Thank you for standing by and welcome to Nanophase first quarter 2023 financial conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. The words believes, expects, anticipates, plans, forecasts, and similar expressions are intended to identify forward-looking statements. Statements contained in this news release that are not historical facts are forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements reflect the company's current beliefs and a number of important factors that could cause actual results for future periods to differ materially from those expressed in this news release. These important factors include, without limitation, a decision of the customer to cancel a purchase order or supply agreement, demand for an acceptance of the company's personal care ingredients, advanced materials and formulated products, changes in development and distribution relationships, the impact of competitive products and technologies, possible disruption in commercial activities occasioned by public health issues, terrorist activities, and armed conflict, and other risks indicated in the company's filings with the Securities and Exchange Commission. Nanophase undertakes no obligation to update or revise these forward-looking statements to reflect new events or uncertainties. I would now like to hand the call over to President and CEO, Jess Jankowski. Please go ahead. Thank you, Latif. Good morning to all those listening live. We also welcome those who choose to listen later online. Thanks for joining us today for a discussion of our first quarter 2023 results, the state of the business, and our outlook for the balance of the year. Kevin Cureton, our Chief Operating Officer, will be joining me on the call today. The first quarter was bumpier than we'd hoped. However, it ended with a good deal of positivity as we saw some of our improvements begin to take shape. As we discussed recently, January was a tough month, with a few weeks being devoted more to locking down inventory rather than building and shipping product. Examining the trends throughout the quarter, revenue was backloaded. We had roughly 20%, 30%, and then 50% of our quarterly revenue shipped during January, February, and March, respectively. With January being a $2 million month, the entire quarter skewed toward a poorer gross profit and to a negative bottom line. The better news is that February was stronger and March was stronger yet, exceeding $4 million. For the entire first quarter of 2023, even given a weak January, we still saw a 2% gross margin pickup in direct labor utilization over 2022. We'll cover more of this when we talk about the specific numbers, but margin improvement and profitability are a major focus for us from top to bottom, and you'll be hearing a lot more about it through 2023. I wanted to spend a little time talking about our operations function, particularly supply chain and manufacturing. We've been working to fix this part of our organization over the past few years. Through these efforts, we achieved many incremental improvements with a lot of hard work by the members of our operations team, but without enough day-to-day attention at the senior level. The litigation that we're involved in with BASF, which began in August 2022, has been a major distraction for our company. It certainly impeded our progress in implementing the changes to our operations functions that are necessary for us to both continue to grow and, more importantly now than ever, to do so with greater profitability and cash flow. The time and money spent on this litigation, were we able to invest it in addressing our operations issues instead, would surely have had a significant positive impact on our gross margin and our bottom line. Speaking for the two of us on this call, attending to the needs of a rapidly growing, rapidly scaling company while being chronically short on infrastructure was a necessary step in developing the business and something we've been committed to doing, but we weren't able to achieve it quickly enough. The distraction of litigation certainly didn't help us in moving these changes along. Looking forward, the best news here, the news that's keeping all of us at Nanophase and Solésence enthusiastic, is that we're finishing up the process of a major overhaul of our manufacturing organization. Last year, we added a seasoned director of supply chain, and we believe our inventory issues are behind us. We're now focused on improving our purchasing function. We believe there are significant opportunities to take greater advantage of our increased buying leverage, which has been created by virtue of our rapid volume growth. We concluded our search for a highly experienced VP of manufacturing this week with an expected start date in early June. We found a professional whom we believe will be an immediate contributor, our expectations for them and their impact on our manufacturing function and the company as a whole are very high. In 2022, we built out the R&D and sales functions, adding experienced leadership and support staff to handle our increased transaction volume. These areas have been functioning well and are well-aligned to support our growth plans. We also added a senior financial leader in the second half of 22, which will allow us to spend more time on identifying and addressing opportunities for cost reduction while remaining compliant with the regulatory load that comes with being a public company. We expect this to allow us more freedom to operate and, critically, to enhance the enterprise value of our company.Before we continue, let's walk through the numbers. Unless identified otherwise, all numbers will be stated in approximate terms. Our Q1 2023 revenue was nine and a half million dollars, versus $8.2 million for the same period last year. We were up 16%. At nine and a half million, Q1 of 2023 also represents the highest revenue we've ever recorded in a first quarter. Q1 2022 revenue also exceeded Q4 2022 revenue by 14%. For the first quarter of 2023, we had a net loss of just under $1.2 million or $0.02 per share, compared to earnings of less than $0.01 a share in Q1 of 2022. The Q1 2023 loss has several drivers that I'd like to cover in more detail before moving on. I'll address it in 2 parts. First, in terms of gross profit impact, which is where we've struggled the most and where we expect to see the greatest improvement this year. Second, in operating expenses, where we've made some significant investments in infrastructure, but also got hit by a few notable expenses that were difficult to anticipate or control. For gross profit, we put ourselves in a hole during January by missing too much production time while locking down year-end inventory. We shipped just under $2 million in January, resulting in too little variable margin being generated to cover our fixed costs. We believe we've addressed this appropriately and don't expect to lose more than a day or two during 2023's year-end process. While that doesn't help now, it's indicative of our getting a better handle on materials flow. Ultimately, this will be a critical driver of both throughput and margin increases. As I mentioned during our year-end call, we are now operating three production facilities, all in Illinois. We have one in Burr Ridge, one in Romeoville, and our newest and largest facility in Bolingbrook. All in, this represents approximately 320,000 sq ft of space, the largest being the 260,000 sq ft facility in Bolingbrook. On average, our facilities costs are up about $250,000 per quarter, representing a gross margin hit of about 3%. To reduce the near-term burden, we've been subletting about a third of the Bolingbrook space. Our schedule for upfitting the building was some months behind last year. We were only able to begin moving production in Q4 of 2022. Today, we have substantially all of our filling and packaging operations running out of Bolingbrook. We also have a much greater capacity to generate more revenue volume with greater efficiency. We expect our new facility to be a net contributor to margins in 2024. Given the headwinds we've had, it's important to remember that we continue to produce at record levels. This alone makes this the area that will yield the most immediate and greatest return in terms of our profitability than our valuation, which is why we're all here. For Q1 of 2023, the fact that we saw a 2% increase as a percentage of sales in direct labor utilization, even after our January struggles, shows the initial return we're getting on the investments we've made in Q1 to streamline operations. In terms of 2022 volume, this modest gain alone would have added $750,000 to our bottom line. We are going to grow in 2023, the benefits will multiply. Given the addition of our new manufacturing leader, on top of the installation of new automation that we began in Q1, we expect to be able to add at least 2% more, more likely 4% or more, to our gross margins as we continue to improve our process during 2023. Another major opportunity for margin improvement, which I alluded to earlier, will be better management of our monthly volumes. Volatility of both monthly customer demand and our own production has eaten into profits significantly over the past 18-24 months. The past 2 Q1 reports underscore this. With a higher functioning supply chain team in place, and now the addition of a seasoned VP of manufacturing, we're expecting to smooth out some of the monthly production and shipping volatility that has been a problem since the Solésence business really took off in 2021. The ability to match production and sales to fixed costs is a practice that we expect will have a marked impact on our bottom line, and we're pursuing this aggressively. Also, another margin contributor that's coming online is the benefit from a series of price increases we put into place that were generally effective beginning sometime in Q1. This will help to enhance our margins and offset cost increases as we continue through 2023. Speaking of cost increases, the last focused area of improvement we're counting on will be the impact of a stronger purchasing function. As the other changes we've made, including the June start of our VP of Manufacturing metabolized through the organization, we'll apply greater focus to purchasing and should see some relatively immediate benefits. As you can see, we're going at margin improvement from every angle that we can, I think this will play out well for the company and all of its stakeholders. There will definitely be more to follow on this. Looking now at operating expenses, we saw R&D expense, which includes our engineering group, up by 50% year-over-year. About half of that was related to compensation expense. Part of that related to the addition of engineering staff in 2022 to help us with the upfitting and optimization of our new facility in Bolingbrook. We expect these engineering adds to pay for themselves in 2023. Another 25% of the variance in R&D expenses was from increases to legal spending relating to securing our intellectual property. These legal expenses help us to actively protect our existing products and our position in the marketplace by deepening the moat around our technology. We're also continuing to develop and protect new technology. This is a technology that will drive the next generation of product offerings. Although we've won many awards, coveted awards, for our Solésence products over the past few years, this is an area that requires continued investment to keep us in the premium end of the markets we serve and to continue to drive growth. Moving to SG&A expenses, these were up $750,000 to a little over $2 million for the first quarter of 2023. Of this increase, 65% or almost $500,000 related to increased legal fees incurred due to the BASF litigation. The bulk of the remaining increases related to compensation, primarily due to the 2022 additions of senior leadership on our sales, marketing, and business development team and the addition of our controller. We also saw interest expense more than triple a $110,000 increase from the same period in 2022, primarily due to rapid increases in the prime lending rate in the last 12 months. Having much of this organizational work completed or near completion, we're now in a better position to increase our focus on capturing the bottom line benefits that these changes were designed to deliver. We expect this to allow us more freedom to operate and critically to enhance the enterprise value of the company. I'd like to introduce Kevin Cureton, our Chief Operating Officer, to discuss progress in these strategic areas and their drivers in greater detail. Kevin? Thanks, Jess. As always, I would like to begin by thanking our team for their efforts in helping fulfill our mission in enhancing people's lives through the world's best skincare products as we also work tirelessly toward creating a more valuable company for our shareholders. I will also add a thank you to all of our investors who remain steadfast in their support of our company. As Jess has already mentioned, our primary focus is on returning to profitability. We know that until the bottom line results are seen, these are empty words given what has been four consecutive quarters of results that are not reflective of our standards and expectations. To this end, I will keep my prepared remarks very brief, but certainly look forward to answering questions that our investors may have. Over the past two months, we have spent an incredible amount of time identifying and recruiting the operational leaders that will further our profit objectives while empowering key engineering personnel to drive changes that have had a significant impact in uptime and throughput. We are further supporting this investment by taking advantage of the strength of our pipeline and our solid backlog to redirect a portion of our investments in business development toward improving operations. This does not mean we have stopped innovating and creating the best products in the industry. In fact, we hope to have several more exciting announcements in this area in the next couple of quarters. That we are fully embracing the need and our ability to drive cash positive growth. We remain completely confident and certain in our ability to achieve profitable performance in the very near term. With that, I'll turn back to Jess for some closing comments. Jess? Thanks, Kevin. Man, I hate to follow that with the L word. I talked a bit about litigation earlier, I wanted to quickly cover our commercial relationship with BASF and to discuss the ways we're managing the litigation to keep it segregated from our day-to-day business activities. The management of both companies, Nanophase and BASF, have remained committed to keeping our respective commercial teams as far away from the demands of litigation as possible. Both of our goals are to continue to support the API market that our products serve through BASF. We're still looking for potential ways to expand our shared reach there. Through all of this, demand remains strong from BASF. Purchase orders keep coming in. We keep shipping world-class product. BASF volume was up by 40% in 2022 from 2021. It was up more than another 40% between 2021 and 2022. For the first quarter, volume's up by almost 50% over the same period last year. We're not sure about their de.ands for 2023 yet, but it's our view that their orders for Nanophase ingredients will follow the demands of the markets they serve, and we continue to believe that our products are among the best. Regarding the litigation, as I said during our year-end call, we continue to feel that our case is a good one, but we'll also pursue a negotiated settlement with the goal of resolving this issue as quickly as is practical and beneficial to our company. I'm sure it's frustrating that we can't share more at this point about the litigation, but things are moving along, and we're working to minimize the impact of it, both financially and in terms of management distraction. Now let's get into the part of the call that Kevin and I appreciate the most. Although we know that most of our investors listen to the webcast or review the transcript after the live call, we'd like to invite those participating in today's call to ask any questions you may have or to share your comments. Latif, would you please begin the Q&A session? Yes, sir. As a reminder, to ask a question, you will need to press star one one on your telephone. Again, that's star one one on your telephone to ask a question. If you'd like to remove yourself from the question queue, you may press star one one again. Again, that's star one one on your telephone to ask a question. Please stand by while we compile the Q&A roster. Again, that's star one one to ask a question. Our first question comes from the line of Stefano Bolas, individual investor. Stefano, your line is open. Hi, and thanks for taking my question. Two questions. First one is on some prospect improvements that were mentioned in the Q3 call. You indicated two ways to improve efficiency. One was labor planning and procedures that could help to reduce labor costs by 25% and automation another 25%. The question is, looking at this March ideal figures, are you seeing this type of improvements or accumulated reduction of cost of 50%? The second one is more in detail on the, again, mentioned in the Q3 call, the four planned automation lines. The first one was indicated as being operational from January 2023, and there was additional two that should be ready by middle or end of Q2 this year. What is the progress on these ones? like the first was operational from this February as planned. what are the current deadlines for the other three? Thanks. I think we're gonna share that question, Stefano. Thank you. I don't recall talking about a 50% reduction or a, you know, 25% reduction in labor or materials cost. I believe we are on track to continue to reduce our direct labor, particularly costs. You know, we're 2% better than we were last year in the first quarter, even with the tough January. I mentioned there's another, probably another 4%, maybe 6% of improvement in that labor and the efficiencies and everything else that we are working towards. From that perspective, we're excited about that, and we think that's achievable. Regarding the lines put in, I'll let Kevin handle that one. I don't recall all of the math that you just laid out there. We were up and running in January on a few of the things we added. Kevin? Thanks, Stefano, for the question. We might not get all of it. It was a good question, but a lot of parts there. To be clear, we were up and running in January. That was part of our goal, and we did achieve that. We weren't, as Jeff said earlier, operating for much of that month for the specifically on the Solésence side of the business, in part because of the inventory count that was going on. We do have 4, really 5 different lines that are operating in the facility. Those operate, they have different capabilities, so those operate based upon requirements, you know, to fill different orders that our clients have. We were talking about, I think what you got in there talking about the 2 additional parts was that one of the lines does have automation from beginning all the way through the end. Then the other 2, we are still seeking to get the back-end process further automated, which is where the final assembly occurs. We're waiting impatiently for those equipment to come. It is, it's coming from the Far East, and so we expect that to be here sometime in early Q3. Hopefully that answers your questions on the operations side and what we've implemented so far. Thanks. Thank you. Again, to ask a question, please press star one one on your telephone. Our next question comes from the line of Wayne Ruin. Wayne, your line is open. Hey, Jeff. Hey, Jeff. How are you doing? Good, Wayne Ruin. How are you? Well, I'm depressed. I'm a White Sox fan. How do you think I'm doing? Oh, you're playing. You're singing my song. It's hard to... I'm looking forward to the OTAs and the Bears that start this week. It's bad. One thing I expect from you, and I'm sure you'll deliver, is your enthusiasm for getting to where you wanna be. I wanna thank all your people for their hard work and dedication. You see any progress about some of the, your competitors products, the government saying that they're not safe anymore? We've talked about that before. When you get the parts for your completing the process, you expect that maybe by the start of the third quarter, will that make a significant impact on reducing cost of production? The other one is, how do you look forward on-Do you think we can end up with record sales for the year 2023, or can't you prognosticate that? But I'm always interested in increasing the sales. Do you think we can have the best year sales-wise the company's had? Thank you for all your work, all of you. Thank you, Wayne. We appreciate it. I'm gonna say going backwards, and then, have Kevin give more color. Certainly, we are gonna have a record year for sales in 2023. Solésence continues to grow, and it'll definitely be another record year. I hope every quarter is consecutively a record quarter because it's fun. For the year, I think, we definitely are going to have a record year in sales. I'll let Kevin answer the question about the automation and the FDA situation. It's just something we haven't talked a lot about on the call, but I know it's something that continues to benefit us generally in the marketplace. Yeah. Thank you, Wayne, for your support. I'll take it in those two orders that Jeff just mentioned. yeah, we expect the back end of the process is really to some great degree, the last part that most companies automate, and it is also the area where we expect to see the biggest gain in terms of efficiency. We will get a big gain also just for overall throughput, total throughput that we have based upon just increasing line speed. What we're talking about on the back end of the process is, in these sort of luxury skincare products, they always end up in cartons and other additional packaging, and that is what we're automating, and we do expect to see that start at the beginning of Q3. Once we receive the equipment, typically it'll take, you know, 1 month to 2 months to work out the kinks. We'll see more of the benefit as we close out Q3 and get into Q4. That notwithstanding, we still expect to see very good improvements just because we've improved throughput overall in the company, starting really at the end of Q1, and we're seeing that same improvement in throughput happening in Q2 as well. To comment about the safety and efficacy questions that are being raised, those questions are still standing. There's really 2 different pieces to that. There's an FDA piece that really goes toward what the regulators are asking from the chemical sunscreen active suppliers. There's no resolution yet on that, but they have still maintained, the FDA being they, their position around what sunscreen actives are considered safe and effective. However, they did, as we expected, gave the chemical sunscreen active suppliers some time to respond with additional testing, which is underway. The other side of that is what the market is doing. What the market generally does is, they are tilting towards safer and safer solutions, in part driven by millennials and Gen Z who care about, you know, their own personal health, but also, you know, environmental health. That's still being driven in the direction of mineral-based sunscreen actives. I can tell you, even with all of the growth that's happening, there's a huge, large share of the market is still chemical. There's a lot of opportunity for us to continue to grow with the offerings that we have. Thank you. You're welcome. Thank you, Wayne. Thank you. For our next question, which comes from the line of Jim Lieberman of Revere Securities. Jim, your line is open. Thank you. again, I want to congratulate you on the job you're doing in trying to consolidate and grow the company, to try to consolidate your operations and grow the company. I had a couple of questions to clarify. Is it your ultimate intention to have all your production at the new, newer facility called the Bolingbrook? Or do you, would you hope to keep all the other production facilities operating as well? Hi, Jim. Yes, it is our intention to ultimately have all the production in the single facility. It's a question of just how we migrate it, how we choose to migrate it. In terms of headcount, the bulk of our production employees are already in Bolingbrook. You've got just infrastructure and things like that that have to be reconfigured and moved, and we have to plan that. That is the goal. Ideally, that will be an added efficiency that we will have to apply to, you know, everything throughout the company over a period of time. That's not going to happen this year. We are heading in that direction, and that is something that is very high on our, on our list of things to accomplish. To the point a couple of other folks have made earlier, I will say though that we have a lot of opportunity to improve our margins and our profitability exactly as we are today. That's something that, you know, I think a weakness I have is occasionally you're looking at what you want to achieve and where you wanna go, and you look at that to the point where, you know, you realize there's some diamonds here in your own backyard, and we need to do more to do that, and we are. That's, that's my take on that one. Well, I mean, I think that makes sense. you know, I like the goal. I also appreciate that you've really got to be methodical about how you do the integration so that you don't leave yourself vulnerable, you know, not having all your processes in a row and ready to go. I think the methodical approach is the best approach. I've seen too many companies not do it that way, so I'm pleased to hear that. Can you comment on how many products your ingredients are currently designed into? Wow. How many skincare products? Thanks, Jim. I guess there's two different ways for us to comment on that. You know, we do with the BASF relationship that we've had for 20-plus years now. Those products go into a lot of what would be referred as recreational sunscreens. There's, you know, literally hundreds of different products. It's, you know, the companies that are in the recreational sunscreen market, like the Coppertone, Banana Boat, Hawaiian Tropic, those types of products. Great. On the Solésence side, We're well over 60 customers, closing in on, 80-plus customers. Typically it's 2-4 products per customer. We're talking about, again, several hundred products there as well now. Well, that's great. Now, for clarity, are the products you're selling to BASF the older line products and not the Solésence products? That's correct. What we sell are two different. You know, the BASF materials are the original Z-Code with a different chemistry and different coding level, different composition. We're non-nano in the Solésence business. There's a lot of very significant differences and covered by different IP as well. Right. That's what I thought, but just for clarification. If I'm looking for products that might have the Solésence ingredients in it, did you say that I look for something called Kleer, or...? Kleer. Is it- K-L-E- Yeah. Yeah. Yeah. That branding is our branding that we use within the Solésence business and selling products to the different brand partners that we have. You wouldn't see it on the label per se, except for our launch partner, Colorescience, uses it. A company, bioClarity, uses it. There's also a company, Glytone, that uses it on their label and on their website, where they reference the Solésence patents. As we mentioned in last call, there are some companies that have allowed us to mention them in addition to Colorescience. The company Relevant, the KINLÒ brand, and then Credo and essentially the product that they sell in partnership with a leading tennis player, we'll call it. Oh, okay. Great. That sounds, that sounds like fun. This is nice in the sense that I have a little broader range of products that I can look for to, and to recommend to my friends. The other question I had regarding the, you mentioned, the $20 million sort of orders on hand, which you thought that you could possibly deliver two-thirds in this quarter. Is that... How likely is it you could do that? I know you have to be very careful how you answer the question. Could you give some color to that? Sure. Sure, Jim. It's, you know, it really depends on how efficiently we're able to get the product ready, shipped, and out the door. I mean, two-thirds of that, maybe a little less, if we could target that amount, that would be, you know, $12 million in a quarter, which we believe is doable, possible. We've evidenced the ability to do that rate on a monthly basis better than that. Mm-hmm. It just depends on a few things and how they come together. One of the things that, you know, historically, we talk about, having, you know, leaving a quarter, having things we haven't shipped yet. I think that that's the risk that we're navigating, and one of the things we didn't talk about in terms of, you know, we're focusing on the bottom line, we're focusing on streamlining operations. The other thing is just on the various metrics of getting all these things out the door when the customer wants them, you know, and quickly to the system. I think that's possible to get that in for this quarter. That's, you know, of course, we're gonna try to do that. It's hanging there for us to grab, and so it's a question of do we, don't we? The demand is there, and I think truly the demand exceeds that. You know, had we hit our... You know, Kevin and I, as you might imagine, have talked about this for a long time. You know, our goal is to get to the point eventually where there's absolutely no restriction on the production side of the business. Right. As much as people want, they get. That's just, that just has to be our next, you know. Profitability is critical. Cash flow is critical. That drives valuation. The other thing is never leaving anything on the table because you're in a position in this business in particular, where you have reorders and launch timing and everything else. You know, if you're, if you're 2 weeks late, you could miss a window for the next set of orders, not necessarily that set of orders. We're all over that. That's something. We'll probably speak more to it as we get into the year, get through the second quarter, see where we're going to be, but that's kind of the brass ring for us for Q2. Well, I mean, that's really very exciting, the demand for the product, and of course, the great challenge for companies is the scaling. It sounds like you're approaching it, again, I'll use the word, a methodical way that gives you the most likely opportunity to reach that goal without leaving you vulnerable. I'm very excited about your progress, and thank you very much for your efforts, all of you. Thank you. Thank you, Joe. Thank you. Again, to ask a question, please press star one one on your telephone. Again, that's star one one on your telephone to ask a question. Our next question comes from the line of Tony Rubin. Your question, please, Tony. Hi. Good morning, gentlemen. As I'm sitting here, I'm looking at the your stock price down 25% just today. Notwithstanding the the kudos from some of the previous callers, clearly, you know, there's not a lot of enthusiasm, and your stock is down 80% in 1 year. You're trading at levels that last you saw in September of 2020, and in fact are even lower than you were 5 years ago before Solésence even started. You know, what, if anything, are you doing to communicate your positives better? Has the company considered doing a share buyback or anything to support you know, investors who clearly have suffered with your underperformance? Let me pivot to a different question. You talk about gross margins. You were 22.7% this quarter versus 26.6% last year. As I look at 2021, where you guys complained tremendously about the challenges of producing in the middle of COVID and with accelerating orders, you managed to make 35.2% gross margin. You know, you've talked generally, and you have for quarters, about enhancements to gross margin, but the numbers we're at right now are so far behind what you did in a COVID-challenged, capacity-challenged year. You know, what are thoughts to get back to that level and timing associated with that? Again, you know, what, if anything, are you going to do, you know, to help out your shareholders, you know, who have suffered tremendously, you know, during these missteps? Thank you. Thank you. I think starting from the second one, you know, looking at our full year, it's better to look at a full year number generally. I recognize, pulling out a comment about March isn't the best thing in terms of trying to equate that with rolling forward. I did that because particularly January was such a rough month, and I know that my expectation, our expectation was that we were gonna have a much better first quarter than we did. A lot of this is based on when the volume happens. To me, looking at a quarter is not really going to be representative because the business doesn't flow even close to evenly on a monthly basis. Some of that is cyclicality that is the way our company works. Some of it is the other things. Customer demand can be spotty, or we don't get things out the door quickly enough. There's gonna be a volatility on that gross margin that really you look at it, you have to look at it over a longer period of time. The pickups that we had that I was most excited about were relative to our direct labor utilization, because that's generally an area that has been, you know, We spent a lot of time as we had that triple in volume, throwing people at an issue, trying to get products out the door so that we didn't miss launches and things like that. We're at a point where We're addressing that literally every day and trying to work that down. I was happy about that in specific, more so than a lot of other things. We also had a, you know, our gross margin for the year in 2022 was disappointing. It was 22%, and our gross margin for the year in 2021 was about 30%, recognizing that's a much better number, and we should be able to get above that, as we've mentioned in the past, because that really it was a tough year, and we were, you know, bailing wire and duct tape and everything else, and we're able to do that. I hear what you're saying. I think that getting our gross margin up to that level, where we finished 2021 on the average, that's something that we see as doable and doable in a methodical fashion that's gonna allow us to do better, you know, improve on it. You know, shave a half a point here and a half a point there and get that up to that point where we are looking at that 35%, 40% gross margin down the line. For this year, I don't know that we'd hit something like that for the entire year. I think we're gonna have a better showing in Q2, in Q3. I don't wanna comment any more on it because the dynamics are so up in the air in terms of the absorption piece. You have, you know, you've got a fixed overhead load, and if you don't ship enough in that particular month, that particular week, however you wanna look at it, that money's gone. That's something that we are driving through the organization and working on in a big way. Relative to a share buyback, I don't think we're there. I think that would be, you know, we are still capital-stretched, and one of the things we're trying to do is generate more organic cash to be able to ease some of the pressure that we have as an organization for that. I do certainly feel for you and our shareholders that have had a rough year, a rough quarter, a rough day. It... One of the things that is happening is we have a very, I mean, if we have a very low trading volume, we have some very frustrated investors. Investor dumps some stock, all of a sudden the stock goes down by 50%. We had a 75,000 share day, my phone was ringing off the hook from everybody about who's doing that. When you think about 70,000 shares at $0.70, you know, you're talking about, you know, $50,000. You know, it's not relative to a $30 million-$40 million market cap that was a $100 million, almost $200 million market cap a year or 2 ago. We need to get our performance up. We need to get that out and communicated. We haven't had some good things to communicate about in advance relative to Q1. We are continuing to do well relative to market penetration, relative to. You know, we're winning awards. We will win more awards, those kinds of things. I think that in tandem with profitability is gonna drive valuation. Well, I hope, sincerely hope that you are correct. I mean, all the sales are great, the awards are great, the product is great. You know, this isn't even talking about the BASF, but just the execution has just continued to disappoint. Obviously, I think everyone on the call hopes and prays for your success, so thank you. Thank you. Thank you, Tony. Thank you. Stand by for our next question. Our next question comes from the line of Larry Saunders. Your line is open, Larry. Okay. Can you hear me? Yep. Good morning, gentlemen. Thank you for taking my call. I'm a new investor in Nanophase and just completed my kind of due diligence here in the last few weeks, and just new to your narrative. I'm very intrigued. I do wanna ask a little bit about the balance sheet. Excuse me. Just mainly curious about your cash position at the moment and your overall liquidity. What kind of, you know, what kind of sources of liquidity you might be able to tap if you need it. I heard you mention your interest expense had gone up a good deal during the quarter. I guess depending on what sorts of access to additional liquidity you may have if needed, do you anticipate that your interest expense is gonna kinda remain at this kind of a run rate through the rest of the year? If you have any kind of guidance you could point to on that, I would appreciate it. Okay. Thanks, Larry. I'd say we plan for it to remain at this level for the year, but I think that the things we're doing, you know, part of that has to do with working capital financing. Part of that has to do with getting a more efficient level of inventory at any given time in-house. We're essentially paying to have the inventory here ahead of time, and I think we're we've been doing a lot of work to get closer to just in time, with the challenge being, you know, we had the challenge before in 2021 of suppliers just not being able to supply anything, so we accumulated a fair amount of material because we just didn't wanna run short. We also, just the nature of the model, some of these things take, you know, a couple, three months to get here. You have some deposits down and other things that kind of suck up capital in that process. I think as we smooth out the whole process, get the flow more balanced, we're gonna be in better shape there. I also think that the fact that, you know, losing $1 billion in a quarter, you know, some of that's depreciation and, you know, stock compensation expense and things like that, but a lot of that just comes right out of cash. Being profitable is the very first step to fixing that, and that also allows us to be a lot more bankable. You know, when we were rolling forward in 2021, we were in a position where we had a lot of available credit, and we still have available credit, but everything costs more than it used to. An additional fact that the prime rate is just so high right now, it went up so quickly. I think that's the first thing to do relative to shoring up the business instead of, say, doing something that would dilute our shareholders, which is already... You know, people have been through a lot of pain. We have a lot of shareholders. You know, Tony had mentioned the loss over the past year. You know, we have a lot of shareholders that have been here for 10, 15, 20 years. I never forget what they got in at and what it's going to take to satisfy that group. Try to avoid dilution at all costs. If we were going to do that, I would wanna do something like that after we crank this year and do really well relative to profitability, have a nice multiple, have a nice profitability piece to do it. Otherwise, to me, it's just not worth it. I'm not concerned about running out of credit in the meantime. Okay. Very good. Thank you so much for your time and best of luck. Thank you. Thank you. Thank you. I would now like to turn the call back over to Jess Jankowski for closing remarks. Sir? Thank you, Latif. There's really not much more to add at this point. We're focused on building a stronger, bigger, more profitable company. Enhancing profitability is highest on our list, with maintaining growth a close second. Our products continue to be in demand, and we're working hard to shorten the time and expense that it takes to get them to our brand partners and ultimately the consumers who are demanding them. The consumers' preference for our products continues to move Solésence forward regardless of the ups and downs in our economy, which is another great facet to this business. Thank you again for attending our call today. We're looking forward to sharing better results with you in a few months. We remain excited about our prospects and hope that you feel the same way. Have a great day, everybody. This concludes today's conference call. Thank you for participating. You may now disconnect.