Legend Power Systems Inc.

Good morning and welcome to Legend Power Systems Physical 2025 Q2 Investor Call. I'm Randy Buckemer, Legend Power's Chief Executive Officer. We're pleased to have you join us on the call today and discuss our corporate progress, our financial results for the second quarter of Physical 2025, which were the three months that ended March 31st, 2025. Please note that certain statements in this call may be forward-looking in nature. These include statements involving known and unknown risks, uncertainties and other factors that could actual changing results and differ material from those expressed or implied in our forward-looking statements. For more information about Legends forward-looking statements and risk factors, please see our management discussion analysis, which was filed on CEDAR yesterday under our company profile at cedarplus.ca. I'm joined by Florence Tan, who is our CFO, Paul Moffitt, COO, Mike Ciosi, who is our VP Sales and Marketing. Florence, as usual, will provide a great financial update and highlight an overview of the quarter. Paul will update you on the great progress made while managing in a tight cash environment. The team continues to reduce costs and cost of goods, strengthening margins and improving supply chain and production capabilities. Paul's team continues to enhance and build Gen 3 solutions with great success. Mike will update you on the exciting Gen 3 solution market performance and customer acceptance. Further development of the five key relationships or pillars continue to show they will be the driving forces of our sales growth. The sales team has secured several outstanding partners that are keen to grow their businesses with Legend Solutions. We've operated in a tight cash environment for the last couple of years, and Q2 continued to be a tight cash quarter, and we continued to make the necessary expense and operational cost reduction changes. While some part orders were put on hold, we successfully managed our backlog by leveraging existing inventory to continue fulfilling commitments. Despite these hurdles, we've maintained strong supplier relationships who have been supportive and patient. We've been paying down outstanding accounts while prioritizing payroll and other critical needs. The dedication and resilience shown by our legend team during a challenging Q2 has been truly commendable. And again, thank you to the legend team. We see more opportunity than before, and we do see a very bright Legend future. The Legend team is absolutely committed to make Legend Power a success story. Our previous $10 million investment in developing Gen 3 continues to drive our business and support a decision well made. You will hear a lot of details about Gen 3 today. The performance of Gen 3 smart gate systems in the field continues to exceed expectations, driving strong customer satisfaction and repeat business. We continue to transition from commitments for dozens of smart gate installations annually to, we believe, hundreds of systems annually. This shift is underpinned by strong execution, proven solutions, and a growing pipeline of wins and opportunities. We're confident that our trajectory is not just upward, but transformative. Importantly, while the green investment sector has faced political challenges, Legend Power Systems' value proposition transcends political narratives. By delivering lower costs, increased profitability, reducing risk, we provide enduring value rooted in traditional business fundamentals. Florence, if you would, please provide some financial highlights.

Thank you, Randy. During this quarter, revenue recognized was $523,000 compared to $124,000 in Q2 of fiscal 24. Our gross margin for the quarter was 22% compared to 46% in the prior year. And gross margin percentage has decreased due to increased cost of certain inventory components, as well as suppliers paid in U.S. dollars. However, gross margin dollars were $114,000 compared to $57,000 in Q2 fiscal 24. Margin percentage is also lower this quarter due to the mix of Smartgate units sold, and we do anticipate margins to return to the targeted margin levels. Paul will go into a bit more detail on this later. The company ended the quarter with $224,000 in cash, no debt, and $874,000 in working capital. The company also received north of $750,000 of outstanding trade receivables and deposits from sales orders subsequent to March 31st, further strengthening our working capital position. We continue to focus on the priorities critical to attaining our projections while managing our resources to support our sales growth plans and deliver for our shareholders. I'll pass it now to Paul, our COO, to provide some operational highlights.

Thank you, Florence, and good morning, good afternoon to everybody. Very excited about the progress that we've made throughout the company and in operations. The entire team remains focused on delivering in product development, supply chain, production, installation, field services, customer services. And we've really realized a lot of success from the continuous improvement and simplification in everything we're doing, business processes, manufacturing processes. And we've really optimized and transformed operations to establish strong methods for our growth and our future successes. So we now have 15 plus systems in backlog, thanks to the great efforts of sales, Mike Ciosi and his team, and with shipments planned over the coming months, providing additional cash flow into the business. I'm happy that we continue to use our on-hand inventory. It's decreased significantly down several hundred thousands of dollars, of course, because we're transforming and converting into goods for sale and for cash. So we're consuming what's on hand, we're offsetting purchases, and really we're now converging down to that new factory design that I mentioned and our optimal safety stock design. So I'm very happy to see that we're making that progress. Material orders, as Randy had mentioned, they continue to be scheduled as needed to minimize cash outlay. Obviously, we're ordering everything we need in addition to inventory for our backlog. But we're doing that to align to factory capacity. And then we're ensuring our working capital is at those optimal levels. And again, as Randy mentioned, our supplier support remains very strong. I'm very happy with the relationships that the team has developed with our key and smaller suppliers. We've seen additional lead time improvements, and we're actively seeking new suppliers. So our cost of goods sold reductions, we saw some really great wins recently. We're now sort of moving on to the next phase. big part in the list. And we're looking for additional suppliers, both for cost savings, good quality, but also to gain, you know, flexibility and redundancy within our supply chain. Our platform continues to be refined, hardware, software, firmware, functionality and capacity of the system. So our engineering team was working hard on, you know, maintaining designs and documentation, but also looking at additional product power capacity and functionality, really improving the overall platform across the board. So great news there. We've got a nice roadmap set up and we're making lots of cool changes coming up to further enhance the functionality of the product. What's a bonus of that is it's all on the existing system. So we can add that in the field as our customers need those options onto existing products. Our gross margin percentage last quarter was impacted by some blips in part costs, largely by product mix. We had some USFX impacts, but I completely see us trending back to 40% and 50% plus gross margins over the coming quarter. So this was a bit of an anomaly, but we have a strong foundation and set up for very strong gross margin percentages, and those will come again. And again, as Randy mentioned, thank you that the monthly operating costs are continuing to be reduced. Following further rationalizations, we've looked at our applications, we've looked at our services, and we've done that really as a cleanup without impacting any of our quality or deliverables. So very proud of the team overall. The entire team, everyone's working together seamlessly on improving business processes to not only improve our product, but to improve our performance to the market and to the customer. And we've created a great and stable foundation to optimize our business systems for seamless delivery and growth. So thanks, thanks everyone for listening. Thanks to the entire team. And with that, I'll pass it over to Mike.