )
            
            
            (440,800
            )**Registration
                rights penalty**
            
            
            -
            
            
            
            (326,710
            )**Other
                expenses**
            
            
            (15,051
            )
            
            
            -**Other
                income**
            
            
            195,442
            
            
            
            -**Interest
                income**
            
            
            3,396
            
            
            
            2,684**Income
                (loss) before income tax**
            
            
            (400,656
            )
            
            
            (764,826
            )**Income
                tax (recovery)**
            
            
            -
            
            
            
            (127,079
            )**Net
                income (loss)**
            
            
            (400,656
            )
            
            
            (637,747
            )**Net
                income (loss) per share (basic and diluted)**
            
            $
            (0.03
            )
            
            $
            (0.05
            )**Weighted
                average number of  common shares**
            
            
            13,656,633
            
            
            
            12,984,028





**2**
 **Index**


**FLEXIBLE
      SOLUTIONS INTERNATIONAL,
      INC.**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**For
      the Nine Months Ended September 30, 2007 and 2006**


**(U.S.
      Dollars -- Unaudited)**




**Nine
                Months Ended September 30,****2007**
            
            
            **2006****Operating
                activities**Net
                income (loss)
            
            $
            (400,655
            )
            
            $
            (637,747
            )Stock
                compensation expense
            
            
            419,975
            
            
            
            641,358Depreciation
            
            
            386,214
            
            
            
            447,894405,534
            
            
            
            451,505Changes
                in non-cash working capital items:(Increase)
                Decrease in accounts receivable
            
            
            369,214
            
            
            
            (484,950
            )(Increase)
                Decrease in inventory
            
            
            (385,304
            )
            
            
            356,426(Increase)
                Decrease in prepaid expenses
            
            
            (11,417
            )
            
            
            (32,313
            )Increase
                (Decrease) in accounts payable
            
            
            (142,958
            )
            
            
            (407,699
            )Increase
                (Decrease) in deferred revenue
            
            
            (10,825
            )
            
            
            -Increase
                (Decrease) in income taxes
            
            
            -
            
            
            
            28,918**Cash
                provided by (used in) operating activities**
            
            
            224,244
            
            
            
            (88,113
            )**Investing
                activities**Long
                term deposits
            
            
            (618
            )
            
            
            -Investments
            
            
            -
            
            
            
            -Loan
                receivable
            
            
            -
            
            
            
            (1,157
            )Development
                of patents
            
            
            (53,186
            )
            
            
            (10,704
            )Acquisition
                of property and equipment
            
            
            161,401
            
            
            
            (41,193
            )**Cash
                provided by (used in) investing activities**
            
            
            107,597
            
            
            
            (53,054
            )**Financing
                activities**Proceeds
                from issuance of common stock
            
            
            3,164,481
            
            
            
            (24,809
            )**Cash
                provided by financing activities**
            
            
            3,164,481
            
            
            
            (24,809
            )Effect
                of exchange rate changes on cash
            
            
            262,104
            
            
            
            58,109**Inflow
                (outflow) of cash**
            
            
            3,758,426
            
            
            
            (107,867
            )Cash
                and cash equivalents, beginning
            
            
            450,759
            
            
            
            526,292**Cash
                and cash equivalents, ending**
            
            $
            4,209,185
            
            
            $
            418,425**Supplemental
                disclosure of cash flow information:**Registration
                rights penalty
            
            
            -
            
            
            
            (326,710
            )Interest
                paid
            
            $
            2,874
            
            
            $
            2,684




**3**
 **Index**


**FLEXIBLE
      SOLUTIONS INTERNATIONAL, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**For
      the Period Ended September 30, 2007**


**(U.S.
      Dollars)**




**1.           Basis
      of Presentation.**




These
      unaudited consolidated financial statements of Flexible Solutions International,
      Inc (the “Company”) have been prepared in accordance with accounting principles
      generally accepted in the United States for interim financial
      information.  These financial statements are condensed and do not
      include all disclosures required for annual financial statements.  The
      organization and business of the Company, accounting policies followed by the
      Company and other information are contained in the notes to the Company’s
      audited consolidated financial statements filed as part of the Company’s
      December 31, 2006 Annual Report on Form 10-KSB.  This quarterly report
      should be read in conjunction with such annual report.




In
      the
      opinion of the Company’s management, these consolidated financial statements
      reflect all adjustments necessary to present fairly the Company’s consolidated
      financial position at September 30, 2007, and the consolidated results of
      operations and the consolidated statements of cash flows for the nine months
      ended September 30, 2007 and 2006.  The results of operations for the
      nine months ended September 30, 2007 are not necessarily indicative of the
      results to be expected for the entire fiscal year.




These
      consolidated financial statements include the accounts of Flexible Solutions
      International, Inc. (the “Company”), and its wholly-owned subsidiaries Flexible
      Solutions, Ltd. (“Flexible Ltd.”), NanoChem Solutions Inc., WaterSavr Global
      Solutions Inc., NanoDetect Technologies Inc. and Seahorse Systems
      Inc.  All inter-company balances and transactions have been
      eliminated.  The parent company was incorporated May 12, 1998 in the
      State of Nevada and had no operations until June 30, 1998 as described further
      below.




Flexible
      Solutions International, Inc. and its subsidiaries develop, manufactures and
      markets specialty chemicals which slow down the evaporation of
      water.  The companies primary product, HEAT$AVR®, is marketed for use
      in swimming pools and spas where its use, by slowing the evaporation of water,
      allows the water to retain a higher temperature for a longer period of time
      and
      thereby reduces the energy required to maintain the desired temperature of
      the
      water in the pool.  Another product, WATER$AVR®, is marketed for water
      conservation in irrigation canals, aquaculture, and reservoirs where its use
      slows down water loss due to evaporation.  In addition to the water
      conservation products, the Company also manufacturers and markets water-soluble
      chemicals utilizing thermal polyaspartate biopolymers (hereinafter referred
      to
      as “TPAs”), which are beta-proteins manufactured from the common biological
      amino acid, L-aspartic.  TPAs can be formulated to prevent corrosion
      and scaling in water piping within the petroleum, chemical, utility and mining
      industries.  TPAs are also used as proteins to enhance fertilizers in
      improving crop yields and as additives for household laundry detergents,
      consumer care products and pesticides.




On
      May 2,
      2002, the Company established WaterSavr Global Solutions Inc. through the
      issuance of 100 shares of common stock from WaterSavr Global Solutions Inc.
      to
      the Company.




On
      February 7, 2005, the Company established Nano Detect Technologies Inc. through
      the issuance of 1,000 shares of common stock from Nano Detect Technologies
      Inc.
      to the Company.




On
      June
      21, 2005, the Company established Seahorse Systems Inc. through the issuance
      of
      1,000 shares of common stock from Seahorse Systems Inc. to the
      Company.




**4**
 **Index**


Pursuant
      to a purchase agreement dated May 26, 2004, the Company acquired the assets
      of
      Donlar Corporation (“Donlar”) on June 9,2004 and
      created a new company, NanoChem Solutions Inc. as the operating entity for
      such
      assets.  The purchase price of the transaction was $6,150,000 with
      consideration being a combination of cash and debt.  Under the
      purchase agreement and as part of the consideration, the Company issued a
      promissory note bearing interest at 4% to Donlar’s largest creditor to satisfy
      $3,150,000 of the purchase price.  This note was paid June 2, 2005 and
      upon payment, all former Donlar assets that were pledged as security were
      released from their mortgage.  The remainder of the consideration
      given was cash.




The
      following table summarizes the estimated fair value of the assets acquired
      at
      the date of acquisition (at June 9, 2004):




Current
                assets
            
            $
            1,126,805Property
                and equipment
            
            
            5,023,195$
            6,150,000Acquisition
                costs assigned to property and equipment
            
            
            314,724Total
                assets acquired
            
            $
            6,464,724




There
      was
      no goodwill or other intangible assets accept certain patents recorded at nil
      fair value, acquired as a result of the acquisition.  The
      acquisition costs assigned to property and equipment include all direct costs
      incurred by the Company to purchase the Donlar assets.  These costs
      include due diligence fees paid to outside parties investigating and identifying
      the assets, legal costs directly attributable to the purchase of the assets,
      plus applicable transfer taxes.  These costs have been assigned to the
      individual assets based on their proportional fair values and will be amortized
      based on the rates associated with the related assets.






**2.           Significant
      Accounting Policies.**




These
      consolidated financial statements have been prepared in accordance with
      accounting principles generally accepted in the United States applicable to
      a
      going concern and reflect the policies outlined below.




(a)           *Cash
      and Cash Equivalents*.




The
      Company considers all highly liquid investments purchased with an original
      or
      remaining maturity of less than three months at the date of purchase to be
      cash
      equivalents.  Cash and cash equivalents are maintained with several
      financial institutions.




(b)           *Inventories
      and Cost of Sales*




The
      Company has three major classes of inventory:  finished goods, works
      in progress, raw materials and supplies.  In all classes, inventory is
      valued at the lower of cost and market.  Cost is determined on a
      first-in, first-out basis.  Cost of sales includes all expenditures
      incurred in bringing the goods to the point of sale.  Inventorial
      costs and costs of sales include direct costs of the raw material, inbound
      freight charges, warehousing costs, handling costs (receiving and purchasing)
      and utilities and overhead expenses related to the Company’s manufacturing and
      processing facilities.




In
      2004,
      the FASB issued SFAS No. 151, “Inventory Costs”, to clarify the accounting for
      abnormal amounts of idle facility expense, freight, handling costs and wasted
      material.  This standard requires that such items be recognized as
      current-period charges.  The standard also establishes the concept of
“normal capacity” and requires the allocation of fixed production overhead to
      inventory based on the normal capacity of the production
      facilities.  Any unallocated overhead must be recognized as an expense
      in the period incurred.  This standard is effective for inventory
      costs incurred starting January 1, 2006.  The adoption of this
      standard did not have a material impact on its financial position, results
      of
      operations or cash flows for 2006 or 2007.




**5**
 **Index**


(c)           *Allowance
      for Doubtful Accounts*




The
      Company provides an allowance for doubtful accounts when management estimates
      collectibility to uncertain.  Accounts receivable are continually
      reviewed to determine which, if any, accounts are doubtful of
      collection.  In making the determination of the appropriate allowance
      amount, the Company considers current economic and industry conditions,
      relationships with each significant customer, overall customer credit-worthiness
      and historical experience.




(d)           *Property,
      Equipment and Leaseholds*.




The
      following assets are recorded at cost and depreciated using the following
      methods using the following annual rates:




Computer
                hardware
            
            30%
                Declining balanceFurniture
                and fixtures
            
            20%
                Declining balanceManufacturing
                equipment
            
            20%
                Declining balanceOffice
                equipment
            
            20%
                Declining balanceBuilding
            
            10%
                Declining balanceLeasehold
                improvements
            
            Straight-line
                over lease term





Depreciation
      is recorded at half for the year the assets are first
      purchase.  Property and equipment are written down to net realizable
      value when management determines there has been a change in circumstances which
      indicates its carrying amount may not be recoverable.  No write-downs
      have been necessary to date.




(e)           *Impairment
      of Long-Lived Assets*.




In
      accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of
      Long-Lived Assets”, the Company reviews long-lived assets, including, but not
      limited to, property and equipment, patents and other assets, for impairment
      annually or whenever events or changes in circumstances indicate the carrying
      amounts of assets may not be recoverable.  The carrying value of
      long-lived assets is assessed for impairment by evaluating operating performance
      and future undiscounted cash flows of the underlying assets.  If the
      sum of the expected future cash flows of an asset, is less than its carrying
      value, an impairment measurement is indicated.  Impairment charges are
      recorded to the extent that an asset’s carrying value exceeds its fair
      value.  Accordingly, actual results could vary significantly from such
      estimates.  There were no impairment charges during the periods
      presented.




(f)           *Investments.*




Investment
      in corporations subject to significant influence and investments in partnerships
      are recorded using the equity method of accounting.  On this basis, the
      Company’s share of income and losses of the corporations and partnerships is
      included in earnings and the Company’s investment therein adjusted by a like
      amount.  Dividends received from these entities reduce the investment
      accounts.  Portfolio investments not subject to significant influence are
      recorded using the cost method.




The
      fair
      value of a cost method investment is not estimated if there are no identified
      events or changes in circumstances that may have a significant adverse effect
      on
      the fair value of the investment.





The
      Company currently does not have any investments that require use of the equity
      method of accounting.





**6**
 **Index**


(g)           *Foreign
      Currency*.




The
      functional currency of one of the subsidiaries is the Canadian
      Dollar.  The translation of the Canadian Dollar to the reporting
      currency of the U.S. Dollar is performed for assets and liabilities using
      exchange rates in effect at the balance sheet date.  Revenue and
      expense transactions are translated using average exchange rates prevailing
      during the year.  Translation adjustments arising on conversion of the
      financial statements from the Company’s functional currency, Canadian Dollars,
      into the reporting currency, U.S. Dollars, are excluded from the determination
      of loss and are disclosed as other comprehensive income (loss) in stockholders’
equity.




Foreign
      exchange gains and losses relating to transactions not denominated in the
      applicable local currency are included in the operating loss if realized during
      the year and in comprehensive income if they remain unrealized at the end of
      the
      year.




(h)           *Revenue
      Recognition*.




Revenue
      from product sales is recognized at the time the product is shipped since title
      and risk of loss is transferred to the purchaser upon delivery to the
      carrier.  Shipments are made F.O.B. shipping point.  The
      Company recognizes revenue when there is persuasive evidence of an arrangement,
      delivery has occurred, the fee is fixed or determinable, collectibility is
      reasonably assured and there are no significant remaining performance
      obligations.  When significant post-delivery obligations exist,
      revenue is deferred until such obligations are fulfilled.  To date
      there have been no such significant post-delivery obligations.




Provisions
      are made at the time the related revenue is recognized for estimated product
      returns.  Since the Company’s inception, product returns have been
      insignificant; therefore no provision has been established for estimated product
      returns.




(i)           *Stock
      Issued in Exchange for Services*.




The
      valuation of the Company’s common stock issued in exchange for services is
      valued at an estimated fair market value as determined by officers and directors
      of the Company based upon trading prices of the Company’s common stock on the
      dates of the stock transactions.  The corresponding expense of the
      services rendered is recognized over the period that the services are
      performed.




(j)           *Stock-based
      Compensation*.




In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued revised
      SFAS No. 123(R), *Share-Based Payment*, which replaces SFAS No. 123,
“*Accounting for Stock-Based Compensation”*, which superseded APB Opinion
      No. 25, “*Accounting for Stock Issued to Employees”*.  FAS No.
      123(R) requires the cost of all share-based payment transactions to be
      recognized in an entity’s financial statements, establishes fair value as the
      measurement objective and requires entities to apply a fair-value-based
      measurement method in accounting for share-based payment
      transactions.  SFAS No. 123(R) applies to all awards granted,
      modified, repurchased or cancelled after July 1, 2005, and unvested portions
      of
      previously issued and outstanding awards.  The Company adopted this
      statement for its first quarter starting January 1, 2006 and will continue
      to
      evaluate the impact of adopting this statement.




Prior
      to
      2006, the Company adopted the disclosure provisions of SFAS No. 123 for stock
      options granted to employees and directors.  The Company disclosed on
      a supplemental basis, the pro-forma effect of accounting for stock options
      awarded to employees and directors, as if the fair value based method had been
      applied, using the Black-Scholes option-pricing model.  The Company
      has always recognized the fair value of options granted to
      consultants.




**7**
 **Index**


(k)           *Comprehensive
      Income*.




Other
      comprehensive income refers to revenues, expenses, gains and losses that under
      generally accepted accounting principles are included in comprehensive income,
      but are excluded from net income as these amounts are recorded directly as
      an
      adjustment to stockholders’ equity.  The Company’s other comprehensive
      income is primarily comprised of unrealized foreign exchange gains and
      losses.




(l)           *Income
      (Loss) Per Share*.




Income
      (loss) per share is calculated by dividing net income (loss) by the weighted
      average number of shares outstanding.  Diluted loss per share is
      computed by giving effect to all potential dilutive options that were
      outstanding during the year. ****For the periods ended June
      30, 2007, 2006 and 2005, all outstanding options were
      anti-dilutive.




(m)           *Use
      of Estimates*.




The
      preparation of consolidated financial statements in conformity with accounting
      principles generally accepted in the United States requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities at the date of the consolidated financial statements and the
      reported amounts of revenues and expenses during the reporting
      period.  Actual results could differ from those estimates and would
      impact the results of operations and cash flows.




(n)           *Financial
      Instruments*.




The
      fair market value of the
      Company’s financial instruments comprising cash, short-term investment, accounts
      receivable, income tax recoverable, loan receivable, accounts payable and
      accrued liabilities and amounts due to shareholders were estimated to
      approximate their carrying values due to immediate or short-term maturity of
      these financial instruments.  The Company maintains cash balances at
      financial institutions which at times, exceed federally insured amounts. The
      Company has not experienced any material losses in such accounts.





The
      Company is exposed to foreign
      exchange and interest rate risk to the extent that market value rate
      fluctuations materially differ from financial assets and liabilities, subject
      to
      fixed long-term rates.





The
      Company is exposed to
      credit-related losses in the event of non-performance by counterparties to
      the
      financial instruments. Credit exposure is minimized by dealing with only credit
      worthy counterparties. Accounts receivable for the four primary customers totals
      $648,538 (68%) as at September 30, 2007 (2006 - $757,828 or 61%).





(o)           *Contingencies*




Certain
      conditions may exist as of the
      date the financial statements are issued, which may result in a loss to the
      Company but which will only be resolved when one or more future events occur
      or
      fail to occur. The Company's management and its legal counsel assess such
      contingent liabilities, and such assessment inherently involves an exercise
      of
      judgment. In assessing loss contingencies related to legal proceedings that
      are
      pending against the Company or unasserted claims that may result in such
      proceedings, the Company's legal counsel evaluates the perceived merits of
      any
      legal proceedings or unasserted claims as well as the perceived merits of the
      amount of relief sought or expected to be sought therein.





If
      the
      assessment of a contingency indicates that it is probable that a material loss
      has been incurred and the amount of the liability can be estimated, the
      estimated liability would be accrued in the Company's financial statements.
      If
      the assessment indicates that a potentially material loss contingency is not
      probable but is reasonably possible, or is probable but cannot be estimated,
      then the nature of the contingent liability, together with an estimate of the
      range of possible loss if determinable and material, would be
      disclosed.





**8**
 **Index**


Loss
      contingencies considered remote are generally not disclosed unless they involve
      guarantees, in which case the guarantees would be disclosed.





**3.           Inventories**




2007
            
            
            2006Completed
                goods
            
            $
            1,455,191
            
            
            $
            970,780Works
                in progress
            
            
            230,082
            
            
            
            397,995Raw
                materials
            
            
            604,346
            
            
            
            535,540$
            2,289,619
            
            
            $
            1,904,315





**4.           Property,
      Plant & equipment**





2007
            
            
            Accumulated
            
            
            2007Cost
            
            
            Depreciation
            
            
            NetBuildings
            
            $
            3,145,010
            
            
            $
            906,215
            
            
            $
            2,238,795Computer
                hardware
            
            
            69,644
            
            
            
            45,143
            
            
            
            24,501Furniture
                and fixtures
            
            
            20,797
            
            
            
            11,336
            
            
            
            9,461Office
                equipment
            
            
            32,593
            
            
            
            21,193
            
            
            
            11,400Manufacturing
                equipment
            
            
            2,266,187
            
            
            
            1,211,112
            
            
            
            1,055,075Trailer
            
            
            2,308
            
            
            
            1,787
            
            
            
            521Leasehold
                improvements
            
            
            45,814
            
            
            
            34,510
            
            
            
            11,304Trade
                show booth
            
            
            8,644
            
            
            
            5,856
            
            
            
            2,788Land
            
            
            199,093
            
            
            
            —
            
            
            
            199,093$
            5,790,090
            
            
            $
            2,237,152
            
            
            $
            3,552,938








2006
            
            
            Accumulated
            
            
            2006Cost
            
            
            Depreciation
            
            
            NetBuildings
            
            $
            3,144,259
            
            
            $
            724,752
            
            
            $
            2,419,507Computer
                hardware
            
            
            60,576
            
            
            
            34,200
            
            
            
            26,376Furniture
                and fixtures
            
            
            18,576
            
            
            
            8,608
            
            
            
            9,968Office
                equipment
            
            
            29,533
            
            
            
            17,488
            
            
            
            12,045Manufacturing
                equipment
            
            
            2,207,781
            
            
            
            990,959
            
            
            
            1,216,822Trailer
            
            
            1,991
            
            
            
            1,411
            
            
            
            580Leasehold
                improvements
            
            
            39,517
            
            
            
            25,551
            
            
            
            13,966Trade
                show booth
            
            
            7,456
            
            
            
            4,353
            
            
            
            3,103Land
            
            
            398,186
            
            
            
            —
            
            
            
            398,186$
            5,907,875
            
            
            $
            1,807,322
            
            
            $
            4,100,553





**5.           Patents**





In
      fiscal
      2005, the Company started the patent process for additional WATER$AVR®
products.  Patents associated with these costs were granted in 2006
      and they have been amortized over their legal life of 17 years.





**9**
 **Index**


Of
      the
      patents costs listed below, $73,828 are not subject to amortization as of yet,
      as the patents are still in the process of being approved.





2007
              Cost
            
            
            Accumulated
              Amortization
            
            
            2007
              NetPatents
            
            $
            233,692
            
            
            $
            10,748
            
            
            $
            222,944





2006
              Cost
            
            
            Accumulated
              Amortization
            
            
            2006
              NetPatents
            
            $
            172,938
            
            
            $
            3,180
            
            
            $
            169,758





**6.    Investments**





2007
            
            
            2006Tatko
                Inc.
            
            $
            271,000
            
            
            $
            271,000Air-Water
                Interface Delivery and Detection Inc.
            
            
            98,000
            
            
            
            98,000$
            369,000
            
            
            $
            369,000





On
      May
      31, 2003, the Company acquired an option to purchase a 20% interest in the
      outstanding shares of Tatko Inc. (“Tatko”) for consideration of the issuance of
      100,000 shares of the Company’s common stock.  The option to purchase
      the shares of Tatko expires on May 31, 2008.  The cost of the
      investment has been accounted for based on the fair market value of the
      Company’s common stock on May 31, 2003.  For further information on
      this option, see Contingencies (Note 13) below.




In
      2005,
      NanoDetect purchased 32.7 shares of equity in Air Water Interface Delivery
      and
      Detection Inc. (“AWD”) for a total cost of $98,000.  This investment
      represents only 3.3% of the issued and outstanding shares of AWD and,
      accordingly, will be accounted for under the cost method.




**7.           Long
      Term Deposits**




The
      Company has reclassified certain
      security deposits to better reflect there long term nature.  Long term
      deposits consist of damage deposits held by landlords and security deposits
      held
      by various vendors.




2007
            
            
            2006Long
                term deposits
            
            $
            47,838
            
            
            $
            47,220





**8.           Stock
      Options**




The Company adopted
      a stock option plan ("Plan").  The purpose of this Plan is to 
provide  additional  incentives  to  key  employees,
      officers, directors and consultants  of  the  Company  and
      its subsidiaries in order to help attract and retain  the  best 
available  personnel  for  positions  of 
responsibility  and otherwise promoting the success of the business
      activities.  It is intended that options issued
      under this Plan constitute non-qualified stock options.
      The general terms of awards under the option plan are that 100%
      of the options granted will vest the year following the grant. 
The maximum term of options granted is 5 years.




**10**
 **Index**


The
      Company may issue stock options and stock bonuses for shares of its common
      stock
      to provide incentives to directors, key employees and other persons who
      contribute to the success of the Company.  The exercise price of all
      incentive options are issued for not less than fair market value at the date
      of
      grant.




The
      following table summarizes the Company’s stock option activity for the years
      ended December 31, 2005 and 2006 and the period ended September 30,
      2007:




Number
                of shares
            
            
            Exercise
                price
              per
                share
            
            
            Weighted
                average exercise priceBalance,
                December 31, 2004
            
            
            1,241,740
            
            
            $
            1.00
                - $4.60
            
            
            $
            2.87Granted
            
            
            30,000
            
            
            $
            3.58
                - $4.40
            
            
            $
            4.17Exercised
            
            
            (162,000
            )
            
            $
            1.40
            
            
            $
            1.40Cancelled
                or expired
            
            
            (49,000
            )
            
            $
            3.00
                - $4.25
            
            
            $
            3.52Balance,
                December 31, 2005
            
            
            1,060,740
            
            
            $
            1.40
                - $4.60
            
            
            $
            3.44Granted
            
            
            1,191,000
            
            
            $
            3.25
                - $3.60
            
            
            $
            3.25Exercised
            
            
            (46,000
            )
            
            $
            1.40
            
            
            $
            1.40Cancelled
                or expired
            
            
            (79,000
            )
            
            $
            1.40
                - $4.25
            
            
            $
            2.46Balance,
                December 31, 2006
            
            
            2,126,740
            
            
            $
            1.40
                – 4.55
            
            
            $
            3.44Granted
            
            
            235,700
            
            
            $
            1.50
                – 3.60
            
            
            $
            2.35Exercised
            
            
            (163,000
            )
            
            $
            1.50
                – 3.25
            
            
            $
            1.77Cancelled
                or expired
            
            
            (124,000
            )
            
            $
            3.00
                – 4.40
            
            
            $
            3.59Balance,
                September 30, 2007
            
            
            2,075,440
            
            
            $
            3.00
                - 4.55
            
            
            $
            3.46




In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued revised
      FAS No. 123(R), *Share-Based Payment*, which replaces FAS No. 123,
*Accounting for Stock-Based Compensation*, which superseded APB Opinion
      No. 25, *Accounting for Stock Issued to Employees*.  FAS No.
      123(R) requires the cost of all share-based payment transactions to be
      recognized in an entity’s financial statements, establishes fair value as the
      measurement objective and requires entities to apply a fair-value-based
      measurement method in accounting for share-based payment
      transactions.  FAS No. 123(R) applies to all awards granted, modified,
      repurchased or cancelled after July 1, 2005, and unvested portions of previously
      issued and outstanding awards.  The Company adopted this statement for
      its first quarter starting January 1, 2006 and will continue to evaluate the
      impact of adopting this statement.





Prior
      to 2006, the Company applied
      APB Opinion No. 25 and related interpretations in accounting for stock options
      granted to its employees and, accordingly, stock compensation expense of nil
      was
      recognized as wages expense in 2005 and 2004.




The
      fair
      value of each option grant is calculated using the following weighted average
      assumptions:




2007
            
            
            2006Expected
                life – years
            
            
            5.0
            
            
            
            5.0Interest
                rate
            
            
            4.69
            %
            
            
            3.85
            %Volatility
            
            
            52
            %
            
            
            52.0
            %Dividend
                yield
            
            
            —
            %
            
            
            —
            %Weighted
                average fair value of options granted
            
            $
            1.35
            
            
            $
            1.69





**11**
 **Index**


During
      the nine months ended September 30, 2007, the Company granted 150,000 stock
      options to Mr. Grant as a part of the litigation settlement made January 3,
      2007.  As the options were previously granted and expensed in 2001, no
      expense was recorded in this period related to this
      transaction.  During the same period, the Company granted 50,700
      options to consultants and has applied FAS No. 123(R) using the Black-Scholes
      option-pricing model, which resulted in additional expenses of $58,259 during
      the nine months ended September 30, 2007.  Options granted in previous
      quarters but not yet vested realized expenses of $140,031 for outsiders and
      $229,411 for employees for the nine months ended September 30,
      2007.  During the three months ended September 30, 2007, the Company
      granted 35,000 stock options to employees, which resulted in additional expenses
      of $5,004 for the period.  During the same period, the company
      cancelled 25,000 stock options written to employees and this resulted in a
      recoup of $12,730 in expenses.




During
      the nine months ended September 30, 2006, the Company granted 440,000 options
      to
      purchase common stock to outsiders and has applied FAS No. 123(R) using the
      Black-Scholes option-pricing model, which resulted in additional expenses of
      $104,451 this quarter (recorded as consulting and investor relations expense),
      for a total of $263,494 recognized year to date.  During the period
      ended March 31, 2006, the Company granted 675,000 options to employees,
      resulting in an additional $125,955 in wages and administrative expenses in
      each
      quarter ended March 31, 2006, June 30, 2006 and September 30, 2006.




**9.           Warrants**




On
      April 14, 2005, the Company
      announced that it had raised $3,375,000 pursuant to a private placement of
      up to
      1,800,000 shares of its common stock.  The investors collectively
      purchased 900,000 shares of the Company’s common stock at a per share purchase
      price of $3.75, together with warrants to purchase up to 900,000 additional
      shares of the Company’s common stock.  The warrants have a four-year
      term and are immediately exercisable at a price of $4.50 per share.




On
      June 8, 2005, the Company
      announced that it had raised an additional $327,750 pursuant to a private
      placement of up to 174,800 shares of its common stock.  An investor
      purchased 87,400 shares of the Company’s common stock at a per share price of
      $3.75, together with a warrant to purchase up to 87,400 additional shares of
      the
      Company’s common stock.  The warrant has a four-year term and is
      immediately exercisable at a price of $4.50 per share.




In
      May
      2007 the Company closed a $3,042,455 private placement with select institutional
      investors.  The terms are 936,140 units with each unit consisting of
      one share at $3.25 and one half warrant with a three year term and a strike
      price of $4.50 per share.  The Company also issued 21,970 warrants
      with the same terms for investment banking services related to this
      transaction.




**12**
 **Index**


The
      following table summarizes the Company’s warrant option activity for the year
      period ended September 30, 2007:




Number
                of shares
            
            
            Exercise
                price
              per
                share
            
            
            Weighted
                average exercise priceBalance,
                December 31, 2004
            
            
            —
            
            
            
            —
            
            
            
            —Granted
            
            
            987,400
            
            
            $
            4.50
            
            
            $
            4.50Exercised
            
            
            —
            
            
            
            —
            
            
            
            —Cancelled
            
            
            —
            
            
            
            —
            
            
            
            —Balance,
                December 31, 2005
            
            
            987,400
            
            
            $
            4.50
            
            
            $
            4.50Granted
            
            
            —
            
            
            
            —
            
            
            
            —Exercised
            
            
            —
            
            
            
            —
            
            
            
            —Cancelled
            
            
            —
            
            
            
            —
            
            
            
            —Balance,
                December 31, 2006
            
            
            987,400
            
            
            $
            4.50
            
            
            $
            4.50Granted
            
            
            490,040
            
            
            $
            4.50
            
            
            $
            4.50Exercised
            
            
            —
            
            
            
            —
            
            
            
            —Cancelled
            
            
            —
            
            
            
            —
            
            
            
            —Balance,
                September 30, 2007
            
            
            1,477,440
            
            
            $
            4.50
            
            
            $
            4.50




**10.           Capital
      Stock.**




During
      the nine months ended September 30, 2007, the Company issued 163,000 shares
      of
      common stock upon the exercise of stock options.  The strike price
      varied from $1.50 – 3.25 per share.




In
      May
      2007 the Company closed a $3,042,455 private placement with select institutional
      investors.  The terms are 936,140 units with each unit consisting of
      one share at $3.25 and one half warrant with a three year term and a strike
      price of $4.50 per share.  The proceeds will be used to build a
      biomass conversion facility that will use renewable agriculture crops to produce
      aspartic acid.




During
      the quarter ended September 30, 2006, the Company amended a stock option
      contract issued in 2001.  The Company initially issued 20,000 common
      stock options with an exercise price of $1.40 to a consultant in exchange for
      services, which resulted in a consulting expense of $19,840 in the 2001
      financial statements.  On September 23, 2006, the Company amended
      these stock options and instead issued 11,111 common shares to the consultant
      for past services rendered and no other consideration was
      received.  The market value of the common shares issued was calculated
      using the then-current trading price of $3.22 per share and totals
      $35,777.  A consulting expense of $15,937, which represents the
      difference between the market value of the shares issued and the expense
      recognized in 2001, was recognized in the financial statements.




During
      the quarter ended June 30, 2006, the Company issued 6,000 shares of common
      stock
      at $1.40 per share upon exercise of stock options.




**11.           Segmented,
      Significant Customer Information and Economic Dependency.**




The
      Company operates in two segments:




(a)   Development
      and marketing of two lines of energy and water conservation products (as shown
      under the column heading “EWCP” below), which consists of a (i) liquid swimming
      pool blanket which saves energy and water by inhibiting evaporation from the
      pool surface, and (ii) food-safe powdered form of the active ingredient within
      the liquid blanket and which is designed to be used in still or slow moving
      drinking water sources.




**13**
 **Index**


(b)    Manufacture
      of biodegradable polymers and chemical additives used within the petroleum,
      chemical, utility and mining industries to prevent corrosion and scaling in
      water piping (as shown under the column heading “BPCA” below).  These
      chemical additives are also manufactured for use in laundry and dish detergents,
      as well as in products to reduce levels of insecticides, herbicides and
      fungicides.




The
      Company’s traditional operating activities related to the production and sale of
      its energy conversation product line.  Upon acquiring the Donlar
      assets, the Company formed NanoChem, which was formed as its wholly-owned
      subsidiary in exchange for the capital contribution necessary to purchase the
      Donlar assets.  The assets the Company acquired from Donlar include
      domestic and international patents and business processes relating to the
      production of TPAs and other environmental products and technologies, as well
      as
      a manufacturing plant.  These assets are currently used by NanoChem
      for its revenue-producing activities.




The
      accounting policies of the segments are the same as those described in Note
      2 to
      the Company’s consolidated financial statements, *Significant Accounting
      Policies*.  The Company evaluates performance based on profit or
      loss from operations before income taxes, not including nonrecurring gains
      and
      losses and foreign exchange gains and losses.




The
      Company’s reportable segments are strategic business units that offer different,
      but synergistic products and services.  They are managed separately
      because each business requires different technology and marketing
      strategies.




EWCP
            
            
            BPCA
            
            
            TotalRevenue
            
            $
            1,080,729
            
            
            $
            4,649,703
            
            
            $
            5,730,432Interest
                revenue
            
            
            2,542
            
            
            
            854
            
            
            
            3,396Interest
                expense
            
            
            783
            
            
            
            2,091
            
            
            
            2,874Depreciation
                andamortization
            
            
            41,056
            
            
            
            345,158
            
            
            
            386,214Segment
                profit (loss)
            
            
            (1,155,336
            )
            
            
            754,680
            
            
            
            (400,656
            )Segment
                assets
            
            
            194,974
            
            
            
            3,357,964
            
            
            
            3,552,938Expenditures
                forsegment
                assets
            
            
            36,419
            
            
            
            (197,820
            )
            
            
            (161,401
            )




The
      sales
      generated in the United States and Canada are as follows:




2007
            
            
            2006Canada
            
            $
            73,759
            
            
            $
            199,312United
                States and abroad
            
            
            5,656,673
            
            
            
            6,473,479Total
            
            $
            5,730,432
            
            
            $
            6,672,791




The
      Company’s long-lived assets are located in Canada and the United States as
      follows:




2007
            
            
            2006Canada
            
            $
            413,823
            
            
            $
            364,487United
                States
            
            
            3,362,059
            
            
            
            3,905,824Total
            
            $
            3,775,882
            
            
            $
            4,270,311





Four
      customers account for $3,598,777 (63%) of sales made in the nine months ended
      September 30th
      2007 (2006 - $4,278,159 or 64%).





**14**
 **Index**


**12.           Commitments.**




The
      Company is committed to minimum rental payments for property and premises
      aggregating approximately $416,226 over the term of four leases, the last
      expiring on December 31, 2011.




Commitments
      in each of the next five years are approximately as follows:




2007
            
            $
            68,5162008
            
            
            184,3122009
            
            
            129,9442010
            
            
            16,7272011
            
            
            16,727








**13.           Contingencies.**




On
      May 1,
      2003, the Company filed a lawsuit in the Supreme Court of British Columbia,
      Canada, against John Wells and Equity Trust, S.A. seeking the return of 100,000
      shares of the Company’s common stock and the repayment of a $25,000 loan, which
      were provided to defendants for investment banking services consisting of
      securing a $5 million loan and a $25 million stock offering.  Such
      services were not performed and in the proceeding the Company seeks return
      of
      such shares after defendant’s failure to both return the shares voluntarily and
      repay the note.  On May 7, 2003, the Company obtained an injunction
      freezing the transfer of the shares.  On May 24, 2004, there was a
      hearing on defendant’s motion to set aside the injunction, which motion was
      denied by the trial court on May 29, 2004.  On the date of issuance,
      the share transaction was recorded as shares issued for services at fair market
      value, a value of $0.80 per share.  No amounts have been recorded as
      receivable in the Company’s consolidated financial statements as the outcome of
      this claim is not determinable.




On
      July
      23, 2004, the Company filed a breach of contract suit in the Circuit Court
      of
      Cook County, Illinois against Tatko.  The action arises out of a joint
      product development agreement entered into between the Company and Tatko in
      which the Company agreed to invest $10,000 toward the product development
      venture and granted to Tatko 100,000 shares of the Company’s restricted common
      stock.  In return, Tatko granted the Company a five-year option to
      purchase 20% of Tatko’s outstanding capital stock.  Tatko has since
      refused to collaborate on the agreement and the Company seeks declaratory relief
      stating that Tatko is not entitled to the 100,000 shares of the Company’s
      restricted common stock.  The litigation is still pending at this
      time.




In
      addition, Tatko filed its own suit on September 24, 2004 in the Circuit Court
      of
      Cook County, Illinois seeking declaratory relief of its entitlement to the
      Company’s restricted common stock.  On May 23, 2005, the Tatko suit
      was dismissed with prejudice by the Circuit Court.




No
      amounts have been recorded as receivable in the Company’s consolidated financial
      statements and no amount has been accrued as a loss as the outcome of the claim
      against Tatko is not determinable.




**14.           Subsequent
      Events.**




There
      have been no subsequent events.




**15.           Comparative
      Figures.**




Certain
      of the comparative figures have been reclassified to conform with the current
      year’s presentation.




**15**
 **Index**




**Item
                2.**
            **Management’s
                Discussion and Analysis or Plan of
                Operation.**




**Overview**




Flexible
      Solutions International, Inc. (“we,” “us,” and “our”) develops, manufactures and
      markets specialty chemicals that slow the evaporation of water.  Our
      initial product, HEAT$AVR®, is marketed for use in swimming pools and spas where
      its use, by slowing the evaporation of water, allows the water to retain a
      higher temperature for a longer period of time and thereby reduces the energy
      required to maintain the desired temperature of the water in the
      pool.  Using the same technology, WATER$AVR®, is marketed for water
      conservation in irrigation canals, aquaculture, and reservoirs where its use
      slows water loss due to evaporation.  We also manufacture and market
      products for use in the oilfields to reduce scale and corrosion in many
‘topside’ water systems and in the agriculture industry to reduce fertilizer crystallization
      before, during and after application.




**Results
      of Operations**




Material
      changes in our Statement of Operations for the periods presented are discussed
      below:





Nine
      Months Ended September 30, 2007




**Item**
            
            **Increase
                (I) orDecrease
                (D)**
            
            **Reason**Sales
            
            D
            
            Maintenance
                shutdowns in the oil extraction industry during Q3, 2007 had a comparative
                year-over-year effect.  It is understood that shutdowns did not
                occur in 2006 because high oil prices encouraged the oil companies
                to
                continue production.Administrative
                salaries and benefits
            
            D
            
            Five
                year stock option plans granted to several long term employees in
                2006
                resulted in higher expenses in 2006.  Granting of stock options
                plans resulted in an expense of $153,451 in first nine months of
                2007 as
                compared to $277,494 in the same period 2006.Investor
                relations and transfer agent fee
            
            I
            
            Increase
                in external investor relations and transfer agent fees as well as
                options
                granted in relation to the private placement in May 2007 increased
                our
                investor relations costs.Consulting
            
            D
            
            The
                granting of stock options to long term consultants in 2006 resulted
                in a
                stock option expense of $188,890 in first quarter 2006 as compared
                to
                $108,747 in the same period 2007.Professional
                fees
            
            D
            
            We
                experienced reduced professional fees after the conclusion of two
                lawsuits
                in December 2006 and January 2007.Travel
            
            I
            
            Increased
                international sales required more travel.Commissions
            
            D
            
            Decreased
                sales resulted in lower commissions.Other
                Income
            
            I
            
            We
                sold land which was not needed for our operations which resulted
                in a one
                time gain of $195,442.











**16**
 **Index**


**Capital
      Resources and Liquidity**





The
      sources and uses of funds are
      directly obtainable from our Consolidated Statement of Cash Flows found on
      Page
      3 of this document.





Wehave
      sufficient cash resources to
      meetour future commitments and cash flow requirements for the coming
      year.  As of September 30, 2007 working capital was $7,295,137 (2006 -
      $3,355,420).





Weare
      committed to minimum rental payments for property and premises aggregating
      approximately $416,226 over the term of four leases, the last expiring on
      December 31, 2011.




Commitments
      in each of the next five years are approximately as follows:




2007
            
            $
            68,5162008
            
            
            184,3122009
            
            
            129,9442010
            
            
            16,7272011
            
            
            16,727





We
      have secured financing for all
      current capital spending plans, including the announced purchase of land and
      a
      building in Alberta.  We do not foresee any additional capital requirements
      for the period ending Dec 31 2007.





See
      Note 2 to the financial statements
      included as part of this report for a description of our significant accounting
      policies and recent accounting pronouncements.







**Item
                3.**
            **Controls
                and
                Procedures.**




*Disclosure
      Controls and Procedures*




We
      maintain disclosure controls and procedures that are designed to ensure that
      information required to be disclosed in our periodic reports to the Securities
      and Exchange Commission (“SEC”) is recorded, processed, summarized and reported
      within the time periods specified in the SEC’s rules and regulations, and that
      such information is accumulated and communicated to our management, including
      our principal executive officer and principal financial officer, as appropriate,
      to allow timely decisions regarding required disclosure.  Our
      disclosure controls and procedures are designed to provide a reasonable level
      of
      assurance of reaching our desired disclosure control objectives.




As
      of the
      end of the period covered by this Quarterly Report, we carried out an
      evaluation, under the supervision and with the participation of management,
      including our principal executive officer and principal financial officer,
      of
      the effectiveness of the design and operation of our disclosure controls and
      procedures (as defined under Rules 13a-15(e) and 15d-15(e) under the Securities
      Exchange Act of 1934, as amended).  Based upon that evaluation, our
      principal executive officer and principal financial officer concluded that
      our
      disclosure controls and procedures are effective in timely alerting them to
      material information relating to us (including our consolidated subsidiaries)
      that is required to be included in our periodic reports.




**17**
 **Index**





**PART
                II**
            **OTHER
                INFORMATION**




**Item
                6.**
            **Exhibits.**




**Number**
            **Description**3.1
            Amended
                and Restated Certificate of Incorporation of the registrant.
                (1)3.2
            Bylaws
                of the registrant. (1)31.1
            Certification
                of Principal Executive Officer
                Pursuant to §302 of the Sarbanes-Oxley Act of
                2002.*31.2
            Certification
                of Principal Financial Officer
                Pursuant to §302 of the Sarbanes-Oxley Act of
                2002.*32.1
            Certification
                of Principal Executive Officer
                Pursuant to 18 U.S.C. §1350 and §906 of the Sarbanes-Oxley Act of
                2002.*32.2
            Certification
                of Principal Financial Officer
                Pursuant to 18 U.S.C. §1350 and §906 of the Sarbanes-Oxley Act of
                2002.*





*
            Filed
                with this report.




(1)
            Incorporated
                by reference to the registrant’s Registration Statement on Form 10-SB (SEC
                File. No. 000-29649) filed February 22,
                2000.






























**18**
 **Index**


**SIGNATURES**




In
      accordance with the requirements of Section 13 or 15(d) of the Exchange Act,
      the
      registrant caused this report to be signed on its behalf by the undersigned,
      thereunto duly authorized.




**Flexible
              Solutions
              International, Inc.**Dated:  November
                14,
                2007
            By:
            /s/ Daniel
              B. O’BrienName: Daniel
              B.
              O’BrienTitle: President
              and Chief
              Executive OfficerBy:
            /s/ Daniel
              B. O’BrienName: Daniel
              B. O’BrienTitle: Chief
              Financial and Accounting Officer



































19