Hello, welcome to the urban-gro 2023 Second Quarter Earnings Conference Call. As a brief reminder, all participants are currently in a listen-only mode. If anyone requires operator assistance during the conference, please press star zero on your telephone keypad. Following the presentation, there will be a question and answer session for those on the teleconference line. Please note that this conference call is being recorded, and a replay will be made available on the company's website following the end of the call. At this time, I'd like to turn the conference over to Dan Droller, Executive Vice President of Corporate Development and Investor Relations at urban-gro. Sir, please go ahead. Good afternoon, and thank you for joining us. Today's call will be led by Brad Nattrass, Chairman and Chief Executive Officer, and Dick Akright, Chief Financial Officer. I'd like to remind our listeners that remarks made during this call will include discussion of non-GAAP metrics, including Adjusted EBITDA and backlog. These items should not be utilized as a substitute for urban-gro's financial results prepared in accordance with GAAP. Reconciliations of our GAAP net loss to Adjusted EBITDA are available in our press release and in our Form 10-Q filed with the Securities and Exchange Commission and can be accessed from the investor relations section of our website at ir.urban-gro.com. On this call, we may state management's intentions, beliefs, expectations, or future projections. These are forward-looking statements and involve risks and uncertainties. Forward-looking statements on this call are made pursuant to the safe harbor provisions of the Federal securities laws and are based on urban-gro's current expectations. Actual results could differ materially. As a result, you should not place undue reliance on any forward-looking statements. Some of the factors that could cause actual results to differ materially from these contemplated by such forward-looking statements are discussed in the periodic reports urban-gro files with the Securities and Exchange Commission. These documents are available in the investors section of our company's website and on the Securities and Exchange Commission's website. We do encourage you to review these documents carefully. Lastly, a copy of our earnings press release and a webcast replay for today's call may be found on the investor relations section of our website, which again is at ir.urban-gro.com. With that, I will now turn the call over to Brad. Thank you, Dan. Good afternoon, everyone, thank you for joining us. Our evolution into a professional services consulting firm continues to gain momentum, in addition to our focus on controlled-environment agriculture, also known as CEA, we continue to expand growth outside of this market in the industrial, commercial, and healthcare sectors. With the dedication and support of our leaders and their teams, consistent with the expectations that we communicated in May, we've continued to do what we said we would do. We recorded another sequential improvement in both revenues and Adjusted EBITDA. We increased our quarter and cash position. We continue to have zero bank debt, we've removed additional costs from the business. With this said, it comes as no surprise that we've been operating in a very challenging environment in the first half of 2023. Our reductions in SG&A to offset decreased margin dollars, especially in the equipment category, have yielded positive results. Coupled with our ongoing business development initiative across all segments in which we operate, we are confident that our model will continue to prove its efficiencies in the quarters ahead. Our messaging remains consistent and that our top corporate priority is returning to sustained positive, Adjusted EBITDA as soon as possible. Based on our third quarter to date trending, along with the costs we've taken out of the business, our increasing revenues and a systems enhanced insight into our project margins, we believe that we are close to reaching that inflection point and moreover, are not in a position where we would need to raise dilutive capital. In the second quarter, we generated net revenue of $18.8 million, which represents a 12% sequential improvement over the first quarter and a 16% improvement over last year. Adjusted EBITDA for the second quarter was negative $2 million, marking a significant $1.4 million improvement over the first quarter. We remain diligently focused on reallocating resources and optimizing our spending where appropriate, to ensure that our infrastructure is aligned with the size of our business. Through these initiatives, year to date, we've now reduced our annualized SG&A expense by $2.9 million. While these were difficult decisions, they were necessary ones, we're now a leaner and more efficient organization than we were at the end of last year. Additionally, we now have improved visibility into our business, with all entities operating on the same ERP system. We'll continue to take action as necessary to position our business for long-term, profitable growth. Now, turning to current sector trends. Sector diversification continues to help insulate our business from the broader weakness that the cannabis and produce-focused vertical farming sectors are working through. Although these sectors remain an important component of our future growth, through our successful diversification strategy initiated a year ago, we've evolved into a professional services consulting company that offers turnkey design build solutions to multiple markets. In fact, approximately 2/3 of our revenue this quarter were from other targeted markets in which we have diversified. We've established ourselves as a trusted partner for all of our clients' projects-... and the quality and level of service we provide lends itself to a high rate of repeat clients and speaks to our ability to attract top-tier companies, including some Fortune 50, as clients of the company. In the CEA sector, as we've detailed on past calls, our equipment revenues have been significantly impacted for over a year now by the weak cannabis market. On a positive note, the second quarter represented the first sequential increase in equipment sales since the second quarter of 2022, the primary driver being projects that resumed after an extended pause. This being said, our professional services revenue is also being affected by this downturn, year to date, more than half of our services revenue is from markets outside of CEA. Overall, we remain well positioned in the sector and will most definitely be ready to handle the surge in demand when the cannabis market rebounds in the future. We also remain confident in the strategic investment that we've made in Europe and believe that we're well positioned for long-term growth. In regards to our backlog, which decreased to $79 million at the end of Q2, the drop is predominantly tied to a design-build cannabis cultivation project that was actively in production. Our client is unfortunately facing some funding uncertainty, and so we had to pause the project. While we remain in close contact with the client, the contract does remain open, and we felt it prudent to remove it from our re-reported backlog until their funding source is solidified. As communicated on past calls, urban-gro, Inc.' backlog is a realistic and trusted indication of our future business. Although there was a quarterly decrease, as of today, we have multiple contracts currently out for signature, which are collectively worth well more than this sequential reduction. Now turning to our guidance for full year 2023. Due in part to the pause of the project discussed above, as well as some other timing shifts where projects have extended out to additional quarters, we are updating our guidance for consolidated revenues to be within a range of $90 million-$95 million and Adjusted EBITDA in the range of negative $6 million to negative $5 million. To put this in perspective, I'd note that our Adjusted EBITDA in the first half of 2023 is negative $5.5 million, which implies that we expect neutral or break-even Adjusted EBITDA performance in the second half of the year. In terms of cadence for the balance of the year, we continue to anticipate sequential increases to both revenue and Adjusted EBITDA. In summary, we remain closely aligned with the interests of our shareholders, and insider ownership now represents approximately 30% of outstanding shares. This alignment is further supported by, first, the recent open market equity purchases by myself and other directors, totaling about 1.5% of shares outstanding, and second, the commitment of my leadership team. Near the beginning of the third quarter, led with a 50% commitment from myself, each Executive Vice President and officer of the company voluntarily opted to take a stock grant in lieu of 20%-50% of their base salary for a three-month period. The key takeaway here, our board and our leadership team strongly believe in the future of the company. We look forward to continuing to deliver improvements in both the top and bottom line and further unlocking the value for ourselves and for our shareholders that we know our business can provide. Thank you. With that, I will now turn the call over to Dick. Thanks, Brad. In the second quarter of 2023, we generated net revenue of $18.8 million, which represents a 12% sequential improvement over the first quarter of 2023 and a 16% improvement over $16.3 million in the prior year period. This increase was driven by an $8.1 million increase in construction design-build revenue associated with the Emerald acquisition in April 2022, while professional services revenue of $3 million remained relatively flat year-over-year. Although equipment revenues decreased by $0.5 million versus the prior year, they increased approximately 59% relative to the first quarter, and further, more than two times what we reported in the fourth quarter of 2022. Combined, we believe this is an early indicator that we are seeing more recovery in equipment spending from our cannabis sector clients. Gross profit was $2.9 million, or 15% of revenue in the second quarter, compared to $3.5 million, or 22% of revenue, in the prior year period. The decrease in overall gross profit margin was driven by the impact of revenue mix, where we experienced a decrease in higher-margin equipment systems revenue, offset by an increase in lower-margin construction design build revenue. Operating expenses were $6.8 million in the second quarter. On a sequential basis, our operating expenses decreased by $1.1 million. In addition to the annualized savings reductions that we had reported in the first quarter, and after aligning all entities into one ERP system, we've taken additional steps to optimize and reallocate our resources, which now total $2.9 million of estimated annualized operating expense savings year to date. Non-operating expenses were $1.6 million in the second quarter, which includes a $1.5 million legal settlement. As a result, net loss was $5.4 million, or a negative $0.50 per diluted share in the second quarter, of which approximately $0.14 per diluted share is due to the $1.5 million settlement I just mentioned. This compares to a net loss of $1.7 million, or negative $0.17 per diluted share in the prior year period. Adjusted EBITDA was negative $2 million in the second quarter, compared to negative $0.5 million in the prior year period. In addition to being driven by lower gross profit due to a change in revenue mix, the decrease in Adjusted EBITDA year-over-year was due to higher operating expenses, predominantly associated with increased compensation, headcount from both organic growth and our acquisitions, increased professional and insurance-related expenses, and the investment in our European entity, which began in Q3 2022. Turning to our balance sheet, we ended the second quarter with $8.6 million of cash, a $1.3 million or 18% sequential improvement over the first quarter. This cash, combined with no bank debt, provides us the necessary flexibility to manage through the macroeconomic market circumstances until we return the business to positive Adjusted EBITDA. In regards to backlog, our total backlog as of June 30, 2023, was approximately $79 million. This is down from the $105 million that we reported at the end of the first quarter of 2023, primarily due to the removal of a client's project, as Brad previously discussed. This backlog is comprised of $70 million in construction design build, $4 million of professional services, and $5 million of equipment systems contracts. That concludes our prepared remarks. Operator, please open the call for questions. We will now begin the question and answer session. To ask a question, you may press Star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press Star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Eric Feder with SCC Research. Please go ahead. Good afternoon. Hi, Eric. Hi. Can you talk a little bit about the G&A? You lowered it significantly out of-- obviously, I think we'll see probably a little more of that benefit roll through the rest of the year. You know, do you have the ability to leverage that? Is this a leverageable number, or are you going to have to start ramping it up going forward? When you look at it, how has it affected your ability, do you think, to do projects or other pieces here? Thanks, Eric. We do not anticipate needing to make more cuts in order to get to our targeted positive Adjusted EBITDA. That being said, we will experience the benefits of some of those cuts that we made in the second quarter. We'll have a full quarter to take on those cuts we made in Q2. In addition, those benefits from the leadership team taking stock in lieu of salary, that will be predominantly recognized in the second quarter as well. As per your, the second part of your question, it's the most exciting part of our model. We've got a strong team. We do have a large number of vice presidents and higher positions. However, we've invested to build out the, this roster of individuals. Actually, even in Q1, we added our controller and our Chief Operating Officer. The good news is, as we build, as revenues double and triple, we don't need to add any more Executive Vice Presidents or higher. We'll need to add architects, we'll need to add engineers, construction management individuals, just to meet the demand and deliver the services, but we will not need to proportionally increase the G&A with the, with the revenue. It's the, it's the exciting future ahead of us that, that urban-gro brings for sure. Great. Could you also talk a little bit about the ERP? How many did you have before? Going forward, how can you leverage that, and how should, how should we be thinking about that in terms of opportunities? Dick, will you take that, please? Sure. Hey, Eric, thanks for the question. Just kind of to clarify, you're asking about, with regard to the ERP system in terms of, how we're able to leverage that into our operations and reporting? How many did you have before that you collapsed into 1? What does having 1 ERP as opposed to multiple ERPs mean in terms of your ability to drive more business and drive more profit? Okay, fair enough. With the acquisitions that we did, everybody had kind of their own ERP. The primary one that urban-gro had developed and acquired, to really handle the business going forward is the one that we are using on a consolidated basis going forward. With the three acquisitions that we did, two of them had the same ERP, and the other one had a different one. That was three different ERP systems. Combining those into our existing ERP system going forward, which is conducive to handling the construction design-build business that we're doing, it's, it's just been a matter of taking their existing projects, making sure we get them into our new ERP system, but that we get the reporting out to all of the project managers and division managers so that they understand, how their business is trending, how profitable it is, and then the things that they have in their pipeline coming into the business, so that they can schedule their people and projects accordingly. You know, it's been not been an easy effort from that standpoint, 'cause we had to keep the business running, but now we've finally gotten that to where all the businesses are in the urban-gro existing ERP, making it so that we're just, frankly, more efficient with regard to doing the work going forward. That did result in some of the headcount savings that we that we were able to reduce our headcount by. Not, not, not as much as not as much as in some of the areas where we did have some reductions, but there were some savings with regard to those aspects of things. Great. Good luck with the rest of the year. Thanks, Eric. Thank you. Our next question comes from Eric Des Lauriers, with Craig-Hallum Capital Group. Please go ahead. Great, thank you for taking my questions, and congrats on the cost cuts made on the G&A side of things. It's impressive to see. My first question is just kind of getting a status quo on the cannabis projects. It sounds like there was one that was paused in the quarter, and then in the prepared remarks, I think I maybe picked up on some that, you know, maybe have, have resumed. Just wondering if you could kind of give us a, you know, a status quo of your current cannabis projects, maybe how many you have active? Then just in terms of the guidance, what's implied in terms of new cannabis projects, starting up in the, in the second half? Thank you. Thanks, Eric. Yeah, as far as that one project, that was a design-build project that launched late in Q1, and we had anticipated to recognize about three-quarters of it or close to $15 million this year. It's paused right now, but there is a chance it'll resume, but we've assumed for now that it's not. That's why we took it off. It was the prudent thing to do. I've mentioned on past calls that we have over 20 projects that have... In the cannabis space, that are at the design-build stage, but for a variety of reasons, typically tied to either legal states expanding and the regulatory delays that are surrounding that, or new states that have legalized, but they haven't awarded their licenses yet, or they did and pulled them back, like in Alabama, for example. That's what's holding our projects up right now. So as those issues, regulatory issues, get worked through, we expect them to release. When they release, we feel we have a very good shot at, at moving to the build side and moving on to supplying the equipment as well. In the cannabis space, there's, you know, further than that, the single-state and multi-state operators are, they're really watching their CapEx expenditures. The projects that, that did open up for us were, were just in, in two states. I think it was Mass and also Georgia, but we'd started working on those projects in the, in the middle of 2022. Overall, look, I think there has to be some sort of banking, SAFE Banking movement, which, which unfortunately I don't see happening this year, getting rid of 280E, you know, and, and getting a D or rescheduling, allowing the, the operators to list on a major exchange and, and to, to take in strong capital. You know, that, that's what it's going to take. You know, some of the contracts that we had signed in, in Q4 and Q1 that are picking up are going to result in a strong sequential lift for us entering Q3. So it's, you know, as we have revised the guidance due to that contract, it's not, hey, it's all going to happen in fourth quarter. It is sequential, but it's going to increase strong in Q3 as well. We'll be ready, Eric, right? Like, that's the nice thing about our model. We'll be ready to take advantage of the opportunities when they present themselves. Because of our diversification, we're able to generate profits, margins in other segments. It's working out fine for us, but it's taken about a year to get here. Yep. Yeah, so, so it sounds like, you know, with those two projects that resumed, you know, that's going to be driving some of the sequential increase from Q2 to Q3. Does the guidance assume that any of these other any other cannabis projects you know, release, or that there's, you know, some regulatory change that's going to, you know, cause more revenue to be recognized from, you know, new cannabis projects either in Q3 or Q4? Is there anything like that implied in the guidance? No, there isn't. On our backlog, about 70% of it is in CEA. The majority of that is cannabis, 30% non-CEA. The projects that have released right now. Well, there's a couple of small $5 million-$8 million ones that we're expecting to release in the next four weeks or so. We proportionately added some of those into the guidance. Guidance is really dependent on continuing with the non-CEA projects and executing it. As you see, as you saw in Q2, about two-thirds of our revenues were from the non-CEA side of the business. Yeah, that's great. So, so, if I heard you correctly, you're saying 30% of the backlog is non, is, is non-CEA. About two-thirds of the recognized revenue in Q2 was non-CEA. Could you maybe... I, I guess just, you know, final kind of question or two for me here. Can you give us a sense of the, you know, sort of pipeline of non-CEA projects? You know, understanding that you guys have a difference in your, you know, very, you know, prudent and strict definition of backlog. Just in terms of the, you know, pipeline of new projects, can you just kind of give us a sense of, you know, of, of how those are going with non-CEA projects, and just how that momentum of kind of combining these various businesses together to be that, you know, one-stop solution? Just kind of talk about how that momentum has carried over into some of these discussions. Then, just as a final one from me, can you just give us sort of a, a sense of the revenue mix of, like, a typical non-CEA project? I know that, for example, for the cannabis or CEA projects, you know, you have a high mix of, of, of equipment systems. I don't think that's the same for non non-CEA projects, but if you could just kind of give us, you know, a rough overview of what a typical non-CEA project looks like, that would be great. Thank you. Perfect. Thanks, Eric. Well, first of all, right, in, in non-CEA, there's a huge potential client list for, for us to go after in, in that side of the marketplace. For our non-CEA business now, we're doing a lot of repeat business, and this repeat business, I had mentioned in the, in the prepared remarks that we have more contracts out for signature right now than more than we need to cover the decrease in our backlog. There's a lot of verbal commitments from the clients, but we don't put it onto our backlog until it's signed. We're confident in those projects. We're sitting at the table, we're planning with our clients, their strategic plans, their CapEx expenditures for the remainder of the year and looking into 2024. We have a pretty good solid indication of where we're going. Now, with the non-CEA accounts, they're typically not signing contracts six months or giving us POs six months in advance. It's a lot of verbal, and then we're able to move forward quickly when we get that the PO from the client. In terms of equipment, yeah, there is equipment in the CEA side of the business, and there's mechanical, lights, airflow, environmental control systems, etc. We have been able to cross over into selling equipment in the non-CEA side. With the acquisition of DVO, their President, Jason Dawson, he has a long-term working relationship with some of the largest mechanical manufacturers in the country, in the world. We have successfully closed our first deal. It's mixed in with construction costs, and not only are we looking at equipment like mechanical, but we're also starting down the path and looking at materials. Like, IMP, insulated metal panels, for example. We're looking at... Well, I do believe that we'll have a very strong uplift, uplift in the equipment side, and right now that will be, that will be baked in with the, the construction. We won't separate it at this point. A project example in non-CEA, it could be... This is the other nice thing about having all of the services under one roof. It could just be an architect design opportunity for a few hundred thousand dollars, but then we're able to integrate our engineering in, and we're able to integrate the construction in. With one of the Fortune 50 clients that we deal with, that was the contract was brought through the acquisition of the construction management firm. When we made that acquisition, it was just construction. Now in those projects with that large CPG company, we're handling the architecture, we're handling the engineering as well, and we hope to to handle some equipment, a reselling, a value-added reselling into that client as well. There's a lot of some of the larger design build firms, companies, firms that are doing $5 billion, $10 billion, $20 billion per year. They operate under $250 million as a minimum. We've found that under the $50 million project ceiling, so $10 million-$30 million on average, there's a great opportunity. There's not a lot of turnkey design build firms in the market. There's individual architecture, engineering, and construction firms or, or, general contracting firms. To have that all with one single point of responsibility, like an urban-gro, we're bringing a value add to the marketplace. Otherwise, the client has to add the construction, add the project management individuals onto their into their company and employ them, and we're able to handle all of that for them. To summarize, a lot of repeat business on the non-CEA side for us right now, and there's absolutely opportunities to add equipment into that type of business, and look forward to talking about it more in future quarters. Great. Thank you for the call. I appreciate it. Thanks, Eric. Our next question comes from Brian Wright with Roth MKM. Please go ahead. Thanks. Good afternoon. And, you know, to, to the team, you know, I sure wish a lot of companies that I cover, they go through bumpy periods, would do what you have all done as far as the, the shock stock buying and salary deferral. I, I really want to applaud you, applaud the team for that and for their commitment. My question, though, is, when I look at the, the guidance for the year in terms of revenue and EBITDA, I just from a modeling perspective, is the right way to think about it on the cadence, you know, a modest sequential increase in the third quarter and then a more meaningful in, in the fourth quarter in, in, on, on the revenue side? Thanks, Brian, and I appreciate. Jack, we'll definitely pass those on. It's, it's greatly appreciated. No, we have a strong -- we're forecasting a strong sequential lift, going into Q3, and then continuing to, to grow from there into Q4. As indicated, both on the, on the top end and on the Adjusted EBITDA side as well. You know, I'm sure your next question may be about margin, and sort of that's one that's flashing. I'd like, I'd like to address that because it's all about the bottom line, right? That's what I tell the team as well. We could have all the revenues in the world, but if we're not positive Adjusted EBITDA and then generating cash in subsequent quarters, we're not going to, to get the respect and attention that, that I, I feel we deserve. We're laser-focused right now on getting those margins back in line. I do feel that Q2 margins in a couple of the areas were outliers. As we grow and the construction becomes a much more larger revenue portion of the business, that is gonna tug down on the overall company's gross margin percentage. Just asking, sorry, answering Eric's question, if we can move equipment at strong margins into the construction side or materials like insulated panels, it'll really help us average out. In addition, you know, we're not acquiring right now, but we do have plans in 2024 to resume the acquisition of profitable services companies. Doesn't have to be architecture or engineering. It, it can be energy efficiency or, or just other margin companies where they have good, strong contracts that we can bring our other, our other service offerings into. Margins of focus, laser, laser focus for us. Dick, is there anything else you want to add to, to that? Because he's, he's all over the team when it comes to margin. Yeah, I would echo Brad's comments with regard to margin. Then in addition to that, Brian, I'd just say from the standpoint of our operating expenses, you know, for Q3, we'll see some additional savings reflected that were part of the reductions that occurred partway during the second quarter. We're gonna see improvement there in the third quarter, then a little bit more of a stabilization going forward. As Brad commented on the overall call, you know, we have a business that leverages very nicely as we, as we look to, look to grow and have the cannabis customers start purchasing equipment again. We're well staffed on the construction design-build side from the standpoint of being able to support growth on that side of the business. Anyway, we really feel we've got ourselves well positioned so that, so that we'll be able to handle or manage really the growth in the business without having an increase on the operating expenses. Great. That's, that's super helpful. Can, can you, I just want to go on the, on the EBITDA side now? Kind of given where we are year to date and with the guidance, how to think about that? Is it, is it again, flattish in the third quarter, or is it more, you know, another, you know, slight down, and then we get positive in the fourth quarter? Just understanding kind of how to, how to model that cadence a little bit better. I know the mix is, is, is an issue, but, but just anything you could help us out on that, on that front would be great. Yeah, yeah. I would say, and to your point, it all, a little bit dependent on mix, there's no doubt about it. With the way we see things right now, from the standpoint of where we think the Adjusted EBITDA is gonna be, I'd say it goes to the latter that you said there, which is probably still slight, slight negative, Q3, and then the improvement seeing in the fourth quarter. It will depend a little bit on the mix. That's the way we kind of see the growth going, through the rest of this year. Okay. That's super helpful. Just one more, just a more of a, like, a theoretical question, and, you know, based on what you've told us today, it may not be relevant for this quarter, but, like, is, like, does backlog age matter? Like, is that something that you've ever considered, like, talking about, you know, externally as far as just, you know, what the age of the backlog is relative to? You, you know what I mean? I, I understand your question. You know, Brad usually handles the theoretical questions, but I'm happy to answer this one. We to the extent, if we ever felt that there was something in backlog that all of a sudden it started to look like, hey, it's just something that the customer signed and there's no intent to move forward here, we, we would be looking to pull that out of backlog. So for the most part, everything in our, everything in our backlog is really, pretty, pretty recently signed projects. Then on some of it, on the construction build side, they are the remaining amounts left under the contracts that haven't been recognized yet. The ongoing projects from the standpoint of construction, design, build, are, are, you know, all good from our perspective, because those are all ongoing projects. We don't have anything that we see in backlog that we have a concern about that a customer, a customer signed, and we feel that they don't have any intent on going forward with it. Thank you. Brian, I'll add. I'll go a little bit deeper here. I'll add on to the back end there. We have a backlog review team internally. It's made up of Dick, our COO, JT Archer, and then two of our EVPs, Sam and Dan Droller. They meet every two weeks, and they go through the backlog on both sides, making sure. There's a representative from biz dev, finance, ops, and then corp dev on there. They're looking at making sure we're in regular communication with all clients, they're progressing, they're being invoiced, and that's how we made the decision through that team to pull out the one project that we did in Q2. You know, backlog is, I, I want it to continue to be a good, strong indicator for future business for urban-gro. People should look at the backlog and, and investors should say, "Hey, look, they have $79 million of, of 80% plus confidence revenue coming in the future." That's what we intend it to be, so we have to maintain the integrity of, of it as well. Great. Thank you so much. Thank you. Again, if you have a question, please press Star, then One. Our next question comes from Thomas McGovern with Maxim Group. Please go ahead. Hey, guys. How you doing? Thanks for taking my questions here. Hey, Thomas. Hi. How's it going? Firstly, I just wanna see if you guys can provide an update on your planned expansion in Europe. Last time we spoke, you know, you discussed that you were monitoring, but there was, you know, not quite as much visibility as we were hoping for at that time. Just wondering if you guys have a little bit more visibility going into the third quarter on that front. Hey, Thomas, Europe, the market on the horticulture side, it's, it's, it's very tight, very tough right now still, since one year later after the war broke out in Eastern Europe. On the cannabis side, it's a little bit looser, but it's similar to the issues we have at the state level here in the U.S. Germany, for example, they had regulations that went against the E.U., so they're trying to figure out their path. Until those regulations are defined, we won't invest aggressively in Germany, but we'll sure make sure we're in regular contact with the existing growers and the potential operators in the country. We are operating right now in the Netherlands from a business standpoint. The other two that are, that are active and increasing in terms of momentum for us, Portugal and even South Africa. There's, there's progress there. If, if there is any progress on the vertical farming side, it, it, while still quarters away, there is discussions, ongoing discussions in the industry in the Middle East. Sonia Lo, our board member, who has been the CEO of other vertical farming companies in the past, she's involved in playing a nice role for us there. But that's more biz dev, early stage, but definitely an opportunity in the future. Hey, look, overall, Thomas, I, I would have hoped, we would have hoped that we would be break even in Europe by now. We would have been stronger. As far as top line, Q2 of this year was the best quarter that Europe's experienced thus far, but it's still in the hundreds of thousands of dollars of revenue and, and hasn't, hasn't pierced $1 million. Mostly all design, no build at all at this point. As it becomes material, we will absolutely talk more about it, and we review it every board meeting and every month as a leadership team internally. Great opportunity, cheering them on and hoping they can sign contracts and we can, we can get those released. Awesome. I appreciate that, that insight. Then finally, just on the backlog, you know, you mentioned in your prepared remarks that there were a number of contracts were up for signing. Just wondering if you could provide any additional color on, on when we might start to see some of those being signed. Is that something we could expect to kind of pick up in the third quarter, or is it something that maybe will have more impact in the fourth and maybe early 2024? Thanks. I would definitely expect the ones that are out for signing would be signed this quarter. They're AIA contracts, so a lot of work goes into them, into the contract. Some of them have MOUs tied to them, but we don't announce them publicly or count them as backlog until we, A, have an AIA contract or a purchase order from the client. On the CEA side, we have confidence and, and proof of funding. We will, as, as we progress down the path in Q3 and, and sign those contracts, we are going to announce them. In the past, we've been very selective on what we announce, and in Q3, we're going to be a little more better communicators with, with our investors on, on what's going on, what region, what market, CEA, non-CEA, and the dollar value of the contract and the period of time over which we expect the revenue to be recognized. Understood. Thanks again for taking my questions, guys. Thank you. Appreciate it. That is all the questions we have for today. Please reach out to investors at urban-gro.com with any additional questions. Thank you. Have a nice evening.