Good day and welcome to the Flexible Solutions International First Quarter 2016 Financial Results Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Dan O’Brien. Please go ahead, sir. Dan O’Brien: Thank you, Kim. Good morning. This is Dan O’Brien, CEO. The 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 involves 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 first quarter 2016 conference call. Before focusing on the financials, I’d like to talk about our product lines and what we think may occur over the next several quarters. Our NanoChem division represents most of the revenues of FSI. This division makes thermal polyaspartic acid called TPA for short, a biodegradable protein with many valuable uses and we also manufacture SUN 27 and N Savr 30, which are used to reduce nitrogen fertilizer loss from soil. TPA is used in agriculture to significantly increase crop yield, the method of action is through limiting crystal embryonic growth between fertilizer IMs and other IMs in the soil. When embryonic crystals are prevented from transforming into fully crystalline form by TPA, the fertilizer remains available to plants longer into the growing season. The firm but light attraction between the TPA and the fertilizer ions also reduces fertilizer run off. Keeping fertilizer easily available to crops, results in better yield with the same level of fertilization. TPA in agriculture is a unique economic situation for all links in the sales to end user chain. FSI earns a fair profit on manufacturing, distribution earns a strong profit selling to dealers. Dealers make good profit selling to growers and yet the growers still earns a great profit from the extra crop he produces with the same land and the same fertilizer program. More than 350 trials over the last 15 years have demonstrated that investing $10 to $20 per acre in TPA can pay back $30 to $100 or more. For example, a recent trial on rice in California increased yield by 1900 pounds an acre. That’s an extra $208 per acre net at current rice prices. We believe this is an excellent basis for long-term growth in sales as more growers become aware of this improvement in best practice. TPA is also a biodegradable way of treating oil field water to prevent pipes from plugging with mineral scale. Our sales into this market are well established and growing steadily, but can be subject to temporary reductions when production is cut back or when platforms are shut down for reconditioning. A simple explanation of TPA’s effect is it prevents the scaling out of minerals that are part of the water fraction of oil as it exits the rock formation. The scale must be prevented to keep the pipes from clogging. Used as a biodegradable addictive and fracking fluid has the same effect, TPA has the same effect on the pipes, but is also known to reduce the scale plugging inside the rock pores, increasing the flow of oil and gas to the pipes from the rock. Many alternative chemicals are used to prevent pore plugging, TPA is the biodegradable choice. SUN 27 saw a year-over-year increase in sales. It’s a fertilizer additive that reduces the speed of nitrogen fertilizer degradation in soil. Most soils contain the protein urease, an enzyme that degrades nitrogen fertilizer. Up to half the nitrogen applied to a field can be lost to urease's activity. This is a significant cost to the grower and has negative environmental side effects. The size of the potential market for urease inhibition is very large given that nitrogen in various formats that can be protected by SUN 27 is applied to millions of acres of cropland worldwide each year, and that nitrogen lost through urease activity destroys large amounts of nitrogen fertilizer. SUN 27 is equal to or better than competing products and our pricing is very competitive at both wholesale and retail levels. SUN 27 has a lower freezing point than competing urease inhibitors, resulting in reduced storage problems. N Savr 30, as a result of our inventive work to develop SUN 27, we became expert enough in nitrogen conservation chemistry to formulate a solution to the second major cause of nitrogen fertilizer loss, denitrification. This is also caused by bacterial activity in soil. Warm wet soils are the most prone and it results in oxygen being stripped from the fertilizer to leave nitrogen gas. The gas can’t be used by the plants and escapes to the atmosphere. The gold standard for reducing denitrification is a DCD solution and we have an excellent version. We had significant sales in the quarter and we’re now focused on increasing capacity in sales for 2017. We manufacture for distribution under trade names owned by the distributors and also under our trademark N Savr 30. WaterSavr, we're continuing our efforts in the USA, Turkey, Morocco, Chile, Brazil, parts of East Asia and Australia. WaterSavr could have had a breakthrough last year with the project in Wichita Falls, Texas. Our 2014 success where we saved 18% of the evaporation from a 5,600 acre drinking water reservoir was set to be repeated in 2015. However, Texas experienced massive flooding with loss of life and property just as WaterSavr was due to be ordered for the 2015 evaporation season and we’re sorry for what the people of Texas have endured, first the drought, then the floods. And we hope to be able to help with any new drought conditions that may emerge in 2016. We've maintained our strong relationships with the groups who manage water in the state and we also have several additional WaterSavr opportunities in -- none of them have progressed as far as Texas has of course. As of today, the rainy season is ending in Texas. I believe it’s important to illustrate the potential of WaterSavr, using it on the salt and sea in California for eight months a year would save enough fresh water to supply the City of San Diego for the whole year, that’s pretty impressive. Q2, the rest of 2016, good sales results are possible in all product lines. EX10 our brand name for TPA for agricultural use has peak uptake in Q1 for the 2016 season, but with significant sales on into Q2. Sales for the 2017 season will begin in Q4 2016. SUN 27 and the N Savr 30, the nitrogen conservation products for agriculture, have finished their sales season, which is Q4 of the last year and Q1 of this year. Growth of oil field use of TPA driven by our worldwide sales efforts is likely, but with caveat that the fall in oil prices has reduced hydraulic fracturing activity and we will not see increases in purchases from fracers until the oil price recovers to the point where the backlog of drilled wells starts to be fractured. We will also be unable to raise prices in the current environment and margins may con track slightly as a result. WaterSavr expect sales in Q2 and Q3 during summer in the Northern Hemisphere. We can’t predict which prospectus will buy and how much, but we are active in enough geographical areas that we hope to avoid another season lost to floods. We're not able to provide specific growth predictions because despite loyal growing customers and new sales opportunities in multiple markets, our sales are purchase order by purchase rather than long-term uptake contracts. It's unrealistic to give numerical guidance under these conditions. Unless oil prices decline again, we are comfortable predicting that full year 2016 revenue will be higher than 2015. Throughout 2016, we expect additional growth in revenue with the usual lumpy quarterly numbers because of customer behavior, shipping dates, weather, crop pricing, oil platform, maintenance and the other variables of our business Now the highlights of the financial results; sales for the quarter increased 7% to $5.31 million compared to $4.96 million in the previous year’s quarter. The result is a gain of $742,000 or $0.06 of share for 2016 first quarter compared to a gain of $504,000 or $0.04 a share in 2015. Share count in the quarter was reduced by $1.75 million due to a buyback at $0.90 a share, but even without this positive event, earnings per share would have increased. Working capital is very adequate. The company’s growth is well supported by retained earnings and a line of credit with a Chicago-based bank. We're confident that we can execute our plans with our internal funds. FSI also provides a non-GAAP measure useful for judging our year-over-year success. Operating cash flow is arrived at by removing taxes interests, depreciation, option expenses and onetime items from our statement of operations. For the three months ending March 2016, operating cash flow was $1.44 million or $0.13 per share compared to $1.11 million or $0.08 a share in the three months period of 2015. The 2015 number is based on shares outstanding prior to the buyback while the 2016 number is based on the new share count after the buyback. Detailed information on how to reconcile GAAP with non-GAAP numbers is included with our news release of yesterday May 12. The text of this speech will be available on our website by Monday, May 16 and email or fax copies can be requested from Jason Bloom at 1-800-661-3560; his email is jason@flexiblesolutions.com. Thank you. The floor is open for questions. Kim, will you take over and give the instructions please.

Yes, Mr. O’Brien [Operator Instructions] And we’ll go to our first question from William Gregozeski from Greenridge Global.

Hey Dan. With the exception of the Wichita Falls prior quarter, the pool products sales was your highest in five years? Is there any reason for that or… Dan O’Brien: Yes good morning, Bill. It’s not material, but it’s a good question. We have successfully got Walmart to carry our swimming pool products and we’re seeing pretty good sales from them. That was the driver -- one of the drivers for first quarter. The second one is Canadian Tire in Canada, that's a customer we’ve been pursuing for four or five years as well and they came on stream in this quarter. Walmart of course is the bigger of the two and it remains to be seen how much increased sales this is going to result in the rest of the year as well.

Oh! Congratulations on that. On the oilfield side, your top two customers had sales up 20% year-over-year. Was that just timing related or is there any sales going -- increases going on there that we could look forward to? Dan O’Brien: That one I’m going to have to be a little bit fuzzy on because I don’t know whether one of our smaller customers who was taken over by one of our bigger customers was back integrated into those year-over-year sales. I suspect they were in which case here is my fuzzy answer, we did get increased sales but certainly not at the 20% level. I am -- and you have to do your research on this because I’m not allowed to say anybody’s names, but one of our -- one of our big customers took over one of our other medium sized customers and inherited their sales.

Okay. All right and then last question is assuming that oil stays roughly around where it is, is low 40s gross margin a realistic target going forward? Dan O’Brien: It is depending on product mix because as you know, we do better with our agricultural sales because instead of just being an environmentally sound, our agricultural products actually give the farmer a profit whenever he uses them and as a result we’re able to charge a little bit more. So I think we’re in a smooth period right now. If oil prices stay where they are and nothing else changes in the world, I think we’re in -- we’re close to where our gross margins will be, but they’re going to vary and it’s going to be based on product mix and also our cost of raw materials, which even though it’s to some extent dependent on oil, there is also other macroeconomic factors like the Chinese currency shipping rates and few other things like that.

Okay. All right. Thanks Dan. Dan O’Brien: Thank you, Bill.

[Operator Instructions] And Mr. O’Brien, it appears we have no further questions. Dan O’Brien: Thank you, Kim. You did a great job. We look forward to the next one.

And ladies and gentlemen, that does conclude today's conference. Thank you for your participation. You may now disconnect.