diff --git a/Test/Expect/cexec06.txt b/Test/Expect/cexec06.txt
new file mode 100644
index 000000000..18608e9f3
--- /dev/null
+++ b/Test/Expect/cexec06.txt
@@ -0,0 +1 @@
+1 1
diff --git a/Test/cexec06.c b/Test/cexec06.c
new file mode 100644
index 000000000..927fae68c
--- /dev/null
+++ b/Test/cexec06.c
@@ -0,0 +1,35 @@
+//
+// a conditional instruction that sets flags must not be folded
+// as if it always ran (flexprop issue 118)
+//
+#include <stdio.h>
+#include <propeller.h>
+
+int g;          // 0
+int seed = 5;
+
+void myexit(int n)
+{
+    putchar(0xff);
+    putchar(0x0);
+    putchar(n);
+    waitcnt(getcnt() + 40000000);
+#ifdef __OUTPUT_BYTECODE__
+    _cogstop(_cogid());
+#else
+    __asm {
+        cogid n
+        cogstop n
+    }
+#endif    
+}
+
+void main() {
+    int v = seed;
+    _Bool f = (v < v);       // false, and the optimizer can tell
+    int r = (12 != g) || f;  // 1, since g is 0
+    _Bool f2 = (seed > 100); // false, and the optimizer cannot tell
+    int r2 = (12 != g) || f2;
+    printf("%d %d\n", r, r2);
+    myexit(0);
+}
diff --git a/backends/asm/optimize_ir.c b/backends/asm/optimize_ir.c
index ff9b671a3..fbffe440c 100644
--- a/backends/asm/optimize_ir.c
+++ b/backends/asm/optimize_ir.c
@@ -2045,6 +2045,11 @@ TransformConstDst(IRList *irl, IR *ir, Operand *imm)
     }
     if (InstrSetsAnyFlags(ir)) {
         int condchange = 0;
+        if (ir->cond != COND_TRUE) {
+            // a conditional instruction sets the flags only where it runs,
+            // so what they are after it is not known
+            return 0;
+        }
         if (!ApplyConditionAfter(irl,ir, cval, val1, &condchange)) {
             return condchange; // Couldn't apply condition :(
         }