Thank you for standing by. This is the conference operator. Welcome to Vext Science's First 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'll be an opportunity to ask questions. To join the question queue, you may press Star, then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing Star and zero. I would now like to turn the conference over to Jonathan Ross. Please go ahead. Thanks, operator. Good morning, everyone, thanks for joining us today. Vext's first quarter 2023 financial results were released earlier this morning. The press release, financial statements, and MD&A are available on SEDAR as well as on the Vext website at vextscience.com. We'd like to remind listeners that portions of today's discussion include forward-looking statements, 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 Vext's other public filings that are made available on SEDAR, 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 presentation 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 US dollars, and the results discussed during this call are in US 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 first quarter 2023 financial results conference call. I am joined on the call today by Steven Bankosz, CFO of Vext Science. I will start by providing a brief overview of our results before turning it over to Steven for an update on our financial performance. As mentioned on our previous call, and as highlighted by the results being reported by retailers across the board in the Q1 earnings season, consumer-facing companies continue to experience sales challenges as discretionary incomes remain under pressure. In Arizona, overall market sales declined by approximately 15% in the first 2 months of the year, according to state data, as compared to the same period last year. Sustained pressure on consumer wallets, overall economic conditions, and changes in consumer behavior related to trade-down and the ongoing medical to recreational shift were some of the key contributors. Against this backdrop, our team was able to continue to execute on our strategy. For the first quarter of 2023, Vext generated revenue of $9.1 million and adjusted EBITDA of $2.9 million, with an adjusted EBITDA margin coming in at 32%. Vext also continued to deliver profitability, reporting EBITDA of $1.6 million during quarter one, making us one of the few companies in this sector to be able to consistently generate positive EBITDA. During the first quarter, we continued to bring traffic into our stores, with customer count growing at a double-digit rate. Our team's expertise at leveraging targeted promotional activities to grow traffic was key to generating the top-line results we realized in the quarter, despite average basket size moderating compared to last year, aligned with market trends. We are getting better every quarter at targeting existing customers and potential new customers, using a growing data set and robust analytical tools, which also led to strong customer retention numbers during the first three months of the year. We maintained our efficiency at retail with our retail operations team handling more transactions and orders during the quarter with the same headcount as in quarter one 2022. We remain well positioned to manage our cultivation footprint based upon market needs and conditions while prudently controlling expenses. On the cultivation front, we decided to idle the outdoor grow in Prescott Valley, and we'll be bringing up the Iroquois grow as needed to support our own volume requirements. Wholesale continues to be oversupplied in vertical states such as Arizona, which is driving the price of wholesale flower lower, consistent with last quarter. Wholesale flower prices have affected us minimally, owing to our ability to absorb what we grow through our retail operations. As MSOs continue to focus on margins and cash flow, the wholesale market and our general wholesale business have seen an impact as retailers are reducing inventory, decreasing the number of brands they carry, and offering more of their own products to maximize profitability and margin. While we expect this trend to continue, we are starting to see some reduction in capacity and anticipate prices to stabilize by the second half of the year. Our Vapen brand and best-in-class products continue to differentiate us. Vext is committed to continue developing innovative products, bringing them to market at the right price points, targeting new customers, and retaining our existing ones through data-backed marketing campaigns to drive revenue, maximize margins, and expand the customer base. While the current backdrop in Arizona is challenging, we expect the combination of higher sequential customer count and high customer retention rates to result in growth, tailwinded discretionary incomes rebound and basket sizes improve. Let's turn to Ohio. As I've indicated on our past couple of calls, we see Ohio as our next key leg of growth. Our agreement to acquire our joint venture partner, Appalachian Pharm Processing, including its subsidiaries and affiliated companies, is progressing well and is on track to close towards the end of Q3 2023, based on state approvals. On closing, the acquisition will create a diversified, fully vertically integrated entity with up to 25,000 sq ft of cultivation, built-out manufacturing facilities, and a strategic retail footprint across Ohio, 100% owned by Vext. While the cultivation is not yet consolidated, they made their first small sale in the quarter and are on track for full production beginning in quarter two. The result of this facility are exceeding our expectations already. The staff is doing a tremendous job of bringing this facility online. On January second, we closed the acquisition of our Jackson dispensary, which was included in our quarter one results. We are very pleased with the early performance of the store under our ownership. Given its rural location with limited competition in the surrounding area, we expect this to be a well-protected location over the long term as the market grows. I would also like to remind you that on closing the proposed Ohio acquisition, we will expand our retail footprint and gain ownership of another cannabis dispensary based in Columbus, Ohio. We intend to apply to the regulators for an ownership transfer shortly afterward, strengthening our retail foothold in the state. While Ohio is not immune to discretionary spending pressures, the market structure suggests it will be strong versus many other states. Licensing in Ohio has market caps for the number of cultivations, processing, as well as the number of dispensaries and the concentration of dispensary ownership. This structure provides for a better matching of supply and demand. Overall, the pieces are in place for Vext to consolidate our vertical operations, further and grow market share in Ohio. The key challenge here will be to support the initial growth while keeping an eye on expense control to drive positive cash flow. Overall, we expect cash flow to continue to grow as these operations come online. We also continue to monitor market developments in other areas of our JV portfolio. As I indicated last quarter, Kentucky is an interesting opportunity, and towards the end of March, the state approved the use of medical cannabis. Our 50/50 partner there has an operating manufacturing facility located in a high traffic area, not far from the borders of Tennessee and Illinois, and are well positioned to benefit from this development once it takes effect in 2025. As a reminder, we have a right of first refusal to buy these operations just as we did with Ohio. While our current focus remains principally on our Arizona and Ohio operations, we are well positioned to continue executing on these opportunities as they arise. On the whole, during a challenging first quarter, our team continues to walk and tap on the derived results for shareholders. 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. With the continued execution of our plans in Ohio and progressive improvement in the Arizona market anticipated in the second half of the year, we expect improved performance in the coming quarters. With that, I will now pass the call to Steven for a quick review of the financials. Steven? Thanks, Eric. In the first quarter of 2023, Vext generated revenue of $9.1 million, an 11.4% increase from $8.2 million in the previous quarter, down from $10.8 million in Q1 2022. The overall increase in revenue over last quarter can be attributed to the Jackson, Ohio, dispensary, which has now been consolidated. I would just note that we are not recognizing the benefits of vertical integration from Ohio currently. We recognize the income and expenses from the dispensary in the quarter, and once the cultivation and manufacturing operations are consolidated, we will expect a margin benefit by Q3 to Q4. Adjusted gross margin from Q1 2023 was 51% up compared to gross margin of 50% in Q4 2022. We drove these constant margins by a continued focus on value products, rapid innovation, and targeted promotions to generate traffic to our stores despite the challenging market conditions. During the quarter, we recognized a charge of $712,000 related to the idling of the Prescott Valley outdoor grow and biological inventory, which ran through cost of goods sold. We recorded $2.9 million in adjusted EBITDA for quarter one, down slightly compared to $3.2 million in the previous quarter. From an expense perspective, we saw a reduction compared to Q4 as we continue to focus on efficiency. From a salary and wages perspective, as well as in G&A, going forward, we expect to continue to operate relatively flat compared to the Q1 level. We had a one-time charge of roughly $742,000 in the quarter related to the cost of debt financing for the pending acquisition of the Ohio assets. You will have also noticed a $190,000 non-cash charge that flowed through the income statement this quarter. This is due to the Ohio acquisition having a prepayment option on the note. due to IFRS guidelines, we are required to fair value them on a quarterly basis and run a charge through the income statement. Cash flow from operations came in at $0.4 million during Q1. Ohio coming online and the completion of the capital growth for Eloy in Ohio resulted in paydowns of accounts payable and increased contributions to the Ohio operations. As Eric mentioned, we expect improvement in cash flow moving forward as the Ohio operations continue to come online and are consolidated, and we see the working capital normalize. Vext has no material growth capital expenditures planned for 2023, as the expansion in Arizona and Ohio are currently budgeted and complete. Vext ended the quarter with $3.4 million in cash at March 31, 2023, which is adequate to execute our business plans. Thanks, everyone, for joining us for our Q1, 2023 financial results conference call. I'll now turn it over to the operator for your questions. Thank you. We will now begin the question-and-answer session. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. We will pause for a moment as callers join the queue. Our first question comes from Matt Bottomley of Canaccord Genuity. Please go ahead. Good morning, everyone. Just first question for me is just on the sequential increase in revenue, about $1 million at 11% versus Q4. Can you break down or give any other color between what you experienced in Arizona, which I know it was a down period, although you guys outperformed it, versus what came online from a contribution standpoint in Ohio? Yeah, Matt, it was primarily all Ohio. The sequential increase was all Ohio. It was picking up that dispensary in Ohio for the first quarter. On the, I guess, the Arizona segment, can you give any expectations looking forward of how that state might be normalizing now? You mentioned, obviously, putting your own flower through your retail stores directly, but just more on the consumer behavior, you know, snowboard travel, things like that have been supporting the market in years past, how that's looking now that we're, you know, a year out or whatever it is at this point from COVID? Yeah, you know, I think what you're really seeing in Arizona is the same thing you see in all consumer-facing businesses, that, you know, the consumer has less money on the disposable income level. It's the same comments we've been making for about the last year and a half, seems to be true, is that depending on the geography or the location or the, you know, makeup of your store mix, really tells you what's going to happen in that store. One of our stores, you know, is a little bit more of an affluent area, and those consumers will make the choice of not coming in as frequent, and they'll buy down, but not buy down as significantly as some of the other places where the customer's consistently in the store, but they're buying down. You know, I think you see a trend as you see the consumer credit rise in the economy, which we've all seen in the US economy. You know, we are not a credit business, so, you know, we don't get to participate in any of that. As they get squeezed, you see them trading down. That's really what we've noticed. The basket size continues to drop, and as you switch from medical to recreational, a lot of consumers have made the decision not to renew their recreational card, and they pay that additional excise tax, which takes, you know, 17% away from what they potentially could buy. You know, on a $100 basket, you know, that's $17, so it's significant. You know, that's what you've seen on the trade down. Obviously, your average basket is a lot better on your medical patient versus your recreational patient, but the switch is, you know, significant in the state. Got it. Okay. Just another question for me on just some of the movements from Q4. Revenue's up about 10-11% and about 100 basis points improvement on the gross margin. You mentioned some of these one-time charges, a lot of them non-cash in the prepared remarks, but on an adjusted basis, using EBITDA or adjusted EBITDA, margin down from 39% to 32%. Still above, you know, where the industry averages, but I'm just curious, with Ohio coming online, some of the operating leverage that was discussed by keeping some of your OpEx flat going forward, how do you find sort of a low 32% margin as a base? Can you give any color on, you know, going forward, the appropriateness of that level of profitability for the remainder of the year? You know, the challenge right now is the regulatory climate on how soon it'll take to get Ohio approved, where we can consolidate it and continuing to get that operation up and going. That really gives me the biggest challenge for that. In Arizona, I think it's, you know, how much product of your own are you going to move through? We've really seen the hit on the wholesale side in Arizona, especially, like, on the contract manufacturing backs up and stuff like that, and that was a big part of the margin because remember, that was all labor. While we're still doing that, you know, some of that's coming offline too, or backing up. You know, you'll see in the MD&A that, you know, there's 285 brands that we've identified working in the state of Arizona now, 90 cartridge brands. You kind of get the idea that everybody's got their own brand in their store now. You're really seeing that squeezes your margin a little bit. I think, you know, I think it probably should be closer to 35%, but, you know, it's gonna be backing off a little bit as you go through the first half of the year. Got it. Then just one more sort of administrative housekeeping question for me. you know, you spoke to your CapEx, and a lot of growth CapEx has already been invested. Can you provide any commentary on maybe run rating, what you spent this quarter for Q1, so about $1 million in CapEx this quarter, is that appropriate base for the remainder of the year? No, I think it'll back down. I think there's probably about, roughly, and Steven can probably answer this a little bit more specifically, but I think there's roughly $400,000-$500,000 that's related to CapEx. You know, we're in the typical season now on repairs and maintenance in Arizona, where the older air conditioning units have to be replaced inside the grows, and that's been minimal. We're guessing, you know, right now, if I was to crystal ball it, I'd say there's probably $1 million of CapEx left for the remainder of the year that you'll see. Got it. Okay, a lot less then. All right, I'll leave it there. Would you agree? No, I would. May add in, thanks. You know, I'm sorry, I would definitely agree. Eloy is coming online, and we should have our first harvest out of there in Q3, we're projecting, and then Ohio is already producing. Yeah, we're down to just the last $1 million, if that. Okay, thanks very much. Our next question comes from Russell Stanley of Beacon Securities. Please go ahead. Good morning, and thank you for taking my question. First on Arizona, can you update us on the latest efforts to expand the central Phoenix store? I think you were working to bring that up to 5,000 sq ft and were seeking municipal approvals around that. What's the latest on that effort, please? Still waiting on the permitting and stuff like that, Russ. Candidly, they're handling more volume and more transactions in the existing footprint, and given the backup on margin in that, it's not one of those things I'm rushing to try to spend capital on. Candidly, I don't think it's gonna increase the bottom line to the shareholders, so I wouldn't risk the cash, you know, at this point in time. We want to get the inspections done and the valuations and everything so that as the market starts to improve, that we're positioned to do that. You know, we added those express windows into those locations, which are kind of like bank teller type of window system, and we put in three of those, which increased the number of stations that we can service customers with. I think Steven might have a better number, but I think the transactional volume in that soars up somewhere around 25% or 26%. Correct. Yep, that's correct. Thanks. Maybe, thanks for that. Moving to Ohio and the Columbus store, I think you mentioned during the prepared remarks, you expect to put the application for the transfer in shortly. I guess, on the last call, I think you were awaiting some clarity, I guess, as to which government department you need to approach for that. I guess, do you have that clarity now? Can you, I guess, elaborate on the timelines for getting that application in and how long you think it might take? Well, no, I don't have any clarity on who's gonna end up regulating it. We kind of made a decision that we're not going to wait any longer. The biggest slowdown or the biggest impediment for getting the paperwork in place is candidly because of the concentration of our shareholders with the institutions, which is nice. Some of them, we hit some thresholds in Ohio, and we started to get into 100% ownership there versus the minority ownership, that we have to get some of our institutional investors have to qualify, you know. Now we gotta get fingerprinting for them and go through that whole process. Other than just being management, we have to go a bit further to the investors, you know, and go beyond the founder tie in that regard. We're working on getting that done. Hopefully, we'll have that done in the next two to three weeks and get the paperwork in, and, you know, then we're waiting for the state. Got it. Maybe just 1 last question, if I could. It's still in Ohio, signature gathering around adult use, I guess, has resumed, you know, less than the last 2 months since the last call. I guess, what are your latest views on that effort and your level of optimism for it getting voter approval? I think if it gets on the ballot, it'll get approved. You know, that's kind of what I think. There's, you know, it's like every other political issue out there, you know, there's both sides of the faction and both sides of the coin. I think from our standpoint as a cannabis industry and stuff, whatever's going on in Ohio is going to be positive for us. They're either going to change how many conditions, the ability to qualify for the medical card and make it easier for people and less expensive for people to go ahead and get the card. That would be a positive to increase the patient count. If it goes recreational, obviously, we know what that does, and as long as they continue to watch what the supply is, you know, that'll be a better position economically than you've seen in, like, Michigan or, you know, other states that have gone through this process. You know, we've seen it in Arizona. You know, I think in Arizona, we're getting to the stage where, you know, some of the capacity people are realizing, hey, you know, it's not like you can just grow an infinite amount of this stuff and that, you know, there's gonna be tremendous demand. You know, the basic economics of supply and demand work in this industry like every other industry. That's great color. I'll get back in the queue. Thank you. Thanks, Russ. Once again, if you have a question, please press star, then one. Our next question comes from Andrew Semple of Echelon Capital Markets. Please go ahead. Hi there. Good morning, and congrats on the Q1 results. First up, just like. Thanks. First, I'd just like to go back to Ohio. With this being kind of the first quarter that you've consolidated, the second, you know, the dispensary in the second state, what kind of margin impact would that have had on the quarter lately? How does the Ohio store compare to kind of the vertically integrated operations, VEX in Arizona? It, you know, the biggest challenge with the 2nd dispensary in Ohio for the 1st quarter, Andrew, is, you know, we didn't have the cultivation up to support it, right? It's still buying in the open market, so it's still a wholesale buyer. You can't do a sale through, you know, running your product through there. As far as, you know, where you leave the margin dollars and stuff like that, there's, you know, tax implications and tax strategies associated with that. On the whole, though, that margin was down slightly in the Ohio store year-over-year, and you'll see that in the MD&A. We did talk a little bit about that in the MD&A, you'll see that. We anticipate that we can recover that. On the good store, on the good news on the Ohio store, we saw an increase in our transactional volume, an increase in the total sales $, you know, some really favorable things. We think there's a lot more we can do there. You know, the prior group, you know, candidly, we're putting more inventory in there. You know, we've put cash towards it to be able to get inventory. Once we can start supplying more of it from our own in-house, it'll be more cash positive to us, not, you know, a cash drain. That's really what you saw, like, on the, on the cash flow statement. You know, we projected that this was gonna happen, that we'd stay positive on cash, but, you know, we knew bringing up Ohio, that it'd be a little bit of a, you know, a drawdown on cash. You know, you had the sales drop in Arizona. We continue to watch the expenses and make darn sure, just like everybody else, you know, watch the balance sheet right now. That's, you know, the prudent thing to do. Great, that's helpful. As you begin to recognize your first sales in the Ohio markets from the cultivation facility, just wondering if you can maybe comment on how demand is beginning to shape up for your wholesale flower in the state. Is that in line with your expectations or, you know, how are the first kind of few weeks in market, how is that going? I think anybody that told you everything goes exactly the way they want it to is lying to you. You know, I will always would say I want to see it selling more and selling faster because I like to turn the cash. It's selling well, and it's doing a good job, and the team out there is executing, and they're making a lot of sales. You know, it's going through the stages of, you know, how do you package flower and sending people out from Arizona to help get the flower packaged and the equipment and all that stuff. They're going well. You know, we talked about this in the MD&A also, you know, we think they go cash neutral, you know, in the second quarter and start going cash positive in the third quarter. That's kind of our expectations of what they're doing, and that's all predicated on the flower. The first harvest is pretty much ran through and been sold. The second harvest is in the process of coming to the finished goods, and the rest of the rooms are coming up, and the product looks great. The testing's great on the product. You know, we couldn't be happier with that. Far as getting it sold, takes a little bit, you know, of time, but we do have a good distribution network there, and we have the good channels. You know, let me put it this way: the gentleman who runs that is a seasoned pro, and he's not concerned at all, and I'm not either, and I'm seeing the sales coming through. Awesome. That's helpful. The final question, just maybe going back to Arizona. You're speaking about the potential for maybe pricing conditions to stabilize in the second half of this year. What's your thoughts? If we begin to see pricing stabilize, do you think that we could see that market return to growth? You know, you are speaking to pretty significant increases in transactional volumes through your own stores. If we see pricing stabilize, do you think that offers better opportunities for revenues to expand in the state? What's your thoughts there? Without a doubt. I mean, I think the biggest challenge is, you tell me what the U.S. economy is gonna do on the consumer end, and I'll tell you I agree. I personally, I tend to look at more what retail, like the big box guys say, and stuff like that. You see Home Depot, all of those gentlemen, and, you know, all those companies, and what they're talking about is that the consumer is gonna continue to face a lot of pressure. The nice thing about Arizona is there's a lot of manufacturing-based expansion and, you know, chip, federal chip money backing it and stuff along those lines. You know, we'll continue to see building a little bit less, but, you know, that pressure is gonna be there. I look more of what, you know, what's gonna happen on the supply side that's gonna help us, and I do think you're gonna see the supply side retract a little bit. If I told you I wasn't disappointed about what's been going on in California, that their supply is decreasing, I'd be lying to you, because I still believe there's a lot of black market stuff in Arizona, and the more that that dries up on the West Coast, I think that helps the Arizona market, too. Great. Thanks for taking my questions. I'll get back to you. Thank you. This concludes the question and answer session and today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.