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spk08: Good afternoon and welcome to the Forefront Ventures second quarter 2023 earnings conference call. Today's call is being recorded. At this time, all lines have been placed on mute to prevent any background noise. After the prepared remarks, there will be a question and answer session. As a reminder, during the course of this conference call, Forefront's management may make forward-looking statements that are based on current expectations and are subject to a number of free and uncertainties that may cause actual results to differ materially from expectations. These results are outlined in the Risk Factors section of the company's filings and disclosure materials. Any forward-looking statements should be considered in light of these factors. Please note that as safe harbor, any outlook presented speaks as of today, and Forefront Management does not undertake any obligation to revise any forward-looking statements in the future. I will now turn the call over to Leo Gontmacher. Chief Executive Officer of Farfront Ventures, please go ahead.
spk03: Thank you, Operator. Good afternoon, everyone, and thank you for joining us today. I'm joined on today's call by our Chief Investment Officer, Andrew Toot, Consulting President, Carl Toscano, Interim Chief Financial Officer, Nicole Frederick, President of California Operations, Ray Landgraf, President of Illinois and Massachusetts Operations, Brandon Mills, and our Director of Finance, Brian Emke. On today's call, I will provide an overview of our second quarter highlights. I will then hand the call over to Andrew, who will expand on our financial results and give an update on current business trends and what's in store for the remainder of the year and into 2024. We'll then conclude with a question and answer session, where the management team will be available for any follow-ups. At Forefront, we are guided by our winning strategy of replicating operational excellence. Since our inception, our primary focus has centered around the enhancement and efficiency of our low-cost production capacities, while also thoughtfully expanding our product range on a state-by-state basis. At present, we are actively generating operational cash flow in Massachusetts, Illinois, and Washington. Additionally, our upcoming cultivation and processing facility in Madison, Illinois, is scheduled to become operational within the current year. In conjunction with this development, Our plan to establish eight more retail stores in Illinois positions us to effectively double the size of our company within the next 12 to 18 months, while expanding margins and generating additional cash flow. Building upon the operational enhancements implemented in 2022, which led to improved genetics and flower quality, and complemented by the introduction of new products across our platform, we continue to see success from this strategy in our key markets of Illinois and Massachusetts. Moreover, we are now starting to reap the additional benefits and advantages in Washington, where the combination of elevated flower quality and fresh branding is poised to further improve our market share. Furthermore, we have taken swift measures in California to right-size the cost structures in that market. As we said on our last call, Forefront is unwilling to sustain prolonged profitless revenue in any market in which we operate. As we sit here today, our aggressive moves to scale back California operations have resulted in those operations no longer being a drag on the company's cash generation. Going forward, our operations in California are in a very tight range as current market conditions in that state continue to remain challenged, largely due to atrocious regulation. Our incremental capital, both human and monetary, is now laser-focused on executing our growth plans I'd like to underscore that we manage our overall business much in the same way we oversee our facility, with an unwavering focus on the various factors that we can adjust to meet market demand and adapt our product mix in response to evolving trends and economic circumstances. Throughout this process, we have maintained a leading position in producing affordable, high-quality cannabis products on a large scale. As the landscape evolves, we retain the flexibility to adapt if needed. directing our attention toward opportunities that promise the highest return on investment within our portfolio. With this purpose in mind, we remain dedicated to implementing our operational efficiency improvement plan, placing a strong emphasis on generating long-term cash flow while upholding self-sustainability as a core strategy for the company. As part of this commitment, we are actively exploring the potential to consolidate our operating assets in California, and have optimized our retail, cultivation, and processing operations across our entire footprint. By ingraining self-sustainability as a fundamental asset, our goal is to cultivate a resilient and thriving business model that can independently flourish for years to come. Our cost-cutting measures alone have resulted in approximately $9 million reduction in our annualized cost structure. This achievement has put us on solid ground as we focus on generating profitable top-line growth and position our business for further execution and profitability improvements for the remainder of the year. I want to reiterate the point that our focus through the remainder of 2023 is on profitable growth. During Q2, our cultivation and manufacturing activities reached optimal levels, building upon an already strong base to meet increased consumer demand. This prompted us to launch dozens of new products in all major product categories, including further expansion of the island brand of products and the entry into the vape category in illinois for the first time our market share has benefited from growing consumer interest across our footprint particularly in mass and illinois where we continue to aggressively grow our presence and differentiate through steady launches of new products to these markets the expanded product menu in massachusetts and illinois anchored by a high quality flower drove an overall increase in our Massachusetts and Illinois wholesale business of 9% from Q1 2023. In Massachusetts, our cultivation process improvements have resulted in continual increases in packaged flower production, with over 80% of that flower testing at more than 25% total active cannabinoids in Q2. We also pursued the expansion of our value distillate vape products, catering to customers who seek a more intricate experience by introducing products like live resin that close to richer and more complex turkey supplies. The construction of our cultivation and production facility in Matson, Illinois was largely completed in April. The facility is truly remarkable, seamlessly integrating best in breed process, systems and technologies from each of our other facilities, which have yielded extremely high quality, low cost and consistent products. We continue to push as hard as we can on the timeline to get power to the facility, and the current expectation being set by ComEd is that this is a fall 2023 event. With necessary easements now in place and laying of power lines ongoing, we're confident this timeline is achievable. With our existing business stable and the majority of our markets generating operational cash flow, we look forward to the step function growth in 2024 when our Illinois assets come online. We've demonstrated the ability to replicate our mature market SOPs when we brought our Washington way to Massachusetts. We've shown that we can learn and adapt on the fly, improving those SOPs through the acquisition and integration of NECC in early 22. And we've proven that our model not only works, but exceeds market average as evidenced by our ability to roughly maintain our market share in Massachusetts with our three-store footprint despite the expansion of third-party retail in the state and prices declining over 40%. It is this blueprint that we're incredibly excited to fully bring to Illinois upon the opening of a massive production facility and expansion of our retail footprint. As we've previously highlighted, Illinois stands as our most substantial avenue for growth over the coming 12 to 18 months. We're eagerly anticipating the opportunity to showcase our complete capabilities in one of the nation's most promising markets. With that, I'll now pass the call over to Andrew to discuss trends in our performance in our key markets, as well as our financial results for 2-2. Andrew?
spk04: Thanks, Leo.
spk07: I will first provide a breakdown of our performance state by state before giving an overview of our second quarter earnings. Starting in Massachusetts, our consistent achievements within this market, despite the pricing challenges we've encountered, have instilled a significant level of confidence in our ability to replicate our successes in Illinois. This confidence remains steadfast regardless of broader market conditions and underscores our capacity to strengthen our platform through an adaptable approach that involves continual refinement and enhancement of our existing products, along with the introduction of innovative new options. In terms of our financial performance, our Massachusetts revenue declined 4% compared to the previous quarter, But more noteworthy is that compared to the same period in 2022, we achieved a more impressive increase of 10%, significantly outperforming the overall market increase of just 2%. We achieved this with a static asset portfolio and in the face of 34% pricing declines year over year. And despite Trulie's liquidation of product in the Worcester market as they exited the state. Pretty impressive performance by any measure, which speaks to the quality of our product our innovation, and customer experience at retail. While the pricing environment in Massachusetts initially exhibited vulnerability at the beginning of the year, we draw encouragement from the fact that our flour's exceptional quality and our innovation in introducing new products have enabled us to sustain our market share position. Furthermore, in recent months, there's been a noticeable stabilization of flour pricing, which offers reason for optimism. In this nascent and rapidly evolving industry, there's no room for resting on laurels. Quality at the right price, innovative products, and a terrific customer experience will carry the day long-term, and this is our forte. On the product development front, we have extended our offerings in Massachusetts by introducing a comprehensive product suite across three of forefront's renowned flagship brands, Island, Crystal Clear, and Marmot. This eagerly anticipated lineup of newly launched products encompasses Island's live resin, all-in-one cartridges and vates, a limited edition Marmot's Marmalade Bites gummy variety pack, and crystal clear cartridges and disposable vates. Those products are now accessible at mission stores and partner dispensaries throughout the state. Furthermore, we proudly unveiled our innovative 1988 brand. This brand introduces a collection of flavored, tobacco-free, filterless, slow-burning one-gram blunts that showcase our premium flowers. Initially, these tobacco-free blunt cones were made available in five robust strains at Mission and Partners dispensaries in Massachusetts and Illinois. Following the impressive performance of the brand's initial launch, we have expanded 1988's product range by introducing infused pre-roll. These one-gram infused blunts are now offered in four new exclusive strains in Mission dispensaries in Massachusetts. We continue to innovate. demonstrating our capacity to swiftly respond to market demand and stay attuned to the changing preferences of a still-developing modern cannabis consumer base. Next, Illinois, which we anticipate will represent the single biggest driver of our company's growth. In Q2, we observed a sequential growth of 8% in our Illinois operations compared to the previous quarter. Specifically, our vape sales at our retail stores were significantly boosted by the popularity of Crystal Clear in Illinois, accounting for approximately 44% of total category sales. Moreover, this momentum has extended to the wholesale market. The launch of Island as our premium flower brand, alongside improvements across all flower brands, has instilled confidence and excitement among third-party buyers in the Illinois wholesale market. Despite our current presence in only two out of the approximately 120-plus retail locations, and with the number of retail outlets steadily growing, we have effectively maintained a robust foothold in the retail market share. Notably, our locations outperform the market average retail store by an impressive 11% during Q2. I want to emphasize that the addition of more retail locations in Illinois presents an exceptional avenue for growth. This expansion holds the potential to contribute to both our top-line revenue and incremental gross margin, primarily through increased sales and vertically integrated operations. In alignment with that, let me provide a concise update on our new state-of-the-art massing facility. In parallel with our retail expansion strategy, and as previously announced, we have successfully completed the construction of Forefront's cultivation and production facility and massing. marking a significant stride in deepening our operational presence in Illinois. This facility encompasses around 43,000 square feet of the overall 67,000 square feet allocated to the flowering canopy and an additional 70,000 square feet of manufacturing space, with an impressive total of around 250,000 square feet. The facility is designed to quickly accord in Additional flowering capacity at a very low incremental cost as demand for our flower expands. With our Tier 1 cultivation license, we will have the ability to efficiently increase our canopy capacity while keeping costs low as we establish our complete complement stores and as additional retail operators come into the market. The development of MAPTEN is proceeding according to our outlined timeline, and we anticipate its launch before the close of the year. Simultaneously, preparations are underway to initiate construction on our new store early in the forthcoming year, along with the arrangements for required retail setup. We are also in the final stages of securing funding to facilitate additional expansion efforts and currently plan to have five Illinois stores open by the middle of 2024. Regarding our plans for additional licenses in the state, we anticipate that the scarcity of funds in the industry will further contribute to the growth of social equity license holders engaging in partnerships or complete acquisitions by larger operators in the coming months. Given that many of the major operators in the region are already constrained by the 10 location limits set by regulations, we are confident that our distinctive position will enable us to offer immediate benefits to these license holders in the short run, while simultaneously creating lasting value for shareholders of Forefront. We are also actively enhancing our operations in Mattson, Illinois, by adding exceptionally talented members to the operations team. To that end, we are thrilled to announce the hiring of Mark Mays as Vice President of Illinois Operations and Head of the Mattson Plant. Mark joins Forefront with a wealth of cannabis experience and a successful track record of launching, scaling, and optimizing large-scale cultivation and manufacturing facilities at holistic, Flourish, and most recently, AYR. Prior to working in the cannabis industry, Mark spent nearly a decade in progressively advancing roles as a project engineer and plant manager in the automotive and packaging industries, respectively. Mark holds a Bachelor of Science in Mechanical Engineering from Penn State and presents an excellent technical and cultural fit to the forefront DNA as we continue to push the boundaries of high quality, low cost production. We eagerly anticipate actively expanding our Illinois footprint and are looking forward to material growth in both our retail footprint and cultivation and processing capabilities in 2023 and 2024. In our Washington facility, amid a demanding pricing landscape, we have been integrating additional innovative techniques from our Massachusetts operations, including transitioning to higher-performing grow mediums and drying techniques. We view this intro of SOPs from Massachusetts into Washington proudly as the strength of our original platform, which was built on Washington operating procedures, continues to improve and evolve as we integrate best practices from other markets. We believe this is a strong indicator of the strength of our entire national team. Our revitalized strategy encompasses the launch of fresh packaging into the market alongside the introduction of novel brands, strains, and a thorough brand revitalization. Concurrently, we unveiled the Island brand for our flower category, injecting new momentum into our flower sales. Our refresh also extended to our vape category, involving improvements in both hardware and packaging aesthetics. As we progress through the summer, we are delighted with the positive reception of the market. Finally, moving to California. As Leo stated earlier, our focus through the rest of the year is profitable growth, and we are adjusting our California strategy with that month. This quarter, we've been laser-focused on tightening our cost structure and overhead and focusing on our most profitable business lines. And we understand that we are in an environment where growth without profit is not sustainable growth. The sheer size of the California market showed great promise, yet it has been disappointing for us in terms of the opportunity for profitable growth. For those of us that are constrained to serving only the legal market, California's lack of reasonable enforcement and regulation of the cannabis industry has not progressed rapidly enough to justify allocating additional funds and resources there. In the first half of this year, we incurred operating losses of approximately $11.3 million in California.
spk05: No more.
spk07: Over the last three months, we've taken aggressive steps in regard to our California cost structure. to the extent that the state is no longer a meaningful drag on cash flow as we sit here today. The decision to de-emphasize the state will positively impact our future EBITDA margins, and our gross margins will normalize in the coming quarters and expand as Illinois continues to come online in 2024.
spk04: Now to conclude, I will review our Q2 financials.
spk07: System-wide pro forma revenue was $35.2 million for Q2 2023, up 2% from the second quarter of 2022. GAAP revenue was $30.7 million for Q2 2023, up 8% from Q2 2022. Adjusted EBITDA was $2 million for Q2 2023, compared to $3.5 million in Q1 2023, attributable to losses in California. Looking ahead to future quarters, we are projecting an increase in adjusted EBITDA attributed to the benefits stemming from our cost-saving initiative and heightened focus on profitable revenue as California revenue declines and Illinois revenue starts to grow and earn. It's important to emphasize that we consider the current EBITDA to be an anomaly, and we expect a significant improvement by Q4. As we conclude, I want to spend a few minutes on where we are as a company. from the standpoint of cost structure, liquidity, and self-sustainability. First on the cost structure. As mentioned earlier, in the past three months, the company has taken decisive measures to reduce annual operating expenses by approximately $9 million. The benefit of these cost reductions will manifest themselves in cash flow and profitability as we finish the second half of the year. Given the current limited availability of capital in the cannabis industry, It is of the utmost importance for businesses to be self-sustaining. While we always have a keen eye on keeping streamlined cost structures, the delayed launch of our matching facility and disappointment in the rollout of California markets have compelled us to make the necessary steps to ensure our company is self-sustaining, independent of the capital market backdrop. While we continue to look for efficiencies in our business, We sit here today confident that we have achieved self-sustainability and expect cash balances to grow as we move throughout the year. Second, our gross margins have been hit disproportionately by our exposure to California. When combined with lack of operating leverage in SG&A, it is compounded to produce a depressed adjusted EBITDA to the tune of about $4 million a quarter. As we proceed through the remainder of this year and into 2024, We expect EBITDA to lift as California revenues decline with more profitable revenue coming onto the P&L as matching gets launched and retail comes online in Illinois. Recall that we view the revenue opportunity in Illinois to be $200 to $300 million with scaled production and a full complement of 10 operational retail assets. By next summer, we expect at least five retail locations to be operational in Illinois. Thirdly, as of June 30, 2023, the company held $5.4 million in cash and had related party long-term debt amounting to $50.1 million. Last month, we announced that we have successfully negotiated an extension of our senior lender's note maturity by an additional two years, now due in May of 2026. Importantly, this extension includes concessions related to security, enabling us to secure additional senior secured finance. This amendment positions us to act as high ROI project financing strategically, allowing us to capitalize on immediate opportunities in Illinois and other regions. We anticipate making an announcement regarding this in the upcoming weeks. As of August 15, 2023, the company has approximately 648.5 million subordinated voting shares outstanding.
spk04: As we wrap up today, I'd like to reiterate a few points.
spk07: Our predominant focus for the remainder of this year centers on sustainable and profitable growth. We are resolute in channeling capital exclusively into projects with the highest return on investment, while reserving resources for select longer-term growth prospects that entail significant short-term cash commitment. Our capacity to replicate successful operations in mature markets and enhance them through acquisition, integration, and efficiencies has been substantiated A resilient market share in Massachusetts, even in the face of considerable price declines, underscores the essence of our value proposition, delivering high-quality cannabis products at affordable prices. With the inauguration of our Madison production facility and the expansion of our retail footprint, we are excited to extend our full capabilities to Illinois. This strategic move offers the most significant growth opportunity in the upcoming 12 months, with very little incremental capital needed, one that we are eager to maximize in order to broaden our outreach and solidify our market position. With that, I will now turn the call over to the operator to open the lines for Q&A.
spk08: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your telephone keypad. You will hear a three-tone prompt acknowledging your request Questions will be taken in the order received. And should you wish to cancel your request, please press the star followed by the two. One moment, please, for your first question. And your first question comes from the line of Nate Gilmer from Haywood Securities. Please go ahead.
spk07: Hey, Neil. How you doing?
spk00: Good. How you doing?
spk07: Happy summer.
spk00: Same to you. Maybe start with California. A little bit of a change of tone from the last conference call where you were pretty optimistic on the April sales. So maybe just a little bit more detail on sort of what unfolded there. And I guess I'm still trying to understand from your comments. It sounds like you still have a presence in California, but you feel you have a you know, structured such that, you know, the revenues can cover off the cost of your facility there. Can you just elaborate? Like, are you looking to completely exit California or you're maintaining a small presence that you feel can remain profitable?
spk07: Sure. I'll let Carl and Ray handle that one. Thanks.
spk04: Hey, Neil.
spk06: Hi. I'll answer the latter half of that and let Ray get into the detail as to the changes in California since April or since our last call. In terms of our decision and our direction, this is not the kind of market, capital market environment where you can continue to lose four and a half, five and a half million dollars a quarter. So after $11 million of loss in the first half of the year, it's like, okay, we have to make decisions notwithstanding you know, a concept internally that we were very, very proud of. We were very proud of the, of the products we make and made and the cost at which we made them. They were just going into a market that didn't reward, you know, superior operations or legal operations. So, um, yeah, we have decided that we cannot lose any more money. So we undertook some very significant cost cutting in California and, um, and downsizing in the approach of California to the point where we're no longer losing money. And that was a significant opportunity for us, obviously, to get back on the front foot, so to speak. And we've got operations in Massachusetts and Illinois and controlled in Washington that are cash flowing. So we have to stop the bleed. And we have decided to stop the bleed, and we have stopped the bleed. In terms of go-forward decisions, yes, we are still in California right now and we're not losing money. I think that's the best way to describe it. Where we go from here, we are continuously looking at what's available to us and what the options are, but we are not going to take a road that has us losing any more money or, to be honest with you, investing further money on an aspirational dream that this market's going to turn around. At this point in time, I think we're just celebrating the fact that we're not losing any more money in California, and we take it day by day. So that's on the where we are now. If you'd like Ray to kind of fill in a little bit of the obstacles that we met in California, I'm happy to pass it on to him.
spk00: Sure. Thank you.
spk01: Yeah, so in Q2, we really focused heavily on our fixed cost structure and then the categories of product that we played in that were a little bit lower margin in some respects, but along the lines of growth and focusing on profitable growth, we trimmed down the number of categories that we were allocated towards, specifically eliminating flour and pre-roll categories and focusing on vape and edibles, where we believe that we continue to have an unfair advantage in terms of production capabilities and operations. On the fixed cost structure side, we were able to, as we reallocated resources away from some of those other categories, we were able to sublease some of the space that we had and drastically reduce the fixed cost structure and overhead.
spk00: Thanks for that. Andrew, in one of your comments, you sort of referred to, you know, now you've done these changes in California. I think sort of the language you used was return to more normalized gross margins. it's obviously been bouncing around for the past few quarters here. So is there some sort of range that you're comfortable with as far as what you guys consider normalized once we sort of see that? I think you sort of set the expectation. We see that reflected in Q4 going forward.
spk07: Yeah, I think on the gross margin side, we expect gross margins in our business to be high 40s, low 50s. And You know, when you X California out of that, we are operating in that neighborhood. So, you know, as, you know, California becomes de-emphasized and we move throughout the year and into 2024 with, you know, math and coming online and new retail coming online, you know, we expect, you know, a pretty significant rebound as we move into 24 in gross margin and EBITDA margin.
spk00: Mm-hmm. And so then, to be clear, Q3 will still have some impact. Obviously, if you made this decision in California, there's probably some costs still associated in Q3 as a result of that, and it's more of a Q4 going forward story.
spk07: Yeah, I think that's fair, Neil. Like, we've got, you know, some of these cost-cutting measures and, you know, the de-emphasizing, you know, bled into Q3, and I think, you know... As we head into Q4 with Matson opening up and into 2024, that's when you're going to see more normalized margins at both of those levels. Okay.
spk00: All right. Thanks very much. I'll pass the line.
spk05: Thank you.
spk08: Thank you. Once again, should you have a question, please press start and the number one on your telephone keypad. And your next question comes from the line of Matt Bottomley from Canaccord Genuity. Please go ahead.
spk09: Hi, good afternoon. This is Galen King on for Matt Bottomley. Thanks for the question.
spk07: Hey there. How are you?
spk09: Good, thanks. How are you?
spk07: We're doing well. Doing well. We've been chopping a lot of wood.
spk09: Good to hear. So, yeah, I just wanted to... ask a question about the drag on the margins this quarter. Just kind of pick that part a little bit more. In terms of the sequential decline in both the gross margins and adjusted EBITDA, I was wondering if you could provide any more color on what caused a drag on these margins during the period, especially because California's operating inefficiencies have been being called out for the past few quarters now so I was just wondering if you know the sequential drag on these margins was again just a function of the operational inefficiencies coming out of California or if there were any inefficiencies coming out of Massachusetts for instance and I guess in terms of adjusted EBITDA going forward into Q3 and Q4 what is kind of like the normal level that you guys are hoping to achieve as a result of you know pulling out of California is scaling back a lot of the operations there. Thanks.
spk07: Carl, do you want to take a crack?
spk06: Yeah, to the extent I can. And Brian, if you want to fill in any gaps that I've left, please do so, or Nicole. Yeah, it's all California. I mean, yes, there's been some pricing declines, as we all know, in both of those markets. But the major drain has been just a continuation of the inefficiency of California. Just to clarify something that, you know, on Neil's question, he was asking Andrew about the fact that we're going to wait until Q4 to actually get rebounds. There could be some truth to that, but we are already in a place where cash has considerably been improved by the decisions we've made in California. But to my knowledge, there's nothing particularly, I mean, we're running high 40s in Illinois and low 50s in Massachusetts for the quarter. And I think that's basically where we expect to be. We may have some efficiencies that eventually grow into the Madison facility as we bring on more retail. But that's kind of where we're sitting. In terms of normalized EBITDA, obviously we don't want to be guiding, but when you're losing $4.5 million due to one particular state, $4 million, let's say, due to one particular state each quarter, we're hoping to get to that range where we're north of We're north of, well, definitely north of where we are. I don't want to guide, but you can see if you look at our adjusted and you take away four and a half, or you add four and a half, you can see where we're hoping to get to, and we see no reason why we shouldn't be able to do that and exceed once we get the stores up and running.
spk04: I'm not sure if that really answered your question, did it?
spk10: Yeah, that was helpful.
spk04: Yeah, I think directionally...
spk06: Brian, is there anything on, or Nicole, anything on the Massachusetts-Illinois that should be added, or was I pretty much on point?
spk05: I think you were pretty much on point, Carl. No, I think you covered it. Cool.
spk10: Thanks, Hank.
spk09: Yeah, thanks. And if I could just have one more question. You spoke about the additional financing that you guys have secured fund the growth in Illinois. Is that just regarding the $30 million additional funding that became available as a result of amending the LI Lending Agreement, or is there additional financing options available in the future? Thanks.
spk04: Yeah, I can speak to that, Anne. Yeah, I can speak to that.
spk06: Saying it's secured, I think Andrew said we are moving towards securing. So we have not yet secured financing, but we are definitely moving along the path that shows us a reasonable source of this, and we're feeling good about it. In terms of the room and security that was granted by the renegotiation of the LI lending facility, this would be super senior financing. super senior secured financing that we'd be looking at. And within that, definitely within the 30 window that was provided to us through the renegotiation. So I'm not saying we've got the additional financing, but we definitely have a clear line of sight towards it, which we haven't had for a while. So we're moving in that direction.
spk10: Thank you so much. I'll jump back into the queue.
spk05: Thank you. Great.
spk08: Thank you. Mr. Kornbaker, there are no further questions at this time. Please proceed.
spk03: Thank you all for joining us, and we look forward to giving you an update in the months to come. Take care.
spk08: Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you all for participating. You may all disconnect.
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