Vext Science Inc

Thank you for standing by. This is the conference operator. Welcome to VectScience's second quarter 2023 financial results conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and 0. I would now like to turn the conference over to Jonathan Ross.

Please go ahead. Thanks, Operator. Good morning, everyone, and thanks for joining us today. BEXT's second quarter 2023 financial results were released earlier this morning. The press release, financial statements, and MD&A are available on CDARE+, as well as on the BEXT website at bextscience.com. We would like to remind listeners that portions of today's discussion include forward-looking statements, and the forward-looking statements are included in today's press release. There can be no assurance that these forward-looking statements will prove to be accurate or that management's expectations or estimates of future developments, circumstances, or results contained therein will materialize. Risks and uncertainties that could affect future developments, circumstances, or results are detailed in the MD&A and VEXTS, other public filings that are made available on CDAR+, and we encourage listeners to read those risk factors in conjunction with today's call. As a result of these risks and uncertainties, the developments, circumstances, or results predicted in forward-looking statements may differ materially from actual developments, circumstances, or results. This call also includes non-IFRS financial information, and such non-IFRS financial measures are subject to the disclosure and reconciliation included in our press release disseminated earlier today. Forward-looking statements made during this conference call are made as of the date of this call. Vext disclaims any intention or obligation to update or revise such information, except as required by applicable law. Vext's financial statements are presented in U.S. dollars, and the results discussed during this call are in U.S. dollars. I will now pass the call over to Eric Offenberger, Chief Executive Officer of Vext.

Thanks, John. Good morning, everybody, and thank you for joining our second quarter 2023 financial results conference call. I am joined on the call today by Stephen Banglos, outgoing CFO of VEX, as well as Trevor Smith, incoming CFO. I will start by providing a brief overview of our results before turning it over to Stephen for an update on our financial performance. Let's talk about the current environment. The market backdrop remains the same as we have discussed over the past several quarters. challenges to consumer discretionary income remain, and in Arizona specifically, pricing pressure is further exasperated by oversupply in the market. Despite these challenges, our team's focus on delivering best-in-class execution led to growth in market share. In a seasonally slow quarter for Arizona, in the current environment, this means declining less than the market. Year-over-year retail in the Arizona market was down 10.75%. and we were down 5.4%. With our dispensary in Ohio starting to contribute to the top line, we generated revenue of 9.2 million in quarter two, a 4.8% increase over quarter two of 2022, and a slight increase from the previous quarter as well. We generated EBITDA of 2.3 million during the quarter and adjusted EBITDA of 1 million. Most importantly, as expected, cash flow from operations came in at a solid $3.4 million through the second quarter. Gross margins were significantly lower in quarter two as a result of our decision to liquidate inventory from our idle outdoor grow. With pricing under continued pressure both at retail and wholesale, we felt the prudent decision was to invest in price on this product, move it quickly, and generate a return. Margins are expected to move back to more normalized levels as we move through quarter three and into quarter four. With our first harvest from the ELI facility expected in quarter three, we're now better positioned in the market moving into the back half of the year with internal production matching internal demand. Our team continues to execute at the store level, leveraging data-backed targeted promotional activities to grow traffic, which in turn contributed to the top line results we realized in the quarter, despite average basket size moderating compared to last year. By growing traffic and creating more customer touchpoints, we drive results now and better position the company for a market turn. Contract manufacturing and wholesale remain particularly pressed as all retail operators focus on growing the mix of the in-house brands on their own shelves to maintain margin. We have also pulled back on the contract manufacturing segment. While we have seen cultivation facilities being scaled back and put on hold, and brands leaving the market we will need to see more of this pain before the market comes back into balance moving on to brands late in the first quarter we launched the new vape and black liquid diamonds product line which has been well received with over 100 000 units sold vex is committed to developing innovative products bringing in the market at the right price point targeting new customers and retaining our existing ones through return focused marketing campaigns designed to drive revenue, maximize margin, and expand the customer base. Turning to Ohio, our agreement to acquire our joint venture partner, Appalachian Farm Processing and Cultivation, has progressed well. We have received regulatory approval and expect to close the transaction before the end of August 2023. This will enable us to become a larger diversified operator with fully vertically integrated footprint, across two limited licensed states with significant potential in both. Ohio is a large growing medical market, and with the potential to move to adult use and its highly regulated vertical market structure, it makes it very attractive from a long-term return on capital perspective. The Jackson dispensary, which completed its second quarter under vexed ownership in quarter two 2023, is continuing to perform well. Upon closing of the acquisition, we will be in a position to gain ownership of another cannabis dispensary based in Columbus, Ohio. We have applied to the regulators for an ownership transfer and expect to receive regulatory approval before the end of the year, thus strengthening our retail foothold in the state. Once vertical operations are consolidated in Ohio, we look forward to growing market share in the state by fine-tuning our existing operations and continue to be on the lookout for potential additions to better leverage our footprint on an accretive basis. While our current focus remains primarily on our Arizona and Ohio operations, we are monitoring market developments under other areas of our joint venture portfolio and remain well positioned to act on developments aligned with our strategic plan. We are still awaiting further guidance on regulations and timing for clarity on Kentucky. Overall, I'm very pleased by our team's performance during a challenging first half of the year. We remain focused on bringing customers into our stores with a broad selection of value-based products and operating efficiently to drive profitability and cash flow. Before handing the call to Stephen, I wanted to express my personal and professional gratitude to Stephen. We have worked closely for the past two and a half years, and Stephen has led the efforts to implement a robust infrastructure to efficiently support growth for the VECs. I wish him the best of luck for his future endeavors. With that, over to Stephen for a quick review of the financials. Stephen?