Avant Brands Inc.

Thank you for standing by. This is the conference operator. Welcome to the Avant Brands, Inc. Second Quarter Fiscal 2023 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 10-0. I would now like to turn the conference over to Alyssa Berry, Investor Relations. Please go ahead.

Thank you, operator, and good afternoon, everyone. Welcome and thank you for joining Avant Brands Q2 Fiscal 2023 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 Miguel Martinez. Avant's Chief Operating Officer David Lin is also present and will be participating in our Q&A session. We'd like to extend a warm welcome to Miguel as this is his first earnings call as Avant CFO. Miguel, welcome. Our Q2 2023 results were disseminated yesterday and 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 Avant Brands or Avant. I will now turn the discussion over to Miguel to share the company's financial highlights. Norton will then provide a strategy update. Please go ahead, Miguel.

Thank you to our board and the Avant team for their warm welcome and support during this quarter. I was excited to join the Avant team for several reasons, including the company's reputation for outstanding product quality, compelling brands, rapid sales growth, and positive cash flows. I previously worked as the VP of Finance at Pure Sun Farms and believe my background in this industry dovetails very well with the competencies and culture within the Avant senior management team. I'm also looking forward to connecting with our investors and industry analysts. Please feel free to reach out to me directly anytime. To summarize Avant's performance, starting with the three months ended May 31, 2023, we continue to achieve strong year-over-year revenue growth on both a quarterly and year-to-date basis, driven by a strong domestic and international demand for our premium products. Quarterly gross revenue was a record $9 million for the company, which represents a 101% increase over last year's Q2 and brings our year-to-date gross revenue to $16.8 million, which is an 86% increase over last year. Our overall gross margin this quarter was a healthy 34%. We're doing an excellent job withstanding price compression in the Canadian REC market while being able to implement a price increase in early 2023 for our international sales. However, the liquidation of Flower Group Okanagan old inventories at below cost did lower our average gross margin. Adjusted EBITDA for Q2 was $1.7 million, which is an increase of $2.7 million over Q2 in the prior year. Avant continues to generate significant positive quarterly cash flows from operations, making it somewhat unique in the Canadian cannabis industry. Cash flow from operations before changes in non-cash working capital was $2.1 million, an increase of $2.7 million over last year. The cash balance of $800,000 at May 31 is down from the $6.8 million balance at November 30th due to the strategic acquisitions of 3PL and Flower. During the same six-month period, the company produced strong cash inflows from operating activities before working capital adjustments, of $3.8 million. This is an outstanding improvement over the cash outflow of $500,000 in the comparative period of the prior year. I will turn the call over to our CEO and founder, Norton Singhaven, for an update on strategic initiatives.