Good day, and thank you for standing by. Welcome to Nanophase's third quarter 2023 financial conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. The words believe, expects, anticipates, plans, forecasts, and similar expressions are intended to identify forward-looking statements. Statements contained in the news release that are not historical facts or 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 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 and 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 and commercial activities occasioned by public health issues, terrorist activity, 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 conference over to your speaker today, Mr. Jess Jankowski, President and Chief Executive Officer. Please go ahead, sir. Thank you, Norma. Good morning to all of those listening live. Welcome to those who choose to listen later online. Thanks for joining us today for our discussion of our third quarter 2023 results, the state of the business, and our outlook for the rest of the year, going into what we plan to be a watershed 2024. Kevin Cureton, our Chief Operating Officer, is joining me on the call today. I have some brief prepared comments, and then Kevin and I will have some time for some Q&A afterwards. While our results are not yet reflecting it, we're in the process of implementing several things that we expect to return positive financial results in the near term. We've added to our operations team, first with the VP of manufacturing that we added in Q2, now with an experienced senior purchasing manager this month, who, in addition to having relevant and broad industry experience, has also built a purchasing organization from the ground up in a company with similar growth to what we've seen over the past few years with our Solésence business. That perspective and experience is something we've been missing that we expect to profit from almost immediately. We mentioned in the release that Q3 was impacted heavily by supply chain issues, most related to purchasing and production planning, where we couldn't get everything aligned efficiently enough to deliver on our volume commitments. Barring existential events, we don't expect to have to deal with these types of things in 2024. Given that much of our funding has been through the financing of working capital, low shipping volume leads directly to cash crunches. That leads to inefficiencies, operational compromises, and temporary losses of negotiating leverage. These things have been a struggle this year, beginning in Q2. Another way we've addressed these issues is through the renegotiation of our existing loan facilities and the addition of a modest amount of equity capital to give us some flexibility. We're also in the process of securing some additional financing for capital equipment as needed. We have received or will receive an additional $3.2 million in cash over the next several working days. $1.2 million of this will be through an expansion of our revolving credit line secured by inventory. We now have excellent terms on both our inventory and accounts receivable revolving lines through the support of our largest shareholder. The terms we have, which you can see in detail in our 10-Q, are significantly better than we believe we can get elsewhere. This has been a nice benefit to us and helps us to focus more on the metrics we need to meet or exceed to help us to achieve our ultimate goal of increasing our enterprise value. The remaining $2 million in financing will come from a shareholder rights offering that we are in the process of implementing with an S-1 to be filed soon. At a high level, we'll offer 5 million shares of stock to our existing shareholders only at a price of $0.40 per share. Each shareholder will have the right to purchase this Nanophase stock based on their ownership percentage. The pro rata calculation amounts roughly to the right to purchase one share of stock for every 10 shares currently owned. We built in an over allotment feature that will allow the purchase of an additional 60% of their pro rata amount of shares if desired. The principle here is that we want all of our shareholders to have the opportunity to avoid dilution while supporting our forward growth strategy. Recognizing that our stock is thinly traded, this will represent an opportunity to maintain or enhance your position in a single transaction at a fixed price. Our largest investor has agreed to serve as a backstop to ensure that the entire 5 million shares are purchased. If the other shareholders do not express interest in purchasing their allotments, Mr. Whitmore will purchase the remaining balance. He has also agreed to extend the company a $2 million bridge loan against the proceeds to allow us immediate access to this capital. This was funded yesterday. The critical goal here is to head into 2024, primed to deliver more value through increased gross margins, reduced operating costs, and a more sustainable infrastructure. We're definitely driving Solésence growth, but enabled by the equity financing, we're planning to do it with a greater degree of security as we navigate the inevitable cyclicality of our business. This is all the more important because we don't expect our Solésence business growth to slow for the foreseeable future. We're positioning ourselves for a strong 2024, with our primary focus to be enhancing profitability and efficiency. The growth will continue, and we've shown we can accelerate it further when the time is right. The last step toward building our value is profitability. Before we continue, let's walk through the numbers. Unless identified otherwise, all numbers will be stated in approximate terms. Our Q3 2023 revenue was $8 million versus $9.7 million for the same period last year. For the third quarter of 2023, we had a net loss of $1.4 million, or $0.03 per share, versus a net loss of $0.8 million, or $0.02 per share, for the same period in 2022. Looking at the nine-month comparable numbers, we had $29.3 million in revenue in the nine months ended September 30th, 2023, versus $29.1 million in the same period in 2022. For the same nine months of 2023, we had a net loss of $2.3 million, versus a net loss of $0.6 million for the same period in 2022. Much of this poor performance in 2023 relates to our extended struggles with getting product out the door, often due to external supply chain issues and internal bottlenecks. As I mentioned last time, most of our external supply chain issues have been resolved. With the addition of our new purchasing manager and the VP of Manufacturing, who was just promoted to VP of Operations in October and is just hitting his stride, we think we'll get the last of the internal issues resolved this quarter. An added benefit our enhanced purchasing function will provide will be the reduction of our direct material costs through more aggressive negotiation and attention to discounted pricing programs available through many suppliers. The added capitalization will help here too. While gross margins are disappointing, a big contributor to that for Q3 has been that we couldn't get enough good ship due to planning and logistics, not lack of demand, so we weren't able to absorb overhead. We've seen some very strong labor utilization and throughput numbers with our new equipment over the past few months and expect that to contribute to enhanced margins as we get the organization running more efficiently. Moving down the P&L, third quarter R&D and SG&A expenses combined were down $400,000 or 12%. We're currently spending a great deal of time internally to optimize our bang for the buck here and expect to report on further progress at year-end. Looking at the nine-month expenses, if we back out the BASF litigation expense, SG&A would have been down 9% year-over-year. While we're continuing to incur expenses relative to the litigation with BASF, legal expenses were down to less than $150,000 for this past quarter. We spent roughly $1.2 million here during the nine months ended September 30, with almost 90% of it distributed almost equally in the first two quarters. We also spent approximately $400,000 in 2022 on this litigation. We continue negotiating with BASF in good faith, with an ideal outcome being a negotiated settlement. Litigation is still a possibility, and we continue to think we have a good case if things go in that direction, but the goal remains to resolve these issues with BASF as quickly and fairly as is practical. We also saw 9-month interest expense almost triple, a $375,000 increase from the same period in 2022, due to the combination of expanded borrowing and a 5%+ increase in the prime lending rate over the past year and a half. While this call has been focused on operations, we wanted to offer a few updates on the commercial side. These are the reasons that we all remain optimistic about 2024 and beyond. In the release, we said we left September with about $19 million in open and shipped orders on the books. Since Friday, we have $3+ million more orders for 2024 booked, bringing confirmed POs in total for 2024 to over $13 million. Total remaining orders for 2023 are about $5+ million, in addition to $4 million being shipped so far. Total customers exceed 60, with approximately 8 of those companies purchasing greater than $1 million in products from us and another 6 purchasing greater than $500,000 in products from us. This leads to a more robust pipeline from which we expect further growth, in addition to new or growing customers coming in for 2024. While we're not thrilled with 2023 bottom line performance, we continue to get excellent customer feedback. This is where we build a 1-2 punch. We fought most of this year to get ourselves a better footing for profitable growth in 2024. Along with growth, we've been focused on increasing our margins, but entering 2024, increasing our margins will be our primary focus. It's all about building value in the near term, which we know will lead to even more value over the next few years after that. We're all investors in Nanophase and Solésence, and we all stand to reap the rewards we're working toward together. Why don't we get right to your questions? 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 feedback. Afterward, I'll offer a few closing comments. Norma, would you please begin the Q&A session? Thank you. As a reminder, to ask a question, you'll need to press star one one on your telephone. To withdraw your question, please press star one one again. Please wait for your name to be announced. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question comes from the line of Barry Blank with J.H. Darbie Your line is open. Thank you very much. Jess, I have several questions. The first question is, this company has absolutely no shareholder relations. I, I have visited the company about five years ago. You and I met. My clients own seven figures, well into the millions of shares of stock. I have called numerous times, nobody returns the phone call, and that's why the stock is probably lower than it would be if it normally had some kind of shareholders relations. Are we gonna do anything in the future to, to improve the shareholders relations and, and, and get the story out a little bit to shareholders? Hi, Barry. We are... Part of it is our, we're just stretched thin and recognizing that, everybody does better when they know more. We see the value in it, but we also see that we are, struggling relative to trying to contain operating expenses and other things in order to ultimately ultimately come back in at a higher level of profitability, which will drive the value. We have been not investing as much in IR, partly because the results have not merited the-- I mean, we, to a certain extent, we don't want to beat the drum and then not have great results to support them. And that's one of the reasons, we haven't done investor talks and gone on traveling and doing kind of non-deal road shows and those kinds of things to much of an extent. I envision over time doing this more so, and once we get stabilized and we get to the point where we're talking about uplisting, I imagine that'll be even more of something we would invest in. Well, I'm not advocating you hire an IR firm now. I think it's kind of premature. But the silence when someone calls and not getting a call back is kind of disturbing. I mean, you know, I did visit the company. I flew down from Phoenix to visit you 5 or 6 years ago. You and I met, and after... You know, every now and then, a client has a question. Nobody wants inside information or anything like that, but we can't get a call back. And I just don't think... I mean, I know you're busy. Don't get me wrong, and you could put it as a non- and, you know, on the back burner, but at least acknowledge the fact when people make contact to, you know, to get back to them. That's all I'm asking. That's fair, Barry. One of the issues is that most of the IR is done by me directly, and that always chews up time. And we also, invariably, some of our investors, particularly the ones that have been around a while, like yourself and your clients, will call during what is effectively a quiet period between the time we end a quarter and before we release earnings. And that just, you know, without having the time to devote to a more polished IR program, and I'm not suggesting we would use a firm regardless, but to have more ready communications, I think, is tough to answer some of those questions because they're very, many are very specific, and that would involve information that hasn't been shared, and that just takes time. But I do, I do respect you as a shareholder, and I respect your point of view, and I recognize that we need to get back to people better, and those things are easier to do via email just because of the nature of the. It's a more efficient process, but that is something that we'll take into consideration for sure. One other question: What is the timeframe? I know you can't predict, you being effective with the SEC, but what is the timeframe on this rights offering? Do you expect to have it? Our goal is to get it filed, get the S-1 filed, within a week, and then typically, there is no guarantee. We did one in 2020, 2012, which took the SEC little over three weeks to approve. This time we're going into the holiday season, but I would guess it would be in the range of 30 days, so probably sometime, sometime toward later December, with the bulk of the activity being in January then. Okay. Well, thank you very much. Appreciate it. Thank you. Thank you. Thank you. One moment for our next question, please. Next question comes from the line of Ronald Richards, private investor. Your line is now open. Hi, Jess. Hey, Ron. I've got a few questions. The first one is, a long time ago, you know, several years, there was a big press release about an Australian regulatory approval that you guys received. And I keep expecting some big announcement of some big combination with an Australian company because of that approval. But to my knowledge, I've never seen anything. Has anything become of that? I'm gonna let Kevin answer that one, Ron. Good morning, Ron. And this dates back to during the pandemic, we were able to get a TGA approval, which is specific to a customer and a product. That TGA approval did end up with a launch of a product in that market. What is continuing to happen in Australia, which has been a bit frustrating, is that you have to go back and reapply, and we did go back and reapply, and we're still waiting for their regulatory process to be completed. They're still backed up pretty substantially, and we haven't heard anything related to continuation of that second round of regulatory approvals. So, I will say, to that comment about Australia, though, that we do see it as pretty fertile ground. There's a large number of, or meaningful number. I won't say large, isn't the right term, but meaningful number of clients that are interested in us supplying them in that space. And, we still operate in that space now through a non-regulatory process, which kind of gets into the weeds. But, there are still a number of good clients available to us for the regulated side of that. Is this second regulatory process more general and further encompassing than the first one? No, the process that Australia has, it's not very different than the Canadian process as well. It is company and product specific. So even if a company, we'll call them company A, gets an approval on product B, if they want to launch product C, they have to go back through that process again. So it is a pretty tedious and arduous process. It does usually go faster. Canada, for example, goes very fast now for us. But Australia still has some backup in their processes, which is kind of related to the unique circumstances they had related to COVID and the kind of shutdowns that they had, which is backing up, not just us, but pretty much anyone who's looking for drug clearances there. Okay. Now, my next question relates to the new facility. When it was promoted, I don't know, two or three years ago now, it was gonna be your path to increased profitability, because all of your different functions would be centered in one location. But to my knowledge, you still have all of your remaining other facilities. Are you soon going to be able to meet your original goals for that new facility and get some benefit from combining everything? Hey, Ron, we are already getting benefits from the combination. We have all of our warehousing is in that facility, and prior to acquiring that facility, we actually had 4 facilities for a little while with multiple warehouses, so we've gotten a benefit there. Our filling and assembly is there, including we've got clean rooms built there that accommodate the FDA requirements. So we've seen some nice efficiencies there, having the crews in a single space and being able to see some growth there. What we haven't done yet is combined multiple facilities, and at the some of it's gonna be a question of volume, some of it will be a question of specific product volume. And then we also have the concept that the cost of the combination needs to be advantageous relative to the cost of the existing rents, which are fairly small at the other facility. So we are in process of working through that. We intend to continue down that path, and I imagine, you know, next year or two, we'll have some consolidation, but we're still kind of looking at that, and we're still kind of looking at the impact of the various volume changes to the business and how those relate. Okay, I just have two more questions. The next one is, it seems like every conference call, every quarterly report, we're gonna get further advantages from new hires, new managers, new people with a lot of experience here and there. But it's always the same story. It doesn't seem like, you know, it doesn't seem like help, like it helps, because it's always another instance, the same story, new people. And I'm wondering how much cost that's added to the bottom line. I mean, is that the difference between profitability if you zero out their profits and, or their salaries and assume you still make as much money? Would we be making a profit? I think that, I don't know about that. I mean, the biggest single drain on profitability has been the litigation, and that's something that we see, hopefully coming to an end relatively soon. Again, can't predict it. We have some of it, I think, the expectations are higher than... You know, we had our VP of operations start in late June. He's done a good job in four months, you know, getting up to speed, but he's just now starting to contribute. We've also had, you know, our purchasing person started in November. And we actually have not had a discrete purchasing function per se for a long time. Certainly, since the lessons came along, we've been kind of working at the formulators, kind of do some of their own thing as we go through a bunch of different suppliers as we get up to speed. So I'm expecting those two particular additions to have a greater impact on our bottom line than we've seen in the past. Regarding the other things we've added, you know, you don't see the advantage of, you know, we added a controller that's allowed us to certainly spend more time doing some analytical work and responding to changes in our business. I do think, and we will talk more about it at the end of the year, we're continuing to look at the operating expenses and a lot of those costs that are that are variable and trying to work through the most efficient way possible to, to both, you know, keep our costs down or reduce our costs, but also to continue growing. I think that for 2024, what you're gonna see to a greater extent is an increase in profitability and an increase in margins. That will be something that we put more emphasis on than we have in the past. It's always been an emphasis, but it'll be the primary emphasis with growth. As you can see, looking at the customer stats, we have a good amount of, I won't call it organic growth within the customer base, because we continue to develop new products for our existing customers. But we have a good amount of positive customer feedback, and we're seeing that those products are taking hold generally in the marketplace. So I don't think it's never, you know, saying it never helps. I think it's going to help. I think it takes longer. It always takes longer to get people up to speed, familiar with the organization, and our organization is still relatively new, and we are transitioning from a strictly entrepreneurial organization that we were, say, three years ago, to a much more regimented organization, particularly in the operations function, which is something that, culturally has required some changes that we are working hard toward. Okay. Now, my last question, Jess, is that lawsuit. When is it scheduled for a trial? Do you have a trial date, a firm trial date? Do you have proposed settlement agreements floating around out there? When, when are we gonna get that thing off around, around from our neck? Sure. There is not a trial date set. There's a date at which discovery has to be completed, which is the end of the year. We have been working toward. We speak regularly, just about weekly, with the BASF commercial team, who is generally the people working on this, working on the settlement with us. So I have confidence that we're gonna get somewhere with it. I'd love to see it behind us in the next several months, but you never know. They have everybody has internal people to answer to, and we are, I think we're working through it in a positive way. I do think that all the indications are that that they in earnest want to get through this and settle this without much further pain. Okay. Well, I appreciate your answers, Jess, and, of course, I wish you luck, Jess. Thank you, Ron. Thank you. One moment for our next question. Our next question comes from the line of James Lieberman with Revere Securities. Your line is open. Thank you. Thank you very much. So again, congratulations. I think actually, you know, in businesses in general, there are all sorts of challenges that come along, and it's how management manages through those challenges, and I think you're doing a commendable job. It's not infrequent that you see companies that are in these transition phases, you know, finding challenges that they can't deal with, and it often causes them a great deal more stress. I thought that Ron's questions, certainly about the consolidations, were covered, and then also the other questions about the color on the litigation were helpful in a sense, but it sounds like you're working through pretty much all of the things that are on your plate. So I just want you to continue, you know, doing what you're doing and rolling things out. I was looking for possibly a little bit more consolidation of operations a little sooner, but it sounds like there's a good reason to keep things going in these various other facilities, so that you can perhaps meet particular types of orders, and you don't have to manage it in one facility. So I think you're probably right. If you feel that it may takes another year or two or three to get it right, you may as well get it right rather than find yourself in a position where some important elements have dropped out of the equation. So I want to congratulate you for managing through this. Thank you. Well, thank you, Jim. I think that we shouldn't forget, part of the reason that this is dragging out a little bit has also been, you know, we need positive results. We need to generate positive cash flow to support these things... And generally, although our this past year hasn't shown you the venture-level returns that you want to see in a, in an investment in a company like Nanophase and Solésence, but the, you know, the returns on, on moving everything into one space and the infrastructure side of it, aren't necessarily-- That's what we're weighing, you know, going back and forth with where best to invest limited resources today. I think that will become more clear as we get into next year and as we start generating the cash we need to look at all this a little more analytically versus, you know, you know, as you know, it's been a struggle this year. No, totally. Thank you for your guidance and your Sure. And your navigational skills. Thank you. Sure. As a reminder, to ask a question, you'll need to press star one, one, and please wait for your name to be announced. One moment for our next question. Our next question comes from the line of Stefano Bolas, private investor. Your line is open. Hello, and thanks for taking my question. First one is, Hello. With regards to the issues, supply chain issues you had this quarter, was there something unusual compared to the other quarters, or it was just the known ones, like the uneven order timing or the issues coming from the source, the customer source packaging? I mean, were the usual issues, or anything special that was unusual? Thanks, Stefano. I think generally some of those issues existed the external side. On the internal side, it became clear that we needed to invest more in doing the kind of the planning ahead of time. You know, some of these some of the lead times on some of these things are 8 weeks, 12 weeks, and we had a lapse where the people responsible for that were not really... They were a little too caught up in what we need to do in the next week or two versus what we're gonna need to do in September, you know, when you're sitting in June, and we gotten to a point where some of these things got backed up. We also. Part of that led to inefficiencies in Q3 that, you know, we're still paying for in the sense of, you know, you could produce 90% of something and have it ready to go, waiting for the last piece, whether that's a part, or a label, or a box, or whatever. Mm-hmm. That is not an efficient way to produce, but it is an efficient way to make sure that you're satisfying your customers as best you can. Those are some of the issues that we had to contend with, that we don't see being an issue going into 2024. Those were a little bit on the newer side, but I think generally, the investment in the entire function is gonna, is gonna have benefits and help us to avoid some of the issues we've been plagued with here in the past. Mm-hmm. I also did get your note the other day about the timing on the rights offering, and there will be an S-1 that gets filed. Okay. Yeah. That will have all the detail that you were interested in, and this is an example of one of those things that, you know, I can't always answer these questions when they come out because we're going to share something publicly with everybody. And fortunately, your question came out a day, you know, last night, I think, or the. Yeah- The day after. I was afraid I missed something. Yeah. No, no, you didn't- you did not miss that, and we'll, you'll see a lot more on it in the next few weeks. Second question, if I may. In terms of volume projection for 2004, 2024, and also taking into account what was said in the last call about customers more and more placing last minute order because of the concerns on the economy and the consumer demand, do you expect still expect the 2024 growth, or you expect more flat volumes? Stefano, this is Kevin. Thanks for the question. I think there's two pieces to our business, as we always talk about or have recently talked about, the ingredient side, which is related to our supply to BASF, and then the finished product side, which is the Solésence business. As we've also talked about, there's a lot of uncertainty from quarter to quarter still related to the ingredient side of the business. So we're not prepared to project or predict much on that side of the business. On the Solésence side of the business, we do see a little bit more strengthening of the demand than what we had seen previously. In other words, we're starting to see that lead time come back, where customers are placing orders ahead. As Jess mentioned, we've already gotten, for example, over $13 million or right around $13 million in orders for 2024. And, you know, that is a good indication of demand and their confidence in the sell-through of the products in 2024. So, we still aren't thinking that it's like it was back in 2022, where customers were buying six months ahead, but we are seeing some good solid pre-orders, which is a good indication of demand in 2024. Okay, then, thanks a lot and all the best for the remaining of the quarter. Thank you. Thank you. One moment for our next question, please. Next question, one moment. Comes from Rand K. Your line is now open with RKA. Thank you. Gentlemen, a couple of questions here. I came into the conference call expecting that we were going to have, you know, good news on a break-even situation for the quarter, based on what I had heard last quarter, and that my questions were going to primarily circle around the legal issues. But as a result of the call and the, I have a couple of questions on the quarter. The first question I have is that, I would appreciate to understand what the increase percentage-wise of capacity was from Q3, 2022 to Q3, 2023. Just roughly, was it 50% greater capacity to manufacture? Was it 30%? Was it 60%? What, what was it? Good morning, Rand. Yeah, I would say actually it's probably more in the order of 2x in terms of our capacity to meet demand from Q3 of last year to now. Okay. And if I recall, we were halfway into the third quarter when Jess said it looks like we're going to have profitability for Q4. So I'm curious, what happened in six weeks that so changed the landscape? Sure. I was expecting that question. Part of it had to do with the timing of the closing of the books. I was, when we were talking, I was expecting a different result for the following month. We, partly due to some of the issues we have internally, occasionally, we don't get the, a given month closed on a timely basis. So I had information that was basically, my feeling, which normally my gut on it is pretty good. And due to the postponement of some of the shipments and the, the building of material that we didn't ship, and we ended up waiting for the last, you know, the cherry on top, and a lot of things say, we took a, took a beating that I hadn't expected, we would. And so that's, essentially, that's, that's what it was. It's difficult given the, you know, we've added a little bit of infrastructure in our accounting group to try to be responsive, but given the probably more than tripling of transaction volume, it's been hard to stay up with it in a way where you get the information, you get a lockdown, and you spend, you know, a week analyzing it, or several days, and I wasn't there. I did earnestly think that, at that time, we were gonna make it for the quarter, and we were just very surprised for that. So for that, you know, I apologize, Rand. I didn't. Nothing, I mean, what changed was the problems that we've been talking about earlier really came into, they bore full fruit. That changed, and I hadn't expected it to the extent that it did happen. Well, let me... I just want to double-check. The CFO duties are, along with the HR duties, along with the presidential duties, are yours, correct? Yes. All right. Mr. Barry Blank made a very, very interesting point about shareholder PR and, you know, not communicating with shareholders. My concern is not the PR, my concern is the credibility, okay? I have historically watched the company go through situations where it has set its own hair on fire a number of times. And as a result, has made changes to the organization. An operations guy came in, who should have been there two years before, because you had operational issues. Now you've had purchasing issues. Well, now we have a purchasing guy, okay? You are alluding to the fact that financially, you don't seem to be able to get a handle on all the financial data in a timely fashion to predict, you know, what's going to happen. I'm kinda curious on, you know, are we going to have— Is the next major fire gonna be a financial one before we get a CFO or before we get, you know, HR? I mean, I hear this story all the time about you guys, you know, don't have the finances and, you know, to hire a CFO. You don't have the finances to hire these people. You don't have the finances to, you know, arrange to have the company go public. Yet, the collateral— the cost of the collateral damage that's inflicted by this attitude and this mentality, I think is significantly worse. And I'm just wondering if, you know, if we add all that up, including the $600,000 that management received for bonuses last year, wouldn't it be better to be a bit more proactive and hire finance people, purchasing people, operations people, before we need them, as opposed to, you know, triage? Um- I'm dead serious. Sure. And, I mean, in hindsight, you could answer that question, yes, surely. Regarding the $600,000 in bonuses, that's the stock compensation calculation based on Black-Scholes, and part of that has to do with our volatility. Part of that is effectively gone for now until the stock moves back up, but those are non-cash. They certainly cause dilution, which in many respects is the same as cash, but for this company, it isn't spending $600,000 and then going to raise $3 million, just to put that out there. I agree that the... It's really a question of prioritization, and, you know, at this point, a couple of things. At the investor level on the calls, everybody wants a lot of information, and that information is gettable, but it's not always available on a timely basis. It's available timely enough for us to run the business. It's not always available in time to talk to you about it, and some of that is hard because everybody wants an answer to a question that doesn't involve, "Don't know, not sure, need to get back to you." And I understand that frustration. I think- Well, let me just ask, wouldn't a CFO solve that problem? Isn't it a CFO's- Um- Okay, to have- I don't... I think that the- To have that information readily available to make decisions going forward instead of trying to catch up with mistakes already, you know, from the past? I think it's. Look- It's an issue... Oh, go ahead. Well, guys, look, I'm an investor for over 10 years, okay? And every time I think we're out of the woods, we inflict another self-inflicted gunshot wound to some part of our organization. You know, we made a hire now on the board of directors of a guy who looks like I don't recall his name, but the most recent guy looks like he has some experience with visibility of peaking around the corner. This issue of confidence, okay, in management is significant, and it is one of the things I feel that is the iron chain around management's leg that keeps shareholders from wanting to invest. So I just don't, you know, get why we are making, you know, the same mistake over and over and over. The definition of insanity is doing the same thing over and over again and expecting a different result. Gentlemen, I'm sorry, this was absolutely and totally, in my opinion, unavoidable. Avoidable. I'm sorry. I am just sickened and disheartened by the lack of ability for management and the board to grasp the gravity of the situation, take hold of the reins, and make some preemptive strikes, you know, and avoid this stuff. Because confidence is nowhere to be found. Woke up this morning to the stock at $0.72. I just don't see the confidence in management's ability to get a firm grasp on the numbers, to know where they are, to know where they're going. And so I can't help but feel I have a confidence issue with management's ability to handle the BASF thing. I know everybody's saying, "It's all right. We've got this just around the corner." Well, guess what? I'm just waiting for the other shoe to drop. And you know what, guys? This has got to change. I have, you know, I cannot be more specific. I'm trying to be as judicious as I possibly can, but, you know, the lack of shareholder confidence, and, and I have to totally disagree with Mr. Lieberman about, you know, your ability to navigate these, these issues. I think you guys have done a horrible job, and I think you've done a job predicated on, "Oh, my God, our house just burned down. Now what do we do?" What is going to change? Why do I want to stay in this stock? Well, all we can do, we're taking what we believe is the most rational course. We are focusing on the cost side of the business in a big way. Part of the reason I think that we have been, you know, running with our hair on fire has been that we grew so quickly, and we did it with, you know, baling wire and duct tape, that, you know, we're paying the piper for that to a degree. That said, we also grew really quickly, and which is remarkable in the business we're in. So I think that I understand your frustration, and I certainly don't like repeating myself quarter after quarter when I can hear the, the melody is similar, even if the lyrics are slightly different. But I do think that we have some opportunities here to turn this. I think that our profitability in 2021 showed us that we could do it with a much less efficient organization than we are working toward now, and I think that's a big piece of it. I mean, it's the volume. We still have the ability to turn up the accelerator on the volume. We don't wanna do that right this second because we wanna make sure that we're taking home more of what we're pulling in than spending on growth. And that, you know, that's a legitimate. Given the results, obviously, it's a legitimate criticism, and we are working our way through it. I expect to have better things to talk about at the next meeting, and I certainly don't dismiss your concerns or your commitment to the company. I know you and I have been involved pretty much the whole time that you've been an investor, and I am not ignoring what you're saying. So it's about all I could say without putting some results down to actually show a difference. And I think at the end of the day, for us to be as credible as we want to be and that every good management team should be, we're going to have to deliver results. And that's where we're, you know, obviously, we've been struggling. The results on the top line have been good. The results on the market have been good. Those things we've proven we're good at. That's the flood of awards we keep getting, is we're good at that. And catching up on the rest of it is something that we think we can do. We think it's known, you know, how to do it. It's a matter of getting our organization to do it, and it's gonna be a critical next number of months. Well, gentlemen, please understand, you know, I, you know, my. Well, awards don't pay bills, okay? And the details that are required in this, okay, I believe are going to begin to make themselves known to you with what looks like, at least on paper, a very competent operations executive who's, you know, CFO. I don't know anything about the, uh, the purchasing person other than, you know, he's a year late. So, you know, and the fact that. Part of my frustration, to be absolutely honest, is that I don't see a 10-K still online, so I don't know what where the details are, okay? The only news that I heard that is better than I had expected was that, you know, we only spent $150,000 on legal fees. But the confidence right now to get this thing settled, okay, and get that off our plates, okay, I cannot overstate the concern that I have about that as a red herring because of the lack of information. I'm following the case on the website for on the legal website. And, you know, all I'm looking at right now is we're about to go into discovery. That the judge has said, you know, we've made every pretrial motion that we can possibly make, and they've been denied, all of them. And so, you know, now it's put up or shut up. And we're now going to get into the process of discovery, which is a financial rattle. The cost of discovery is astronomical. They can beat us. BASF can beat us with legal fees. So, you know, gentlemen, enough. Step up, take charge, make it happen. Please, no more excuses. No more excuses. Thank you. Okay, thanks, Rand. Thank you. One moment for our next question. I have a follow-up from the line of James Lieberman with Revere Securities. Your line is open. Mr. Lieberman, your line is open. Are you muted? I'm sorry. Thank you very much. I appreciate the concerns and comments from the previous caller. I understand that there are concerns and challenges that the company has to deal with. I do agree with Jess that when you transition from a company that's managing on a shoestring to a company that grew from about a, you know, yearly $9-$12 million to a $40 million company, there are a lot of transitions that need to be done. Historically, if you look at any of the various models out there, when companies go above $20 million and go up to $50 million, there are other challenges. So these companies had to deal with all those kind of all at once, moving from a shoestring to a more evolved and broader management undertaking. That all is pretty understandable and natural, and it sometimes sinks companies, but I think Nanophase is showing some resilience and understands what the challenges are. So yes, time will tell how it plays out, but I'm much more encouraged by what I'm seeing in spite of some of the near-term disappointments. And I think that, you know, I'm all in. Basically, I want to thank you all for your efforts. Regards. Thank you, Jim. Thank you. One moment, please, for our next question. I have a follow-up from Mr. Barry Blank with DH Darby. Your line is open. Hi. You know, we've talked about the past, and the past is the past. What are we going to do to make it better? Maybe you want to put some major shareholders on the board. I certainly know Mr. Whitmore is on, and I mean, that has representation, and thank God for him because he's been wonderful to the company. But I've been in the brokerage business for, oh, God, 50 years now, and I have positions in over 30 microcap stocks for people. This is the hardest company in all 30 to be able to make contact. I flew to Illinois to visit you. I have over 40 clients with it. All I'd like to know is, number one, of course, I want to see improvement, but I would like to know if can open up the lines of communication. I mean, I don't think it's too much to ask. I know I will never take up much of your time, and I would never call you unless it's something that some client wanted to know that was not inside information. I would never ask for inside information. But the communications has been so poor, it has been nonexistent, and I'd like to see a change and maybe get some representation from shareholders on the board. Well, that's a good, good feedback. I understand your, your frustration with the communication, and we'll try to do something a little more active with it. Regarding on the board, that's something we could either talk about at our board level, which, we have a meeting coming up after, tomorrow's shareholder meeting. Or and additionally, you also have the right to request that if that's something that you're interested in, for the next meeting, which is something we haven't seen, much of, and I certainly don't want to have, frustrated shareholders, obviously, but, it's something to think about. Jess, we're all on the same team. The shareholders are not the enemy. Shareholders are your friends. They can be behind you and, and, and, and that sort of thing. I stopped recommending the stock because I don't have any information. Also, the performance has been poor, but even if the performance was good, I, I have, as I said before, the least rapport with this company of anyone that I have, anyone that I have a position or any company I have a position in. That's what I wanted to say. Thank you. Thank you. One moment for our next question, please. I have a follow-up from the line of Rand K with RKA. Your line is now open. In rebuttal to Mr. Lieberman's comment about, you know, this has not been done before, nonsense. This has been done thousands of times before at thousands of successful companies that have scaled. Product is different. The mix is different. You guys aren't doing anything, okay, that hasn't been done. The problem has been, is that there has been an unbelievable reluctance to get anybody, okay, with enough experience and to be able to peek around the corner. And the fact that some people have accepted the excuse that, well, this has never been done before, is poppycock. The answers are out there. The people who know how to solve these problems are out there, okay? This has been done before. The commitment to finding those people and bringing those people on in a timely fashion before the problems hit the fan, has been the reluctance. I could not more vehemently disagree with Mr. Lieberman and his assessment that this has not been done before, and that you guys have responded heroically. Thank you. Thank you. One moment for our next question. Our next question comes from the line of Tony Rubin, private investor. Your line is open. Yeah. Hi, good morning or afternoon, I guess, where I am. I actually said I wasn't gonna call in today, but I just felt compelled after the, I guess, the gentleman who commented previously to share a perspective that, yes, I think the company has had significant operational issues over a significant period of time, and that's been frustrating to me and obviously to all of us. However, having sat in some of those chairs and understanding the balance sheet, I understand that you were cash limited. And to be honest, I'm very pleased with what sounds like a very positive and elegant solution in that shareholders' rights offering, which will be fair to current shareholders and provide additional working capital in addition to, perhaps belatedly, you know, those key hires. And further, I'll say I take comfort in the positive trends that you speak of, both with respect to orders, new products, seven-figure customers, and reordering trends. So certainly I wouldn't say I'm sitting here as a happy shareholder, but I'm looking towards the future, not the past. And I think a number of those things that you mentioned on the call today or and or that shareholders offering will be very positive. And I just thought, well, I just strongly disagreed with the tone of that previous caller, and I just, I guess, wanted to provide a counterpoint to that point. Again, understanding what it's like to grow a company. So that's all I have to say. So thank you, and that's it. Bye-bye. Thank you. Thank you. One moment for our next question. And I have a follow-up from James Lieberman with Revere Securities. Your line is open. Thank you. This time I'm unmuted. So I do appreciate the last two comments, and I just wanted to clarify, I never said that this hasn't been done before. I said that the kind of growth that a company like Nanophase has experienced often presents challenges that need to be addressed, and that's what I think the company is trying to do. Thank you all. And I have the same forward-looking optimism. Ciao. Thank you. I'm currently showing no further questions at this time. I'd like to hand the conference back over to Mr. Jankowski for closing remarks. Okay. Thank you, Norma. As I said, as I have said, demand for our products has not diminished. We're working hard to get them out the door faster and to help more people to be healthier, feel better, and look better with them. We're growing, we are winning award after reward, and we're winning new brand partners and customers. While we're not thrilled with 2023 bottom line performance, we continue to get excellent customer feedback. We have $23 million in shipped and confirmed POs after Q3. We added $4 million of those in the last few days. In the release, we said we left September with about $19 million in open and shipped orders on the books. Adding 4 to that was a nice thing in a couple of days. We've got more than 60 total customers, 8 of which are currently purchasing at more than $1 billion per year, another 6 at over $500,000, and they all have significant upside potential. Consumer preference is on our side, and we now have to execute on becoming more profitable within this strong business that we've built against the odds. We now have to deliver, and we will. We're in this with all of you, and we appreciate your patience. Thank you again for joining us today. We'll look forward to the next call when we'll have more to discuss regarding our improvements to the profitability and stability of our business. Have a good day, everyone. This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.