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.

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…

(Operator Instructions) Thank you. The first question comes from John Nobile with Taglich Brothers. Please go ahead with your question.

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?

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.

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.

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.

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.

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?

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.

No.

Okay, but bottom line, things look like they are going as planned, they are shaping up nicely as far the sales at Alberta.

They are.

Okay, that’s a bit quantitative, not quantitative.

I know. Thanks very much.

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?

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.

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.

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.

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.

Yes.

Hopefully, the (inaudible) part of that was accounted (inaudible).

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.

Okay, all right. Well, obviously when it is indeed is made up but you had mentioned that Q1, we are looking at.

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).

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.

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?

What can I say? Thank you, Dan.

Thanks, John.

(Operator Instructions) The next question comes from Bill Gregozeski from Mont Blanc Capital. Please go ahead with your question.

Hi, Dan. Can you talk about how aspartic acid prices are looking for 2013?

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.

Okay, so, Europe, just over 32% growth margin this year, would you expect that to be less for 2013 now?

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.

Okay, so if the margin for this year is probably more oil sales or ag related than some big margin benefit from favor related.

Correct. Its already into second quarter today. We are spooling up better rate that is going to substantially change our margin structure this year.

Okay, al right.

Nicely hooked out. You have got more information that I wanted to give.

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?

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.

Okay.

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.

Right, okay. Thanks, Dan.

Thank you, and the next question comes from Gary Schwab from Valley Forge. Please go ahead with your question.

Yes, hi, Dan.

Good morning, Gary.

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?

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.

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.

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.

What percentage of are your detergent goes in to the U.S. market? Any of it?

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.

Okay, all right. My other questions pretty much have been answered.

Thank you, Gary.

Thanks, Dan.

(Operator Instructions) We do not seem to have any further questions. Please continue with any points you wish to reiterate.

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.