Good morning. My name is Joelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Legend Power Systems Q2 2023 Financial Results C onference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question- and- answer session. If you would like to ask a question during this time, press star one. Thank you. Legend Power, you may begin your conference. Welcome to the Legend Power Systems Fiscal 2023 Q2 Investor Call. We're pleased to have you on the call today to discuss our corporate progress and provide our fiscal 2023 Q2 update, representing the three months ending March 30th, 2023. We've had a bit of an unusual event this morning, in that the number on the PR apparently is not correct, so we do not have the regular number of people we would have on the call. We've made the decision to proceed with the call, record the call, and we'll offer people an opportunity to call if there's additional questions. We appreciate the patience, everybody, once they do hear the call. I'm joined by Florence Tan, our CFO, Paul Moffat, COO, and Mike Cioce, our VP Sales and Marketing. 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 cause actual results to differ materially from those expressed or implied in our forward-looking statements. For additional information about Legend's forward-looking statements and risk factors, please see our quarter and management discussion analysis, which was filed on SEDAR today under our company profile at sedar.com. We're gonna take a bit of a different approach to today's call. We have been gathering the most frequent shareholder and investor questions that we've recently received, and we will ask each question and provide an answer. We still will have a question period at the end, and we will provide a few brief summaries before we get into questions. Over the last few years, Legend has transformed significantly from an energy savings company to building our brand as the Active Power Management solution for ensuring optimal power management for buildings. Our transformation and rebranding has resonated with our target markets and major federal and state agencies. Leading commercial building owners are planning to implement the Active Power Management solution. We have created a new category and a market without any direct competitor. Our pipeline and order flow is growing. It will make Legend Power a compelling public company. When we last raised $10 million, we submitted our use of proceeds summary. I'd like to point out that we've delivered as promised on our use of proceeds. In fact, each key category spend represents our key pillars for growth. We've invested over the last two or three years to grow by investing over CAD 4 million in the new Gen3 solution. Field and customer feedback is extremely encouraging, and it will create revenue for many years. Over 40% of the last raise has been invested in creating Gen3. I view this as an asset investment and not just a P&L expense. We have paid inventory of CAD 1.8 million. CAD 1.4 million of it is Gen3 components. All current inventory makes a 100% + margin cash contribution as it's sold. We've created a category, the brand Active Power Management, and we're being written into as a standard specification in major electrification and decarbonization initiatives. We simply own the space. We've improved our sales team and processes, starting with insights and developing into a Power Impact Report. We're continuing securing supply chain improvements to improve margins and time to delivery. We're reviewing production outsourcing alternatives to improve margins and time to delivery. We're building a strong engineering team that will continue to enhance existing technologies and build leading-edge energy management solutions. Before we highlight the frequent questions and answers, I'm going to ask Florence to discuss Q2 financial information, Mike Cioce will provide a brief sales update, we'll go into the questions. Thank you. Thank you, Randy. During this quarter, revenue recognized was CAD 74,000, compared to CAD 343,000 in Q2 FY 2022. Revenue recognized was based on 1 SmartGATE system, compared to 4 SmartGATE systems, respectively. Sales pipelines as well as sales bookings backlog are both healthy, and we will see the transition of these revenue recognition over the coming months. Gross margin in the second quarter of fiscal 2023 was -7%, compared with 17% in Q2 of FY 2022. The decrease in gross margin experienced during Q2 of this fiscal was due to additional costs incurred to replace and repair a unit damaged in transit, which the company expects to recover the majority of these costs incurred. The change in margin for the second quarter was also impacted by an inventory adjustment due to count results, offset by a recovery on inventory previously provided for. The normalized gross margin for the quarter, excluding these items, would have been 34%. On a year-to-date basis, gross margin for the six-month period was 20%, compared with 18% year- to- date in Q2 of FY 2022. Given the company had taken action last year by increasing sales prices, we've seen a moderate increase in our margin. The company ended the quarter with CAD 1.5 million in cash, no debt, and CAD 3.15 million in working capital. With this working capital, we continue to proactively focus on the items critical to attaining our growth projections, and we will continue to frugally manage our capital resources as we always have, and squeeze the most out of every dollar provided by our shareholders. Thank you, and now over to Mike Cioce. Thank you, Florence, and thank you, everybody, for your time today. As Randy said, we're gonna get into some of the common questions, but I just would like to take two minutes for a quick update on our progress. As Randy mentioned, over the last couple of years, our company has invested in and undergone a remarkable transformation. Initially, we focused on selling one system at a time to improve building energy efficiency. Today, based on our investments to date, we've achieved some significant milestones. We're currently averaging 10 or more buildings simultaneously for a customer, with each opportunity representing dozens of SmartGATE systems with energy savings, as well as maintenance and repair savings, as well as just making the buildings better for everyone. Based on our investments, our third-generation SmartGATE system has been a game changer. It expands our value proposition beyond energy efficiency to include substantial savings in maintenance and repair costs. Our customers are telling us that for each $1 of energy savings, they are also seeing a $1-$2 maintenance and repair savings after installing SmartGATE. Based on our investments, our pipeline has grown tremendously, escalating from under $20 million to a staggering $150 million in four years. This increase reflects the growing demand for our products and the clients have put on our capabilities. As with any new technologies, the customers must figure out how to procure and implement SmartGATE. In many cases, the SmartGATE is being included in much larger projects. These larger scope projects have larger budgets and in some cases, longer timelines. While it's taking a bit longer than expected, our progress speaks for itself, and we'll discuss this in more detail in just a few minutes. Again, our investments to date have resulted in an Active Power Management written in as a standard specification in major electric decarbonization initiatives. This means that any bid that wants that opportunity to win must include an Active Power Management system in order to be able to be a winning solution, a winning bid. When we look at the trillions of dollars a year being spent annually in this segment, it's expected to continue for the next two to three decades. The investments we have made to date are driving massive demand, which is starting to and will continue to convert into SmartGATE orders. In conclusion, we are delighted with our investments, our expansion, inclusion of maintenance and repair savings, and impressive pipeline growth fueled by our investments to date. These indicators demonstrate our success to position us as leaders in the field. Thank you for your continued support, and we look forward to answering your questions shortly. I'm just going to repeat what I said earlier in the call for those that have come onto the call since then, that we're taking a different approach today for the call. We've gathered the most frequent shareholder and investor questions that we received, and we'll go through each and answer each. We'll still offer a opportunity for additional questions from participants at the end. We're gonna move now to the frequent questions and answer portion. First of all, we get the question: Why has it taken longer than expected to achieve sales success? Mike, can you give us a flavor on that? Yeah, sure. There's a number of things to keep in mind. First of all, is we are making a market. And to really drive home what that means, every one of our new customers have purchased an Active Power Management system before. This is definitely very different than buying an iPhone or even buying a replacement HVAC system. Because of that, they have to learn how to buy it. And again, when you're connecting major building systems to a switchgear, which is the heart of any facility, sometimes those updates and upgrades need to occur, and sometimes our efforts get rolled into major electrification and decarbonization efforts. What's interesting is, again, we have a very large pipeline that is continuing to grow, and we're simply not getting the no's. The no's just aren't happening. Our close rates are higher than expected, and what's also interesting is that we also have sufficient late-stage deals to hit our booking targets for the remainder of the year. We're very confident that, while it is taking a little bit longer, we're not getting the no's, and we are continuing to grow the pipeline and close business. Great. On that topic, with the pipeline growing, how do you see the next 12 to 36 months, Mike? Yeah, again, keeping in mind that four years ago, our pipeline was under $20 million, and now it's over $150 million. When we look at the fact that the total addressable market of north of 1 million buildings in North America alone is tens of billions, if not hundreds of billions of dollars. When we look at the fact that awareness is continuing to skyrocket, in fact, some local municipalities in Ontario are getting ready to issue RFPs to solve power quality challenges. Because, again, the power is getting worse and people are starting to realize it's going to have a negative impact on their, on their facilities. When we look at that, and we also consider that we currently have one of the concepts in sales leadership is what's called quota coverage or pipeline coverage. Right now, we have double the pipeline coverage for our fiscal 2023 bookings, and we have almost double our pipeline for fiscal 2024 bookings in sight today. When we combine that with the fact that, again, we are being written into specifications, and just to touch a little bit more on what that means, being a required specification means that you can't have a winning bid if Active Power Management is not in it. When we look at the fact that most state and local governments look to the leading players for those best practices, they look to leaders like the City of New York and the federal government and the United States of America. We are in specification or getting approval for specification with those leaders, which will continue to roll out to other organizations. That's on the public sector side. If you look at the private sector side, we are also engaged in late stage sales cycles with the corporate leaders or those Oracles that other corporations look to as well. At the end of the day, the pipeline growth of the next 12 to 36 months continues to look explosive. Thanks, Mike. The next question we get asked a lot is: What's happening with GSA? For the folks on the call, may have a few people that may not know what GSA is, in case new shareholders. Could you explain what GSA is and what's happening with GSA, please? Certainly. The GSA is the General Services Administration. We're engaged with them through their Green Proving Ground, which is a limited deployment for developing a full deployment plan for their organizations. As we've already announced, the first site is selected, and we are continue to support installation in the fall of this year. The second site has been identified, and we're in due diligence. That due diligence is scheduled to happen during the month of June. Again, this is just a massive opportunity for us when we look at the scope of the GSA and all of the federal buildings that they own or operate. It's just a massive opportunity. Again, they're also seen as the Oracle or as the leaders of that space. Again, when you look at the fact that the ESCO market alone is, you know, $10 billion-$15 billion a year, that represents a very significant opportunity for us. What's also encouraging with the GSA is just a high level of an excitement from the entire project team, not only from the folks at the Green Proving Ground, but also Oak Ridge National Laboratory are the organization that's gonna be doing the project testing. From that standpoint, they're very excited about it because this is one of the first solutions they've seen in a long time that actually fixes power. They're highly engaged, and we're getting some very positive feedback from them. What's also exciting is just the feedback from the site teams that we're working with. The level of frustration that they have today over challenges with the power and what it's causing the facility, to have a solution in sight for them is. They're incredibly engaged. We are very well-positioned. We've got a lot of activity around the GSA. Excellent. obviously, the company maker, you got another one on DCAS, Mike. We do get asked what's happening with DCAS also, and for the sake of some new shareholders, same thing, if you could just let us know what DCAS is and then answer the question, please. Thank you. DCAS is the Department of Citywide Administrative Services for the City of New York. They are the central group for all the city agencies for the City of New York. They support the School Construction Authority, the schools, the design construction services, all of the major groups inside of the City of New York, and they're the central spending authority. As we've previously announced, we are an approved solution with them. We've went through a rigorous testing process with them, we've passed that with flying colors. Also, as they have previously announced, that they're getting ready to spend $4 billion on electrification and decarbonization efforts over the coming years. One of the latest updates is that the specification for Active Power Management is finalized, and it's being actively distributed to addendums for RFPs that are in progress, as well as new RFPs. With that, we see over two dozen projects starting this calendar year, representing between 50 and 100 SmartGATEs alone. Again, the DCAS can certainly continue to be a company maker for us. Again, our investments to date have made us the industry and segment pioneer and front runner, so anyone else who's wanting to play catch-up is already five to 10 years behind us. Again, keeping in mind that being in spec means that any bid must include an Active Power Management system in order to win, and that we are, again, the category pioneer and front runner for Active Power Management systems. I'll just add, Mike, that's probably about four to five years of sales investment to get to this stage. Again, well done. Very exciting. The other question we get is: Are we making progress with resellers, Mike? Comments? Yeah, absolutely. Yes, we are continuing to be written into proposals with leading ESCO providers across North America. Beyond the ESCOs, we're also working with other distributors. We're also working with other leading electrical organizations, and we're working with some of the largest organizations in North America. One of the partners that we recently announced is an organization who focuses in Ontario on power quality solutions, and they've added us to their offering. What they're excited about is it dramatically expands their market capabilities as well as our reach. They have a 20-year history with the local utilities, and they are the go-to solution provider for Ontario manufacturing. They've been getting more and more calls recently for commercial buildings, and their industrial solutions just are not sized for commercial buildings. Adding the SmartGATE to their capabilities dramatically increases their solution capabilities and their market opportunities as well as ours. These are the types of partners that we're engaging with. We've steadily seen an increase in partner-led pipeline. That's currently accounting for almost 20% of our pipeline today. That's great. We also get questions about Gen3, and I think really what we get is people asking: We're fairly comfortable that you have proven you save energy, and Gen3 obviously is an improvement over the previous generation. How about non-energy efficiency targets, and how do we know that we're hitting them? Mike? Yeah, absolutely. A lot of great progress has been made there based on the investments we've made. First of all, what we do with the part of the Power Impact Assessment is we capture a baseline for the facility to understand what the incoming power looks like. As we've been, in the past, we've always provided a measurement and verification report, but recently we've also added a power quality verification report as well, which demonstrates that there's a dramatic improvement in the power. We're able to actually show them what their scores were ahead of time, and then post-installation, what their scores are with a SmartGATE active. Again, the results are incredibly dramatic. Not only are we seeing better than a 4.5% energy savings, but we're also eliminating over 98% of all of the power fluctuations that are getting hit, that these buildings are getting hit with. Again, in Ontario, it's not uncommon for us to see buildings getting hit with hundreds of voltage fluctuations per year, any one of which can play havoc on their buildings. We are absolutely generating the results with there. What's also interesting is that our customers are telling us what kind of results that they're experiencing. They're telling us that for every CAD 1 in energy savings they see, they also see CAD 1-CAD 2 of maintenance and repair savings. To put things in perspective, one of our customers who recently deployed 10 SmartGATEs, they were spending CAD 15,000-CAD 20,000 a month just replacing one category, and that's control boards across their portfolio of those 10 buildings. In the first six months of SmartGATE operation, the spend was literally zero. Again, hundreds of thousands of CAD saved because of the SmartGATE. In another situation, we saw the CEO saw the results. Not only did they get a better than a 15% ROI, which is what they were looking for, the buildings just worked better, and that made for happier tenants and happier employees. Based on that, and seeing the results and hearing the feedback from the team, they bought 10 more systems on the spot. At the end of the day, yes, we are absolutely nailing it on non-energy, performance as well, as well as energy performance. That's great. Mike, we also get asked, because we announced a couple of years ago, that we introduced the Insight process to measure how power is being used in a building, and then that was refined into a Power Impact Report. How's it going? How do the two fit together, please? Yeah. First thing is that it's going way better than expected. We need to kind of clarify for everybody, SmartGATE Insights is the equipment and the Power Impact Report is the service for a customer. What's interesting, again, one customer can do one Power Impact Report. They might use five SmartGATE Insights to look at those 10 buildings, those 10 buildings represent 40-50 SmartGATEs. You know, when we look at it from a standpoint of, is it accomplishing the end goal of identifying and showing the value for potential SmartGATE sales, it's absolutely there. It's absolutely providing massive value to our customers because they now can see things that they haven't been able to see before. They can see what's driving the challenges that they face with their buildings. Again, when we look at it, over the previous years, we've identified 300 SmartGATE, potential SmartGATE sales using the Power Impact Report process. About 90 we've reached decisions on a little over 90 of those potential, and we have better than a 50% close rate on those, just as expected. We've got about 100 that are actively being presented, and we've got about another 100 that are in progress. We still definitely see tremendous value in the insights, but more important than us seeing it, our customers are seeing it, 'cause now they're able to see challenges that they have had with their buildings for decades, that is getting worse, that now they have a solution to. It's definitely going better than expected. That's excellent. Mike, we also get asked about large deals we've talked about in different, quarters, et cetera. How are the large deals going? Are they still active, and are they progressing? Yes, they are. They are all still active, and they're all progressing, albeit at different cadence and paces. Each organization and each opportunity, they continue to move at their own situation. We've got some where they wanna put SmartGATE in, but they realize that the switchgear that they wanna attach to is 20 years past the end of life, and that they need to look at replacing the switchgear. We've got some that once they see the challenges that are in their buildings, that they realize that a larger effort is required, and the SmartGATE sits at the heart of that. When we look at those large deals, they are still active, they are progressing very nicely, each one of them is moving at its own pace. Again, that's part of the challenge of making a market, and the fact that these organizations, not only have they not purchased SmartGATE before, but for a lot of these buildings, you know, and a lot of the people that we're dealing with, replacing a switchgear in a building is a once in a career event per building. It's not like these are replaced like HVACs, where you're putting a new one in every eight to 10 years. You know, we see switchgears that we are being asked to attach to, that could be 40, 50, 60 years old. Sometimes cases even longer than that. Which means that they that they need to include the replacement of that as part of the project. Yeah, they're definitely active, definitely growing and continuing to continue to move forward. Great! Well, a bit of a rest, Mike. There was a lot of sales questions there. We'll turn to Mr. Moffat, a few questions in your area, Paul. The first one is: How is supply chain management going, and what progress can you tell us about that? Yeah, sure. Thank you, and good morning, everyone. First of all, I wanna say as well, that I'm very pleased with the investment we're making, and that I'm leading in terms of governance, controls, processes, and really overall continuous improvement. It's setting a real solid business foundation and a platform for our growth. I'm enjoying, and we're making great progress on attacking a lot of supply chain, operational production, issues. You know, in terms of supply chain, lead times are definitely improving, and so are prices in some cases. There are some exceptions, of course. We've had some transformer lead times increase on us, but we've been able to look at alternate sources, and get those reduced. Costs have definitely increased. I mean, everyone knows that costs have increased everywhere over the last year. We have been working with several distributors. We've negotiated reductions on many of our commodities, so I'm very happy that we're developing those relationships further. They're even helping with vendor managed inventory, with forecasting, and with ensuring that, you know, they have the materials available and ready for us when we need them. I guess the toughest part is the semiconductors, and they're still quoting longer lead times. As I've mentioned before, on those critical parts, I've placed, you know, I've placed orders. Well, I placed orders probably 12 or 14 months ago. I'm respecting those lead times and ordering against those, and we don't have to pay for those until they're received. But I am confident, and I am starting to see improvements coming in the near future. In terms of procurement and buying, we now have a strong MRP model, and we've begun to establish a safety stock plan. We're being cautious there. We, you know, in terms of how we spend our money, and we're currently ordering to order right now. I want to evaluate and understand what kind of flexibility we can obtain, at what cost, in order to further reduce our lead times. In terms of our backlog, it's been completely provided for. We'll, production is currently underway, and will be for the next several months. Randy? That's great, Paul. I guess the subpart of that is, we get asked about our progress on margin improvement and. Mm-hmm. Florence backed out some of those extraordinary items and talked about 34% margin would have been realized with those backed out, which is an improvement, but can you give us some flavor about how you see margin improvement going? Yeah, I'm really pleased with that normalized increase, and we have been projecting those improvements and further improvements as we are realizing gains in both overhead, you know, unit hours of production and also materials. So that will be improving, and it will improve more so towards our fiscal target and our strategic target as well. In terms of equipment COGS, those have been reduced by over 5%. There's lots of opportunities we're seeing as well because we have major efforts underway in terms of outsourcing, both Canada, U.S., and Mexico, on sub-assemblies and full systems. I'm very excited about the gains that we will see there. As mentioned earlier, we, you know, we're seeing those reductions on several of the commodities. Of course, as our volumes increase, I look forward to the advantage of volume pricing. As those volumes are increasing, the utilization of our factory and resources is going up. We are seeing great reductions in terms of overhead allocation to each unit, and that's further reducing our COGS. Overall, I have an active project in place covering many, many aspects of COGS reduction. We'll see that further reduction, and this will meet our future gross margin targets. Yeah. Lots of great work going on there, Paul, and lots of room to bring those margins up to significant levels, which is great. Absolutely. Great opportunities. Thank you. Thank you. The last question that we received in our numbers here is: How we will ensure you have an adequate balance sheet to fuel sales growth? Just wanted to take a couple different thoughts on that. First of all, when you look at the last raises said earlier of CAD 10 million, CAD 4 million went into Gen3, that is something that we produced, which is a leading product and a solution that will create revenue for many years. There's CAD 4 million there. We have CAD 1.8 million in paid inventory, which will create cash as it goes out the door, plus the margin increase. We've put over CAD 1 million in our sales processes with insights power reports. That's CAD 7 million of the CAD 10 million we raised. CAD 7 million of the CAD 10 million we raised is absolutely deployed in the business to grow. It's not just money that was spent on whatever it might be from an expense point of view. It's absolute key core pillars of growth that we've made the investments that are now starting to pay off significantly. The question is about adequate balance sheet and fuel sales growth. You know, we've continued to manage our costs. We continue to look at quarter to quarter expenses, reduce our operating costs as best we can, we see as we additionally increase the margins of gross sales that make more of a cash contribution. We also implemented a 25% deposit on orders, and that's a big swing for us because it's the best deal you can get is an industry loan on a 25% upfront. Some deals may or may not provide the 25%, but so far we've been hitting on the deals we've brought in, the 25% deposit has been coming with the orders. We're also in contact with government agencies about exporting loans and things like that, and we'll have some news report on that as we proceed through the process. We also have had discussions of loans against inventory, loans against large orders. When you've got brand companies like we do, and some of these large orders, we can finance those, which is key. Also, it's in our cost structure, we don't have to put a lot of cash out on our deals. We really have the cost of goods, and then we share the installation, or we don't have to pay out the installation costs, which can be 50%-60% of an overall deal until it's done. We're only putting out probably about 25%-30% of the overall total cost of a deal upfront, which is something to keep in mind. Also, the board reviews these alternatives and will make appropriate decisions to ensure, absolutely ensure that the balance sheet is adequate to be able to fuel the sales growth. It's something that we're working on a continuous basis. Those are the common 12 questions. We'll give you a second, a chance to ask some additional questions. I just wanted to add that there's been a significant shift over the last couple of years, a massive shift, in fact, of corporate mind space and effort to climate and environmental initiatives becoming top corporate objectives. We're really seeing every day that the world is serious about taking steps to positively impact climate change. In all of our markets, we see consistent, systemic change to make buildings less harmful to the environment, combined with improving efficiencies, reducing costs, and making a better tenant experience. As Mike talked about with the GSA, DCAS is just two examples. Federal and civic government are committed to making it easier for corporations to adopt energy-saving, improving technologies for commercial buildings, and they're continuing to introduce programs that support Legend solutions. At this point, hopefully, there's a few people on the call who would like to ask a question. We'll be taking them, please. Thank you, ladies, and gentlemen. We will now begin the question- and- answer session. Should you have a question, please press star followed by the one on your touchtone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be pulled in the order they are received. Should you wish to decline from the polling process, please press two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. There are no questions at this time. Okay. Again, I apologize with the, with the number on the PR. That's obviously affected some of the people being able to get in, but we'll address that at the end. I'd really like to summarize. I mean, the company's been going through a significant transformation over the last two years. This is not the company it was five years ago, just an energy-saving company. This is a company that has a compelling solution that is resonating with our markets, and we continue to earn the respect of our target markets, and we make them comfortable that Legend is an innovative company to work with. We also continue to build our brand by working with key eco players to ensure that we are aware and ultimately support Legend in power in their client buildings. The Legend Power leadership team is very positive about the future. We're very excited about what we're doing, and we're each committed to making Legend a leading energy and power management company. We have a committed and talented team, and we're getting stronger with each new hire. We have an outstanding Active Power Management platform. There is nothing else in the world that does what our Active Power Management system does. Markets with high energy costs, they've got power challenges, ESG and climate change objectives, and they're seeking innovative ways to reduce their energy costs and improve the quality of their building's energy. We believe the future's never looked better for Legend and our stakeholders. The time for Legend is now. I just want to remind everybody that may be listening to this later on in the day or over the weekend that's recorded. The press release had the incorrect number on it as far as the dial-in number, please listen to the recordings. We did put 12 questions that were commonly asked over the last few weeks. If you have any additional questions, you can contact me, Randy, at 604-657-1200. That's Randy Buchamer, 604-657-1200. On that note, thank you. Have a great legendary day and weekend, and thank you. Ladies, and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your line.