UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

WASHINGTON,
D.C. 20549



FORM
10-K/A

(Mark
One)



|[X] | ANNUAL
    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ----------------------------------------------------------------------------------------



For
the Fiscal Year Ended December 31, 2017

OR



|[  ] | TRANSITION
    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|---- | --------------------------------------------------------------------------------------------



Commission
File No. 001-31540



FLEXIBLE
SOLUTIONS INTERNATIONAL, INC.

(Exact
name of registrant as specified in its charter)



|Nevada                                                                                                                  |  | 91-1922863                                                                                   
|----------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------
|(State
                                         or other jurisdiction
        of
        incorporation or organization) |  | (I.R.S.
                                         Employer
        Identification
        No.)



|6001
    54 Ave.                            |  |             
|------------------------------------------- |  | ------------
|Taber,
    Alberta, Canada                  |  | T1G
    1X4 
|(Address
    of Principal Executive Office) |  | Zip
    Code



Registrant’s
telephone number, including Area Code: (403) 223-2995

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



|Title
    of each class            |  | Name
    of each exchange on which registered         
|---------------------------------- |  | ------------------------------------------------------
|                                   |  |                                                       
|Common
    Stock, $0.001 par value |  | NYSE
                                         American



Securities
registered pursuant to Section 12(g) of the Act: None



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes
[  ]          No [X]



Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes
[  ]          No [X]





Indicate by check mark whether the registrant
(1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 [X]         No [  ]



Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files). Yes [X]       No [  ]



Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s
knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment
to this Form 10-K. [X]



Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”,
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.





|Large
    accelerated filer [  ]                  | Accelerated
    filer [  ]       
|------------------------------------------------- | ---------------------------------
|                                                  |                                  
|Non-accelerated
    filer [  ]                    | Smaller reporting
    company [X]
|(Do not check if
    a smaller reporting company) | Emerging
    growth company [  ] 



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



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act): [  ] Yes [X] No



As
of June 30, 2017 the aggregate market value of the Company’s common stock held by non-affiliates was $12,914,521 based on
the closing price for shares of the Company’s common stock on the NYSE American for that date.



As
of March 30, 2018, the Company had 11,630,991 issued and outstanding shares of common stock.



Documents
incorporated by reference: None









This amended 10-K report is being filed to correct the date
of the auditor’s opinion on the Company’s financial statements.




















CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS





This
Annual Report on Form 10-K for the year ended December 31, 2017 (“Annual Report”), including the Audited Consolidated
Financial Statements, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements include, without limitation, those statements relating to development of new products, our financial
condition and our ability to increase distribution of our products. Forward-looking statements can be identified by the use of
forward-looking terminology, such as “may,” “will,” “should,” “expect,” “anticipate,”
“estimate,” “continue,” “plans,” “intends,” or other similar terminology. These
forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are
difficult to predict. Therefore, actual outcomes and results may differ materially from what is anticipated or forecasted in these
forward-looking statements due to numerous factors, including, but not limited to, our ability to generate or obtain sufficient
working capital to continue our operations, changes in demand for our products, the timing of customer orders and deliveries and
the impact of competitive products and pricing. In addition, such statements could be affected by general industry and market
conditions and growth rates, and general domestic and international economic conditions.



Although
we believe that the expectations reflected in these forward-looking statements are reasonable and achievable, such statements
involve risks and uncertainties and no assurance can be given that our actual results will be consistent with these forward-looking
statements. Except as otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise
any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason,
after the date of this Annual Report is filed with the Securities and Exchange Commission.





-ii-







PART
I



|Item
    1. | Description
    of Business
|----------- | ---------------------------



We
were incorporated as Flexible Solutions Ltd., a British Columbia corporation on January 26, 1991. On May 12, 1998, we merged Flexible
Solutions Ltd. into Flexible Solutions International, Inc., a Nevada corporation. In connection with this merger, we issued 7,000,000
shares of common stock to the former shareholders of Flexible Solutions Ltd. in exchange for all of the outstanding shares of
Flexible Solutions Ltd.



In
June 2004 we purchased 52 U.S. and 139 International patents, as well as a 56,780 sq. ft. manufacturing plant near Chicago, Illinois
from the bankruptcy estate of Donlar Corporation (“Donlar”) for $6.15 million. The patents we acquired from Donlar
relate to water-soluble chemicals (“TPAs”) which prevent corrosion and scaling in water pipes used in the petroleum,
chemical, utility and mining industries. TPAs are also used to enhance fertilizers and improve crop yields and as additives for
household laundry detergents, consumer care products and pesticides.



We
operate through a number of wholly-owned subsidiaries which are mentioned in Note 1 to the consolidated financial statements included
as part of this report. Unless otherwise indicated, all references to our business include the operations of these subsidiaries.



Our
website is www.flexiblesolutions.com



Our
Products



HEATSAVR®



Our
studies indicate that approximately 70% of the energy lost from a swimming pool occurs through water evaporation. HEATSAVR®
is a chemical product for use in swimming pools and spas that forms a thin, transparent layer on the water’s surface. The
transparent layer slows the evaporation of water, allowing the water to retain a higher temperature for a longer period of time
and thereby reducing the energy required to maintain the desired temperature of the water. We have received reports from our commercial
customers documenting energy savings of between $2,400 and $6,000 per year when using HEATSAVR®.



In
outdoor pools, the HEATSAVR® also provides convenience compared to pool blankets. Pool blankets are plastic covers which are
cut to the size and shape of the surface of the pool or spa. Pool blankets float on the surface and, like the HEATSAVR®, reduce
energy costs by inhibiting water evaporation. However, it is often inconvenient to use conventional pool blankets because a pool
blanket must be removed and stored before the pool can be used. Pool blankets do not provide any energy savings when not on the
pool. Conversely, HEATSAVR® eliminates the need to install, remove and store the blanket and works 24 hours a day. In addition,
the use of HEATSAVR® in an indoor pool results in even greater energy savings since indoor pool locations use energy not only
to heat the pool water, but also to air condition the pool environment. By slowing the transfer of heat and water vapor from the
pool to the atmosphere of the pool enclosure, less energy is required to maintain a pool at the desired temperature and there
is a reduced load on the air-conditioning system.



HEATSAVR®
retails for between $250 and $300 per four gallon case in the United States. We market our HEATSAVR® product to homeowners
with swimming pools and spas as well as operators of swimming pools and spas in hotels, motels, schools, and municipal and private
recreational facilities.



2







We
also manufacture and sell products which automatically dispense HEATSAVR® into commercial size swimming pools or spas at the
rate of one ounce per 400 sq. ft. of water surface per day.



We
have non-exclusive distributorships in Canada and the United States for the sale of bulk HEATSAVR® and exclusive distributorships
in several countries outside North America.



WATERSAVR®



This
product utilizes a patented variation of our HEATSAVR technology to reduce water evaporation in reservoirs, potable water storage
tanks, livestock watering ponds, aqueducts, canals and irrigation ditches. WATERSAVR may also be used for lawn and turf care and
potted and bedding plants.



WATERSAVR®
is sold in granulated form and can be applied by hand, by fully automated scheduled metering, or by an automatic dispenser.



Tests
have indicated that WATERSAVR®:



| | ● | Reduces
                                         daily water evaporation as much as 54%
| | - | ---------------------------------------------------------------------------------------

| | ● | Reduces
                                         monthly water evaporation as much as 37%
| | - | -----------------------------------------------------------------------------------------

| | ● | Is
                                         odorless
| | - | ----------------------------------------------------

| | ● | Has
                                         no effect on invertebrates or vertebrates
| | - | --------------------------------------------------------------------------------------

| | ● | Has
                                         no anticipated effect on any current drinking water treatment processes and
| | - | ------------------------------------------------------------------------------------------------------------------------

| | ● | Is
                                         biodegradable
| | - | ---------------------------------------------------------



We
have one full-time employee and one part-time employee involved in the sales and marketing of WATERSAVR®.



TPAs
(thermal polyaspartate biopolymers)



TPAs
for Oilfields. TPAs are used to reduce scale and corrosion in various “topside” water systems. They are used in
place of traditional phosphonate and other products when biodegradability is required by environmental regulations. We have the
ability to custom manufacture TPAs depending on the specific water conditions associated with any oil well. TPAs are also used
in fracking fluids to reduce the toxicity while maintaining equal function.



TPAs
for the Agricultural Industry. TPAs have the ability to reduce fertilizer crystallization before, during and after application
and can also prevent crystal formation between fertilizer and minerals present in the soil. Once crystallized, fertilizer and
soil minerals are not able to provide plant nourishment. As a result, in select conditions the use of TPAs either blended with
fertilizer or applied directly to crops can increase yields significantly. TPAs are designated for crop nutrient management programs
and should not be confused with crop protection and pesticides or other agricultural chemical applications. Depending on the application,
TPA products are marketed under a variety of brands including EX-10TM, AmisorbTM, LYNXTM, MAGNETTM,
AmGroTM and VOLTTM. Markets of significance include corn, wheat, soybeans, rice, potatoes, sugar beets,
cotton, tomatoes, almonds and other high value per acre crops.



TPAs
for Irrigation. The crystallization prevention ability of TPAs can also be useful in select irrigation conditions. By reducing
calcium carbonate scale propagation, TPAs can prevent early plugging of drip irrigation ports, reduce maintenance costs and lengthen
the life of equipment. TPAs compete with acid type scale removers, but have the advantage of a positive yield effect on the plant,
as well as an easier deployment formulation with liquid fertilizers when used as part of a “fertigation” program.
Our TPAs for drip irrigation scale prevention are marketed and sold through the same channels as TPAs used by the agricultural
industry.



3







TPAs
for Detergent. In detergents, TPAs are a biodegradable substitute for poly-acrylic acid. In select markets, the use of this
substitute outweighs the added cost of TPAs, which has allowed for the continued growth of this TPA product line. However, to
increase penetration of this market beyond specialty detergent manufacturers, we will need to decrease the cost of this product
or wait for legislative intervention regarding biodegradability of detergent components. In the meantime, we are researching various
methods to reduce production costs.



TPAs
for Personal Care Products. TPAs can also be used in shampoo and cosmetic products for increased hydration that improves the
feel of the core product to consumers. TPA’s may also be used as an additive to toothpaste with the documented effect of
reducing decay bacteria adhesion to tooth enamel and presumed reduction in total decay. We do not currently sell TPAs for use
in personal care products.



Nitrogen
conservation products for Agriculture. We manufacture and sell two conservation products for slowing nitrogen loss from
fields. One significant loss route for nitrogen fertilizer is enzymatic degradation by bacteria naturally present in soil. Our
product, SUN 27TM inhibits the bacterial action and keeps the nitrogen fertilizer available for plant growth. The second
significant nitrogen loss mechanism is de-nitrification. This is also caused by bacterial activity in soil resulting in oxygen
being stripped from the fertilizer leaving nitrogen gas. The gas can’t be used by the plants and escapes into the
atmosphere. Our N Savr 30TM product uses the most effective active ingredients available to combat this
cause of fertilizer loss. We sell SUN 27TM and N Savr 30TM through distributors in North and South
America under our trade names and under private labels.







Principal
Customers



The
table below presents our revenue resulting from purchases by our major customers for the periods presented.





|              |  | Year
    Ended December 31, |          
|------------- |  | --------------------------- | ---------
|              |  | 2017                        |          
|              |  |                             |          
|Company
    A |  | $                           | 4,630,784
|Company
    B |  | $                           | 2,224,184
|Company
    C |  | $                           | 1,598,195



Customers
with balances greater than 10% of our receivable balances as of each of the fiscal year ends presented are shown in the following
table:





|              |  | Year
    Ended December 31, |        
|------------- |  | --------------------------- | -------
|              |  | 2017                        |        
|              |  |                             |        
|Company
    A |  | $                           | 728,848
|Company
    B |  |                             | 518,526



4







Competition



HEATSAVR®



Although
we are aware of two other companies that manufacture products that compete with HEATSAVR® , we believe our products are more
effective and safer. We maintain fair pricing equal to or lower than our competitors and protect our intellectual property carefully.
Our products are expected to maintain or increase market share in the competitive pool market.



HEATSAVR®
also competes with plastic pool blanket products. However, we believe that HEATSAVR® is more effective and convenient than
pool blankets.



WATERSAVR®



Ultimate
Products (Aust) Pty Ltd. of Australia has a product called Aquatain that directly competes with WATERSAVR®. We believe our
WATERSAVR® product is superior for the following reasons: it is safer, much less expensive and has much better test data.
Aquatain has not expended the capital to test for environmental effects on insects and other aquatic life whereas WATERSAVR®
has recognized third party environmental safety documentation.



As
water conservation is an important priority throughout the world, numerous researchers are working to develop solutions that may
compete with, or be superior to, WATERSAVR.



TPAs



Our
TPA products have direct competition with Lanxess AG (spun out of Bayer AG), a German manufacturer of TPAs, which uses a patented
process different from ours. We have cross-licensed each other’s processes and either company can use either process for
the term of the patents involved. We believe that Lanxess has approximately the same production capacity and product costs as
we do. We believe that we can compete effectively with Lanxess by offering excellent customer service in oilfield sales, superior
distributor support in the agricultural marketplace and flexibility due to our relative size. In addition, we intend to continue
to seek market niches that are not the primary targets of Lanxess.



Our
TPA products face indirect competition from other chemicals in every market in which we are active. For purposes of oilfield scale
prevention, phosphonates, phosphates and molibdonates provide the same effect. For crop enhancement, increased fertilizer levels
or reduced concentrations can serve as a substitute for TPAs. In irrigation scale control, acid washes are our prime competitor.
In detergent, poly-acrylic acid is most often used due to price advantage. Notwithstanding the above, we believe our competitive
advantages include:



| | ● | Biodegradability
                                         compared to competing oil field chemicals;
| | - | ----------------------------------------------------------------------------------------------------

| | ● | Cost-effectiveness
                                         for crop enhancement compared to increased fertilizer use;
| | - | ----------------------------------------------------------------------------------------------------------------------

| | ● | Environmental
                                         considerations, ease of formulation and increased crop yield opportunities in irrigation
                                         scale markets; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | Biodegradability
                                         compared to poly-acrylic acid for detergents.
| | - | -------------------------------------------------------------------------------------------------------



5







Manufacturing



Our
HEATSAVR® products and dispensers are made from chemicals, plastic and other materials and parts that are readily available
from multiple suppliers. We have never experienced any shortage in the availability of raw materials and parts for these products
and we do not have any long term supply contracts for any of these items. We have these products made by outside parties without
long term contracts.



Our
WATERSAVR® products are manufactured by a third party. We are not required to purchase any minimum quantity of this product.



Our
56,780 sq. ft. facility in Peru, Illinois manufactures our TPA products. Raw materials for TPA production are sourced from various
manufacturers throughout the world and we believe they are available in sufficient quantities for any increase in sales. Raw materials
are, however, derived from crude oil and are subject to price fluctuations related to world oil prices.





In
November 2007, we purchased a building and 3.3 acres of land in Taber, Alberta, Canada. The price paid was CDN$1,325,000 and was
financed by cash of $660,000 and an interest free mortgage that was paid in June 2008. The building was operated as a fermentation
facility for the production of aspartic acid, a key ingredient in TPAs. Aspartic acid made in Taber was then shipped to our plant
in Illinois for finishing. In February 2014 we suspended production of aspartic acid at our Taber plant. The suspension was due
to the fact that since construction of the plant began in 2008, economic conditions in Alberta and worldwide have changed significantly.
In particular, plant operating costs increased and the price of aspartic acid derived from oil was less than forecast.
In February 2017, the Taber plant was destroyed in a fire. However, the loss was covered by insurance.





Government
Regulations



HEATSAVR®



Chemical
products for use in swimming pools are covered by a variety of governmental regulations in all countries where we sell these products.
These regulations cover packaging, labeling, and product safety. We believe our products are in compliance with these regulations.



WATERSAVR®



Our
WATERSAVR® product is subject to regulation in most countries, particularly for agricultural and drinking water uses. We do
not anticipate that governmental regulations will be an impediment to marketing WATERSAVR® because the components in WATERSAVR®
have historically been used in agriculture for many years for other purposes. Nevertheless, we may require county or state approval
on a case by case basis to sell WATERSAVR® in the United States for agricultural and drinking water uses. We have received
National Sanitation Foundation approval for the use of WATERSAVR® in drinking water in the United States.



TPAs



In
the oil field and agricultural markets we have received government approval for all TPAs currently sold. In the detergent market,
there are currently no regulatory requirements for use of TPAs in detergent formulations. For personal care products such as shampoo
and toothpaste, there are various regulatory bodies, including the National Sanitation Foundation and the United States Food and
Drug Administration, which regulate TPA use. If we begin to market our TPA products for personal care use, we will need to satisfy
applicable regulatory requirements.



6







Proprietary
Rights



Our
success is dependent, in part, upon our proprietary technology. We rely on a combination of patent, copyright, trademarks, trade
secrets and nondisclosure agreements to protect our proprietary technology. We currently hold many U.S. and International patents
which expire at various dates up to 2032. We also have applied to extend some of these patents to other countries where we operate.
There can be no assurance that our foreign patent applications will be granted or that any issued patent will be upheld as valid
or prevent the development of competitive products, which may be equivalent to or superior to our products. We have not received
any claims alleging infringement of the intellectual property rights of others, but there can be no assurance that we may not
be subject to such claims in the future.



Research
and Development



We
spent $98,833 during the year ended December 31, 2017 and $95,028 during year ended December 31, 2016 on research and development.
This work relates primarily to the development of our water and energy conservation products, as well as new research in connection
with our TPA products.



Employees



As
of December 31, 2017 we had 25 employees, including one officer, six sales and customer support personnel, and eighteen manufacturing
personnel. None of our employees is represented by a labor union and we have not experienced any work stoppages to date.



Item
1A. Risk Factors



This
Form 10-K contains forward-looking information based on our current expectations. Because our actual results may differ materially
from any forward-looking statements made by us, this section includes a discussion of important factors that could affect our
future operations and result in a decline in the market price of our common stock.



We
have incurred significant operating losses since inception and may not sustain profitability in the future.



We
have in the past experienced operating losses and negative cash flow from operations and we currently have an accumulated deficit.
If our revenues decline, our results of operations and liquidity may be materially and adversely affected. If we experience slower
than anticipated revenue growth or if our operating expenses exceed our expectations, we may not be profitable. We may not remain
profitable in future periods.



Fluctuations
in our operating results may cause our stock price to decline.



Given
the nature of the markets in which we operate, we cannot reliably predict future revenues and profitability. Changes in competitive,
market and economic conditions may cause us to adjust our operations. A high proportion of our costs are fixed, due in part to
our sales, research and development and manufacturing costs. Thus, small declines in revenue could disproportionately affect our
operating results. Factors that may affect our operating results and the market price of our common stock include:



7







| | ● | demand
                                         for and market acceptance of our products;
| | - | ------------------------------------------------------------------------------------------

| | ● | competitive
                                         pressures resulting in lower selling prices;
| | - | -------------------------------------------------------------------------------------------------

| | ● | adverse
                                         changes in the level of economic activity in regions in which we do business;
| | - | ------------------------------------------------------------------------------------------------------------------------------

| | ● | adverse
                                         changes in the oil and gas industry on which we are particularly dependent;
| | - | ----------------------------------------------------------------------------------------------------------------------------

| | ● | changes
                                         in the portions of our revenue represented by various products and customers;
| | - | ------------------------------------------------------------------------------------------------------------------------------

| | ● | delays
                                         or problems in the introduction of new products;
| | - | ------------------------------------------------------------------------------------------------

| | ● | the
                                         announcement or introduction of new products, services or technological innovations by
                                         our competitors;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | variations
                                         in our product mix;
| | - | -----------------------------------------------------------------------

| | ● | the
                                         timing and amount of our expenditures in anticipation of future sales;
| | - | -------------------------------------------------------------------------------------------------------------------

| | ● | increased
                                         costs of raw materials or supplies; and
| | - | ------------------------------------------------------------------------------------------

| | ● | changes
                                         in the volume or timing of product orders.
| | - | -------------------------------------------------------------------------------------------



Our
operations are subject to seasonal fluctuation.



The
use of our swimming pool products increases in summer months in most markets and results in our sales from January to June being
greater than in July through December. Markets for our WATERSAVR® product are also seasonal, depending on the wet versus dry
seasons in particular countries. We attempt to sell into a variety of countries with different seasons on both sides of the equator
in order to minimize seasonality. Our TPA business is the least seasonal, however there is a small increase in the spring related
to inventory building for the crop season in the United States and a small slowdown in December as oilfield customers run down
stock in advance of year end, but otherwise, little seasonal variation. We believe we are able to adequately respond to these
seasonal fluctuations by reducing or increasing production as needed.



Interruptions
in our ability to purchase raw materials and components may adversely affect our profitability.



We
purchase certain raw materials and components from third parties pursuant to purchase orders placed from time to time. Because
we do not have guaranteed long-term supply arrangements with our suppliers, any material interruption in our ability to purchase
necessary raw materials or components could have a material adverse effect on our business, financial condition and results of
operations.



Our
WATERSAVR® product has not proven to be a revenue producing product and we may never recoup the cost associated with its development.





The
marketing efforts of our WATERSAVR® product may result in continued losses. We introduced our WATERSAVR® product in June
2002 and, to date, we have delivered quantities for testing by potential customers, but only a few customers have ordered the
product for commercial use. This product can achieve success only if it is ordered in substantial quantities by commercial customers
who have determined that the water saving benefits of the product exceed the costs of purchase and deployment of the product.
We can offer no assurance that we will receive sufficient orders of this product to achieve profits or cover the expenses incurred
to manufacture and market this product. We have received National Sanitation Foundation approval for the use WATERSAVR® in
drinking water in the United States. Neverless, we may require county or state approval on a case by case basis. We expect
to spend $200,000 on the marketing and production of our WATERSAVR® product in fiscal 2018.





8







If
we do not introduce new products in a timely manner, our products could become obsolete and our operating results would suffer.



Without
the timely introduction of new products and enhancements, our products could become obsolete over time, in which case our revenue
and operating results would suffer. The success of our new product offerings will depend upon several factors, including our ability
to:



| | ● | accurately
                                         anticipate customer needs;
| | - | ------------------------------------------------------------------------------



| | ● | innovate
                                         and develop new products and applications;
| | - | --------------------------------------------------------------------------------------------



| | ● | successfully
                                         commercialize new products in a timely manner;
| | - | ----------------------------------------------------------------------------------------------------



| | ● | price
                                         our products competitively and manufacture and deliver our products in sufficient volumes
                                         and on time; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | differentiate
                                         our products from our competitors’ products.
| | - | ---------------------------------------------------------------------------------------------------



In
developing any new product, we may be required to make a substantial investment before we can determine the commercial viability
of the new product. If we fail to accurately foresee our customers’ needs and future activities, we may invest heavily in
research and development of products that do not lead to significant revenues.



We
are dependent upon certain customers.



Among
our current customers, we have identified three that are sizable enough that the loss of any one would be significant. Any loss
of one or more of these customers could result in a substantial reduction in our revenues.



Economic,
political and other risks associated with international sales and operations could adversely affect our sales.



Revenues
from shipments made outside of the United States accounted for approximately 72% of our revenues in the year ended December 31,
2017, 71% in the year ended December 31, 2016 and 75% in the year ended December 31, 2015. Since we sell our products worldwide,
our business is subject to risks associated with doing business internationally. We anticipate that revenues from international
operations will continue to represent a sizable portion of our total revenue. Accordingly, our future results could be harmed
by a variety of factors, including:



| | ● | changes
                                         in foreign currency exchange rates;
| | - | ------------------------------------------------------------------------------------



| | ● | changes
                                         in a country’s or region’s political or economic conditions, particularly
                                         in developing or emerging markets;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | longer
                                         payment cycles of foreign customers and difficulty of collecting receivables in foreign
                                         jurisdictions;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



9







| | ● | trade
                                         protection measures and import or export licensing requirements;
| | - | ---------------------------------------------------------------------------------------------------------------



| | ● | differing
                                         tax laws and changes in those laws;
| | - | --------------------------------------------------------------------------------------



| | ● | difficulty
                                         in staffing and managing widespread operations;
| | - | ---------------------------------------------------------------------------------------------------



| | ● | differing
                                         laws regarding protection of intellectual property; and
| | - | ----------------------------------------------------------------------------------------------------------



| | ● | differing
                                         regulatory requirements and changes in those requirements.
| | - | -------------------------------------------------------------------------------------------------------------



We
are subject to credit risk and may be subject to substantial write-offs if one or more of our significant customers default on
their payment obligations to us.



We
currently allow our major customers between 30 and 90 days to pay for each sale. This practice, while customary, presents an accounts
receivable write-off risk in that if one or more of our significant customers defaulted on their payment obligations to us, such
write-off, if substantial, would have a material adverse effect on our business and results of operations.



Our
products can be hazardous if not handled, stored and used properly; litigation related to the handling, storage and safety of
our products would have a material adverse effect on our business and results of operations.



Some
of our products are flammable and must be stored properly to avoid fire risk. Additionally, some of our products may cause irritation
to a person’s eyes if they are exposed to the concentrated product. Although we label our products to warn of such risks,
our sales could be reduced if our products were considered dangerous to use or if they are implicated in causing personal injury
or property damage. We are not currently aware of any circumstances in which our products have caused harm or property damage
to consumers. Nevertheless, litigation regarding the handling, storage and safety of our products would have a material adverse
effect on our business and results of operations.



Our
failure to comply with environmental regulations may create significant environmental liabilities and force us to modify our manufacturing
processes.



We
are subject to various federal, state and local environmental laws, ordinances and regulations relating to the use, storage, handling
and disposal of chemicals. Under such laws, we may become liable for the costs of removal or remediation of these substances that
have been used by our consumers or in our operations. Such laws may impose liability without regard to whether we knew of, or
caused, the release of such substances. Any failure by us to comply with present or future regulations could subject us to substantial
fines, suspension of production, alteration of manufacturing processes or cessation of operations, any of which could have a material
adverse effect on our business, financial condition and results of operations.



Our
failure to protect our intellectual property could impair our competitive position.



While
we own certain patents and trademarks, some aspects of our business cannot be protected by patents or trademarks. Accordingly,
in these areas there are few legal barriers that prevent potential competitors from copying certain of our products, processes
and technologies or from otherwise entering into operations in direct competition with us. In particular, we have been informed
that our former exclusive agent for the sale of our products in North America is now competing with us in the swimming pool and
personal spa markets. As a former distributor, they were given access to many of our sales, marketing and manufacturing techniques.



10







Our
products may infringe on the intellectual property rights of others, and resulting claims against us could be costly and prevent
us from making or selling certain products.



Third
parties may seek to claim that our products and operations infringe on their patents or other intellectual property rights.
We may incur significant expense in any legal proceedings to protect our proprietary rights or to defend infringement claims by
third parties. In addition, claims of third parties against us could result in awards of substantial damages or court orders that
could effectively prevent us from making, using or selling our products in the United States or abroad.



A
claim for damages could materially and adversely affect our financial condition and results of operations.





Our
business exposes us to potential product liability risks. There are many factors beyond our control that could lead to
liability claims, including the failure of our products to work properly and the chance that consumers will use our products incorrectly
or for purposes for which they were not intended. There can be no assurance that the amount of product liability insurance that
we carry will be sufficient to protect us from product liability claims. A product liability claim in excess of the amount of
insurance we carry could have a material adverse effect on our business, financial condition and results of operations.



Our
ongoing success is dependent upon the continued availability of certain key employees.



Our
business would be adversely affected if the services of Daniel B. O’Brien ceased to be available to us since we currently
do not have any other employee with an equivalent level of expertise in and knowledge of our industry. If Mr. O’Brien no
longer served as our President and Chief Executive Officer, we would have to recruit one or more new executives, with no real
assurance that we would be able to engage a replacement executive with the required skills on satisfactory terms. The market for
skilled employees is highly competitive, especially for employees in the fields in which we operate. While our compensation programs
are intended to attract and retain qualified employees, there can be no assurance that we will be able to retain the services
of all our key employees or a sufficient number to execute our plans, nor can there be any assurances that we will be able to
continue to attract new employees as required.





|Item
    1B. | Unresolved
    Staff Comments.
|------------ | ------------------------------



Not
applicable.



|Item
    2. | Properties.
|----------- | -----------





We
lease a 6,400 sq. ft. facility in Naperville, Illinois which we use for offices and laboratories at a cost of $5,440 per month
with a lease effective to December 2020 and 30,600 sq. ft. of warehouse space in Peru, IL used for storage and extra capacity
at a cost of $10,270 per month with a lease effective to October 2021. We own a 56,780 sq. ft. facility in Peru, Illinois which
is used to manufacture our TPA line of products. In 2017, we purchased a 3,000 sq ft building on 1 acre of land in Taber, AB Canada.
We also own 3.3 acres of cleared and undeveloped land in Taber, AB.





11







|Item
    3. | Legal
    Proceedings.
|----------- | ----------------------



None.





|Item
    4. | Mine
    Safety Disclosures
|----------- | ---------------------------



Not
applicable.







PART
II



|Item
    5. | Market
    for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities.
|----------- | ----------------------------------------------------------------------------------------------------------------





Our
common stock is traded on the NYSE American under the symbol “FSI”. The following is the range of high and
low closing prices for our common stock for the periods indicated:





|                                 |  | High |      |  | Low |  
|-------------------------------- |  | ---- | ---- |  | --- | -
|                                 |  |      |      |  |     |  
|Year
    Ended December 31, 2017 |  |      |      |  |     |  
|First
    Quarter                |  | $    | 1.63 |  |     | $
|Second Quarter                   |  |      | 2.48 |  |     |  
|Third Quarter                    |  |      | 1.93 |  |     |  
|Fourth Quarter                   |  |      | 1.97 |  |     |  





|                                 |  | High |      |  | Low |  
|-------------------------------- |  | ---- | ---- |  | --- | -
|                                 |  |      |      |  |     |  
|Year
    Ended December 31, 2016 |  |      |      |  |     |  
|First
    Quarter                |  | $    | 1.10 |  |     | $
|Second
    Quarter               |  |      | 1.81 |  |     |  
|Third
    Quarter                |  |      | 2.41 |  |     |  
|Fourth
    Quarter               |  |      | 2.26 |  |     |  





As
of March 30, 2017 we had approximately 2,200 shareholders.





Our
common stock also trades on the Frankfurt stock exchange under the symbol “FXT.”



We
have not paid any dividends on our common stock and it is not anticipated that any dividends will be paid in the foreseeable future.
Our board of directors intends to follow a policy of retaining earnings, if any, to finance our growth. The declaration and payment
of dividends in the future will be determined by our directors in light of conditions then existing, including our earnings, financial
condition, capital requirements and other factors.



None
of our officers or directors, nor any of our principal shareholders purchased, on our behalf, any shares of our common stock from
third parties either in a private transaction or as a result of purchases in the open market during the years ended December 31,
2016 and 2017.



As
of March 30, 2018 we had 11,630,991 outstanding shares of common stock. The following table lists additional shares of our common
stock, including shares issuable upon the exercise of options which have not yet vested, which may be issued as of March 30, 2018:





|                                                                                                                           |  | Number        |         |  | Note     
|-------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- |  | ---------
|                                                                                                                           |  | Of
    Shares |         |  | Reference
|Shares
    issuable upon exercise of options granted to our officers, directors, employees, consultants, and third parties |  |               | 680,000 |  |          



12







A.       Options
are exercisable at prices ranging from $0.75 to $1.70 per share. See Item 11 of this report for more information concerning these
options.



|Item
    6. | Selected
    Financial Data.
|----------- | ----------------------------



Not
applicable.



|Item
    7. | Management’s
    Discussion and Analysis of Financial Condition and Results of Operation.
|----------- | -----------------------------------------------------------------------------------------



Results
of Operations



We
have two product lines.



The
first is a chemical (“EWCP”) used in swimming pools and spas. The product forms a thin, transparent layer on the water’s
surface. The transparent layer slows the evaporation of water, allowing the water to retain a higher temperature for a longer
period of time thereby reducing the energy required to maintain the desired temperature of the water. A modified version of EWCP
can also be used in reservoirs, potable water storage tanks, livestock watering pods, canals, and irrigation ditches for the purpose
of reducing evaporation.



The
second product, biodegradable polymers (“TPAs”), is used by the petroleum, chemical, utility and mining industries
to prevent corrosion and scaling in water piping. TPAs can also be used to increase biodegradability in detergents and in the
agriculture industry to increase crop yields by enhancing fertilizer uptake.



Material
changes in the line items in our Statement of Operations for the year ended December 31, 2017 as compared to the same period last
year, are discussed below:





|Item                                                                      |  | Increase
        (I) or
        Decrease
        (D) |  | Reason                                                                                                                          
|------------------------------------------------------------------------- |  | ---------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------
|                                                                          |  |                                                      |  |                                                                                                                                 
|Sales
        EWCP
        products
        
        TPA
        products |  | D
        
        D                                 |  | Loss
        of Taber, AB manufacturing facility to fire.
        
        Lower
        uptake by customers.                   
|Gross
        Profit, as a %
        of
        sales                     |  | D                                                    |  | Temporary
        increase in costs after loss of the EWCP manufacturing plant to fire along with increased aspartic acid costs.
|Wages                                                                     |  | I                                                    |  | Increased wages
    to retain employees.                                                                                        
|Administrative
        salaries
        and
        benefits              |  | I                                                    |  | Increased wages
    to retain employees.                                                                                        
|Rent                                                                      |  | I                                                    |  | Additional
        storage and capacity space for BCPS products.                                                                
|Professional fess                                                         |  | I                                                    |  | Increased legal
    fees related to IP and general legal representation along with increased accounting costs.                  
|                                                                          |  |                                                      |  |                                                                                                                                 
|Gain
    on involuntary disposition                                       |  | I                                                    |  | Result
    of fire at Taber, AB manufacturing facility.                                                                         







13







The
factors that will most significantly affect future operating results will be:



| | ● | the
                                         sale price of crude oil which is used in the manufacture of aspartic acid we import from
                                         China. Aspartic acid is a key ingredient in our TPA product;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | activity
                                         in the oil and gas industry, as we sell our TPA product to oil and gas companies; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------



| | ● | drought
                                         conditions, since we also sell our TPA product to farmers.
| | - | -----------------------------------------------------------------------------------------------------------



Other
than the foregoing we do not know of any trends, events or uncertainties that have had, or are reasonably expected to have, a
material impact on our revenues or expenses.



Capital
Resources and Liquidity





Oursources and (uses) of cash for the years ended December 31,
2017 and 2016 are shown below:







|                                                            |  | 2017 |           |   | 2016 | 
|----------------------------------------------------------- |  | ---- | --------- | - | ---- | 
|                                                            |  |      |           |   |      | 
|Cash
    provided by (used by) operations                   |  |      | 1,042,425 |   |      | 
|Long term deposits                                          |  |      | 7,980     |   |      | 
|Return
    on investment                                    |  |      | 25,000    |   |      | 
|Insurance proceeds
    from fire loss                       |  |      | 3,366,889 |   |      | 
|Sales (purchases)
    of equipment                          |  |      | (426,480  | ) |      | 
|Advances from (repayments
    of) short term line of credit |  |      | -         |   |      | 
|Repayment of loans                                          |  |      | (201,193  | ) |      | 
|Repurchase of common
    stock                              |  |      | -         |   |      | 
|Proceeds from issuance
    of common stock                  |  |      | 156,020   |   |      | 
|Changes in exchange
    rates                               |  |      | 471,431   |   |      | 











We have sufficient cash
resources to meets our future commitments and cash flow requirements for the coming year. As of December 31, 2017, our working
capital was $11,259,028 and we have no substantial commitments that require significant outlays of cash over the coming
fiscal year.







We are committed to minimum
rental payments for property and premises aggregating approximately $735,670 over the term of three leases, the last expiring
on October 31, 2021.





Commitments
for rent in the next four years are as follows:





|2018 |  | $ | 201,840 | 
|---- |  | - | ------- | 
|2019 |  | $ | 205,580 | 
|2020 |  | $ | 209,400 | 
|2021 |  | $ | 118,850 | 



Other
than as disclosed above, we do not anticipate any material capital requirements for the twelve months ending December 31, 2018.



Other
than as disclosed in Item 7 of this report, we do not know of any trends, demands, commitments, events or uncertainties that will
result in, or that are reasonable likely to result in, our liquidity increasing or decreasing in any material way.



Other
than as disclosed in Item 7 of this report, we do not know of any significant changes in our expected sources and uses of cash.



We
do not have any commitments or arrangements from any person to provide us with any equity capital.



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



14







Critical
Accounting Policies And Estimates



Allowances
for Product Returns. We grant certain of our customers the right to return product which they are unable to sell. Upon sale,
we evaluate the need to record a provision for product returns based on our historical experience, economic trends and changes
in customer demand.



Allowances
for Doubtful Accounts Receivable. We evaluate our accounts receivable to determine if they will ultimately be collected. This
evaluation includes significant judgments and estimates, including an analysis of receivables aging and a review of large accounts.
If, for example, the financial condition of a customer deteriorates resulting in an impairment of its ability to pay or a pattern
of late payment develops, an allowance may be required.



Provisions
for Inventory Obsolescence. We may need to record a provision for estimated obsolescence and shrinkage of inventory. Our estimates
would consider the cost of inventory, the estimated market value, the shelf life of the inventory and our historical experience.
If there are changes to these estimates, provisions for inventory obsolescence may be necessary.



Recent
Accounting Pronouncements



We
have evaluated recent accounting pronouncements issued since January 1, 2017 and determined that the adoption of these
recent accounting pronouncements will not have a material effect on our financial statements.



Item
7A. Quantitative and Qualitative Disclosures About Market Risk.



Not
applicable.



15











|Item
8. | Financial
                  Statements and Supplementary Data.
|------- | --------------------------------------------------------------



FLEXIBLE
SOLUTIONS INTERNATIONAL, INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                              | Page
|------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                              |     
|Report
        of Independent Registered Public Accounting Firm, MNP LLP                                      | F-1 
|Consolidated
    Balance Sheets as of December 31, 2017 and 2016                                              | F-2 
|Consolidated
    Statements of Income and Comprehensive Income for the Years Ended December 31, 2017 and 2016 | F-3 
|Consolidated
    Statements of Cash Flows for the Years Ended December 31, 2017 and 2016                      | F-4 
|Consolidated
    Statements of Stockholders’ Equity for the Years Ended December 31, 2017 and 2016            | F-5 
|Notes
    to Consolidated Financial Statements                                                                | F-6 



16











REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To
the Board of Directors andStockholders of Flexible Solutions International,
Inc.



Opinion
on the Financial Statements



We
have audited the accompanying balance sheets of Flexible Solutions International Inc. (the Company) as of December 30, 2017 and
2016, and the related statements of income, comprehensive income, stockholders' equity, and cash flows for each of the years in
the two-year period ended December 31, 2017, and the related notes (collectively referred to as the financial statements). In
our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December
31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the two-year period ended December
31, 2017, in conformity with accounting principles generally accepted in the United States of America.



Basis
for Opinion



These
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.



We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but
not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion.



Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.



|                                                       
|-------------------------------------------------------
|                                                       
|We
    have served as the Company’s auditor since 2009.
|                                                       
|Vancouver,
    BC                                      
|                                                       
|March
    31, 2018                                     









F-1







FLEXIBLE
SOLUTIONS INTERNATIONAL, INC.

Consolidated
Balance Sheets

As
at December 31

(U.S.
Dollars)









|                                                                                                                                           |  | 2017 |            |   | 2016 |  
|------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | ---------- | - | ---- | -
|                                                                                                                                           |  |      |            |   |      |  
|Assets                                                                                                                                     |  |      |            |   |      |  
|                                                                                                                                           |  |      |            |   |      |  
|Current                                                                                                                                    |  |      |            |   |      |  
|Cash and cash equivalents                                                                                                                  |  | $    | 6,912,138  |   |      | $
|Accounts receivable (see Note 3)                                                                                                           |  |      | 2,105,471  |   |      |  
|Inventories (see Note 4)                                                                                                                   |  |      | 4,686,852  |   |      |  
|Prepaid expenses                                                                                                                           |  |      | 255,080    |   |      |  
|Total current assets                                                                                                                       |  |      | 13,959,541 |   |      |  
|                                                                                                                                           |  |      |            |   |      |  
|Property, equipment and leaseholds, net (see Note 5)                                                                                       |  |      | 1,938,509  |   |      |  
|Patents (see Note 6)                                                                                                                       |  |      | 79,452     |   |      |  
|Long term deposits (see Note 7)                                                                                                            |  |      | 18,531     |   |      |  
|Investment (Note 8)                                                                                                                        |  |      | 13,414     |   |      |  
|Deferred tax asset (Note 11)                                                                                                               |  |      | 1,763,923  |   |      |  
|                                                                                                                                           |  |      |            |   |      |  
|Total Assets                                                                                                                               |  | $    | 17,773,370 |   |      | $
|                                                                                                                                           |  |      |            |   |      |  
|Liabilities                                                                                                                                |  |      |            |   |      |  
|                                                                                                                                           |  |      |            |   |      |  
|Current                                                                                                                                    |  |      |            |   |      |  
|Accounts payable and accrued liabilities                                                                                                   |  | $    | 939,116    |   |      | $
|Deferred revenue                                                                                                                           |  |      | 208,608    |   |      |  
|Income taxes payable                                                                                                                       |  |      | 1,101,596  |   |      |  
|Short term line of credit (Note 9)                                                                                                         |  |      | 250,000    |   |      |  
|Current portion of long term debt (Note 10)                                                                                                |  |      | 201,193    |   |      |  
|Total current liabilities                                                                                                                  |  |      | 2,700,513  |   |      |  
|Long term debt (Note 10)                                                                                                                   |  |      | 150,896    |   |      |  
|Total liabilities                                                                                                                          |  |      | 2,851,409  |   |      |  
|                                                                                                                                           |  |      |            |   |      |  
|Stockholders’ Equity                                                                                                                       |  |      |            |   |      |  
|                                                                                                                                           |  |      |            |   |      |  
|Capital stock (see Note 14)                                                                                                                |  |      |            |   |      |  
|Authorized                                                                                                                                 |  |      |            |   |      |  
|50,000,000 common shares with a par value of $0.001 each 1,000,000 preferred shares with a par value of $0.01 each Issued and outstanding: |  |      |            |   |      |  
|11,597,991 (2016: 11,457,991) common shares                                                                                                |  |      | 11,598     |   |      |  
|Capital in excess of par value                                                                                                             |  |      | 15,114,835 |   |      |  
|Other comprehensive loss                                                                                                                   |  |      | (656,093   | ) |      |  
|Accumulated earnings (deficit)                                                                                                             |  |      | 451,621    |   |      |  
|                                                                                                                                           |  |      |            |   |      |  
|Total Stockholders’ Equity                                                                                                                 |  |      | 14,921,961 |   |      |  
|                                                                                                                                           |  |      |            |   |      |  
|Total Liabilities and Stockholders’ Equity                                                                                                 |  | $    | 17,773,370 |   |      | $





Commitments
and Subsequent events                                                         (See
Notes 16 and 17)



See
Notes to Consolidated Financial Statements.



F-2







FLEXIBLE
SOLUTIONS INTERNATIONAL, INC.

Consolidated
Statements of Income and Comprehensive Income



For
the Years Ended December 31

(U.S.
Dollars)





|                                                   |  | 2017 |            |   | 2016 |  
|-------------------------------------------------- |  | ---- | ---------- | - | ---- | -
|                                                   |  |      |            |   |      |  
|Sales                                              |  | $    | 15,494,325 |   |      | $
|Cost of sales                                      |  |      | 9,508,827  |   |      |  
|                                                   |  |      |            |   |      |  
|Gross profit                                       |  |      | 5,985,498  |   |      |  
|                                                   |  |      |            |   |      |  
|Operating Expenses                                 |  |      |            |   |      |  
|Wages                                              |  |      | 1,647,780  |   |      |  
|Administrative salaries and benefits               |  |      | 1,007,850  |   |      |  
|Advertising and promotion                          |  |      | 18,257     |   |      |  
|Investor relations and transfer agent fee          |  |      | 152,362    |   |      |  
|Office and miscellaneous                           |  |      | 238,195    |   |      |  
|Insurance                                          |  |      | 285,418    |   |      |  
|Interest expense                                   |  |      | 44,125     |   |      |  
|Rent                                               |  |      | 241,286    |   |      |  
|Consulting                                         |  |      | 133,949    |   |      |  
|Professional fees                                  |  |      | 222,743    |   |      |  
|Travel                                             |  |      | 137,392    |   |      |  
|Telecommunications                                 |  |      | 26,071     |   |      |  
|Shipping                                           |  |      | 19,624     |   |      |  
|Research                                           |  |      | 98,928     |   |      |  
|Commissions                                        |  |      | 112,678    |   |      |  
|Bad debt expense                                   |  |      | 1,191      |   |      |  
|Currency exchange                                  |  |      | 64,870     |   |      |  
|Utilities                                          |  |      | 21,339     |   |      |  
|                                                   |  |      |            |   |      |  
|Total operating expenses                           |  |      | 4,474,058  |   |      |  
|                                                   |  |      |            |   |      |  
|Operating income                                   |  |      | 1,511,440  |   |      |  
|Gain on sale of equipment                          |  |      | -          |   |      |  
|Gain on involuntary disposition (net of tax)       |  |      | 2,043,614  |   |      |  
|Write down of inventory                            |  |      | (51,346    | ) |      |  
|Loss on investment                                 |  |      | (84,066    | ) |      |  
|Interest income                                    |  |      | 913        |   |      |  
|Income before income tax                           |  |      | 3,420,555  |   |      |  
|                                                   |  |      |            |   |      |  
|Income taxes (Note 11)                             |  |      |            |   |      |  
|Deferred income (expense) tax recovery             |  |      | (985,495   | ) |      |  
|Income tax recovery (expense)                      |  |      | (680,319   | ) |      |  
|                                                   |  |      |            |   |      |  
|Net income for the year                            |  | $    | 1,754,741  |   |      | $
|                                                   |  |      |            |   |      |  
|Other comprehensive income                         |  |      | 431,115    |   |      |  
|Comprehensive income                               |  |      | 2,185,856  |   |      |  
|Income per share (basic) (Note 12)                 |  | $    | 0.15       |   |      | $
|Income per share (diluted) (Note 12)               |  | $    | 0.15       |   |      | $
|Weighted average number of common shares (basic)   |  |      | 11,485,580 |   |      |  
|Weighted average number of common shares (diluted) |  |      | 11,725,482 |   |      |  



See
Notes to Consolidated Financial Statements.



F-3









FLEXIBLE
SOLUTIONS INTERNATIONAL, INC.

Consolidated
Statements of Cash Flows

For
Years Ended December 31

(U.S.
Dollars)





|                                                                |  | 2017 |            |   | 2016 |  
|--------------------------------------------------------------- |  | ---- | ---------- | - | ---- | -
|                                                                |  |      |            |   |      |  
|Operating activities                                            |  |      |            |   |      |  
|Net income                                                      |  | $    | 1,754,741  |   |      | $
|Adjustments to reconcile net income to net cash:                |  |      |            |   |      |  
|Stock based compensation                                        |  |      | 116,092    |   |      |  
|Depreciation and amortization                                   |  |      | 286,616    |   |      |  
|Loss on investment                                              |  |      | 84,066     |   |      |  
|Decrease in deferred tax asset                                  |  |      | 985,495    |   |      |  
|Write down of inventory                                         |  |      | (51,346    | ) |      |  
|Gain on involuntary disposition                                 |  |      | (2,043,614 | ) |      |  
|                                                                |  |      |            |   |      |  
|Changes in non-cash working capital items:                      |  |      |            |   |      |  
|(Increase) Decrease in accounts receivable                      |  |      | 912,056    |   |      |  
|(Increase) Decrease in inventories                              |  |      | (887,339   | ) |      |  
|(Increase) Decrease in prepaid expenses                         |  |      | (23,758    | ) |      |  
|Increase (Decrease) in accounts payable and accrued liabilities |  |      | (407,555   | ) |      |  
|Increase (Decrease) in taxes payable                            |  |      | 207,729    |   |      |  
|Increase (Decrease) deferred revenue                            |  |      | 109,242    |   |      |  
|                                                                |  |      |            |   |      |  
|Cash provided by operating activities                           |  |      | 1,042,425  |   |      |  
|                                                                |  |      |            |   |      |  
|Investing activities                                            |  |      |            |   |      |  
|Long term deposits                                              |  |      | 7,980      |   |      |  
|Investment                                                      |  |      | 25,000     |   |      |  
|Proceed from insurance                                          |  |      | 3,366,889  |   |      |  
|Net purchase of property, equipment and leaseholds              |  |      | (426,480   | ) |      |  
|                                                                |  |      |            |   |      |  
|Cash used in investing activities                               |  |      | 2,973,389  |   |      |  
|                                                                |  |      |            |   |      |  
|Financing activities                                            |  |      |            |   |      |  
|Draw from short term line of credit                             |  |      | -          |   |      |  
|Loan repayment                                                  |  |      | (201,193   | ) |      |  
|Repurchase of common stock                                      |  |      | -          |   |      |  
|Proceeds of issuance of common stock                            |  |      | 156,020    |   |      |  
|                                                                |  |      |            |   |      |  
|Cash used in financing activities                               |  |      | (45,173    | ) |      |  
|                                                                |  |      |            |   |      |  
|Effect of exchange rate changes on cash                         |  |      | 471,431    |   |      |  
|                                                                |  |      |            |   |      |  
|Inflow (outflow) of cash                                        |  |      | 4,442,072  |   |      |  
|Cash and cash equivalents, beginning                            |  |      | 2,470,066  |   |      |  
|                                                                |  |      |            |   |      |  
|Cash and cash equivalents, ending                               |  | $    | 6,912,138  |   |      | $
|                                                                |  |      |            |   |      |  
|Supplemental disclosure of cash flow information:               |  |      |            |   |      |  
|Income taxes paid                                               |  |      | 833,766    |   |      |  
|Interest paid                                                   |  |      | 43,003     |   |      |  



See
Notes to Consolidated Financial Statements.



F-4







FLEXIBLE
SOLUTIONS INTERNATIONAL, INC.

Consolidated
Statements of Stockholders’ Equity

For
the Years Ended December 31, 2017 and 2016

(U.S.
Dollars)





|                          |  |        |            |   |           |   |        | Capital in |  |   | Accumulated  |   |  | Other         |            |   | Total         |  
|------------------------- |  | ------ | ---------- | - | --------- | - | ------ | ---------- |  | - | ------------ | - |  | ------------- | ---------- | - | ------------- | -
|                          |  |        |            |   |           |   |        | Excess of  |  |   | Earnings     |   |  | Comprehensive |            |   | Stockholders’ |  
|                          |  | Shares |            |   | Par Value |   |        | Par Value  |  |   | (Deficiency) |   |  | Income (Loss) |            |   | Equity        |  
|                          |  |        |            |   |           |   |        |            |  |   |              |   |  |               |            |   |               |  
|Balance December 31, 2015 |  |        | 13,177,991 |   |           | $ | 13,178 |            |  | $ | 16,317,225   |   |  | $             | (3,096,454 | ) |               | $
|                          |  |        |            |   |           |   |        |            |  |   |              |   |  |               |            |   |               |  
|Translation adjustment    |  |        | —          |   |           |   | —      |            |  |   | —            |   |  |               | —          |   |               |  
|Net income                |  |        | —          |   |           |   | —      |            |  |   | —            |   |  |               | 1,793,334  |   |               |  
|                          |  |        |            |   |           |   |        |            |  |   |              |   |  |               |            |   |               |  
|Comprehensive income      |  |        | —          |   |           |   | —      |            |  |   | —            |   |  |               | —          |   |               |  
|                          |  |        |            |   |           |   |        |            |  |   |              |   |  |               |            |   |               |  
|Common stock cancelled    |  |        | (1,750,000 | ) |           |   | (1,750 | )          |  |   | (1,573,250   | ) |  |               | —          |   |               |  
|                          |  |        |            |   |           |   |        |            |  |   |              |   |  |               |            |   |               |  
|Common stock issued       |  |        | 30,000     |   |           |   | 30     |            |  |   | 32,570       |   |  |               | —          |   |               |  
|                          |  |        |            |   |           |   |        |            |  |   |              |   |  |               |            |   |               |  
|Stock-based compensation  |  |        | —          |   |           |   | —      |            |  |   | 66,318       |   |  |               | —          |   |               |  
|                          |  |        |            |   |           |   |        |            |  |   |              |   |  |               |            |   |               |  
|Balance December 31, 2016 |  |        | 11,457,991 |   |           | $ | 11,458 |            |  | $ | 14,842,863   |   |  | $             | (1,303,120 | ) |               | $
|                          |  |        |            |   |           |   |        |            |  |   |              |   |  |               |            |   |               |  
|Translation adjustment    |  |        | —          |   |           |   | —      |            |  |   | —            |   |  |               | —          |   |               |  
|Net income                |  |        | —          |   |           |   | —      |            |  |   | —            |   |  |               | 1,754,741  |   |               |  
|                          |  |        |            |   |           |   |        |            |  |   |              |   |  |               |            |   |               |  
|Comprehensive income      |  |        | —          |   |           |   | —      |            |  |   | —            |   |  |               | —          |   |               |  
|                          |  |        |            |   |           |   |        |            |  |   |              |   |  |               |            |   |               |  
|Common stock issued       |  |        | 140,000    |   |           |   | 140    |            |  |   | 155,880      |   |  |               | —          |   |               |  
|                          |  |        |            |   |           |   |        |            |  |   |              |   |  |               |            |   |               |  
|Stock-based compensation  |  |        | —          |   |           |   | —      |            |  |   | 116,092      |   |  |               | —          |   |               |  
|                          |  |        |            |   |           |   |        |            |  |   |              |   |  |               |            |   |               |  
|Balance December 31, 2017 |  |        | 11,597,991 |   |           | $ | 11,598 |            |  | $ | 15,114,835   |   |  | $             | 451,621    |   |               | $





See
Notes to Consolidated Financial Statements.



F-5







FLEXIBLE
SOLUTIONS INTERNATIONAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2017 and 2016

(U.S.
Dollars)

1.       Basis
of Presentation.



These
consolidated financial statements include the accounts of Flexible Solutions International, Inc. (the “Company”),
and its wholly-owned subsidiaries Flexible Fermentation Ltd. (“Flexible Ltd.”), NanoChem Solutions Inc. (“NanoChem”),
Flexible Solutions Ltd., Flexible Biomass LP, FS Biomass Inc., NCS Deferred Corp., Conserve H2O Ltd. and Natural Chem SEZC Ltd.
All inter-company balances and transactions have been eliminated. The Company was incorporated May 12, 1998 in the State of Nevada
and had no operations until June 30, 1998.



Flexible
Solutions International, Inc. and its subsidiaries develop, manufacture and market specialty chemicals which slow the evaporation
of water. One product, HEATSAVR®, 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, WATERSAVR®, is marketed for water conservation
in irrigation canals, aquaculture, and reservoirs where its use slows water loss due to evaporation. In addition to the water
conservation products, the Company also manufactures 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 can be used as additives for household laundry
detergents, consumer care products and pesticides.



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: completed goods, work in progress and raw materials and supplies. In all classes,
inventories are stated at the lower of cost and net realizable value for 2017 and at the lower of cost or market for 2016. 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. Inventory 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.



F-6







(c)       Allowance
for Doubtful Accounts



The
Company provides an allowance for doubtful accounts when management estimates collectability to be 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, Leaseholds and Intangible Assets.



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



|Computer
    hardware         |  | 30%
    Declining balance        
|----------------------------- |  | ---------------------------------
|Furniture
    and fixtures    |  | 20%
    Declining balance        
|Manufacturing
    equipment   |  | 20%
    Declining balance        
|Office
    equipment          |  | 20%
    Declining balance        
|Boat                          |  | 20%
    Declining balance        
|Building
    and improvements |  | 10%
    Declining balance        
|Trailer                       |  | 30%
    Declining balance        
|Patents                       |  | Straight-line
    over 17 years  
|Technology                    |  | Straight-line
    over 10 years  
|Leasehold
    improvements    |  | Straight-line
    over lease term





Property
and equipment are written down to net realizable value when management determines there has been a change in circumstances which
indicates their carrying amounts may not be recoverable. No write-downs have been necessary to date.





(e)       Impairment
of Long-Lived Assets.



In
accordance with FASB Codification Topic 360, “Property, Plant and Equipment (ASC 360), the Company reviews long-lived assets,
including, but not limited to, property, equipment and leaseholds, 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 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)       Foreign
Currency.





The
functional currency of three of the Company’s subsidiaries is the Canadian Dollar. The translation of the Canadian Dollar
to the reporting currency of the Company, 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 Company’s financial statements from the subsidiary’s functional
currency, Canadian Dollars, into the reporting currency, U.S. Dollars, are excluded from the determination of income (loss) and
are disclosed as other comprehensive income in the consolidated statements of income and comprehensive income.





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



(g)       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 to the carrier has occurred, the fee is fixed or determinable, collectability 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.



Since
the Company’s inception, product returns have been insignificant; therefore, no provision has been established for estimated
product returns.



Deferred
revenues consist of products sold to distributors with payment terms greater than the Company’s customary business terms
due to lack of credit history or operating in a new market in which the Company has no prior experience. The Company defers the
recognition of revenue until the criteria for revenue recognition has been met, and payments become due or cash is received from
these distributors.



(h)       Stock
Issued in Exchange for Services.



The
Company’s common stock issued in exchange for services is valued at estimated fair market value 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.



(i)       Stock-based
Compensation.



The
Company recognizes compensation expense for all share-based payments in accordance with FASB Codification Topic 718, Compensation
— Stock Compensation, (ASC 718). Under the fair value recognition provisions of ASC 718, the Company recognizes share-based
compensation expense, net of an estimated forfeiture rate, over the requisite service period of the award.



The
fair value at grant date of stock options is estimated using the Black-Scholes option-pricing model. Compensation expense is recognized
on a straight-line basis over the stock option vesting period based on the estimated number of stock options that are expected
to vest. Shares are issued from treasury upon exercise of stock options.



(j)       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.



(k)Income
Per Share.



Basic
earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares
outstanding in the period. Diluted earnings per share are calculated giving effect to the potential dilution of the exercise of
options and warrants. Common equivalent shares, composed of incremental common shares issuable upon the exercise of stock options
and warrants are included in diluted net income per share to the extent that these shares are dilutive. Common equivalent shares
that have an anti-dilutive effect on net income per share have been excluded from the calculation of diluted weighted average
shares outstanding for the years ended December 31, 2017 and 2016.



F-7









(l)       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.



Estimates
and underlying assumptions are reviewed at each period end. Revisions to accounting estimates are recognized in the period in
which the estimates are revised and in any future periods affected.



Significant
areas requiring the use of management estimates include assumptions and estimates relating to the asset impairment analysis, share-based
payments and warrants, valuation allowances for deferred income tax assets, determination of useful lives of property, equipment
and leaseholds, and the valuation of inventory.



(m)       Financial
Instruments.



The
fair market value of the Company’s financial instruments comprising cash and cash equivalents, accounts receivable, accounts
payable and accrued liabilities, and short term line of credit were estimated to approximate their carrying values due to immediate
or short-term maturity of these financial instruments.



(n)       Fair
Value of Financial Instruments



Fair
value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in
the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on
the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize
the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs described below,
of which the first two are considered observable and the last unobservable, that may be used to measure fair value.



| | ● | Level
    1 – Quoted prices in active markets for identical assets or liabilities                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                              
| | ● | Level
    2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar
    assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated
    by observable market data for substantially the full term of the assets or liabilities.
| |   |                                                                                                                                                                                                                                                                                                                                                              
| | ● | Level
    3 — Unobservable inputs that are supported by little or no market activity which is significant to the fair value of
    the assets or liabilities.                                                                                                                                                                                                



The
fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities and the short term line
of credit for all periods presented approximate their respective carrying amounts due to the short term nature of these financial
instruments



F-8









(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 potential 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.



Loss
contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would
be disclosed. Legal fees associated with loss contingencies are expensed as incurred.



(p)Income Taxes



Income
taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected
future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance so that the
assets are recognized only to the extent that when, in the opinion of management, it is more likely than not that some portion
or all of the deferred tax assets will be realized.





Per
FASB ASC 740 “Income taxes” under the liability method, it is the Company’s policy to provide for uncertain
tax positions and the related interest and penalties based upon management’s assessment of whether a tax benefit is more
likely than not to be sustained upon examination by tax authorities. At December 31, 2017, the Company believes it has appropriately
accounted for any unrecognized tax benefits. To the extent the Company prevails in matters for which a liability for an unrecognized
benefit is established or is required to pay amounts in excess of the liability, the Company’s effective tax rate in a given
financial statement period may be affected. Interest and penalties associated with the Company’s tax positions are recorded
as interest expense in the consolidated statements of income and comprehensive income.



(q)
       Risk Management.



The
Company’s credit risk is primarily attributable to its accounts receivable. The amounts presented in the accompanying consolidated
balance sheets are net of allowances for doubtful accounts, estimated by the Company’s management based on prior experience
and the current economic environment. The Company is exposed to credit-related losses in the event of non-payment by customers.
Credit exposure is minimized by dealing with only credit worthy counterparties. Accounts receivable for the Company’s two
primary customers totaled $1,247,374 (65%) at December 31, 2017 (December 31, 2016 - $2,032,646 or 67%).





The
credit risk on cash and cash equivalents is limited because the Company limits its exposure to credit loss by placing its cash
and cash equivalents with major financial institutions. 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.



F-9









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.



In
order to manage its exposure to foreign exchange risks, the Company is closely monitoring the fluctuations in the foreign currency
exchange rates and the impact on the value of cash and cash equivalents, accounts receivable, and accounts payable and accrued
liabilities. The Company has not hedged its exposure to currency fluctuations.



(r)Equity
Method Investment





The
Company accounts for investments using the equity method of accounting if the investment provides the Company the ability to exercise
significant influence, but not control, over the investee. Significant influence is generally deemed to exist if the Company’s
ownership interest in the voting stock of the investee ranges between 20% and 50%, although other factors, such as representation
on the investee’s board of directors, are considered in determining whether the equity method of accounting is appropriate.
Under the equity method of accounting, the investment is recorded at cost in the consolidated balance sheets under other assets
and adjusted for dividends received and the Company’s share of the investee’s earnings or losses together with other-than-temporary
impairments which are recorded through interest and other loss, net in the consolidated statements of income and comprehensive
income.





(s)Adoption
of new accounting principles



In
July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. The standard will require inventory to be measured
at the lower of cost or net realizable value. The guidance will not apply to inventories for which cost is determined using the
last-in, first-out method or the retail inventory method. The standard is effective for annual and interim reporting periods beginning
after December 15, 2016. Adoption of this standard had no material effect on our consolidated financial statements.



In
March 2016, the FASB issued Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU
2016-09”). This standard was issued as part of the FASB’s Simplification Initiative that involve several aspects of
the accounting for share based payment transactions, including the income tax consequences, classification of awards as either
equity or liabilities and classification on the statement of cash flows. Some of the areas for simplification apply only to nonpublic
entities. For public business entities, ASU 2016-09 is effective for annual periods beginning after December 15, 2016 and interim
periods within those annual periods. The method of adoption is dependent on the specific aspect of accounting addressed in this
new guidance. Early adoption is permitted in any interim or annual period. Adoption of this standard had no material effect on
our consolidated financial statements.



F-10







(t)Accounting
Pronouncements Not Yet Adopted



In
February 2016, the FASB issued ASU 2016-02, Leases. The standard will require lessees to recognize most leases on their balance
sheet and makes selected changes to lessor accounting. The standard is effective for annual and interim reporting periods beginning
after December 15, 2018. A modified retrospective transition approach is required, with certain practical expedients available.
We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements.



In
May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which has been updated through several revisions
and clarifications since its original issuance. The standard will require revenue recognized to represent the transfer of promised
goods or services to customers at an amount that reflects the consideration which a company expects to receive in exchange for
those goods or services. The standard also requires new, expanded disclosures regarding revenue recognition. The standard will
be effective January 1, 2018 with early adoption permissible beginning January 1, 2017. We do not expect this to have a material
impact on our consolidated financial statements.



3.       Accounts
Receivable



|                                     |  | 2017 |           |   | 2016 |  
|------------------------------------ |  | ---- | --------- | - | ---- | -
|                                     |  |      |           |   |      |  
|Accounts
    receivable              |  | $    | 2,145,803 |   |      | $
|Allowances
    for doubtful accounts |  |      | (40,332   | ) |      |  
|                                     |  | $    | 2,105,471 |   |      | $





4.       Inventories

|                               |  | 2017 |           |  | 2016 |  
|------------------------------ |  | ---- | --------- |  | ---- | -
|                               |  |      |           |  |      |  
|Completed
    goods            |  | $    | 2,530,914 |  |      | $
|Work
    in progress           |  |      | 183,944   |  |      |  
|Raw
    materials and supplies |  |      | 1,971,994 |  |      |  
|                               |  | $    | 4,686,852 |  |      | $





In
February 2017, the Company lost $367,331CAD ($277,482USD) in inventory in a fire at the Taber, AB location. Insurance was in place.
See Note 5.



F-11







5.       Property,
Equipment and Leaseholds



|                               |  | 2017 |           |  | Accumulated  |   |           | 2017 | 
|------------------------------ |  | ---- | --------- |  | ------------ | - | --------- | ---- | 
|                               |  | Cost |           |  | Depreciation |   |           | Net  | 
|Buildings
    and improvements |  | $    | 3,400,792 |  |              | $ | 2,409,179 |      | 
|Computer
    hardware          |  |      | 40,904    |  |              |   | 39,398    |      | 
|Furniture
    and fixtures     |  |      | 17,673    |  |              |   | 11,156    |      | 
|Office
    equipment           |  |      | 1,480     |  |              |   | 148       |      | 
|Manufacturing
    equipment    |  |      | 2,590,158 |  |              |   | 2,104,137 |      | 
|Trailer                        |  |      | 9,562     |  |              |   | 1,434     |      | 
|Boat                           |  |      | 34,400    |  |              |   | 14,586    |      | 
|Leasehold
    improvements     |  |      | 85,432    |  |              |   | 32,506    |      | 
|Technology                     |  |      | 101,748   |  |              |   | 101,748   |      | 
|Land                           |  |      | 370,652   |  |              |   | —         |      | 
|                               |  | $    | 6,652,801 |  |              | $ | 4,714,292 |      | 





|                               |  | 2016 |            |  | Accumulated  |   |           | 2016 | 
|------------------------------ |  | ---- | ---------- |  | ------------ | - | --------- | ---- | 
|                               |  | Cost |            |  | Depreciation |   |           | Net  | 
|Buildings
    and improvements |  | $    | 4,762,094  |  |              | $ | 2,967,370 |      | 
|Computer
    hardware          |  |      | 89,480     |  |              |   | 85,784    |      | 
|Furniture
    and fixtures     |  |      | 32,439     |  |              |   | 23,142    |      | 
|Office
    equipment           |  |      | 17,745     |  |              |   | 16,788    |      | 
|Manufacturing
    equipment    |  |      | 5,236,404  |  |              |   | 4,102,635 |      | 
|Trailer                        |  |      | 12,859     |  |              |   | 12,250    |      | 
|Boat                           |  |      | 34,400     |  |              |   | 9,632     |      | 
|Leasehold
    improvements     |  |      | 85,432     |  |              |   | 15,419    |      | 
|Technology                     |  |      | 101,748    |  |              |   | 101,748   |      | 
|Land                           |  |      | 356,111    |  |              |   | —         |      | 
|                               |  | $    | 10,728,712 |  |              | $ | 7,334,768 |      | 









Amount
of depreciation expense for 2017: $270,178 (2016: $524,463) and is included in cost of sales in the consolidated statements of
income and comprehensive income.





In
February 2017, the Company lost a net carrying value total of $2,196,722CAD ($1,659,404USD) in building and manufacturing equipment
in a fire at the Taber, AB location. Insurance was in place. During the year ended December 31, 2017, the Company was approved
for interim insurance proceeds of $5,570,000CAD ($4,207,578USD).



F-12









6.       Patents





|        |  | 2017 Cost |         |  | Accumulated
    Amortization |   |         | 2017 Net | 
|------- |  | --------- | ------- |  | ---------------------------- | - | ------- | -------- | 
|Patents |  | $         | 212,426 |  |                              | $ | 132,974 |          | 





|        |  | 2016 Cost |         |  | Accumulated
    Amortization |   |         | 2016 Net | 
|------- |  | --------- | ------- |  | ---------------------------- | - | ------- | -------- | 
|Patents |  | $         | 197,448 |  |                              | $ | 101,558 |          | 





Increase
in 2017 cost was due to currency conversion. 2017 cost in Canadian dollars - $265,102 (2016 - $265,102 in Canadian dollars).



Amount
of amortization for 2017: $16,438 (2016: $15,616) and is included in cost of sales in the consolidated statements of income
and comprehensive income (loss).





Estimated
amortization expense over the next five years is as follows:



|2018 |  | $ | 16,438 | 
|---- |  | - | ------ | 
|2019 |  |   | 16,438 | 
|2020 |  |   | 16,438 | 
|2021 |  |   | 16,438 | 
|2022 |  |   | 16,438 | 





7.       Long
Term Deposits



The
Company has security deposits that are long term in nature which consist of damage deposits held by landlords and security deposits
held by various vendors.





|                       |  |   | 2017   |  |  |   | 2016   | 
|---------------------- |  | - | ------ |  |  | - | ------ | 
|                       |  |   |        |  |  |   |        | 
|Long
    term deposits |  | $ | 18,531 |  |  | $ | 26,163 | 



8.       Equity
Method Investment





The Company has a 42%
ownership interest in ENP Peru Investments LLC (“ENP Peru”), which the Company acquired in fiscal 2016.
ENP Peru is located in Illinois and leases warehouse space. The Company accounts for this investment using the equity method
of accounting. A summary of the Company’s investment is as follows:





|                                     |  |   |        
|------------------------------------ |  | - | -------
|January 1,
    2016 Balance          |  |   | -      
|Capital
    contributions            |  | $ | 150,066
|Return of
    equity                 |  |   | (12,500
|Loss
    in equity method investment |  |   | (15,086
|December 31,
    2016 Balance        |  | $ | 122,480
|Return of
    equity                 |  |   | (25,000
|Loss
    on equity method investment |  |   | (84,066
|December
    31, 2017 Balance        |  |   | 13,414 





F-13







9.       Short-Term
Line of Credit





In
May 2017, the Company signed a new agreement with Harris Bank (“the Bank”) to renew the expiring credit line. The
revolving line of credit is for an aggregate amount of up to the lesser of (i) $3,000,000, or (ii) 75% of eligible domestic accounts
receivable and certain foreign accounts receivable plus 40% of inventory. The loan has an annual interest rate of 5%. (2016
– 4%) and is up for renewal on June 30, 2018.



The
Revolving Line of Credit contains customary affirmative and negative covenants, including the following: compliance with laws,
provision of financial statements and periodic reports, payment of taxes, maintenance of inventory and insurance, maintenance
of operating accounts at the Bank, the Bank’s access to collateral, formation or acquisition of subsidiaries, incurrence
of indebtedness, dispositions of assets, granting liens, changes in business, ownership or business locations, engaging in mergers
and acquisitions, making investments or distributions and affiliate transactions. The covenants also require that the Company
maintain a minimum ratio of qualifying financial assets to the sum of qualifying financial obligations. As of December 31, 2017,
Company was in compliance with all loan covenants.



To
secure the repayment of any amounts borrowed under the Revolving Line of Credit, the Company granted the Bank a security interest
in substantially all of the assets of NanoChem Solutions Inc., exclusive of intellectual property assets.



Short-term
borrowings outstanding under the Revolving Line as of December 31, 2017 were $250,000 (December 31, 2016 - $250,000).



10.       Long
Term Debt



In
September 2014, NanoChem Solutions Inc. signed a $1,005,967 promissory note with Harris Bank with a rate of prime plus 0.5% (2017
– 5%) to be repaid over 5 years with equal monthly installments plus interest. This money was used to retire the previously
issued and outstanding debt obligations. The balance owing at December 31, 2017 was $352,089 (December 31, 2016 - $553,282). The
final payment will be made in September 2019.





The
Company has committed to the following repayments:



|2018 |  | $ | 201,193 | 
|---- |  | - | ------- | 
|2019 |  | $ | 150,896 | 





As
of December 31, 2017, Company was in compliance with all loan covenants.





|                               |  | December
    31, 2017 |          |   | December
    31, 2016 |  
|------------------------------ |  | --------------------- | -------- | - | --------------------- | -
|Continuity                     |  |                       |          |   |                       |  
|Balance,
    beginning of year |  | $                     | 553,282  |   |                       | $
|Less:
    Payments on loan     |  |                       | 201,193  |   |                       |  
|Balance,
    end of year       |  | $                     | 352,089  |   |                       | $
|Less:
    current portion      |  |                       | (201,193 | ) |                       |  
|Long
    term balance          |  | $                     | 150,896  |   |                       | $



F-14









11.       Income
Tax



The
provision for income tax expense (benefit) is comprised of the following:



|                             |  | 2017 |           |   | 2016 |  
|---------------------------- |  | ---- | --------- | - | ---- | -
|Current tax, federal         |  | $    | 547,486   |   |      | $
|Current tax, state           |  |      | 132,833   |   |      |  
|Current tax, foreign         |  |      | -         |   |      |  
|Current tax, total           |  |      | 680,319   |   |      |  
|                             |  |      |           |   |      |  
|Deferred income tax, federal |  |      | (11,069   | ) |      |  
|Deferred income tax, state   |  |      | (2,686    | ) |      |  
|Deferred income tax, foreign |  |      | 385,639   |   |      |  
|Deferred income tax, total   |  |      | 371,884   |   |      |  
|Total                        |  | $    | 1,052,203 |   |      | $



The
following table reconciles the income tax benefit at the U.S. Federal statutory rate to income tax benefit at the Company’s
effective tax rates.



|                                                                          |  | 2017 |           |   | 2016 | 
|------------------------------------------------------------------------- |  | ---- | --------- | - | ---- | 
|Income (loss) before tax, net of tax from gain on involuntary disposition |  |      | 3,420,556 |   |      | 
|Tax from gain on involuntary disposition                                  |  |      | (613,611  | ) |      | 
|Income (loss) before taxes                                                |  |      | 2,806,945 |   |      | 
|US statutory tax rates                                                    |  |      | 39.69     | % |      | 
|Expected income tax (recovery)                                            |  |      | 1,114,147 |   |      | 
|Non-deductible items                                                      |  |      | 520,665   |   |      | 
|Change in estimates                                                       |  |      | (91,632   | ) |      | 
|Change in enacted tax rate                                                |  |      | 189,626   |   |      | 
|Option expired during the year                                            |  |      | 21,640    |   |      | 
|Foreign tax rate difference                                               |  |      | (662,381  | ) |      | 
|Change in valuation allowance                                             |  |      | (39,863   | ) |      | 
|Total income taxes (recovery)                                             |  |      | 1,052,203 |   |      | 
|                                                                          |  |      |           |   |      | 
|Current income tax expenses (recovery)                                    |  |      | 680,318   |   |      | 
|Deferred tax expenses (recovery)                                          |  |      | 371,884   |   |      | 
|Total income taxes (recovery)                                             |  |      | 1,052,203 |   |      | 



Deferred
taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes. Deferred tax assets (liabilities) at December 31, 2017 and 2016 are comprised of the following:



|Canada                             |  | 2017 |           |  | 2016 | 
|---------------------------------- |  | ---- | --------- |  | ---- | 
|Non capital loss carryforwards     |  |      | 1,378,242 |  |      | 
|Patents                            |  |      | 69,597    |  |      | 
|Fixed assets                       |  |      | -         |  |      | 
|Financial instruments              |  |      | -         |  |      | 
|                                   |  |      | 1,447,839 |  |      | 
|Valuation Allowance                |  |      | -         |  |      | 
|Net Deferred tax asset (liability) |  |      | 1,447,839 |  |      | 



|USA                               |  |      |         |  |      | 
|--------------------------------- |  | ---- | ------- |  | ---- | 
|                                  |  | 2017 |         |  | 2016 | 
|Fixed Assets                      |  |      | 351,746 |  |      | 
|Stock-Based Compensation          |  |      | 154,023 |  |      | 
|                                  |  |      | 505,768 |  |      | 
|Deferred tax asset not recognized |  |      | 189,684 |  |      | 
|Net Deferred tax asset            |  |      | 316,084 |  |      | 







F-15









The
Company has non-operating loss carryforwards of approximately $5,097,682 (2016 - $3,075,838) which may be carried forward to apply
against future year income tax for Canadian income tax purposes, subject to the final determination by taxation authorities, expiring
in the following years:



|Expiry |  | Loss |          
|------ |  | ---- | ---------
|2029   |  |      | 710,778  
|2030   |  |      | 862,371  
|2031   |  |      | 992,967  
|2032   |  |      | 649,299  
|2033   |  |      | 77,587   
|2037   |  |      | 1,804,680
|Total  |  |      | 5,097,682



As
at December 31, 2017, the Company has no net operating losses carryforward available for US tax purposes.



Accounting
for Uncertainty for Income Tax



Effective
January 1, 2009, the Company adopted the interpretation for accounting for uncertainty in income taxes which was an interpretation
of the accounting standard accounting for income taxes. This interpretation created a single model to address accounting for uncertainty
in tax positions. This interpretation clarifies the accounting for income taxes, by prescribing a minimum recognition threshold
a tax position is required to meet before being recognized in the financial statements.



As
at December 31, 2017 and 2016, the Company’s consolidated balance sheets did not reflect a liability for uncertain tax positions,
nor any accrued penalties or interest associated with income tax uncertainties. The Company has no income tax examinations in
progress.





F-16







12.       Income
Per Share





We
present both basic and diluted income per share on the face of our consolidated statements of income. Basic and diluted income
per share are calculated as follows:





|                                            |  | 2017 |            |  | 2016 |  
|------------------------------------------- |  | ---- | ---------- |  | ---- | -
|                                            |  |      |            |  |      |  
|Net income (loss)                           |  | $    | 1,754,741  |  |      | $
|Weighted average common shares outstanding: |  |      |            |  |      |  
|Basic                                       |  |      | 11,485,580 |  |      |  
|Diluted                                     |  |      | 11,725,482 |  |      |  
|Net income (loss) per common share:         |  |      |            |  |      |  
|Basic                                       |  | $    | 0.15       |  |      | $
|Diluted                                     |  | $    | 0.15       |  |      | $





Certain
stock options whose terms and conditions are described in Note 13, “Stock Options” could potentially dilute basic
EPS in the future, but were not included in the computation of diluted EPS because to do so would have been anti-dilutive. Those
anti-dilutive options are as follows.



|                          |  |  | 2017 |  |  |  | 2016   | 
|------------------------- |  |  | ---- |  |  |  | ------ | 
|                          |  |  |      |  |  |  |        | 
|Anti-dilutive
    options |  |  | nil  |  |  |  | 72,000 | 



There
were no preferred shares issued and outstanding during the years ended December 31, 2017 or 2016.



13.       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 promote the success of the Company’s business. 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.



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.



F-17







The
following table summarizes the Company’s stock option activity for the years ended December 31, 2017 and 2016:



|                                   |  | Number
    of shares |           |   | Exercise
    priceper share |  |                                                        | Weighted
    average exercise price | 
|---------------------------------- |  | -------------------- | --------- | - | --------------------------- |  | ------------------------------------------------------ | ----------------------------------- | 
|                                   |  |                      |           |   |                             |  |                                                        |                                     | 
|Balance,
    December 31, 2015     |  |                      | 1,190,000 |   |                             |  | $0.75
                                         - $2.45 |                                     | 
|Granted                            |  |                      | 168,000   |   |                             |  | $1.42                                                  |                                     | 
|Cancelled
    or expired           |  |                      | (515,000  | ) |                             |  | $0.75
                                         – 2.45  |                                     | 
|Exercised                          |  |                      | (30,000   | ) |                             |  | $1.00
                                         – 1.21  |                                     | 
|Balance,
    December 31, 2016     |  |                      | 813,000   |   |                             |  | $0.75
                                         – 2.22  |                                     | 
|Granted                            |  |                      | 154,000   |   |                             |  | $1.70                                                  |                                     | 
|Cancelled
    or expired           |  |                      | (114,000  | ) |                             |  | $1.00
                                         - 2.22  |                                     | 
|Exercised                          |  |                      | (140,000  | ) |                             |  | $0.75
                                         – 1.21  |                                     | 
|Balance,
    December 31, 2017     |  |                      | 713,000   |   |                             |  | $0.75
                                         – 1.70  |                                     | 
|Exercisable,
    December 31, 2017 |  |                      | 559,000   |   |                             |  | $0.75
                                         – 1.41  |                                     | 



The
weighted-average remaining contractual life of outstanding options is 2.8 years.



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



|                                                   |  | 2017 |        |   | 2016 |  
|-------------------------------------------------- |  | ---- | ------ | - | ---- | -
|                                                   |  |      |        |   |      |  
|Expected
    life – years                          |  |      | 3.0    |   |      |  
|Interest
    rate                                  |  |      | 2.23   | % |      |  
|Volatility                                         |  |      | 73.09  | % |      |  
|Dividend
    yield                                 |  |      | —      | % |      |  
|Weighted average
    fair value of options granted |  | $    | 0.8344 |   |      | $



During
the year ended December 31, 2017, the Company granted 40,000 (2016 – 40,000) stock options to consultants and has applied
ASC 718 using the Black-Scholes option-pricing model, which resulted in additional expenses of $6,675 (2016 - $5,658). Options
granted in other years resulted in additional expenses of $22,634 (2016 – $11,879). During the year ended December 31, 2017,
employees were granted 114,000 (2016 – 128,000) stock options, which resulted in additional expenses of $19,024 (2016 –
$17,824). Options granted in other years resulted in additional expenses in the amount of $67,759 for employees during the year
ended December 31, 2017 (2016 - $30,957). There were 110,000 employee and 30,000 consultant stock options exercised during the
year ended December 31, 2017 (2016 – 30,000 employee; nil consultant).



As
of December 31, 2017, there was approximately $102,798 of compensation expense related to non-vested awards. This expense is expected
to be recognized over a weighted average period of 1 year.



The
aggregate intrinsic value of vested options outstanding at December 31, 2017 is $413,410 (2016 – nil).



14.
       Capital Stock.



During
the year ended December 31, 2017, the Company issued 110,000 shares upon the exercise of employee stock options and 30,000 shares
upon the exercise of consultant stock options



F-18









On
January 6, 2016, the Company repurchased 1,750,000 shares of its common stock at $0.90 per share for a total purchase price of
$1,575,000. The shares were returned to treasury.



The
Company issued 30,000 shares upon the exercise of employee stock options during the year ended December 31, 2016.



15.       Segmented,
Significant Customer Information and Economic Dependency.



The
Company operates in two segments:



(a)
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.



(b)
Biodegradable polymers (“BCPA’s”), also known as TPA’s, used by the petroleum, chemical, utility and mining
industries to prevent corrosion and scaling in water piping. This product can also be used in detergents to increase biodegradability
and in agriculture to increase crop yields by enhancing fertilizer uptake.



The
accounting policies of the segments are the same as those described in Note 2, 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.



Year
ended December 31, 2017:





|                                |  | EWCP |           |  | BCPA |   |            | Consolidated | 
|------------------------------- |  | ---- | --------- |  | ---- | - | ---------- | ------------ | 
|                                |  |      |           |  |      |   |            |              | 
|Sales                           |  | $    | 641,675   |  |      | $ | 14,852,650 |              | 
|Interest expense                |  |      | 54        |  |      |   | 44,071     |              | 
|Depreciation                    |  |      | 62,376    |  |      |   | 219,108    |              | 
|Income tax expense              |  |      | -         |  |      |   | 680,319    |              | 
|Segment profit                  |  |      | 2,021,289 |  |      |   | (266,548)  |              | 
|Segment assets                  |  |      | 580,304   |  |      |   | 1,437,657  |              | 
|Expenditures for segment assets |  |      | 287,853   |  |      |   | 138,628    |              | 















F-19













Year
ended December 31, 2016:



|                                    |  | EWCP |           |   | BCPA |   |            | Consolidated | 
|----------------------------------- |  | ---- | --------- | - | ---- | - | ---------- | ------------ | 
|                                    |  |      |           |   |      |   |            |              | 
|Sales                               |  | $    | 785,660   |   |      | $ | 15,460,354 |              | 
|Interest expense                    |  |      | 59        |   |      |   | 41,640     |              | 
|Depreciation                        |  |      | 325,696   |   |      |   | 214,383    |              | 
|Income tax expense                  |  |      | -         |   |      |   | 982,133    |              | 
|Segment profit (loss)               |  |      | (417,770  | ) |      |   | 2,211,104  |              | 
|Segment assets                      |  |      | 1,966,564 |   |      |   | 1,523,270  |              | 
|Expenditures
    for segment assets |  |      | 6,352     |   |      |   | 107,918    |              | 



Sales
by territory are shown below:



|                             |  | 2017 |            |  | 2016 |  
|---------------------------- |  | ---- | ---------- |  | ---- | -
|                             |  |      |            |  |      |  
|Canada                       |  | $    | 362,362    |  |      | $
|United States
    and abroad |  |      | 15,131,963 |  |      |  
|Total                        |  | $    | 15,494,325 |  |      | $



The
Company’s long-lived assets (property, equipment, leaseholds and patents) are located in Canada and the United States as
follows:



|              |  | 2017 |           |  | 2016 |  
|------------- |  | ---- | --------- |  | ---- | -
|              |  |      |           |  |      |  
|Canada        |  | $    | 580,304   |  |      | $
|United States |  |      | 1,437,657 |  |      |  
|Total         |  | $    | 2,017,961 |  |      | $



Three
customers accounted for $8,453,163 (55%) of sales made in 2017 (2016 - $10,148,042 or 62%).



16.
Commitments.





The Company is committed
to minimum rental payments for property and premises aggregating approximately $735,670 over the term of two leases, the
last expiring on October 31, 2021.





Commitments for rent
in the next four years are as follows:





|2018 |  | $ | 201,840 | 
|---- |  | - | ------- | 
|2019 |  | $ | 205,580 | 
|2020 |  | $ | 209,400 | 
|2021 |  | $ | 118,850 | 



17.
Subsequent Events.



In
January 2018, the Company issued 23,000 shares on the exercise of employee stock options and 10,000 shares on the exercise of
consultant stock options.



F-20







Item
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.



None.



Item
9A. 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 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 Annual Report on Form 10-K for the year ended December 31, 2017, 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.



Management’s
Report on Internal Control Over Financial Reporting



Our
management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment
of the effectiveness of internal control over financial reporting. As defined by the Securities and Exchange Commission, internal
control over financial reporting is a process designed by, or under the supervision of our principal executive officer and principal
financial officer and implemented by our Board of Directors, management and other personnel, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of our financial statements in accordance with U.S. generally accepted
accounting principles.



Our
internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with U.S.
generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations
of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of our assets that could have a material effect on the financial statements.



Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



In
connection with the preparation of our annual financial statements, management has undertaken an assessment of the effectiveness
of our internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or the 2013 COSO Framework.
Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing
of the operational effectiveness of those controls.





17







Based
on this evaluation, management has concluded that our internal control over financial reporting was effective as of December 31,
2017.



There
was no change in our internal control over financial reporting that occurred during the period covered by this report that has
materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



Item
9B. Other Information.



None.



Item
10. Directors, Executive Officers and Corporate Governance.



|Name                                                                          |  | Age           |  | Position                                                                                         
|----------------------------------------------------------------------------- |  | ------------- |  | -------------------------------------------------------------------------------------------------
|                                                                              |  |               |  |                                                                                                  
|Daniel
    B. O’Brien                                                         |  | 61            |  | President,
    Chief Executive Officer, Principal Financial and Accounting Officer and a Director
|John
    H. Bientjes                                                          |  | 65            |  | Director                                                                                         
|Robert
    Helina                                                             |  | 52            |  | Director                                                                                         
|Tom
                                         Fyles
        Ben
        Seaman |  | 66
        37 |  | Director
        Director                                                                        
|David
    Fynn                                                                |  | 60            |  | Director                                                                                         



Daniel
B. O’Brien has served as our President, Chief Executive Officer and Principal Financial and Accounting Officer, as well
as a director since June 1998. He has been involved in the swimming pool industry since 1990, when he founded our subsidiary,
Flexible Solutions Ltd. From 1990 to 1998 Mr. O’Brien was also a teacher at Brentwood College where he was in charge of
outdoor education.



John
H. Bientjes has been a director since February 2000. Since 1984, Mr. Bientjes has served as the manager of the Commercial Aquatic
Supplies Division of D.B. Perks & Associates, Ltd., located in Vancouver, British Columbia, a company that markets supplies
and equipment to commercial swimming pools which are primarily owned by municipalities. Mr. Bientjes graduated in 1976 from Simon
Fraser University in Vancouver, British Columbia with a Bachelor of Arts Degree in Economics and Commerce.



Robert
T. Helina has been a director since October 2011. Mr. Helina has been involved in the financial services industry for over 25
years which has given him extensive knowledge in business, economics and finance. His specially is in Corporate Finance and Capital
Markets. Mr. Helina holds a Bachelor of Arts degree from Trinity Western University.



Thomas
M. Fyles has been a director since August 2012. Since 1979 Dr. Fyles has been a chemistry professor at the University of Victoria
(Assistant Professor 1979-1984/Associate Professor 1984-1992/and Professor with Tenure since 1992) Dr. Fyles received his Bachelor
of Science degree (with honors) from the University of Victoria in 1974 and his Ph.D. in chemistry from York University in 1977.
Dr. Fyles was a postdoctoral fellow with Prof. J.M. Lehn, Institut Le Bel, Universite Louis Pasteur, Strasbourg, France, between
September 1977 and July 1979.



18







Ben
Seaman was elected as a director in 2016. Mr. Seaman has been the CEO of Eartheasy.com Sustainable
Living Ltd since 2007, growing the company from $50K to over $25M in annual revenue. His company has contributed over $1M towards
clean water projects in Kenya since 2013, and has been recognized internationally by the Stockholm Challenge Award and the Outdoor
Industry Inspiration Award in 2016. Prior to that, he worked in sales and investor relations at Flexible Solutions. Mr. Seaman
graduated from the University of Victoria with a Bachelor of Science degree in 2004. He has significant experience in launching
new products, marketing, distribution and e-commerce in both the US and Canada. He’s a strong believer in the triple bottom
line approach to business, giving consideration to social and environmental issues in addition to financial performance.



David
Fynn was elected as a director in 2016. Mr. David Fynn is a Canadian Chartered Professional Accountant
and services individuals/companies in many sectors including mining and commodities in his private practice. David worked as a
senior manager with KPMG in Canada and Ernst & Young in the United Kingdom and Saudi Arabia. Since 1996 he has been the principal
of D.A. Fynn & Associates Inc., an accounting firm.



Directors
are elected annually and hold office until the next annual meeting of our stockholders and until their successors are elected
and qualified. All executive offices are chosen by the board of directors and serve at the board’s discretion.





John
Bientjes, Thomas Fyles, Ben Seaman and David Fynn are independent directors as that term is defined in section 803 of the listing
standards of the NYSE American.



Our
Audit Committee, consisting of John Bientjes, Ben Seaman and David Fynn all of whom have strong financial backgrounds, facilitates
and maintains open communications with our board of directors, senior management and our independent auditors. Our Audit Committee
also serves as an independent and objective party which monitors our financial reporting process and internal control system.
In addition, our Audit Committee reviews and appraises the efforts of our independent auditors. Our Audit Committee meets periodically
with management and our independent auditors. John Bientjes and David Fynn meet the SEC’s definition of an audit committee
financial expert. Each member of the Audit Committee is “independent” as that term is defined in Section 803 of the
listing standards of the NYSE American.



Our
Compensation Committee, consisting of John Bientjes, Ben Seaman and David Fynn, establishes salary, incentive and other forms
of compensation for our Chief Executive Officer and administers our Stock Option Program. None of our officers participated in
deliberations of the compensation committee concerning executive officer compensation. During the year ended December 31, 2017,
none of our executive officers served as a member of the compensation committee or as a director of another entity, one of
whose executive officers served on our compensation committee or as one of our directors.



We
have adopted a Code of Ethics that applies to our Chief Executive Officer, our Chief Financial Officer and our Principal Accounting
Officer, as well as our other senior management and financial staff. Interested persons may obtain a copy of our Code of Ethics
from our website at www.flexiblesolutions.com.





19







We
believe our directors benefit us for the following reasons:





| | Name                  |  | Reason                                                                                                                                  
| | --------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------
| |                       |  |                                                                                                                                         
| | Daniel
    B. O’Brien |  | Long
    standing relationship with us.                                                                                                 
| | John
    J. Bientjes  |  | Long
    standing relationship with us.                                                                                                 
| | Robert
    Helina     |  | Corporate
    finance experience.                                                                                                       
| | Dr.
    Thomas Fyles  |  | Scientific
    expertise.                                                                                                               
| | Ben
    Seaman        |  | Younger
    generation businessman increases our awareness of internet sales and adds value to our audit and compensation
    committees
| | David
    Fynn        |  | Experienced
    accountant adds value our audit and compensation committees                                                             





Item
11. Executive Compensation.



Summary
Compensation Table



The
following table shows in summary form the compensation earned by (i) our Chief Executive Officer and (ii) by each other executive
officer who earned in excess of $100,000 during the two fiscal years ended December 31, 2017.



|Name and Princi-                                                     |  | Fiscal |      |  | Salary |   |         | Bonus |  |  | Restric-ted Stock Awards |  |  | Options
    Awards |   |  | All
    Other 
    Annual
    Compen-
    sation |  |   |       | 
|-------------------------------------------------------------------- |  | ------ | ---- |  | ------ | - | ------- | ----- |  |  | ------------------------ |  |  | ------------------ | - |  | ------------------------------------------------ |  | - | ----- | 
|pal Position                                                         |  | Year   |      |  | (1)    |   |         | (2)   |  |  | (3)                      |  |  | (4)                |   |  | (5)                                              |  |   | Total | 
|                                                                     |  |        |      |  |        |   |         |       |  |  |                          |  |  |                    |   |  |                                                  |  |   |       | 
|Daniel B. O’Brien                                                    |  |        | 2017 |  |        | $ | 901,605 |       |  |  | —                        |  |  |                    | — |  |                                                  |  | — |       | 
|President, Chief                                                     |  |        | 2016 |  |        | $ | 743,042 |       |  |  | —                        |  |  |                    | — |  |                                                  |  | — |       | 
|Executive Officer and Principal Financial
    and Accounting Officer |  |        |      |  |        |   |         |       |  |  |                          |  |  |                    |   |  |                                                  |  |   |       | 



|(1) | The
    dollar value of base salary (cash and non-cash) earned.                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                     
|(2) | The
    dollar value of bonus (cash and non-cash) earned.                                                                                                           
|    |                                                                                                                                                                     
|(3) | During
    the periods covered by the table, the value of the shares of restricted stock issued as compensation for services to the persons
    listed in the table.
|    |                                                                                                                                                                     
|(4) | The
    value of all stock options granted during the periods covered by the table.                                                                                 
|    |                                                                                                                                                                     
|(5) | All
    other compensation received that we could not properly report in any other column of the table.                                                             



During
the year ended December 31, 2012, the Company determined that Daniel B. O’Brien, the Company’s President and Chief
Executive Officer, was underpaid. Accordingly, the Company increased Mr. O’Brien’s annual salary to twice that which
was paid to the highest paid employee of the Company. The Company expects that Mr. O’Brien’s salary for the year ending
December 31, 2018 will again be twice the annual salary paid to the Company’s highest paid employee, excluding Mr. O’Brien.



20







Non-Qualified
Stock Option Plan



In
August 2014 we adopted a Non-Qualified Stock Option Plan which authorizes the issuance of up to 1,500,000 shares of our common
stock to persons that exercise options granted pursuant to the Plan. Our employees, directors and officers, and consultants or
advisors are eligible to be granted options pursuant to the Non-Qualified Plan.



The
Plan is administered by our Compensation Committee. The Committee is vested with the authority to determine the number of shares
issuable upon the exercise of the options, the exercise price and expiration date of the options, and when, and upon what conditions
options granted under the Plan will vest or otherwise be subject to forfeiture and cancellation.



During
the fiscal year ended December 31, 2017 we issued 154,000 options pursuant to the Non-Qualified Plan (2016 – 168,000).



Stock
Option Program



Prior
to August 2014 we had a Stock Option Program which involved the issuance of options, from time to time, to our employees, directors,
officers, consultants and advisors. Options were granted by means of individual option agreements. Each option agreement specified
the shares issuable upon the exercise of the option, the exercise price, the expiration date and other terms and conditions of
the option.



Options
granted had terms of between one and five years after the date of grant and had exercise prices equal to the fair market value
of a share of our common stock on the date of grant.



As
a result of the adoption of our Non-Qualified Stock Option Plan in August 2014, all future options have been granted pursuant
to the Non-Qualified Stock Option Plan.



Summary



The
following table shows the weighted average exercise price of the outstanding options granted pursuant to our Non-Qualified Stock
Option Plan and our Stock Option Program as of December 31, 2017, our most recently completed fiscal year.



|Plan
    Category               |  | Number
    of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights |         |  | Weighted-Average
    Exercise Price of Outstanding Options, Warrants and Rights |   |      | Number
    of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in
    Column (a)) | 
|------------------------------- |  | ----------------------------------------------------------------------------------------------- | ------- |  | ------------------------------------------------------------------------------- | - | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------- | 
|                                |  | (a)                                                                                             |         |  | (b)                                                                             |   |      | (c)                                                                                                                                                 | 
|Non-Qualified Stock Option Plan |  |                                                                                                 | 561,000 |  |                                                                                 | $ | 1.26 |                                                                                                                                                     | 
|                                |  |                                                                                                 |         |  |                                                                                 |   |      |                                                                                                                                                     | 
|Stock Option
    Program        |  |                                                                                                 | 152,000 |  |                                                                                 | $ | 1.03 |                                                                                                                                                     | 
|                                |  |                                                                                                 |         |  |                                                                                 |   |      |                                                                                                                                                     | 
|Total                           |  |                                                                                                 | 713,000 |  |                                                                                 | $ | 1.21 |                                                                                                                                                     | 



21







Our
Non-Qualified Stock Option Plan and all grants made pursuant to our Stock Option Program have been approved by our shareholders.





As
of December 31, 2017 options to purchase 561,000 shares of our common stock were outstanding under our Non-Qualified Stock Option
Plan. The exercise price of these options varies between $0.75 and $1.70 per share and the options expire at various dates
between on December 31, 2019 and December 31, 2022.



As
of December 31, 2017 options to purchase 152,000 shares of our common stock were outstanding under our Stock Option Program. The
exercise price of these options varies between $1.00 and $1.21 per share. The options expire on December 31, 2018.



No
options were exercised by our executive officers during the fiscal year ended December 31, 2017.





Director
Compensation



We
reimburse directors for any expenses incurred in attending board meetings. We also compensate directors $5,000 annually for each
year that they serve.



Our
directors received the following compensation in 2017:



|Name             |  | Paid
    in Cash |       |  | Stock
    Awards (1) |  |   | Option
    Awards (2) | 
|---------------- |  | ---------------- | ----- |  | -------------------- |  | - | --------------------- | 
|                 |  |                  |       |  |                      |  |   |                       | 
|John H. Bientjes |  | $                | 5,000 |  |                      |  | — |                       | 
|Dale Friend      |  | $                | 5,000 |  |                      |  | — |                       | 
|Robert Helina    |  | $                | 5,000 |  |                      |  | — |                       | 
|Tom Fyles        |  | $                | 5,000 |  |                      |  | — |                       | 



|(1) | The
    fair value of stock issued for services computed in accordance with ASC 718 on the date of grant.
|--- | ---------------------------------------------------------------------------------------------------------
|    |                                                                                                          
|(2) | The
    fair value of options granted computed in accordance with ASC 718 on the date of grant.          



The
terms of outstanding options granted to our directors are shown below:



|Name             |  | Option
    Price |      |  | No.
    of Options |  |       | Expiration
    Date
|---------------- |  | ---------------- | ---- |  | ------------------ |  | ----- | -------------------
|John H. Bientjes |  | $                | 1.00 |  |                    |  | 5,000 |                    
|John H. Bientjes |  | $                | 1.05 |  |                    |  | 5,000 |                    
|Robert Helina    |  | $                | 1.00 |  |                    |  | 5,000 |                    
|Robert Helina    |  | $                | 1.05 |  |                    |  | 5,000 |                    



Daniel
B. O’Brien was not compensated for serving as directors during 2017.



22







Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.



The
following table shows the beneficial ownership of our common stock as of March 30, 2018 by (i) each stockholder who is known by
us to own beneficially more than five percent of our outstanding common stock, (ii) each of our officers and directors, and (iii)
by all of our executive officers and directors as a group.



|                                                      |  | Shares
    (1) |           |  | Percentage
    Ownership | 
|----------------------------------------------------- |  | -------------- | --------- |  | ------------------------ | 
|                                                      |  |                |           |  |                          | 
|Daniel B. O’Brien                                     |  |                | 4,521,900 |  |                          | 
|6001 54 Ave.                                          |  |                |           |  |                          | 
|Taber, AB                                             |  |                |           |  |                          | 
|Canada T1G 1X4                                        |  |                |           |  |                          | 
|                                                      |  |                |           |  |                          | 
|John Bientjes                                         |  |                | 10,000    |  |                          | 
|#1-230 West 13th Street North                         |  |                |           |  |                          | 
|Vancouver, B.C.                                       |  |                |           |  |                          | 
|Canada V7M 1N7                                        |  |                |           |  |                          | 
|                                                      |  |                |           |  |                          | 
|Robert Helina                                         |  |                | 15,000    |  |                          | 
|6001 54 Ave.                                          |  |                |           |  |                          | 
|Taber, AB                                             |  |                |           |  |                          | 
|Canada T1G 1X4                                        |  |                |           |  |                          | 
|                                                      |  |                |           |  |                          | 
|Dr. Thomas Fyles                                      |  |                | 15,000    |  |                          | 
|Box 3065                                              |  |                |           |  |                          | 
|Victoria, BC                                          |  |                |           |  |                          | 
|Canada V8W 3V6                                        |  |                |           |  |                          | 
|                                                      |  |                |           |  |                          | 
|Ben Seaman                                            |  |                | 800       |  |                          | 
|Unit 605 5 E. Cordova St.                             |  |                |           |  |                          | 
|Vancouver BC                                          |  |                |           |  |                          | 
|Canada V6A 0A5                                        |  |                |           |  |                          | 
|                                                      |  |                |           |  |                          | 
|David Fynn                                            |  |                | 0         |  |                          | 
|202-2526 Yale Court,                                  |  |                |           |  |                          | 
|Abbotsford, BC                                        |  |                |           |  |                          | 
|Canada V2S 8G9                                        |  |                |           |  |                          | 
|                                                      |  |                |           |  |                          | 
|All officers
    and directors as a group (6 persons) |  |                | 4,562,700 |  |                          | 



|(1) | Includes
    shares which may be acquired on the exercise of the stock options, all of which were exercisable as of March 30, 2018, listed
    below.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------



23







|Name          |  | No.
    of Options |       |  | Exercise
     Price |   |      | Expiration
    Date
|------------- |  | ------------------ | ----- |  | ------------------- | - | ---- | -------------------
|              |  |                    |       |  |                     |   |      |                    
|John Bientjes |  |                    | 5,000 |  |                     | $ | 1.00 |                    
|              |  |                    | 5,000 |  |                     | $ | 1.05 |                    
|              |  |                    |       |  |                     |   |      |                    
|Robert Helina |  |                    | 5,000 |  |                     | $ | 1.00 |                    
|              |  |                    | 5,000 |  |                     | $ | 1.05 |                    



Item
13. Certain Relationships and Related Transactions, Director Independence.





Not
applicable.





Item
14. Principal Accountant Fees and Services.



MNP,
LLP, Chartered Accountants, examined our financial statements for the years ended December 31, 2016 and 2015.



Audit
Fees



MNP
was paid $72,375 and $64,553 for the fiscal years ended December 31, 2017 and 2016, respectively, for professional services rendered
in the audit of our annual financial statements and for the reviews of the financial statements included in our quarterly reports
on Form 10-Q during these fiscal years.



Tax
Fees



MNP
was paid nil and $5,663 for the fiscal years ended December 31, 2017 and 2016, respectively, for professional services rendered
for the preparation and filing of our income tax returns for the fiscal years ended December 31, 2016 and 2015.



All
Other Fees



MNP
was not paid any other fees for professional services during the fiscal years ended December 31, 2017 and 2016.



24







Audit
Committee Pre-Approval Policies



Rules
adopted by the SEC in order to implement requirements of the Sarbanes-Oxley Act of 2002 require public company audit committees
to pre-approve audit and non-audit services. Our Audit Committee has adopted a policy for the pre-approval of all audit, audit-related
and tax services, and permissible non-audit services provided by our independent auditors. The policy provides for an annual review
of an audit plan and budget for the upcoming annual financial statement audit, and entering into an engagement letter with the
independent auditors covering the scope of the audit and the fees to be paid. Our Audit Committee may also from time-to-time review
and approve in advance other specific audit, audit-related, tax or permissible non-audit services. In addition, our Audit Committee
may from time-to-time give pre-approval for audit services, audit-related services, tax services or other non-audit services by
setting forth such pre-approved services on a schedule containing a description of, budget for, and time period for such pre-approved
services. The policies require our Audit Committee to be informed of each service and the policies do not include any delegation
of our Audit Committee’s responsibilities to management. Our Audit Committee may delegate pre-approval authority to one
or more of its members. The member to whom such authority is delegated will report any pre-approval decisions to our Audit Committee
at its next scheduled meeting.



During
the year ended December 31, 2017 our Audit Committee approved all of the fees paid to MNP. Our Audit Committee has determined
that the rendering of all non-audit services by MNP is compatible with maintaining MNP’s independence. During the year ended
December 31, 2017, none of the total hours expended on our financial audit by MNP were provided by persons other than MNP’s
full-time permanent employees.



|Item
    15. |  | Exhibits,
    Financial Statement Schedules.                                                                                             
|------------ |  | -----------------------------------------------------------------------------------------------------------------------------------------
|             |  |                                                                                                                                          
|Number       |  | Description                                                                                                                              
|             |  |                                                                                                                                          
|3.1          |  | Articles
        of Incorporation of the Registrant. (1)                                                                                 
|3.2          |  | Bylaws
    of the Registrant. (1)                                                                                                        
|21.1         |  | Subsidiaries.
    (2)                                                                                                                    
|23.1         |  | Consent
    of Independent Accountants.                                                                                                  
|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 and Financial Officer Pursuant to 18 U.S.C. §1350 and §906 of the Sarbanes-Oxley Act of 2002.   



|(1) | Previously
    filed as an exhibit to our Registration Statement on Form 10-SB filed with the Commission on February 22, 2000, and incorporated
    herein by reference.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                         
|(2) | Previously
    filed as an exhibit to our Registration Statement on Form SB-2 filed with the Commission on January 22, 2003, and incorporated
    herein by reference.  



25







SIGNATURES



In
accordance with the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this amended
report to be signed on its behalf by the undersigned, thereunto duly authorized.



|April
    23, 2018 | Flexible
    Solutions International, Inc.
|------------------ | ------------------------------------------
|                   |                                           
|                   | By:                                       
|                   | Name:                                     
|                   | Title:                                    



In
accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated:



|Signature                 |  | Title                                                           |  | Date              
|------------------------- |  | --------------------------------------------------------------- |  | ------------------
|                          |  |                                                                 |  |                   
|/s/
    Daniel B. O’Brien |  | President,
    Principal Executive Officer, Principal Financial |  | April
    23, 2018
|Daniel
    B. O’Brien     |  | and
    Accounting Officer and a Director                       |  |                   
|                          |  |                                                                 |  |                   
|/s/
    John H. Bientjes  |  | Director                                                        |  | April
    23, 2018
|John
    H. Bientjes      |  |                                                                 |  |                   
|                          |  |                                                                 |  |                   
|/s/
    Robert T. Helina  |  | Director                                                        |  | April
    23, 2018
|Robert
    T. Helina      |  |                                                                 |  |                   
|                          |  |                                                                 |  |                   
|/s/
    Thomas Fyles      |  | Director                                                        |  | April
    23, 2018
|Thomas
    Fyles          |  |                                                                 |  |                   
|                          |  |                                                                 |  |                   
|/s/
    Ben Seaman        |  | Director                                                        |  | April
    23, 2018
|Ben
    Seaman            |  |                                                                 |  |                   
|                          |  |                                                                 |  |                   
|/s/
    David Fynn        |  | Director                                                        |  | April
    23, 2018
|David
    Fynn            |  |                                                                 |  |                   



26