Avant Brands Inc.

Thank you for standing by. This is the conference operator. Welcome to the Avant Brands Inc. Third Quarter 2021 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, then zero. I would now like to turn the conference over to Ms. Alyssa Berry, Investor Relations for Avant Brands, Inc. Please go ahead, Ms. Berry.

Thank you, operator, and good afternoon, everyone. Welcome and thank you for joining us for Avant Brands' third quarter Cisco 2021 results conference call. My name is Alyssa Berry, Investor Relations for Avant Brands. Speaking on our call today is Avant's founder and chief executive officer, Norton Singhaven, and chief financial officer, Kendra Blackford. Avant's chief operating officer, David Lynn, is also present and will be participating in our Q&A session. Our third quarter fiscal 2021 results were disseminated yesterday and are available on CDAR and on our website at www.avantbrands.ca. Before we get started, I wish to remind everyone that some statements made on today's call are forward-looking in nature and therefore are subject to certain risks and uncertainties, which are all outlined in detail in our regulatory filings available on CDAR. On this call, we will refer to the company as Avon Brands or Avon. We recognize that most of you have already reviewed our results issued yesterday, so be mindful of your time. Kendra and Norton will keep their comments brief. and we will then transition to our Q&A session. With that, I will turn the discussion over to Kendra to share the company's financial highlights, and then over to Norton to provide a strategy update. Please go ahead, Kendra.

Thank you, Alyssa, and good afternoon, everyone. Touching on the key highlights for the third quarter ended August 31st, 2021, compared to the second quarter ended May 31st, 2021, we reported another solid quarter of revenue growth through our three distinct channels, recreational, medical, and export. For the second quarter in a row, we achieved record gross revenue of 3.1 million and net revenue of 2.7 million. Our gross margin increased slightly for the quarter to 40%, and gross margin dollars increased 14% to 1.1 million. We sold 525 kilograms of cannabis during the third quarter, compared to 394 kilograms, representing a 33% increase. Our recreational cannabis sales in Canada accounted for 71% of total sales, compared to 92%, thanks to our initial global export shipment to Israel, which shipped over 200 kilograms of dried cannabis. While the company's medical sales also increased significantly, this business is still emerging and accounts for less than 5% of total gross sales. As export shipments typically have a lower average selling price compared with Canadian recreational sales. Given the large initial export shipment, our overall weighted average selling price decreased by 20% to $5.78 per gram. However, the cost of sales is also lower on export. Therefore, the margins remain attractive and are within the range provided by our recreational product portfolio. During the quarter, sales for our Tenzo brand increased with the launch of new cultivars and packaging. The Tenzo brand has a lower weighted average selling price over our black market brand, and as a result, the recreational weighted average selling price decreased 5% to $6.97 per gram. Operating expenses, excluding non-cash items, was $1.5 million, representing an increase of $311,000, as the company had various one-time non-recurring expenses, such as fees related to the TSX graduation and associated professional fees. Net loss from operations was 2.97 million compared to a loss of 124,000 as the company recorded a non-cash loss of 2.3 million on fair value changes of biological assets. This was a result of the company decreasing the fair value price per gram of flour in order to be more consistent with the current weighted average selling price that the company is receiving for the product mix and various sales channels. As the fair value price per gram is represented by the company's estimates, By nature, they are subject to change on differences from anticipated yields or market value and will be reflected in the gain or loss on biological assets in future periods. Our positive cash flow from operations of 831,000 indicates significant growth within our operations and demonstrates our ability to generate positive cash flow. Adjusted EBITDA loss of $267,000 compared to a loss of $28,000 as the company had various one-time non-recurring expenses as previously noted. Overall, we are pleased with the results we have achieved and our strong capital position with approximately $16.3 million of cash and $26.7 million of working capital and no debt. This provides the flexibility to be strategic and opportunistic as we continue to grow our business. We also have our preliminary base shelf perspective, which we filed in August for up to an aggregate offering of $50 million to provide the company with the flexibility to capitalize on financing opportunities and favorable market conditions during the 25-month period that it remains active. With that, I'll pass it over to Norton for his remarks.