Good day, everyone, and welcome to today's Flexible Solutions International Full Year 2023 Financials. [Operator Instructions] Please note, this call may be recorded, and I'll be standing by if you need in any assistance. It is now my pleasure to turn the conference over to Dan O'Brien. Please go ahead.

Thanks, James. Good morning. This is Dan O'Brien, CEO of Flexible Solutions. 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 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 2023. To start, I'd like to discuss our company condition and our product lines, along with what we think may occur in 2024. I will comment on our financials afterwards. The NanoChem division. NCS represents approximately 70% of FSI's revenue. This division makes thermal polyaspartic acid, called TPA for short, a biodegradable polymer with many valuable uses. NCS also manufactures SUN 27 and N Savr 30, which are used to reduce nitrogen fertilizer loss from soil. In 2022, MTS started food-grade toll operations using the spray dryer we installed over the last several years. TPA is used in agriculture to significantly increase crop yield. It acts by slowing crystal growth between fertilizer ions and other ions in the soil, resulting in the fertilizer remaining available longer for the plant to use. TPA is also a biodegradable way of treating oilfield water to prevent pipes from plugging with mineral scale. TPA's effect is prevention of scale for minerals that are part of the water fraction of oil as it exits a rock formation. Preventing scale keeps the oil recovery pipes from clogging. TPA is also sold as a biodegradable ingredient in cleaning products in our Food…

Certainly, Mr. O'Brien. [Operator Instructions] We'll take our first question from Greg Hillman.

Dan, hi. First, I had a question about the sales cycle. Could you like go through like all your major products in terms of sales cycle from the longest time to the shortest time?

Sure. Good to hear you, Greg Yes, the longest cycle is for new products, which is, in our case, the basic new products are in the Food division. And obviously, we had one existing food product, which we we're already making. So that one was a zero time frame. But the other ones where we're having to reach out or have customers reach in, we're seeing about 12 months on that one. And then if you move backwards to our agriculture industry sales cycles there are, I would say, quarterly to 6 months depending on the area of the world. Increases out of Brazil, which is serviced by the Florida LLC, there's two crops a year down there. So they can have a 3 to 6 month period, whereas in North America, we would be looking more at a 6 to 12 month period for cycles for new sales. Industrial, those ones are quite random because it depends on a customer wanting to change into a biodegradable from a non-biodegradable product. In the event that we find a customer that wants to do this, the process is between 6 months and a year. And then in the oilfield, we are not seeing new customers in the oilfield. We're seeing variations in uptake depending on the number of wells in operation and the amount of shutdowns for maintenance. So in oilfield, it wouldn't be appropriate to put a number on the sales cycle.

Okay. And then Dan, I wanted to ask you about the inputs, the cost of inputs in particular. Could you touch on aspartic acid that comes from China, how the price has varied over the last, like, 10 years, where it's at now and what your outlook is for that?

Okay. I think we're getting into a pretty speculative area here. Over the last 10 years, we've seen prices between 1,500 a ton, it's a metric ton and 3,800 a metric ton, sometimes including shipping, sometimes having an extra 10,000 and shipping bolted on, such as during the COVID mess. So as you can see, it's a wild world out there. Our recent experience has been in the area of $2,300 a metric ton. And it appears relatively stable, but with maybe a 10% variance. I'm not sure how helpful that is though.

Okay. And then on your website, when you talk about for some of the divisions, I forget which one, that use fermentation to make L-alpha [ph] TPA think that has a certain cost and then another division from natural sources. Can you explain the differentiation between those two and what it means for cost for your company?

Certainly. First point I should make is that sustainable aspartic acid is not yet available. Our work with Lygos several years ago was intended to get there. Our factory in Taber back in 2011 was also intended to do the same process. We have not been able to make it economically, nor has Lygos at this point. So the only source of aspartic acid in today's world in any volume more than a few grams is by fermenting fumaric acid and the fumaric acid is usually obtained from benzene and the benzene is usually obtained from fractioning oils. So in a way, the oil price can have an effect on the aspartic acid price. But it's a very small effect because as the oil price varies and the benzene price varies, all the people in the lineup ahead of us, take a little smaller or a little bigger piece of the pie as they can. And so oil is a little bit of a way to predict what our pricing is going to be, but it's not a very good correlation. It's an indicator, rather. Hopefully, that helped too.

Okay. Thanks for your comment. I'll get back in line.

Thank you.

Our next question will come from Tim Clarkson with Van Clemens.

Hey, Dan, good to talk to you again. Just again, some basic questions for a small company. You guys are actually pretty complicated. So on this TPA, what percentage of your business is fertilizer and what percentage of it is this mineral scale stuff for the oil industry? How would that break down?

Well, we don't break it down specifically for investors. I'll give you general opinions...

Okay...

That will be plus or minus 5% to 10%. Agriculture of our polyaspartic business, agriculture is in the range of 30%, oilfield is in the range of 30%, and industrial is in the range of 30%.

Okay. Are the margins any different from industry to industry? Or are they about the same?

We don't -- we definitely don't talk about specific margin...

Okay. All right I get it. So I noticed that at a fairly large capital expenditure last year, do you expect large capital expenditures this year?

At this point, no. We have completed and installed all the equipment we think is needed for our Food division. And it's now time to make it work for its supper.

Okay. Good. Now is this enzyme product that you talk about, is that different than the TPA product? Is that a separate aspect of nitrogen fertilizer stuff?

Yes. The enzymes and the soil that damage nitrogen, they are fought with chemical called MBPT and literally, everybody calls it that because the name is one of the longest words on earth. So that's a different field. It's still part of our agriculture division. It does not use TPA, and it, like all our other things, we aim to be as green as possible. So by working with nitrogen conservation, even though it's not with a full biodegradable ingredient, we are doing our best to be good corporate citizens.

Okay. So which product is bigger than in terms of fertilizer stuff? The enzyme product or the TPA product in terms of revenue growth - revenues, total revenues?

I'm not going to disclose that.

Okay. All right. That's fine. I can -- that's one reason I'm always confused is this some of the stuff isn't so clear. And then can you say anything about the new food product, what it is and how it's selling and why it works? Or is that kind of still a secret?

That one -- let me keep it as a secret, some of it is a secret for now, but I'm going to ask the customer if I can disclose it because they've had some recent success in their industry that I think they may say that they feel well enough protected that I can speak about.

Okay.

But in general, it is a TPA based product. So it's fully biodegradable and it is a food product that is very, very useful in preventing precipitation. So again, in food, it goes all the way back to the scale control aspect of polyaspartate, preventing one ion from affecting another ion.

Sure. Well, that makes sense. Are you happy with the margins on that so far?

Yes. They're decent, not great, but the volumes are very reliable and have potential for growth.

Okay. Okay. Good. Okay. That's helpful. And I'll hand it over to some other people. Thank you.

Thank you, Tim.

[Operator Instructions] And Mr. O'Brien, there are no further questions.

Thank you very much, James. I'd - everybody a wonderful call. We look forward to talking to you in six weeks and we're going to keep working as hard as we can.

This does conclude today's program. Thank you for your participation. You may now disconnect.