Good day, everyone. And welcome to the Flexible Solutions International Full Year 2018 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn things over to Dan O'Brien. Please go ahead, sir. Dan O'Brien: Thank you, Kelly. Good morning. This is Dan O'Brien, CEO of Flexible Solutions. 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 2018. Before concentrating on our financials, I'd like to speak about our product lines and what we think may occur over the next several quarters. The insurance compensation from our fire has been received in full, but the accounting and tax effects of the payments will continue to distort and complicate our financials for two or three more quarters. Our NanoChem Division, NCS represents most of the revenue of FSI. This division makes thermal polyaspartic acid, called TPA for short, a biodegradable polymer with many valuable uses. NCS also manufacturers 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 by slowing crystal growth between fertilizer ions and other ions in the soil, resulting in the fertilizer remaining available longer for the plants to use. The attraction between the TPA and the fertilizer ions also retains the nutrients closer to the plant roots, keeping fertilizer more easily available for crops to use results in better yield with the same level of fertilization. TPA and agriculture has a strong economic value for all links in the sales to end user chain. There's good profits from manufacturer through the distribution system, all the way to the grower. Yet the growers still earns a great profit from the extra crops produced in the same land, but with no extra fertilizer. For example, summer 2018 trial on strawberries done by the University of California Davis, resulted in a 15% increase in berries along with increased quality. Using $40 worth of TPA yielded several hundred dollars in additional gross profit per acre. TPA is also a biodegradable way of treating oilfield water to prevent pipes from plugging with mineral scale. Our sales into this market are well established and normally grow steadily but slowly. A simple explanation of TPA's effect is that it prevents the scaling out of minerals that are part of the water fraction of oil as it exits the rock formation. Scale must be prevented to keep the oil recovery pipes from clogging. SUN 27 and N Savr 30 are our nitrogen conservation products. Nitrogen is a critical fertilizer, but it's subject to loss through bacterial breakdown, evaporation and so a run-off. Both our nitrogen products are becoming well respected and sales continue to grow. They utilize much more environmentally friendly solvents than some of the competing products. SUN 27 is used to conserve nitrogen from attack by soil bacterial enzymes, while N Savr 30 is directed towards nitrogen loss through leaching and evaporation. Each of our nitrogen products are equal to or better than the competing products. Water saver. Spring is starting in most of the areas we are trying to sell into. News regarding water saver trials and sales will be released if and when it occurs. Delivered wholesale water now exceeds $1,200 dollars per acre foot in many California cities, while the total cost of saving an acre foot using water saver is less than $200. Water saver can reduce annual losses from reservoirs by up to two feet per treated acre. A municipality that pays $1,200 to $2,400 per acre foot for water and does not use water saver is wasting significant tax revenue, about $12 million a year for San Diego, regardless of the drought conditions in any particular year. The full year and looking backwards in the first half of 2019, looking forwards; TPA, SUN 27 and N Savr 30 for agricultural use have peak uptake in Q1 and Q2; first half 2018 results are strong as reported for agriculture; Q3 was weaker because crops had received most of their 2018 nutrition; in Q4, agriculture product sales strengthened to service early by and winter crop programs as expected; and in the first half of 2019, we will show significant improvements over the year earlier periods. Oil, gas and industrial sales of TPA were not as strong in Q3, 2018 as they were in the same period of 2017. We are continuing to change this and saw some improvement in fourth quarter 2018. The recovery of sales into this market vertical is expected to continue throughout 2019. The effect of the ENP acquisition. This synergistic acquisition added more than $1.5 million in consolidated revenue to FSI for Q4 2018 and contributed to EBITDA immediately. In 2019, we expect that ENP will provide more than $8 million in consolidated revenue and significant positive cash flow. Effect of the LLC investments announced in January. This investment will generate quarterly cash flows and profits starting in Q1 2019. The company we invested in will also order substantially more product from us in 2019 than in 2018, which will further increase revenue and profitability. Full year 2019 revenue will increase very strongly compared to 2018, driven by historic operations, the ENP acquisition and the January LLC investments. We expect that profits and cash flow will increase very significantly along with the increases in top line revenue. A regular warning applies that we can't control customer behavior, shipping dates, weather, crop pricing, oil platform maintenance and the other variables of our business, so quarterly results will be unlikely to form a straight line on a graph. However, we do expect the slope of the graph to be up sharply. Tariffs. Since September 30th, all raw materials imported from China have included 10% additional tariff. U.S. customers have received price increases from us now that this inventory is being used. International customers are not charged the tariff, because we are applying for the export rebates available to recover these tariffs. To hedge against the chance of even higher tariffs and to service the increased production expected in 2019, we have increased inventory substantially. As a result, the accumulating tariff payments to the government are affecting our cost of goods, our cash flow and our profits negatively until the rebates are received. Rebates can take many months and the total dollar amount due back to us will become significant later in the year. The rebates will increase profitability and cash flow, while decreasing cost of goods for the future quarters in which the rebates are received. Highlights of the financial results. Sales for the year increased 15% to $17.83 million compared with $15.49 million for full year 2017. The result is a gain of $2.49 million or $0.21 a share in the 2018 period compared to a gain of $1.75 million or $0.15 per share in 2017. Our working capital is adequate for all our purposes and is expected to increase rapidly during the year as our revenue grows. We also have a line of credit with BMO Harris Bank of Chicago. We are confident that we can execute our plans with our existing capital. The ENP acquisition was funded with a loan from BMO Harris plus a convertible note to the seller, and it did not reduce our cash position. The LLC investment in January was made with cash on hand. The insurance recovery and site remediation costs from the Taber fire had a large effect on our results in 2017 and 2018. The final cash recovery in 2018, any tax adjustment and the amounts received already, are affecting our GAAP financials until at least Q2 this year. This is the period allowed by Canadian Tax law before a final tax occurs on any profits from uninsured event. It's highly probable that the deferred tax exit shown on our balance sheet will offset any tax on the insurance recovery. Now, the text of this speech will be available on our Web site by Wednesday, April 2nd, that would be April 3rd, and email or fax copies can be requested from Jason Bloom, Jason@flexiblesolutions.com. Thank you. The floor is open for questions. Kelly, can you set that up for everyone please?

[Operator instructions] We will go first to Talha Ismail with Poplar Point Capital Management.

Just wondering, we saw that you guys also made few investments, small ones in the investments line item. You guys have Applied Holding Corp. and Trio Opportunity Corp. Just trying to understand what those were all about. I know they are pretty small. But I was just wondering what they were and what we can expect from them? Dan O'Brien: They are, one is an investment in a leased own housing funds, and it's got a relatively good return of 8% with the potential for a bump up every three years. And then the second one is an investment in a -- and it's very small one, the second one is an investment in a captive insurance company for the same group Trio. And again, good income, low risk and it is a place where some of our current excess capital can reside for a period of time. These are not core investments but they've been chosen by the board as an appropriate place to keep our money and have it earning money while we're waiting to see what else of real core value may occur.

We'll hear next from [Raymond Hall with CFP Inc].

Can you comment a little bit about the seasonality of the ENP business? Dan O'Brien: Yes, still learning everything about it, obviously, but it has a slightly weaker quarter in fourth, first and second quarters and third quarters are stronger. ENP, it's directly in our agricultural world but they aim much more -- they're much more focused on turf, golf courses and ornamentals, which are an area that our sales team is not skilled at, because it is not exactly the same as real crop agriculture. And what we found is that the ornamental and golf and turf people think that agriculture salesman don't know their business and frankly, vice versa. So, we're really pleased that ENP is targeting this high value marketplace for us and of course they utilize some of our products and their products, and so that's where the synergy comes in. Has that a good answer to your question?

Yes. Is it being managed autonomously or are there -- I know you had a gentleman that was running that business that continues to run it. But what I guess synergies or overlap is there, are they completely independent and doing their own thing? Dan O'Brien: No, there's overlap. The President of ENP is a man named, George Murray, and he is now able to integrate his research and development programs with the NanoChem research and development. The ability to share knowledge completely across between the two companies now that we're a majority owner has been very valuable in the starting the development of new product lines, and optimizing some of the ones that were already in place. Yes, it is accounted for its consolidation but because it's an LLC and there is another partner, we're being very, very careful never to use assets directly between the two companies. So for instance we do not share a forklift that would be unfair to the other partner. Is that clear?

Yes. And touch on the previous questions about some of the smaller investments made during the fourth quarter. Obviously, there is cash $7.8 million to $8 million of cash on the balance sheet. Is that a way of you still looking to possibly do some things and want to keep some dry powder, and that's a short term parking spot? Or I mean, obviously, I know we had the one-time dividend in March and started the semi-annual starting on April. Can you comment on the cash balances and going forward? Dan O'Brien: Obviously, with the taking a loan to buy ENP, if you set that against our cash balance and you take away the anticipated payment for dividends and the cash payment for the larger investment of the LLC in January, our cash has dropped substantially. But in each case, we believe that we have bought something worth far more than the cash. And I think I got across during the speech that we expect rapid growth this year and that the cash coffers will refill. But to answer the core question, yes, that's a parking spot. I would consider it more medium term than short term. It's quite rare companies like ours to find opportunities like the two we found within three months this year, or this past year. One of the things that we absolutely insist on because we have a lien management is that anything that we purchase or assimilate with has to bring exceptional management with it, and management that our management can get along with. I mean, sometimes people are brilliant that we can't get along with them and vice versa. So the point is that it may take some time before we find another opportunity. So we need to find good uses for the money where they all make decent recovery returns while we wait.

[Operation instructions] We'll hear next from William Gregozeski with Greenridge Global.

In regards ENP, what gross margins should we be looking for going forward? It looks like they've been quite high in the past. But what we should we look for going forward? Dan O'Brien: I don't see very much change. It's going to be difficult to pick out of our financials, because we are going to consolidate it and we are unlikely to break it apart, because as you know, competing companies look for your best customers and your best product lines and duplicate those ones first. They hardly ever duplicate your bad product lines. So we don't see change, either positive or negative, but it's not going to be something we comment on by numbers.

In regards to Florida Fertilizer LLC you acquired. What percentage did you acquire and how is that going to show up on the financial statements? Dan O'Brien: We acquired exactly 50% and we did not acquire control. We believe, subject to audit or review, because it's -- we aren't audited again for a year. But we believe that the auditors will treat it as an investment and it will show up as an investment and with the income being investment income, and of course revenue and then income without deduction, because of that situation. But until it's fully reviewed by the auditors, I think you should check that. As my opinion, I think it's a good opinion but I can't prove that it's absolutely true yet.

And the two additional payments that you would have for the EBITDA threshold, are those [indiscernible] 50% ownership you have now? Dan O'Brien: No, those are to -- they are only released if the numbers are made. So the selling party does not receive their money unless they hit their numbers. We keep the 50.

And last question is how did you guys decide on the $0.15 per share dividend? Dan O'Brien: Well, board meetings are not public. But the general feeling was this was something we could afford. It was a low enough number. So that with the expected growth we have coming at us, we would have a reasonable payout ratio and the ability subject to success of raising the dividend over time. So those were the thinking patterns that we were employing and $0.15 or a dividend that consumes about $2 million a year of profits seemed about right.

[Operator instructions] And Mr. O'Brien, we have no further questions. I'll turn things back to you. Dan O'Brien: Thank you, Kelly. Everybody, appreciate you joining us for this conference call and look forward to hearing from some of you on future calls. I take this moment to say thanks and goodbye.

And again, that does conclude today's conference. Thank you all for joining us.