Good day and welcome to the Flexible Solutions International First Quarter 2018 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Dan O'Brien. Please go ahead, sir.

Thank you, April. 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 First Quarter Conference Call for 2018. Before addressing our financials, I'd like to talk about our recoveries on the fire, our product lines and what we think might occur over the next several quarters. The fire at Taber was unfortunate, however, we have now received a total of 8.8 million Canadian from our insurance. There will be no further payments and it should be noted that the final payment was provided after the end of the quarter, so it is not included in the Q1 financials. The Heatsvr liquid pool cover is back in production to serve our worldwide customer base and the property where the fire took place has been listed and will be sold when a reasonable offer is received. The NanoChem Division, NCS, represents most of the revenue of FSI. This division makes thermal polyaspartic acid called TPA for short. Its' 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. TPA is used in agriculture due to significantly increased crop yield. The method of action is by slowing crystal growth between fertilizer ions and other ions in the soil resulting in fertilizer…

Yes, thank you. [Operator Instructions] And we'll take our first question from William Gregozeski from Greenridge Global. Please go ahead.

Hey Dan. I got a couple of questions. In regards to the $2.4 million final insurance payment, do you have any estimate as to how that will be reflected on the second quarter results?

Hi, Bill. Yes. I think what they will do is what they did last time which is simply put it into -- reflected as actual earned income, which doesn't make a whole lot of sense until you see that they start backing it out later in the year after. It just happens. It will be added during the income. It will distort the income for Q2 and for the rest of the year and the distortion will drop out over a full-year period.

Okay and when you say the distortion, there will be losses to income, say in the second, third -- third and fourth quarters of this year and first and second next year possibly?

There won't be losses, but operating income and top line income or bottom line income will be more different and it will be necessary to continue to subtract out the fire income from the accumulated annual income for each quarter until this is over.

Okay. But on a quarter-by-quarter basis, there may be nothing after the second quarter?

That would be my guess. There's no more money coming in, we have no more cost related to the fire going out.

Okay. You mentioned you had the sales to oil field where weaker in the first quarter and it looks like you have customer A listed in your results that was down quite a bit again and that was listed there as not a primary customer. But did you move back? They were over $1 million each of the last first quarter of the last four years.

No. We don't comment on individual customers. We limit the parsing of our financials so that our competitors don't get the advantage of us giving them free information.

I guess my question is more what is the not a primary customer in the period need [ph]?

Well, that means that they weren't one of the top five.

Okay, you said the oil was weaker in the first quarter and you're working to improve that. What are you seeing in the oil field generally? Because taking out that customer, it looks like you've seen a lot of growth from other customers over the last 12 months.

Yes. Bill, but I don't want to get into is divulging our change in customers, where stuff went, where it's coming back from because this is stuff that we consider trade secret to our company and we just don't comment on it. But your base question, what do we see in the oil industry? We see that it's quite strong, but that all of our oil customers that we talk to are not confident that the industry will stay strong. They are not as if you remember back to 2007, 2008 when every oil company thought that $130 or $140 oil was going to last forever. That is not the feeling we get from our oil customers now we feel that they are maintaining their strong cost controls and making sure that everything they buy does its job and does it well. So it's a good -- business conditions are good, but we definitely don't see the oil industry thinking that there is nothing that could go wrong.

Since you just want to talk about the industries generally -- previously you talked about when the customer have well shut down because it would obviously negatively impact the quarter. Are you not going to do that anymore?

If we know that one has happened for sure, we will let you know. Sometimes our customers aren't telling us and sometimes they're telling us late and we don't want to give out information that we don't know is true, so we definitely don't comment when we don't have solid information.

Okay. But as far as the it goes down, it sounds like things are going well. You're still seeing good growth?

We're seeing good growth. We're not really comfortable with work on prices are. We think they're at the bottom end of a spectrum and we would like to see it closer to 450 then 350. But as we know, besides farming, the second most favorite thing that a farmer can do is complain. So we take it all at the grain assault.

Okay. All right, thanks, Dan.

Thank you.

We'll take our next question from Stephen Weinstein [ph] who is a private investor. Please go ahead.

I was mainly just wondering about the Press Release you noted, that earnings are flat even with the top line to the cost control on part mix. I was wondering where does the cost control show up on the income statement? What areas are you focusing on?

Well, we are focused on our basic efficiency inside our factory and we also focus on making sure that our cost of raw materials doesn't increase too rapidly. On the sell side, improvements in our mix between agriculture and oil field will usually provide an improvement in our profitability before tax and of course, there are some definite advantages than the tax machine.

Got it. Just looking at the rising oil prices over the past few months. Is there sort of -- I guess, on -- give your competitors an advantage [ph] but like -- is there any set like price per barrel of oil that you feel comfortable with where you think you're going to have to study demand while still making a good profit.

Well, if I look back over the quarter, I would suggest that the $55 to $75 barrel range doesn't result in us having to do anything radical to restrain our cost and results in the oil industry, not having to do anything radical to either contain their underlying cost or reduce their cost. I don't like the word sweet spot, but the general area that we're in now is an area where we believe we can maintain business and grow from time to time at rates that are reasonable. Not guaranteeing any growth rates, but we're seeing interest, we are keeping our customers, we're quite comfortable with our cost of goods and I wouldn't like to see $100 oil and I definitely would like to see continuous $40.

I was also wondering, the plant where the factory was, do you have a general price range you think you sort of sell that for?

Yes. It's now on developed land and it's 3.3 acres in Southern Alberta Canada. The listing price is CAD $399,000. So it is not going to have a large effect on our financials when we sell it.

And then just another thing on the financials. After adding back in the last bit of insurance, you seem to have about $9 million in cash and I think about $3 million of undrawn line of credit. I was just wondering, is there a set plan with the cash? Where will that be deployed?

That's in front of my Board of Directors right now. We have some ideas. We're going to be careful, but if something of good interest and high return in investment shows up, we will consider taking action. Nothing has been defined yet, so this is very theoretical and it should be taken as only theoretical, but we are always looking and if we find the right opportunity, we will be able to move.

[Operator Instructions] We'll take our next question from Raymond Hall [ph] from Comprehensive Financial

My question has been answered. Thank you.

And we'll take our next question from J.T. Waters [ph], a private investor. Please go ahead.

Hi, Dan. Thanks very much for taking my call. Question real quick. You mentioned the board of directors and this is not meant to be a hostile question at all, but have you guys ever done an analysis of what it cost you to be a publicly traded company? I'm just curious if that's ever been approached recently?

Yes. In fact I keep a very good idea of what that number is. Our audit and audit-related cost are less than $100,000 a year. Our securities lawyer cost are less than $25,000 a year. Our board cost us $25,000 a year and our investor relations program is between $75,000 and $100,000 a year. I think that that is a pretty reasonable price to pay for access to the public markets and for providing my original shareholders with friends and family, people that I still remember my promise to of some kind of a liquid exit if they ever don't want to own their shares.

Sure. Got you. Thank you for that. And then just curious -- and you may have covered this in previous conference calls, but can you add a little color to your way to market for your various products? Do you use independent sales agents or do you have company sales guys and then maybe a mix of both? If you can pull a color there?

Yes. It's quite a mix. In oil field and industrial sales, it's a very technical sales -- direct technical sales connection between our senior scientists and the scientific teams inside the customers. And when both sets of scientists are satisfied, a proposal is sent to the people who sign tracks and of course by then it's usually approved. So that's a technical sales route. In the agriculture industry, we use a combination of our own sales team which goes from customer to customer presenting and representing. We also use independent -- the customers in that case would be distributors who would then [indiscernible] to their growers. But we also worked with independent agents and with people who sell -- although they're not full-on distributors, but people who sell directly to growers. And then again in our WaterSavr, we have a dedicated salesperson who works the entire world and in some of the pool sales, we have downsized ourselves after the fire to a situation where we fill incoming orders from past customers and maintain as high of profit with the low on efforts as possible on that one.

And then just as far like -- I'm assuming, are you the head of sales that there were such a thing that manages all that or do you have a dedicated VP of Sales?

We have an interesting situation there. In agriculture, I'm Head of Agriculture Sales and I report directly to the managing director of the NanoChem division. She reports back to me for industrial sales, oil field sales and of course manages the division and reports on that. We have a mix mash according to whose skills are best for the purpose and a very level playing field where any of the sales operation people can say, 'hey, this is not working right. Why don't we try changing it this way?'

Got you. I think I just have two more questions. Your new factory, it's kind of a little bit more of a greenfield set up, I would imagine. I know the building is an older building, but I think you guys did a great job of keeping cost in control and I know that when you throw materials. Are you seeing any efficiency gains from your new production facility? Or is it about the same as it was before?

Efficiency is driven first by volume and then second by available space. Our volume is similar year-over-year, so efficiency hasn't changed on that. But one of the things we are noticing upon having the extra space is that we can carry a bigger inventory and a better mix of inventory, which does mean that we are prepared to take advantage of quick turnarounds. When somebody orders something, we are more likely to be able to fill the order and that had some benefits in -- well, already in Q2, we had some short notice orders that we were able to fill that we would not have been able to fill last year or say two years ago before we had the extra space. So yes, it is allowing us to be more flexible [ph], and more reactive to customer needs. But in terms of overall efficiency, it's not measurable yet.

Great. Thank you. And last question. Is there a current share buyback plan in place? And if not, is that one thing I'm assuming your board may be considering with excess cash? And thank you for your answers.

Yes. That is one of the questions the board is asking itself. It is a complicated process that cost money, so we would have to feel that that was the best answer, but yes, it's one of the questions. And we have done buy backs in the past and certainly we are willing to do them again in the future.

[Operator Instructions] There are no further questions this time. I would like to turn the conference back to you, Mr. O'Brien for any closing or additional remarks.

Thank you, April. Thank you, all, for coming to the conference today and I look forward to speaking with you again in three months and thanks again for the interesting and widely varying questions. Good bye.

This concludes today's presentation. We thank you for your participation. You may now disconnect.