Good day, everyone, and welcome to today's Flexible Solutions International Third Quarter 2024 Financials Conference Call. At this time all participants are in a listen-only mode. Later you will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note this call is being recorded and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Dan O'Brien. Please go ahead, sir.

Thank you, Jen. Good morning. I'm Dan O'Brien, the 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 Q3 2024. I would like to discuss our company condition and our product lines first along with what we think may occur in the remainder of 2024 and the first half of 2025. I'll comment on our financials in the second part of the speech. NanoChem division. NCS represents approximately 70% of FSI's revenue. This division makes thermal polyaspartate acid called TPA for short. It's 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, NCS 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. The result is the fertilizer remaining available longer for the plant to use. TPA is a biodegradable way of treating oilfield water to prevent stale. Preventing stale keeps oil recovery types from clogging. TPA is also sold as a biodegradable ingredient in cleaning products and as a water treatment chemical. In our food division, a special version of TPA is sold as a…

[Operator Instructions] We'll take our first question from William Gregozeski with Greenridge Global.

Hey Dan, a couple of questions for you. On the gross margin side in the last quarter, you mentioned, because they were good in the last quarter and they're even better this quarter, that last quarter was kind of the top end. I mean, should we just look at what the third quarter was as kind of a max and it'll start going back to a more normalized rate or how do you think we should look at that? Dan O’Brien: I would suggest that the second quarter was a better median position. You've been watching us for a period of time since about 2003, I believe. So you've seen gross margins all over the map, but I think, and we're pretty variable based on the lifetime between when we obtain our raw materials and when our customer actually books the sale. So I think the best number for now would be Q2 rather than Q3.

Okay. On the balance sheet, the total debt has been increasing as has the cash. Do you plan to leave both of those there to have the cash for opportunities or might start paying the debt down faster? Dan O’Brien: Our debt doesn't necessarily have repayment without penalties and of course it's floating debt which has recently been going down along with the central bank decisions. We will probably keep the cash, at least most of the cash, for opportunities and keep paying down at the normal rate. If something changes, we will change direction. We are also making quite a bit more effort to get the best interest rates on our cash forwards.

Okay. And then the last question on the kind of the food initiative. You mentioned, possibly having contracts beginning of next year are for the four products that don't have customers right now. I mean, how close are you or what kind of progress has been made since the last quarter update on just getting those closer to contract? Dan O’Brien: What we're finding in the food and nutrition field is that customers who want to do business with us always want to do just one more test or one more iteration before they buckle down to negotiating the price and setting a contract. And that one more thing attitude is what we've been doing for the last three months and expect to be completing across the rest of Q4. We wish it wasn't so, but it appears to be part of the market in this vertical. So we're doing the jobs. Every time we reiterate a product, it does get better. But of course, everyone is much -- is very aware that money really talks. And so we feel we're getting very close to the end of this cycle. And we thought we were close at the end of last quarter and we're engaged in the one more thing merry-go-round.

Okay. All right, that's all I have. Thanks, Dan. Dan O’Brien: Thanks, Will.

And we'll move next to Tim Clarkson with Van Clemens.

Hey, Dan, excellent quarter again. Now, on this food -- new area in the food, let's go out a little bit further than a quarter. Let's go out a couple years. I mean, is there a potential if these new products hit that this could double the size of the company? Dan O’Brien: Tim, that's yes, that's what we're aiming for. The market size in these verticals is -- let's say the addressable market size is multiples of our current revenue and active margins. This is why we chose, well there are two reasons why we chose to move into this industry. The first one is actually protectionism related. Food and nutrition products in the United States are made in the United States, in most cases, for consumption in the United States. And that solves a lot of the geopolitical problems. If you have to bring products in from outside the US, the US customer ends up paying the tariffs because we pass them through. Not ideal for quality of life, but it's the way it is. The second reason is that this is a marketplace that's really very large and very varied, and we have a unique skill set and a unique equipment set that allows us, we believe, to be positioned for multiplying our revenue over the years.

Sure. Now, I know that in the initial product, the wine product, the big deal is eliminating crystallization so that you can move these wines at higher temperatures. Is that the advantage on most of these food products, eliminating crystallization, or are there other things you're looking at? Dan O’Brien: Well, each one is a separate segment. Some of the target areas we're looking at is, I can name them, not guarantee that these are things we're going to close, but we're engaged in sleep aids, we're engaged in products that could be utilized for hormone supplementation. We're looking at products that are the opposite of sleep aids, alertness products. So the wine product was one -- well, the one that got us started, and it's based on polyaspartates. So that's our internal decision. But what's coming to us in the other situations is contract manufacturing for people with other -- with ideas that they bring to us and problems that we solve for them. And essentially, what I mentioned to Mr. Gregozeski was, this one more iteration thing is a function of problem solving. When your business plan is to find customers who have problems that need to be solved, sometimes it just takes a little bit longer to get it to perfection.

Right, right. Now with these new products that you're looking at, would they have good margins? Dan O’Brien: Yeah, they'd be equal to or better than our current margins.

Great, great. Well listen, I'm very excited and hanging in there, so good work. Thanks, Dan, I'm done. Dan O’Brien: Thank you, Tim.

[Operator Instructions] And it appears there are no further questions. Mr. O'Brien, I'll turn the conference back to you.

Thank you, Jen. Everybody, thanks very much for joining us. There's a big gap until our full year speech in March. But look, we're going to keep working hard. And hopefully, I'll have some great news before then and during then. So thank you again. And let's get it closed. Have a wonderful Thanksgiving. Goodbye.

And this does conclude today's Flexible Solutions International third quarter 2024 financial conference call. Thank you for your participation. You may disconnect.