Daniel O'Brien - President, Chief Executive Officer, Director

John Nobile - Taglich Brothers Securities William Gregozeski - Mont Blanc Capital Gary Schwab - Valley Forge Capital Management

Welcome to the Flexible Solutions full-year 2012 financials on the April 2, 2013. Throughout today's presentation, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. (Operator Instructions). I will now hand the conference over to your host, Dan O'Brien. Please go ahead, sir. Daniel O'Brien: Thank you, Danny. Good morning. This is Dan O'Brien, the CEO. Safe harbor provision. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Certain of the statements contained herein which are not historical facts are forward looking statements with respect to events, the occurrence of which involve risks and uncertainties. These forward-looking statements may be impacted, either positively or negatively, by various factors. Information concerning potential factors that could affect the company is detailed from time to time in the company's reports filed with the Securities and Exchange Commission. Welcome to the FSI conference call for full-year 2012. I would like to review what we have accomplished in the last year and our estimates looking forward. Then move to speaking about the financials. 2012 was a good year for FSI and I am extremely proud of how hard each worked to supply increased volume to more customers with no additional personnel. The addition of several chemical and biological research staff will accelerate our new product development and open new market opportunities for polyaspartate industry. Our dedication to lean operations, low leverage and sales in multiple market verticals has been maintained. Our significant achievements in 2012 include growth of 6% year-over-year. Another year of record sales, $16.4 million $0.9 million higher than 2011, even with headwinds such as the difficult economy in Europe and a major drought in the United States. Growth was recorded in all market verticals, except cleaning products with the strongest growth by percentage being in agriculture, once again. The Alberta sugar to aspartic acid factory completed a full year of operations. We note that this does not mean that production has had added any specific level yet. Our Alberta employees are increasing operations at the best rate possible but we repeat that we will not meet production figures available in the foreseeable future and this is for competitive reasons. Regarding the biomass factory in Alberta, this plant is designed to supply our Chicago operations with most of the aspartic acid they use for making polyaspartic acid. By using sugar in Alberta, we delink our raw materials for oil which is our current source, shorten our supply online by several weeks and thousands of miles, and dramatically improve the sustainable content of our finished products. Production from sugar will result in reduced cost to goods sold and the opportunity to gain customers who insist on renewable-based materials. The Alberta plant is one of the parts of optimum success for Flexible Solutions, even though the company can be very successful regardless. It plays a supporting role to the NanoChem division by providing backward integration and simplification of our supply chain and by reducing the number of external profit margins that NCS must pay between the base carbon source and finished aspartic acid ready to be polymerized in Chicago. The NanoChem division, this division makes polyaspartic acid, TPA, a biodegradable protein with many valuable uses. It now represents 95% of revenue and is the sales and profit driver of our company. TPA is used in agriculture to increase crop yield. The chemical mechanism is the ability of TPA to maintain crystal embryos of fertilizer salts in their embryonic form in the soil for several months. This has the effect of keeping fertilizer easier for plants to absorb because the plant expends less energy getting its nutrients, it has more energy available to produce valuable crops. In North America alone, the wholesale market for TPA is over $2 billion a year and most crops are able to use it profitably. 2012 was another good year for fertilizers and additives due to high crop prices. The market vertical saw a continued growth. One of our signed in late 2009 has grown faster than any group we have ever worked with. They built on their excellence in 2011 performance and delivered good growth for TPA in agriculture in 2012. However the drought in North America played a part in the overall reduction in year-over-year revenue growth. Agricultural sales growth was partially limited by the drought in Q4. TPA is a biodegradable way of treating oilfield water to prevent pipes from plugging with mineral scale. Our sales in to this market are strong and oil companies in the Nordic countries use TPA as part of environmental regulation. In 2012, oilfield TPA sales increased and they are expected to increase again in 2013. We are experiencing interest from forward-looking oil producing countries other than the Scandinavian ones and have reasonable expectations of gaining new customers over the next several quarters. There is continuing research on the concept of using TPA as part of part of tide oil and gas fracturing liquids. Should this continue to progress from concept to use, TPA would be part of the fracing fluid and intended to prevent scale for destroying the permeability of the rock pores. Rock \pores reduce well production. TPA may have added value compared to existing fluid components due its biodegradability. It does not need to be removed when cleaning up the used fracing water. To talk about Q1 and the rest of through '13, our agriculture revenue in the first three months of '13 has been weaker than through '12. The effects of last year's drought are still present. Our Midwest distribution has not taken up as much product in Q1 as in Q1 the year before and the reasons for this include more growers and dealers who choose just in time purchases to conserve cash after last year, as well as space and cash constraints at the distribution level. FSI management will release the Q1 revenue number next week once it's been finalized, however we are already sure that Q1 revenue will be several hundred thousand dollars less than the year earlier period. Conversations with our distribution network indicate they believe the sales not closed in Q1 will be made in Q2 and Q3 and the strong growth in the sector is still expected for 2013. Therefore, we still expect the largest percentage of growth in 2013 will be in agriculture followed by oilfield. Detergent sales are likely to be flat after dropping in 2012 as customers around the world concentrate on value over biodegradability. We are confident that revenue growth will continue through 2013 at variable rates from quarter-to-quarter as is usual for small companies. To highlight the financial report of our results. Sales for the year increased 6% to $16.4 million, compared with $15.5 million for 2011. The result was a loss of $1.08 million or $0.08 a share in the 2012 period compared to a gain of $183,000 or $0.01 a share in 2011. Sales in Q4 were $3.85 million, up 14.2% compared to $3.37 million in the year earlier period. Q4 revenue was stronger in oil services and agriculture but flat in cleaning products. Because of the outsized effects of depreciation, stock option expenses and one-time items on the financials of small companies, FSI also provides a non-GAAP measure useful for judging year-over-year success. Operating cash flow is arrived at by removing depreciation, option expenses, income tax and one-time items from the statement of operations. This year, the FASB treatment of consultant options changed again, requiring that consultant options be revalued as investing point as well as grant points. This was negative for our GAAP results regardless that it is an imaginary number. We consider consultant options to be a useful tool and we will continue using them judiciously. In 2012, the Alberta factory began depreciation as well as having expenses in excess of income resulting in increased losses in Canada. The data following and in our news releases of April 1, we have revised our 2011 operating cash flow to be as comparative as possible with 2012 given the change in treatment of the Alberta plant. For full year 2012, operating cash flow was $1.37 million and $0.10 per share compared to $1.89 million and $0.14 per share for a large part in 2011. Detailed information on how to reconcile GAAP with non-GAAP numbers is included in our news release of April 1. Income taxes. Our financials for 2012 include $1.145 million in U.S. income tax paid compared to $1.126 million in 2011. The Canadian division of flexible solutions has accumulated losses as the Alberta factory was expense and is now being depreciated. This has reached a point where we have become uncomfortable with the total as well as with how much potential working capital is being paid as tax. Therefore we have reorganized our Canadian assets as directed by a specialist accounting firm, beginning January 1, 2012. With this (inaudible) corporate organization, parts generated in Canada that are intended to benefit our U.S. district corporations will become deductible against U.S. taxes beginning in the 2012 tax year. Reduced taxation will increase our earnings and our internally generated growth capital starting in Q1 2012 Income tax for 2013 will be detailed in the quarter reports with the first one being Q1 2013, 44 days from now When income occurs in Canada in the future any remaining losses will be consumed after which our tax flow will become a mix of the 25% Alberta rate and the 40% Illinois rate. Finally, our other product lines. WaterSavr has had many more quarters over the last several months. A successful trial on a lake in Las Vegas, Nevada has been completed and will be detailed in a news release next week. At least one large prospect has closed the order. We are continuing our efforts in Turkey, Morocco, parts of Far East, Australia and Spain. We are going to use revenue generated by WaterSavr sales, we are going to redeploy towards earning more WaterSavr sales. Our swimming pool division will continue to be managed to optimize the cash flow to support other divisions. The text of this speech will be available on our website tomorrow, April 3 and an e-mail copy can be requested from Jason Bloom at 1-800-661-3560 within the hour, jason@flexiblesolutions.com is his e-mail address. Thank you. The floor is open for questions. Danny, will you teach everybody please?

(Operator Instructions) Thank you. The first question comes from John Nobile with Taglich Brothers. Please go ahead with your question. John Nobile - Taglich Brothers Securities: Hi, good morning, Dan. I wondered if the European sales in the fourth quarter, if you could put the percentage of what those were of the total sales? Daniel O'Brien: Okay, this will have to be an estimate because we do not normally break that out but the sales into Europe in fourth quarter would have in the range of 50% and they would have been mostly to the very northern parts of Europe for oilfield supplies with some in to the middle part of Europe for detergent customers. None of our sales were directed at Southern Europe. John Nobile - Taglich Brothers Securities: Okay, so currently even the fourth quarter looks like European sales will seem to be more effected negatively compared to the prior quarters. Usually you bring up what that might be on a quarterly basis. It looks like it could be down. Daniel O'Brien: I would say that it is not so much bad that we are finding other customers but we do not feel any competitive need to disclose and they are not in Europe. John Nobile - Taglich Brothers Securities: Okay, my next question. Dan, I am going to ask this not quantitatively, sugar-based TPA sales, but if you could speak about that on a quarterly basis, qualitatively. I would love to get a quantitative numbers but I know that you are going to provide those but if you could be a little more general about how, it looks like that might be ramping up. Daniel O'Brien: Okay, that’s a very nice way of putting it, John, and I am happy to do what I can for you. A little background for everybody else. We are actually starting with sugar and we are using microbial fermentation to produce aspartic acid. There are a lot of companies trying to do this around the world and there have been some serious problems with many companies. Operating structure, this is why John is so interested in it and the rest of you as well. Qualitatively, we are getting regular high-quality aspartic acid from sugar. Each quarter we are getting more. We are learning how to get higher and higher percentage yields in terms of pounds of aspartic acid compared to pounds of sugar that went in. So every quarter, our yield is improving and our volume is improving. But we are a small company that cannot afford some of the mistakes made by groups, and I will mention Amyris as one, who took the wrong direction, spilled all their capital into it and couldn’t recover easily and as a result are not doing all that well. So we are being pretty careful. The other point that I would have to make about Alberta is that it was very low cost structure place when we started six years ago. It is a very high cost structure place now as a result of six years of extremely high oil prices. The high oil prices of course make our process more beneficial but the high cost structure mix is important that we move at the right pace to conserve our capital. Did I help? John Nobile - Taglich Brothers Securities: And the area that you work in, I believe there is an abundance of sugar surrounding Alberta which means there really shouldn’t be any problems for getting the core ingredient for this. Daniel O'Brien: No. John Nobile - Taglich Brothers Securities: Okay, but bottom line, things look like they are going as planned, they are shaping up nicely as far the sales at Alberta. Daniel O'Brien: They are. John Nobile - Taglich Brothers Securities: Okay, that’s a bit quantitative, not quantitative. Daniel O'Brien: I know. Thanks very much. John Nobile - Taglich Brothers Securities: No problem. You mentioned in the press release that you expect Q2 and Q3 sales to make up basically for the sales of the last close in the first quarter. I was just hoping to get a little more confident as to why you believe it would be really or not in to Q1 and that’s drought related? Daniel O'Brien: It's drought related but its also related to, and this is a feeling, we can't quantitatively confirm this feeling but the feeling is that all the way down the line people are keeping their wallets in their pockets until the last minute because last year, although the prices were great for crops, many people didn’t get the crop they expected. John Nobile - Taglich Brothers Securities: Which I thought might have actually been beneficial to wanting to really have a better uptick of fertilizer. With all the crops out there and the kind of artificial fertilizers sales in general which should lead to increased TPA sales. Daniel O'Brien: We believe that’s true. We aren’t pulling these numbers out of nowhere, all this expectation of the recovery in Q2, Q3 out nowhere. We are actually in constant contact with our major distributors and they are telling us that they have space constraints in their factories and that their customers have space constraints further down as well as the final customer is waiting until the last minute to order. Our distribution, especially in the Midwest, has shared with us their growth expectations for the year and stated as recently as a week and a half ago that they still expected to make them. So I am sharing with you what I have been told and I have no proof of this but these are honorable people who believe that sales lost in Q1 or delayed in Q1 will be made up in Q2 and Q3. John Nobile - Taglich Brothers Securities: Okay, so basically it should reduce for giving you feeling back. Okay, it looks like Q1 is going to be soft. However, we are not Q2 and Q3, at least from their take it looks like it should be well. Daniel O'Brien: Yes. John Nobile - Taglich Brothers Securities: Hopefully, the (inaudible) part of that was accounted (inaudible). Daniel O'Brien: Well, and yes. So farming is an inexact science, even though it is a science now. I am sharing with you the best knowledge that I have at this point in time and I can't do any better. John Nobile - Taglich Brothers Securities: Okay, all right. Well, obviously when it is indeed is made up but you had mentioned that Q1, we are looking at. Daniel O'Brien: Q1 is definitely soft and that’s why I diluted what should have been a simple full-year financials announcement on the news release yesterday by making sure that every investor was aware before this morning so that some people didn’t find about it in the conference call and others not until the conference call was (inaudible). John Nobile - Taglich Brothers Securities: Well, thank you for that transparency. That is much appreciated. All right, well, that’s all I have. I would love to get a little quantitative analysis here. Daniel O'Brien: Well, perhaps, this is New York this Sunday and we will go out one-and-one and then afterwards I will remove parts of your brain, so you can't pass it on. How is that? John Nobile - Taglich Brothers Securities: What can I say? Thank you, Dan. Daniel O'Brien: Thanks, John.

(Operator Instructions) The next question comes from Bill Gregozeski from Mont Blanc Capital. Please go ahead with your question. William Gregozeski - Mont Blanc Capital: Hi, Dan. Can you talk about how aspartic acid prices are looking for 2013? Daniel O'Brien: Sure. They are looking like they are going to be high. I think that the margin compression we have seen over the last two years has been riddled. It is going to continue. Whether they will continue to rise, or whether they will flatten out at the current levels of around $2,400 a metric ton, I am not sure. As of right now, all our aspartic acid except what we producing in favor is made in China and there have been a lot of different events happen in China over the six months from a change in government to a slowdown in their economy. I would hesitate to predict a reduction in prices because they have substantial inflation in wages and in raw materials and also because the Chinese are paying more or less world oil prices rather than shut-in American oil prices. But I don’t see anything that will bring it down and over time, I am expecting, and of course we have positioned our company for the estimate that Chinese aspartic acid prices will continue to rise at the lowest rate that they can organize because, of course, they want to stay in business, but they prices might recover there. William Gregozeski - Mont Blanc Capital: Okay, so, Europe, just over 32% growth margin this year, would you expect that to be less for 2013 now? Daniel O'Brien: I am hesitating because there is moving parts here, not because I don’t know the answer. The moving parts are the ratio of oil sales to agricultural sales. We get a slightly better margin on agricultural sales than oil. If agriculture grows substantially as we expect I would imagine that our margins will stay very similar. If I am wrong about growth in 2013 in Q2 and Q3 in agriculture, I would expect our margins to be slightly pressured on the downside perhaps 1% or 2% but I can't be more accurate than that. William Gregozeski - Mont Blanc Capital: Okay, so if the margin for this year is probably more oil sales or ag related than some big margin benefit from favor related. Daniel O'Brien: Correct. Its already into second quarter today. We are spooling up better rate that is going to substantially change our margin structure this year. William Gregozeski - Mont Blanc Capital: Okay, al right. Daniel O'Brien: Nicely hooked out. You have got more information that I wanted to give. William Gregozeski - Mont Blanc Capital: Yes, it was a surprising answer there. You mentioned the tax changes. Can you go over what you actually did for that change that you can now deduct your Canada operations from Illinois? Daniel O'Brien: Yes, now this is detailed in the K, so I insist that you check up on my details. We have formed a limited partnership in Canada and a general partner corporation in Canada that is the operating general partner of the limited partnership. Our last year's Canadian operations has leased all of its intellectual property and assets to the new limited partnership, which is minority owned by the Canadian general partner and majority-owned by the American limited partner which is 100% owned by Flexible Solutions International. William Gregozeski - Mont Blanc Capital: Okay. Daniel O'Brien: The result here is that if costs are related to producing aspartic acid or other valuable products for NanoChem or Flexible Solutions International or for the new sister company that Flexible International owns, a proportion of those costs and we are told that it will be a large proportion will be deductible against American income tax. Now that’s accurate. I can't tell you yet because we have not gone through a quarter, how much it is going to close out. We are told that it will be a lot and by a lot, I am understanding greater than 50% of our cost but I need to ask you to be patient for 44 days until I can give you the true answer based on accounting that has been reviewed by our auditors and has been directed by the new accounting company which is Spicer Jeffries and which has been developed by our controller. So that’s the best I can do for you right now but we believe that it is a good move for the company because anything that increases working capital is very valuable. William Gregozeski - Mont Blanc Capital: Right, okay. Thanks, Dan.

Thank you, and the next question comes from Gary Schwab from Valley Forge. Please go ahead with your question. Gary Schwab - Valley Forge Capital Management: Yes, hi, Dan. Daniel O'Brien: Good morning, Gary. Gary Schwab - Valley Forge Capital Management: Good morning. Just play with me. At one time, I thought there were European geographies that were required or mandated to do changeovers to (inaudible). I didn’t realize that’s the fixed part of your business, but has that actually happened or are they still in the works? Daniel O'Brien: That’s right. That was five or six years ago and the Europeans have still not made a decision and it doesn’t look imminent. I think there is something else far more important on that branch right now. Gary Schwab - Valley Forge Capital Management: Okay, and that’s the best, the biggest issue. That’s why you said over biodegradability, because people don’t have to buy a biodegradable product. Daniel O'Brien: They do not and unlike to the North America were phosphates are not allowed in your detergents, the Europeans have decided that phosphates are allowed and that phosphates are a pretty darn good way of achieving what TPA does, if you are not particularly worried about the downstream effect of your washing. Gary Schwab - Valley Forge Capital Management: What percentage of are your detergent goes in to the U.S. market? Any of it? Daniel O'Brien: Quite a bit. For instance, if you looking to buy our products in your detergent and cleaning products, I highly recommend, Seventh Generation, I recommend that method home, I recommended Ecover, and for perfect cleaning, shouldn’t have started this unless I better run with them all. But yes, we are seeing quite a bit more in the United States. We would like to have Green Works as a customer and they are perhaps the last of the majors in the United States that we haven’t got. Gary Schwab - Valley Forge Capital Management: Okay, all right. My other questions pretty much have been answered. Daniel O'Brien: Thank you, Gary. Gary Schwab - Valley Forge Capital Management: Thanks, Dan.

(Operator Instructions) We do not seem to have any further questions. Please continue with any points you wish to reiterate. Daniel O'Brien: Thank you, Danny. I have no further points. Gentlemen, I look forward and ladies, I look forward to speaking with you in 44 days to tell you about the first quarter. Thanks very much and good bye.

This completes today's presentation. Thank you for your participation. You may now disconnect.