Q4 2021 Clever Leaves Holdings Inc Earnings Call

Good afternoon, everyone and thank you for participating in today's conference call to discuss clever leases financial results for the fourth quarter and full year ended December 31, 2021, joining us today are clever leaves as chairman and CEO , Kyle Detwiler, the company's president and incoming CEO .

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Cleverly's financial results for the fourth quarter and full year ended December 31st, 2021.

Joining us today are Cleverly's chairman and CEO , Kyle Detweiler, the company's president

Speaker Change: Andres Fajardo, and the company's CFO , Hank Hegg.

Dressed for hard, though and the company's CFO Henk Hague.

Speaker Change: Before I introduce Kyle, I remind you that during today's call, including the question and answer session, statements that are not historical facts including any projections or guidance

Before I introduce Kyle I remind you that during today's call, including the question and answer session statements that are not historical facts, including any projections our guidance statements regarding future events, our future funding future financial performance or statements of intent or belief.

Speaker Change: Statements regarding future events or future financial performance or statements of intent or belief are forward-looking statements and are covered by the Safe Harbor Disclaimer Act.

Our forward looking statements and are covered by the Safe Harbor disclaimers contained in today's press release and the company's public filings with the SEC.

Speaker Change: Actual outcomes and results may differ materially from what is expressed in or in

Actual outcomes and results may differ materially from what is expressed in or implied by these forward looking statements spa.

Speaker Change: Specifically, please refer to the company's Form 10-K for the year ended December 31, 2021, which was filed prior to this call.

Specifically, please refer to the company's Form 10-K for the year ended December 31 2021.

It was filed prior to this call as.

As well as other filings made by clever leaves with the SEC from time to time.

These filings identify factors that could cause results to differ materially from those forward looking to one.

Speaker Change: These filings identify factors that could cause results to differ materially from those for the

Please also note that during this call management will be disclosing adjusted EBITDA adjusted gross profit and adjusted gross margin.

Speaker Change: Please also note that during this call, management will be disclosing adjusted EBITDA, adjusted gross profit, and adjusted...

These are non-GAAP financial measures as defined by SEC regulation G. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures in our statement disclosing the reasons why company management believes that adjusted EBITDA.

Speaker Change: These are non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures.

Speaker Change: directly comparable GAAP measures and a statement disclosing the reasons why company management believes that.

Adjusted gross profit and adjusted gross margin provide useful information to investors regarding the company's financial condition and results of operations are included in today's press release.

Speaker Change: Adjusted Gross Profit and Adjusted Gross Margin provide useful information to investors regarding

Speaker Change: financial condition and results of operations are included in today's press release as posted on the company's website. With that, I will turn the call over to Kyle.

Posted on the Companys website with that I will turn the call over to Kyle.

Thank you Cody and good afternoon, everyone with today, marking my last day with <unk> I believe I wanted to begin today's call by thanking our entire team and our shareholders for their support of this company and it's been a true privilege to serve alongside such a talented team over the past seven years.

Kyle Detweiler: With today marking my last day with Cleverlease, I wanted to begin today's call by thanking our entire team and our shareholders for their support of this

Kyle Detweiler: It has been a true privilege to serve alongside such a talented team over the past seven years, including navigating our first year as a public school.

Navigating our first year as a public company.

Kyle Detweiler: Having worked with Andres for more than half a decade, I know he will continue working to build upon the momentum in our core markets and leverage the robust infrastructure we have put in place across our production.

Having worked with Andreas for more than half a decade I know he will continue working to build upon the momentum in our core markets and leveraged the robust infrastructure, we have put in place across our production footprint I am proud to be leaving the company in such capable hands and to welcome him to the call today to walk you through the details of cleverly used.

Kyle Detweiler: proud to be leading the company in such capable hands and to welcome him to the call today to walk you through the details of Cleverly's progress over the past year, as well as the company's vision for 2022. Andres, over to you.

Progress over the past year as well as the company's vision for 2020 to Andreas over to you.

Thank you Kyle.

Andres Fajardo: It is a pleasure to be joining you on today's call, which marked my first time speaking with you as Cleverly's incoming CEO .

It is a pleasure to be joining you on today's call, which Mark My first time speaking with you escalate release coming CEO .

I have been with the company since I co founded it back in 2016 and they have served as its president since 2019.

Andres Fajardo: I have been with the company since I co-founded it back in 2016, and I have served as its president since 2019.

I held a variety of leadership positions within the company before then carefully overseen the robust and efficient foundation, we have since built in Colombia.

Andres Fajardo: I held a variety of leadership positions within the company before then, carefully overseeing the robust and efficient foundation we have since built in Colombia.

Andres Fajardo: Over the past six years, we have quite literally built the business from the ground up, from establishing our cannabis production footprint in Colombia, and now in Portugal.

Over the past six years, we have quite literally build the business from the ground up from establishing our cannabis production footprint in Colombia and now in Portugal.

Gaining important footholds in key cannabis markets around the world.

Andres Fajardo: to gaining important footholds in key cannabis markets around the world.

I am honored to transition to the role of CEO at such an important time in the company's history.

Andres Fajardo: I am honored to transition to the role of CEO at such an important time in the company's history.

Andres Fajardo: As our fourth quarter results demonstrate, we're making progress on our strategic objective.

Our fourth quarter results demonstrate we're making progress on our strategic objectives.

We delivered year over year revenue growth and maintained our approach to cost management.

Andres Fajardo: We delivered year-over-year revenue growth and maintained our approach to cost management. During the year, our cannabis...

During the year or cannot be don't revenues have increased.

Proving that the commercial gains as we've established in our key markets are slowly beginning to act week.

Andres Fajardo: proving that the commercial linguists we've established in our key markets are slowly beginning to act.

Andres Fajardo: Our progress towards our long-term vision is gradual, yet steady, and I believe we are positioned to maintain our momentum in the years ahead.

Our progress towards our long term visions gradual get steady and I believe we are positioned to maintain our momentum in the years ahead.

2021, our first serious all the company, that's about extending our operational footprint and setting the foundation for commercial.

Andres Fajardo: 2021, our first year as a public company, was about extending our operational footprint and setting the foundation for our commercial pipeline.

As a complement to our operations in Colombia, we work to ramp our Portugal operations and expand our capacity to serve the flower Mart.

Andres Fajardo: as a complement to our operations in Colombia. We work to ramp up our Portugal operations and expand our capacity to serve the flower market.

After we complete the construction of our Portuguese cultivation expansion in the third quarter, we saw.

Andres Fajardo: After we complete the construction of a Portuguese cultivation expansion in the third quarter, we see the license from the Portuguese Regulatory Health Authority, Infermed, IP, for the newly expanded facilities in December .

Keep the license from the Portuguese regulatory health authority intermittent IP for the newly expanded facilities in December .

Andres Fajardo: Production in the new cultivation facility began shortly thereafter, with the first commercial production expected to be market ready as early as the second quarter of 2022.

Production in the new cultivation facility began shortly thereafter with the first commercial production expected to be market ready asserted against the second quarter of 2022.

The last major capital project is a new post harvest specialty, Portugal, which we expect to be operational by the end of 2022 and for which we are also pursuing EU GMP certainly one.

Andres Fajardo: The last major capital project is our new post-harvest facility in Portugal, which we expect to be operational by the end of 2022 and for which we are also pursuing EU GMP Certificate 1.

Finishing the construction and the cultivation expansion and post harvest facility in Portugal.

Andres Fajardo: Finishing the construction and the cultivation expansion and post-harvest facility in Portugal not only allows us to progress our ramp up in the country, but also marks the near completion of our CAPEX cycle, positioning us to move forward into our next phase of growth with lower CAPEX going forward.

It only allows us to progress our ramp up in the country, but also marks the near completion of our Capex cycle positioning us to move forward to our next Facebook gross with lower Capex going forward.

Importantly, we're entering 2022 with a more focused strategy as we aim to strengthen our commercial pricing and revenues, while working to capture organizational efficiencies.

Andres Fajardo: Importantly, we're entering 2022 with a more focused strategy as we aim to strengthen our commercial piping and revenues while working to capture organizational efficiency.

We have determined that the best investments of our time and resources will be to our Langer commercial efforts on a select set of markets that have near term catalyst for business, namely, Australia, Germany, Brazil, Israel and the United States.

Andres Fajardo: We have determined that the best investments of our time and resources will be to align our commercial efforts on a select set of markets that have near-term catalysts for our business, namely Australia, Germany, Brazil, Israel, and the United States.

Andres Fajardo: In addition, and because of the recent regulatory changes in Colombia to allow for the export of smokable cannabis flower, we will focus on developing the commercial contracts, the product, and the regulatory pathways for Colombian flowers.

In addition, and because of the recent regulatory changes in Colombia to allow for the export of Smokable flower, we will focus on developing the commercial contracts the province, and the regulatory pathway for Colombian flower.

We believe that our strategy will enhance our ability to grow while generating organizational efficiency one.

Andres Fajardo: We believe that our strategy will enhance their ability to grow while generating organizational efficiency.

In Australia, we aim to capitalize on the retraction, which generated by expanding our power sales as well as scaling upstream additional extra sale agreements.

Andres Fajardo: In Australia, we aim to capitalise on the early traction we've generated by expanding our flour sales as well as scaling and securing additional extra sales premiums.

Andres Fajardo: As you may recall, we sent our first commercial flower shipment to this market in June 2021 as part of our partnership with IDT Australia, and we have already closed several agreements with partners there, as publicly announced in recent months.

You may recall, we sent their first commercial flower shipments in this market in June 2021, as part of our partnership with IDT Australia.

We have already closed several agreements with partners. There is publicly announced in recent months.

In Germany, we're focusing on three areas first we will work to expand our presence in the market through our iconic flower brand.

Andres Fajardo: In Germany, we're focusing on three areas. First, we will work to expand our presence in the market through our Itana flower brand.

Andres Fajardo: Following our successful soft launch last quarter, we have confidence in both the product market fit for our flower brand and our commercial capability.

Following our successful soft launch last quarter, we have confidence in both the product market fit for flower brand in your commercial capabilities.

Andres Fajardo: Second, we aim to grow our product sales through our extract B2B partnerships. And third, we will work to activate our import path for flour from our Portugal operation for commercialization through our B2B partners.

We aim to grow our product sales through our extra PDP partnerships and third we will work to activate or input path for flowers from Portugal operation for commercialization through our <unk> partners.

In Brazil, we expect to supply products that have recently received regulatory approval and to obtain regulatory approval for other key products.

Andres Fajardo: In Brazil, we expect to supply products that have recently received regulatory approval and to obtain regulatory approval for other

Andres Fajardo: We believe the commercial agreements we have entered into, the product approvals we've obtained, and the overall market potential will make Brazil one of the company's most important drivers of growth in 2021.

We believe the commercial agreements we have entered into the product approvals, we've obtained and the overall market potential we make Brazil, one of the company's most important drivers of growth in 2021.

In Israel, we are looking to increase our presence within this large canada's markets scaling our existing relationships for active pharmaceutical ingredients or API and working to capitalize on our recently announced long term strategic partnership with flower.

Andres Fajardo: In Israel, we are looking to increase our presence within this large cannabis market through scaling our existing relationships for active pharmaceutical ingredients, or APIs, and working to capitalize on our recently announced long-term strategic partnership for flower.

Andres Fajardo: Having successfully navigated evolving quality standards in this market last year, we've proved that we have the adaptability and commitment to quality to continue building on our early progress.

We successfully navigated and bolting quality standards and these market last year. We proved that we have the adaptability and commitment to quality to continue building on our early progress.

In the United States, we announced the launch of our CBD brand Joyful January of this year.

Andres Fajardo: In the United States, we announced the launch of our CBD brand, Joysol, in January of this year.

Andres Fajardo: Joysol is produced by herbal brands, offering CBD in the forms of easy-to-use oil drop blends, gummies, and topicals that comprise a CBD daily care.

So it's produced by herbal brands offering CBD in the forms of you see us oil dropped lens gummies and topical step comprise a CBD daily care system.

This offering targets new and.

Andres Fajardo: This offering targets new and early CBD adopters at an accessible price point, and we will continue working to leverage Herbal Brands Distribution Network, expanding product visibility and...

And early CBD adopters at an accessible price point, and we will continue working to leverage their boot brands distribution network, expanding product visibility and brand awareness.

We will also work to continue supporting the overall momentum in our apparel brands business.

Andres Fajardo: We will also work to continue supporting the overall momentum in our arable brands.

Andres Fajardo: Finally, in Colombia, we will continue to prepare for our first flower sales as a result of the national government's recent passage of the regulations around flower export.

Finally in Colombia, we will continue to prepare for our first flower sales as a result of the national governments recent passage of the regulations around flower exports.

We believe we are well positioned to leverage our existing customer relationships. Our G. E M. EU GMP certification for <unk> power.

Andres Fajardo: We believe we are well positioned to leverage our existing customer relationships, our GACP and EU GMP certifications for dried flowers.

Andres Fajardo: And as well as capitalizing on our experience, navigating the nuances of selling flour for my Portuguese operations to increase our presence in the global smokable flower cannabis.

And as well as capitalize when our experience navigating the nuances of selling flowers for my Portuguese operations to increase our presence in the global Smokable flower cannabis smart.

In terms of our governance and leadership, we have continues to benefit from the expertise of our board and executive team as we transition into this next phase of growth.

Andres Fajardo: In terms of our governance and leadership, we have continued to benefit from the expertise of our board and executive team as we transition into this next phase of growth.

As we announced at the beginning of February we appointed George Chu, the founder and managing member of <unk> asset management to our board of directors and audit Committee.

Andres Fajardo: As we announced at the beginning of February , we appointed George Schulze, the founder and managing member of Schulze Asset Management, to our Board of Directors and Audit Committee.

Andres Fajardo: George brings over 25 years of experience in the investment industry, and we are pleased to welcome him to the board as we aim to further activate our commercial pipeline and enhance shareholder value.

Rich brings over 25 years of experience in the investment industry and we are pleased to welcome him to the board as we aim to further activator commercial piping and hence shareholder body.

I would like to also thank my predecessor called at wider for the contributions that he has made to this company over the years, especially used to his leadership as CEO during their first year as a public company one.

Speaker Change: I would like to also thank my predecessor, Kyle Dettweiler, for the contributions that he has made to this company over the years, especially through his leadership as CEO during our first year as a public company. One.

This leadership transition is the culmination of a succession planning process that our board and Kyle have worked on together and we wish him all the best in his next chapter.

Speaker Change: This leadership transition is the culmination of a succession planning process that our board and Kyle have worked on together, and we wish him all the best in his next chapter.

Following Cal departure, Artemis growth partners co founder and managing partner, who will be joining our board of directors with appointments to both our compensation Committee and our nominating and governance Committee.

Speaker Change: Following Kyle's departure, Artemis Growth Partners co-founder and managing partner Will Muecke will be joining our board of directors with appointments to both our compensation committee and our nominating and governance committee.

With extensive experience in corporate finance candidates health care and ESG. He brings a welcome and see some perspective to our company as we continue advancing our progress on our refined growth objectives.

Will Muecke: With Will's extensive experience in corporate finance, cannabis, healthcare, and ESG, he brings a welcome and seasoned perspective to our company as we continue advancing the progress on our refined growth objective.

I think cofounder of the company and a true believer in its purpose of bringing the benefits of candidates to patients around the world I have seen how far we have come in building our production footprint and our commercial pipeline.

Speaker Change: As a co-founder of the company and a true believer in the purpose of bringing the benefits of cannabis to patients around the world, I have seen how far we have come in building our production footprint and our commercial pipeline.

Speaker Change: I believe that we have the right team, clients, products, and assets to lead Cleverly into the next phase of growth in 2021.

I believe that we have the right team clients products and assets to deploy released into the next phase of growth in 'twenty one.

We have already made meaningful progress on the strategic objectives, I, just summarized but before I provide further details on these I'd like to turn the call over to our CFO Heng hate to provide more details on our financial performance for the fourth quarter and full year.

Speaker Change: We have already made meaningful progress on the strategic objectives I just summarized, but before I provide further details on these, I'd like to turn the call over to our CFO , Hank Hague, to provide more details on our financial performance for the fourth quarter and full year. Hank, over to you.

And over to you.

Thank you Andres.

Starting with our quarterly results.

Hank Hague: revenue in the fourth quarter of 2021 increased 25% to $4.5 billion.

Neither in the fourth quarter of 'twenty, 'twenty, one increased 25% to $4 2 million compared to $3.3 million in the year ago period.

Hank Hague: compared to 3.3 million in the year ago period.

This increase was primarily driven by the same sales strength in our nutraceutical or boat brands business, which has made a steady recovery from the lows the pandemic in 2020.

Hank Hague: This increase was primarily driven by sustained sales strength in our nutraceutical herbal brands business.

Hank Hague: which has made a steady recovery from the lows of the pandemic in 2020. As Andres

As Andres mentioned earlier, we have driven year over year growth in our cannabinoid revenues, which increased 11% to 1.1 billion compared to $1 billion.

Hank Hague: We have driven year-over-year growth in our cannabinoid revenue.

Hank Hague: which increased 11% to $1.1 million compared to $1.2 million.

While we continue to experience lumpiness in our sales cycle.

Hank Hague: while we continue to experience lumpiness in our sales cycle.

Due to the many regulatory and quality checks involved in our production and export process, our ability to adhere to these evolving standards ensures that we maintain our pharmaceutical grade quality across our operations.

Hank Hague: due to the many regulatory and quality checks involved in our production and export process.

Hank Hague: Our ability to adhere to these evolving standards ensures that we maintain our pharmaceutical grade quality across our operation.

Our all in cost per Gram of dry flower in the fourth quarter of 2021 was 47 cents per gram compared to 15 cents per Gram mirek up here at.

Hank Hague: of 2021 was 47 cents per gram.

Hank Hague: compared to $0.15 per gram in the year ago period.

Hank Hague: The increase was driven by production costs associated with ramping our early-stage operations in Portugal, offset by efficiencies we are driving in our Colombian operations. Within our expanded production capacity in Portugal, now online and licensed, we expect some quarter-to-quarter.

The increase was driven by production costs associated with ramping our earliest stage operation in Portugal.

All set by efficiencies we are driving.

The inauguration.

Within our expanded production capacity in Portugal now.

Now online and license.

We expect some quarter to quarter Choppiness in our consolidated cost per Gram.

We manage the cost associated with ramping that additional capacity.

Hank Hague: However, as our Portugal operations gradually become more mature,

However, as our Portugal operations gradually become more mature.

We expect our unit costs to drop over the longer term.

Hank Hague: We expect our unit costs to drop over the longer term as we capture economy.

Capture economies of scale.

Our gross profit, including inventory write down of 3 million during the fourth quarter of 2021 .

Hank Hague: Including the inventory write-down of $3 million during the fourth quarter of 2021 was a loss

It was a loss of <unk>.

Arrow point 3 billion compared to 2.3 million in the year ago period.

Hank Hague: compared to 2.3 million in the year ago period.

Gross margin, including inventory write downs with negative six 9% compared to 67, 9%.

Hank Hague: including inventory write-down was negative 6.9% compared to 67.9%.

In the year ago period.

Hank Hague: For the fourth quarter and going forward, we will be reporting an adjusted gross profit figure to adjust.

For the fourth quarter and going forward, we won't be reporting an adjusted gross profit year to adjust for the inventory write down that was previously classified in SG&A and it's now classified separately within cost of goods sold to highlight the impact on gross profit.

Hank Hague: that was previously classified in SGNA and is now classified separately.

Hank Hague: then cost the goods sold to highlight the impact on gross profit.

That said the company recorded a $2 7 million and zero point means million inventory write down in our cannabinoid and non can happen nine segments.

Hank Hague: That said, the company recorded a $2.7 million

Hank Hague: 0.3 million inventory write-down in our cannabinoid and non-cannabinoid segments respectively for obsolete and unsaleable.

Actively are obsolete and unsaleable inventory.

Adjusted gross profit, which excludes the inventory write down what quarter of 2021 was flat at $2 7 million compared to $2 7 million a year ago period.

Hank Hague: excludes the inventory write-down in the fourth quarter of 2021, was flat at $2.7 million compared to $2.7 million in the year-ago period. The adjusted gross margin was 64.1% compared

Adjusted gross margin was 64, 1% compared to 79, 8% and a year ago period.

While we have maintained strong growth within our nutraceutical business, we are still navigating pandemic related impacts around wage pressure rising.

Hank Hague: while we have maintained strong growth within our nutraceutical business.

Hank Hague: we are still navigating pandemic-related impacts around wage pressure, rising transportation costs, and the availability of both labor.

Rising transportation costs, and the availability of both labor and material.

These factors constrained our margins this quarter and will likely continue to affect our margins over the coming quarters, and we will closely monitor bolt these impacts and the longer term effects of our current labor and supply chain additions more broadly.

Hank Hague: These factors constrained our margins this quarter and will likely continue to affect our margins over the coming quarters, and we will closely monitor both these impacts and the longer-term effects of our current

Hank Hague: Operating expenses in the fourth quarter of 2021 were $11,000.

Operating expenses in the fourth quarter of 2021 were $11 4 million compared to $9 6 million for the same period in 2020.

Hank Hague: compared to $9.6 million for the same period in 2020, excluding the impact of an $18.5 million non-cash goodwill.

Excluding the impact of an 18 5 million noncash goodwill impairment related to our acquisition of our Columbia Operation November of 2019.

Hank Hague: related to our acquisition of our Columbia operations in November of 2019.

The charge was triggered certain impairment indicators president during the fourth quarter of 2021.

Hank Hague: The charge was triggered due to certain impairment indicators present during the fourth quarter of 2021, primarily related to the decline in forecast

Primarily related to the decline in forecasted revenues.

And decline in our share Crichton one the increase in operating expenses during the fourth quarter was primarily driven by higher non cash share based compensation expenses.

Hank Hague: The increase in operating expenses during the fourth quarter was primarily driven by higher non-cash share-based compensation expenses, which grew to approximately $3.5 million.

Which grew to approximately 3.3 million compared to 0.5 million in the year ago period.

As well as insurance and professional fees related to being a public company.

Hank Hague: as well as insurance and professional fees related to being a public company, partially offset by cost-cutting measures. Net loss in the fourth quarter of 2021 was

Partially offset by cost cutting measures.

Net loss in the fourth quarter of 2021 was 24 million compared to a net loss of Europe , <unk> 9 million for the same period in 2020.

Hank Hague: This was driven by higher non-cash goodwill impairment charges.

This was driven by higher noncash goodwill impairment charge higher noncash share based compensation expenses.

Hank Hague: higher non-cash share-based compensation expenses, higher inventory write-down, higher public company expenses.

Inventory write down higher public company expenses and.

And noncash interest expense recognized.

Hank Hague: in connection with the conversion feature related to our convertible note to 2024 with Catalina LP.

Connection with the conversion feature related to our convertible note due 2024.

L P.

Partially offset by the $11 5 million dollar gain on Remeasurement of warrant liability.

Hank Hague: partially upset by the $11.5 million gain on the measurement of warrant viability.

Continued cost cutting measures.

Adjusted EBITDA in the fourth quarter of 2021 with negative $7 8 million compared to negative $6 3 million in the year ago period.

Hank Hague: Adjusted EBITDA in the fourth quarter of 2021.

Hank Hague: negative $7.8 million compared to negative $6.3 million in the year ago period.

Hank Hague: The decrease was mainly attributable to public company expenses and higher inventory rights.

Kris was mainly attributable to public company expenses and higher inventory write down.

At December 31st 2021, our cash balance was $37 7 million compared to $79 5 million at December 31st 2020.

Hank Hague: At December 31st, 2021, our cash balance was $37.7 million compared to $79.5 million at the

The decrease primarily attributable to our operating loss and capital investments.

Hank Hague: with the decrease primarily attributable to our operating losses in capital investments, partially offset by increased borrowings and proceeds from public warrants exercised during the year.

Partially offset by increased borrowings and proceeds from public warrant exercises during the year.

Now briefly turning to our full year himself.

Revenue in 'twenty, 'twenty, one increased 27% to $15 4 million compared to $12 1 million in 2020.

Hank Hague: Revenue in 2021 increased 27% to $15.4 million.

This increase was primarily driven by strong sales and recovery trends within our nutraceutical business as well as growth in our Napa North revenue.

Hank Hague: This increase was primarily driven by strong sales and recovery trends within our nutraceutical business, as well as growth in our cannabinoids.

We drove throughout the year.

Hank Hague: In 2021, Kanabalai revenue increased 29% to $3.2 million compared to $2.5 million.

For 2021 and outside revenue.

29% to $3 2 million compared to 2.5.

Our all in cost per.

Graham of dry flower in 2020 , one was 22 per gram compared to 14 per Gram in 2020.

Hank Hague: $0.22 per gram compared to $0.14 per gram in 2020.

Hank Hague: The increase was largely driven by production costs associated with ramping early stage production operations and portfolios.

The increase was largely driven by production costs associated with ramping our early stage production operation in Portugal.

So offset by the efficiencies, we're driving in our Colombian operations.

Hank Hague: so offset by the efficiencies we are driving in our Colombian operations. Gross profit was $6.8 million.

Gross profit was $6 8 million compared to $7 4 million in 2020 with a gross margin of 44, 3% compared to 61, 2% in 2020.

Hank Hague: with a gross margin of 44.3% compared to 61.2% in 2020.

Hank Hague: The declining gross profit is attributable to higher inventory rights.

The decline in gross profit is attributable to higher inventory write down.

Hank Hague: labor and supply chain related cost impacts within the non-cannabinoid segment.

Her and supply chain related cost impacts within the non cannabinoid segment.

Offset by aforementioned revenue growth across both segments of the business.

Hank Hague: offset by aforementioned revenue growth across both segments of the business. Adjusted gross profit increased 25%

Adjusted gross profit increased 25% to $9 8 million compared to $7 8 million in 2020.

Hank Hague: 2020, reflecting a 63.7 adjusted gross margin, compared to 64.5% in the year-ago period.

It was 63.7 adjusted gross margin.

Third to 64, 5% in the year ago period.

Operating expenses in 2021 were $45 5 million.

Hank Hague: compared to 34.3 million in 2020.

<unk> to $34 3 million in 2020, excluding the impact of the E N a half million dollar non cash goodwill impairment.

Hank Hague: excluding the impact of the $18.5 million non-cash goodwill and

Is it to the acquisition of our Colombia operations in November 19 Plano.

Hank Hague: related to the acquisition of our Columbia operations in November 19, 2019. And it's

And excluding the impact of the $1 7 million noncash goodwill impairment charge, we recorded in the first quarter of 2020 related to our herbal Grand acquisition and the non cannabinoid segment.

Hank Hague: non-cash goodwill impairment charge we recorded in the first quarter of 2020 related to our herbal brand acquisition in the non-cash.

Hank Hague: The increase in operating expenses in 2021 was attributable to increased non-cash share-based compensation expenses, which grew to $11.5 million compared to $1.5 million.

The increase in operating expenses in 2021 was attributable to increased noncash share based compensation expenses, which grew to $11 5 million compared to $1 7 million in 2020 as.

Hank Hague: as well as insurance and professional fees related to being a public company, partially offset by continued cost-cutting measures.

As well as insurance and professional fees related to being a public company, partially offset by continued cost cutting measures.

Net loss in 2021 was $45 7 million compared to a net loss of $25 9 million in 2020 one.

Hank Hague: compared to a net loss of $25.9 million in 2020.

Hank Hague: This was primarily driven by higher non-cash goodwill and payment charge, higher non-cash share-based compensation expense, higher inventory write-down, higher public company expenses, and non-cash interest expense recognized in connection with the conversion feature related to the 2020.

This was primarily driven by higher noncash goodwill impairment charge.

Non cash share based compensation expense.

Higher inventory write down.

Public company expenses and noncash interest expense recognized in connection with the conversion feature related to the 2024 convertible notes, partially offset by the $16 $9 million.

Our measurement of warrant liability and continued cost cutting measures.

Adjusted EBITDA in 2021 was negative $24 9 million compared to negative 23 3 million in 2020.

Hank Hague: Adjusted EBITDA in 2021 was negative 24.9.

Hank Hague: compared to negative 23.3 million in 2020.

Hank Hague: The decrease was mainly driven by public company expenses.

The decrease was mainly driven by public company expenses.

To briefly discuss some of our recent financial update subsequent to the fourth quarter. We entered into a first amendment of our secured convertible note with town L. P. On January 13.

Hank Hague: to briefly discuss some of our recent financial...

Hank Hague: to the fourth quarter, we entered into a First Amendment of our Secured Convertible Note with Catalina LP on January 13th. Under the amended terms,

Under the amended terms.

Now they elect to use cash repayments.

Hank Hague: for approximately $7 million of principal and accrued interest if the closing price per common share of our stocks is $7 million.

Approximately 7 million of principal and accrued interest if the closing price per common share if our stock is below $2 in 'twenty.

And 10 out of the previous 20 trading days.

Hank Hague: on any 10 out of the previous 20 trading days.

The amendment also modify the optional redemption price at which Catalina and they are actually doing the principal into our common shares to be greater.

Hank Hague: The amendment also modifies the optional redemption price at which Catalina may elect to redeem the principal into our common shares to be greater

<unk> to 'twenty or an 8% discount to the four P. Wap on.

Hank Hague: of 220 or an 8% discount to the four-day VWAP on each of the three days prior to and including the date of the optional redemption notice.

Each of the three days prior to and including the day of the optional redemption notice.

These terms will remain in place until July 19th of this year.

Hank Hague: These terms will remain in place until July 19th of this year. As such, we will provide.

As such we will provide further updates on our Q1 call, but we are continually evaluating both our current financing arrangements and other options to strengthen our balance sheet.

Hank Hague: you one call, but we are continually evaluating both our current financing arrangements and

We also filed a $100 million shelf registration statement with the SEC on January 14 2022.

Hank Hague: We also filed a $100 million shelf registration statement with the SEC on January 14, 2022.

Hank Hague: which included an aftermarket offering prospective supply.

Which included an after market offering stock to supplement.

Hank Hague: Through March 2022, the company has issued and sold 2.8 million shares pursuant to the.

March 2022 the company has issued and sold two 8 million shares pursuant to the ATM offering for aggregate net proceeds of $3 3 million.

Hank Hague: for aggregate net proceeds of $3.3 million.

And in the future may issue additional shares.

Hank Hague: and in the future may issue additional shares.

Hank Hague: We expect to use the proceeds of these sales for the repayment of debt and for general working capital purposes.

We expect to use the proceeds of sales with a repayment of debt and for general working capital purposes.

As we move further into 2022, the operational and financial progress we have made throughout the past year demonstrates our continued execution on our key growth drivers.

Hank Hague: The operational and financial progress we have made throughout the past year demonstrates our continued execution on our key growth drive.

Hank Hague: our success with secure and new partnerships, reaching the pathfinder shipment stage within existing.

Our success, securing new partnerships, reaching a pathfinder shipment stage with an existing agreement and evolving towards implemented and scaled commercial shipments in 2021.

Hank Hague: and evolving towards repeated and scaled commercial shipments in 2021.

It's positioned us to continue.

Hank Hague: has positioned us to continue meaningfully advancing these efforts in the year ahead.

Advanced copper in the year ahead.

Accordingly, the sixth strategic growth objectives, and key regions of focus.

Hank Hague: Accordingly, the six strategic growth objectives and key regions of focus that Andres introduced for this year will support our full year 2022 financial target.

<unk> introduced this year will support our full year 2022 financial targets, which we introduced in our preliminary results announced on February nine.

Hank Hague: which we introduced in our preliminary results announcement on February 9th.

As a reminder, we continue to expect our full year 2022 revenue.

Hank Hague: As a reminder, we continue to expect our full-year 2022 revenue to range between $20 million to $25

Range between 20 million to $25 million with an expected adjusted gross margin of approximately 50% to 55%.

Hank Hague: with an expected adjusted gross margin of approximately 50% to 55%.

Hank Hague: This revenue range reflects an estimated increase in cannabinoid revenue.

This revenue range reflects an estimated increase in cannabinoid revenue of between two times and five times 2021 cannabinoid revenue as we drive further progress in our core 2022 markets.

Hank Hague: between two times and five times 2021 cannabinoid revenue as we drive further progress in our

Our gross profit range reflects this expected growth while also taking into account the production costs associated with scaling our core triple operation.

Hank Hague: Our gross profit range reflects this expected growth while also taking into account the production costs associated with scaling our Portugal operations.

As well as supply chain and labor related costs, and our herbal brands business.

Hank Hague: supply chain and labor-related costs in our herbal brands.

We also expect our full year 2022, adjusted EBITDA to range between negative $23 million to negative 20 million and we expect our annual capital expenditures to be approximately 2 million to 3 million, representing a 60% to 70%.

Hank Hague: We also expect our full-year 2022 adjusted EBITDA to range between negative $23 million to negative $1 million.

Hank Hague: And we expect our annual capital expenditures to be approximately $2 million to $3 million.

Hank Hague: representing a 60 to 70 percent reduction respectively relative to our full year 2021 CapEx. As Andres previously discussed, completing construction on our portfolio

Adoption start to bleed.

Relative to our full year 2021 capex.

As Andre as previously discussed complete.

Completing construction on Portugal production expansion marks the virtual completion of our Capex cycle. So the 2 million to $3 million range represents more of a maintenance level or run rate.

Hank Hague: So the $2 million to $3 million range represents more of a maintenance level annual wage.

We will continue to focus on generating cash to reduce both our expenses and working capital.

Hank Hague: We will continue to focus on generating cash through reducing both our expenses.

Hank Hague: That said, we believe we are positioned to benefit from the completion of the capital-intensive phase of our growth by focusing on gaining commercial contracts.

That said, we believe we are positioned to benefit from the completion of the capital intensive phase of our growth by focusing on gaining commercial contracts in 2022.

This concludes my prepared remarks, I'll turn the call back over to Andre Andre.

Hank Hague: This concludes my prepared remarks. I'll turn the call back over to Andres.

Thank you Hank.

Andres Fajardo: To continue the thread of our 2022 growth targets, the key global market I discussed at the beginning of the call with the center core regions and business areas of focus for 2022.

To continue the thread of the heart 2022 growth targets the key global markets I discussed at the beginning of the cold at the center core regions and business areas of focus for 2022.

Before we open up the call to questions I'd like to spend some time reviewing our recent progress with each of these areas.

Andres Fajardo: Before we open up the coach questions, I'd like to spend some time reviewing our recent progress in each of these areas.

In Australia, you announced two agreements last month that we believe are examples of how we intend to deepen our presence within this market and expand the portfolio of products, we export there.

Andres Fajardo: In Australia, we announced two agreements last month that we believe are examples of how we intend to deepen our presence within this market and expand the portfolio of products we export there.

In mid February we expanded our existing relationship with kind of tricky to a two year three 6 million take or pay basis supply agreement that includes high THC flower from Portugal.

Andres Fajardo: In mid-February, we expanded our existing relationship with CanTrack into a two-year, $3.6 million taker-paid basis supply agreement that includes high-THC flour from pork.

Andres Fajardo: Canatric was the first organization to import Cleverleaf's CBD oral solutions to the Australian market back in 2020.

Patrick what was the first organization to a clever niche CBD oral solutions to the Australian market back in 2020.

And we have been supplying various 10%, 20% CVD oral solutions to Patrick from Colombia ever since.

Andres Fajardo: And we have been supplying various 10% and 20% CBD oil solutions to contract from Columbia ever since.

Andres Fajardo: We are now positioned to provide them with one strain of high THC flour complementing our oral solutions offering and expect the flour to be sold and distributed through Australia's medical cannabis prescription pathway.

We are now positioned to provide them with one stream of high THC flower complementing our oral solution suffering unexpected flowers to be sold and distributed through Australia medical cannabis prescription pad.

Andres Fajardo: We believe this expanded take-or-pay-supply agreement will allow greater patient access to critical cannabis products in Australia, and we are pleased to provide additional support to this long-time partner as we strengthen our prospective positions in the rapidly growing medicinal cannabis market.

We believe this expanded take or pay supply agreement will allow greater patient access to critical cannabis products in Australia, and we are pleased to provide additional support to this long time partner as we strengthen our perspective positions and their rapidly growing medicinal cannabis mark.

We further advanced our progress in Australia with the four year take or pay supply agreement, we announced with Australian Natural Europe Ethics group or <unk>, a leading Australian medicinal cannabis company.

Andres Fajardo: We further advanced our progress in Australia with the four-year taker pay supply agreement we announced with Australian Natural Therapeutics Group, or ANTG, a leading Australian medicinal cannabis company.

Under the terms of the agreement we will be supplying CBD isolate in GMP certified THC crude oil from Colombia, and THC flower from Portugal.

Andres Fajardo: Under the terms of the agreement, we will be supplying CBD isolate and GMP certified THC crude oil from Colombia and THC flour from Portugal.

Andres Fajardo: and ENTG has committed to purchasing a minimum of 7.8 million worth of products.

NPD has committed to purchasing a minimum of $7 million worth of product.

Andres Fajardo: This marks the largest supply agreement Cleverleaf has signed with an Australian cannabis company.

This marks the largest supply agreement until the lease is signed we began Australia cannabis company.

With patient registrations for medical cannabis on the rice as well as an increasing focus on local clinical cannabinoid research the rapid growth of our addressable market in Australia presents a strong opportunity for us as we seek to build upon our early commercial progress in the region.

Andres Fajardo: with patient registrations for medical cannabis on the rise, as well as an increasing focus on local clinical cannabinoid research, the rapid growth of our addressable market in Australia presents a strong opportunity for us as we seek to build upon our early commercial progress in the region.

We have also made commercial strikes in Germany. In these first few months of 2022.

Andres Fajardo: We have also made commercial strikes in Germany in these first few months of 2022.

Andres Fajardo: In January , we launch our first Ticana flower products with positive.

In January we launched her first I'd kind of flower products with positive results.

The first batch of products was well received and we have seen with purchases by pharmacies across the country with patients providing positive feedback on the kind of flower.

Andres Fajardo: The first batch of products was well-received, and we have seen repurchases by pharmacies across the country, with patients providing positive feedback on the Aitana flower.

During 2022, we expect to launch additional flower products carefully selected to target specific needs.

Andres Fajardo: During 2022, we expect to launch additional flower products carefully selected to target specific needs.

In February we announced that we had in our commercial extra distribution through Ft farm European specialty pharmaceutical company with a strong focus on the central nervous system, a key therapeutic area for medical cannabis that has many cleverly partner since last year.

Andres Fajardo: In February , we announced that we had imported our commercial extracts for distribution through Etifar, a European specialty pharmaceutical company with a strong focus on the central nervous system, a key therapeutic area for medical candidates that has been a Cleverleaf's partner since last.

These extracts comply with Germany's demanding quality standards and the patient makes us one of the first successfully complete the commercial shipping of Colombian manufactured high CBD pharmaceutical products to Germany.

Andres Fajardo: These extracts comply with Germany's demanding quality standards, and the importation makes us one of the first to successfully complete a commercial shipment of Colombian-manufactured high-CBD pharmaceutical products.

Andres Fajardo: where these products were subsequently released into the market as pharmaceutical products and are now available for patients in pharmacies under.

These products were subsequently released into the market of pharmaceutical products and are now available for patients pharmacies under prescription.

Our agility to navigate Germany's complex regulatory and quality standards reflects our team's deep knowledge of the market and commitment to strict compliance with both EU GMP and German for myopia standards through collaborating with a C. Some pharmaceutical like get different we believe we're solidifying our foothold in the German extra work.

Andres Fajardo: Our agility to navigate Germany's complex regulatory and quality standards reflects our team's deep knowledge of the market and commitment to strict compliance with both EU GMP and German pharmacopoeia standards.

Andres Fajardo: Through collaborating with a seasoned pharmaceutical, like Etifarm, we believe we are solidifying our foothold in the German extractive industry.

In a similar vein, we also expanded our partnership with cancer Tivo, a German cannabis distributor and wholesaler, which we have owned.

Andres Fajardo: In a similar vein, we also expanded our partnership with CanSativa, a German cannabis distributor and wholesaler in which we have owned a minority stake since December 20.

Since December 2018.

Andres Fajardo: In connection with Casativa's Series B capital race, led by a $15 million investment from Casa Verde Capital.

In connection with the kind of see the series B capital race, let's say 15 million investments from concentrated capital.

<unk> entered into a three year supply agreement in which cancer fever, who purchase a minimum of 2 million euro or approximately $2 $2 million of high THC cannabis flower.

Andres Fajardo: Cleverly entered into a three-year supply agreement in which CanSativa will purchase a minimum of 2 million euro or approximately 2.2 million dollars of high-THC cannabis flowers.

Andres Fajardo: We expect this agreement to be initiated near the end of this year, contingent upon Cleverleaf's receiving EU GMP certification in our Portuguese facility, as well as other countries.

We expect this agreement to be initiated at the end of this year contingent upon Kevin Lynch, receiving EU GMP certification and our Portuguese facility.

As well as other closing conditions.

We also sold a portion of our minority stake in the business concert with cancer, Chivas GSV capital waste, reducing on the ownership to approximately 9% and generating over 2 million Youtube or approximately $2 2 million of additional liquidity and non dilutive capital for Clarence.

Andres Fajardo: We also sold a portion of our minority stake in the business in concert with CanSativa's GSB Capital Group.

Andres Fajardo: Reducing on ownership to approximately 9% and generating over 2 million euro or approximately 2.2 million dollars of additional liquidity and non-dilutive capital for Claremont.

Okay, Steve I host National extra C. D for distributing all domestically produce cannabis in Germany, making this relationship and important Avenue, we're expanding our products distribution within the market.

Andres Fajardo: Tensativa holds national exclusivity for distributing all domestically produced cannabis in Germany, making this relationship an important avenue for expanding a product's distribution within the market.

Andres Fajardo: At the beginning of this month, we also announced a one-year international sales agreement with German-Colombian medical cannabis and wellness operator, Olimed Holdings, as well as its German manufacturing partner, Fidelio Health.

At the beginning of this month, we also announced a one year international sales agreement with Chairman Colombian medical cannabis and wellness operator, Paul We made holdings as well as its German manufacturing partner Dale Your health care.

Dale.

Andres Fajardo: you will have access to three of our pharmaceutical grade bulk cannabis extracts and we use this to create gel capture.

This two three year for pharmaceutical grade bulk cannabis extracts and we use this to create Joe capture supported customers.

I see large EU GMP compliant producer worldwide that manufacturers talk show split prescription medicine.

Andres Fajardo: as a large EU GMP-compliant producer worldwide that manufactures soft-shells for prescription medicine.

Andres Fajardo: Fidelio is another strong relationship for us as we leverage our production capabilities in Colombia to expand our market penetration throughout the geography Fidelio serves.

Then do we send rather strong relationship for us as we liberate your production capability from Colombia to expand our market penetration throughout the geography feed daily users.

We will work to maintain the strong commercial momentum we are generating in Germany and are proud of the progress we have driven in this early months of 2022.

Andres Fajardo: We will work to maintain the strong commercial momentum we are generating in Germany and are proud of the progress we have driven in these early months of 2022.

Turning to Israel, we can.

Andres Fajardo: Turning to Israel, we recently announced a comprehensive, global, multi-year strategic partnership with Intercure, a leader in the cannabis industry within the country.

You announced a comprehensive global multi year strategic partnership with insecure a leader in the cannabis industry within the country.

We expect this partnership to provide growth in the short term intergroup will have access to whatever nice high THC medical cannabis flower to serve several medical cannabis markets.

Andres Fajardo: We expect this partnership to provide growth in the short term as Intercure will have access to Cleverleaf's high THC medical cannabis flower to serve several medical cannabis markets.

In addition, we will cultivate inter curious high quality strange looking to enable <unk> to lunch they must EU GMP compliant ramp products within the U K and South American markets as regulation evolves.

Andres Fajardo: In addition, we will cultivate Intercure's high-quality strains, looking to enable Intercure to launch them as EU GMP-compliant branded products within the EU, UK, and South American markets as regulation evolves.

Andres Fajardo: This agreement will also allow both companies to work together on new product development that will allow us to reach global patients.

The agreement will also allow both companies to work together with new product development that will allow us to reach global patients John .

In Israel, we have also solidified our commercial agreements for Api's that are already being used and one of the fastest growing non flower product lines in the country.

Andres Fajardo: In Israel, we have also solidified our commercial agreement for APIs that are already being used in one of the fastest growing non-flour product lines in the country.

Okay.

In Brazil.

Andres Fajardo: Two of her products have already been approved by AMVISA, the national regulatory agency under RDC 327. The local regulatory framework.

Two of her products have already been approved by NBC, the National regulatory agency under our D. C. Three twenty-second.

The local regulatory framework for cannabis products.

These and other pending approvals represent the culmination of a multiyear regulatory process and having discomfort nations completed have allowed for existing commercial relationships with both of them joined regulatory and technical work with our clients.

Andres Fajardo: These and other pending approvals represent the culmination of a multi-year regulatory process.

Andres Fajardo: And having these confirmations complete have allowed our existing commercial relationships to evolve from joint regulatory and technical work with our clients into revenue generating partnerships expected to last multiple years.

Revenue generating partnerships expected to last multiple years.

While our products are racing to market via the compassionate use recognition.

Andres Fajardo: While our products are already in the market via the Compassionate Use Regulation, we expect our recently approved products under RDC 327 to be available in the market as soon as Q2 of 2022.

Our recently approved products under our D. C 27 to be available in the market as soon as Q2 of 2022.

In the United States as I mentioned before we commercially launched our first CBD Brent Joyful eat January 2022.

Andres Fajardo: In the United States, as I mentioned before, we commercially launched our first CBD brand, Joysol, in January 2022, which is one of our key.

Which is one of our key operational goals this year.

We believe our comprehensive approach to Joyce, who will own luck, the CBD category and expand beyond your your adapters into the mass market.

Andres Fajardo: We believe our comprehensive approach to Joysol will unlock the CBD category and expand beyond the early adopters into the mass market. In pursuit of this, we are following a

In pursuit of this we're following a three dimensional approach.

Andres Fajardo: First, her product development is focused on the use of CBD, other minor cannabinoids, and terpenes in our formulation.

First a predictive element is focused on the use of CBD and other minor cannabinoid therapies in our formulations.

Second our go to market model combines both direct to consumer as well as we take channels for which we will leverage our extensive distribution network to the extent possible.

Andres Fajardo: Second, our go-to-market model combines both direct-to-consumer as well as retail channels for which we will leverage our extensive distribution network to the extent possible.

Andres Fajardo: Third, our pricing strategy pursues affordability for the mass market.

Third our pricing strategy to support the ability for the mass market.

Beyond CBD, we're working to grow and with Chris circle business by increasing distribution into new clients and expanding penetration of our different skus to existing customers. While we actively manage pressure in costs, driven mainly by labor and transportation.

Andres Fajardo: Beyond CBD, we're working to grow our nutraceutical business by increasing distribution to new clients and expanding penetration of our different SKUs into existing customers while we actively manage pressure and costs driven mainly by labor and transportation.

Finally to provide the latest update on Colombia in the next phases of the country's approval of dried flower exports.

Andres Fajardo: Finally, to provide the latest update on Colombia and the next phases of the country's approval of dried flower exports, the Colombian government recently passed Regulation 277, which implements the legal provisions surrounding the initial decree issued by President Duque last July .

Columbian government recently passed regulation, $2, 77, which implements the legal provision surrounding the initial decree issued by Brexit and Duke last July .

These provisions allow us and our peers to start producing powerful commercial sales reappropriate flowers previously grown for extra sales, we're expert in a dry powder form.

Andres Fajardo: These provisions allow us and our peers to start producing flour for commercial sales, or re-appropriate flour previously grown for extract sales for export in a dried flour form.

Andres Fajardo: They also allow us to pursue further commercial activities around CBD-based products.

And you also allow us to pursue further commercial activities around CBD based products.

While we are still waiting passage of a supplementary technical commercial guidelines, our existing EU GMP certification for dried flower place us in a strong position to fulfill the existing provisions and expand our flaring capacity got nothing for new and perspective to be planes beyond our ramping cloud.

Andres Fajardo: while we are still waiting passage of the supplementary technical commercial guidance.

Andres Fajardo: Our existing EU GMP certification for dried flower places us in a strong position to fulfill the existing provisions and expand our flower capacity and offering for new and prospective B2B clients beyond our ramping flower production in Portugal.

Production in Portugal, we.

Andres Fajardo: We continue to prepare Colombian operations for dried flower production and are making strong progress on this front, leveraging the learnings we've already gleaned from our flower production and sales in Portugal.

We continue to prepare our Colombian operations flip right power production and are making strong progress on this front leveraging the learnings we've already cleaned from our plywood production and sales in Portugal.

Pending the passage of the commercial guidance I. Just mentioned you are currently on track to commence our first strike flower exports in Q4 of this year.

Andres Fajardo: Pending the passage of the commercial guidelines I just mentioned, we are currently on track to commence our first dried flower exports in Q4 of this year.

And this initial announcements demonstrate we're off to a strong start with building upon the solid commercial and financial Foundation, we established for business and continuing to grow our sales through 2022.

Andres Fajardo: As these initial announcements demonstrate, we're off to a strong start with building upon the solid commercial and financial foundation we established for our business and continuing to grow our cannabinoid sales through 2022.

Based on current trends I believe we are on track for a strong first quarter performance.

Andres Fajardo: Based on current trends, I believe we are on track for a strong first quarter performance, and we will work to maintain the early momentum we are generating across our six key strategic goals and focus regions.

We will work to maintain the early momentum we are generating across our six key strategic goals and focused regions.

Andres Fajardo: The regulatory, quality, and operational insights we've gained within our core markets have given our teams greater focus and know-how for driving progress in our current partnerships and pursuing additional business development opportunities.

The regulatory quality and operational insights we've gained within our core markets have given our teams greater focus and Knowhow for Gregory progress.

Current partnerships and pursuing additional business development opportunities.

Combined with our prudent cost control and focus on maintaining our operational efficiency I believe we are well positioned to drive progress on our strategy throughout the year.

Andres Fajardo: combined with our prudent cost control and focus on maintaining our operational efficiency, I believe we are well positioned to drive progress on our strategy throughout the year.

Andres Fajardo: I am proud of our team's commitment to deepening our commercial footprint and strengthening our overall presence with the global cannabinoid supply chain.

I am proud of our team's commitment to deepening our commercial footprint and strengthening our overall presence with the global supply.

Supply chain.

Operator, we'll now open up the call for Q&A.

Thank you Sir at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

Speaker Change: Thank you, sir. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad.

You May press Star two if you like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: is using speaker equipment, it may be necessary to pick up your handset before pressing the start keys. One moment, please, while we...

One moment, please while we poll for questions.

Our first question comes from the line of Vivien <unk> with Cowen and company. Please proceed with your question.

Hi, This is Victor MA on for video needs are actually.

Speaker Change: Hi, this is Victor Ma, on for Vivian Azar, actually.

Speaker Change: Andres, you and Carl have been partners for several years and you bring with you many years of experience in industry.

Andre you don't call had been partners for several years and you bring with your many years of experience in industry.

Speaker Change: And over that time, you know, you've seen a lot of change in the global landscape, both in terms of the timing of regulation changes and...

And over that time, you know you've seen a lot of change in the global landscape. Both in terms of the timing of regulation changes and.

Just where the competitive landscape is focus, namely in Canada. So so given all of that were hoping if you could start by.

Speaker Change: just where the competitive landscape is focused, namely in Canada. So given all of that, we're hoping if you could start by giving your perspective on what changes you've observed that has been favorable for your operating model and what changes have prompted you to evolve your strategy. Thanks.

Given you're getting your perspective on what changes you've observed that has.

Then favorable for your operating model and what changes that.

Prompted you to to evolve your strategy. Thanks.

Oh, Thank you very much.

Speaker Change: Thank you very much for the question and in effect Kyle and I have been around the international industry mostly for over 5-6 years now and certainly there have been some positive developments. I would say regulation has not only passed in key geographies for us, again Australia, Brazil, Germany.

The question and in fact apparel and I have been around the international industry, mostly for over.

Five six years now uncertainty there there have been some positive developments I would say no regulation has not only passed in key geographies for us.

No.

Then Australia, Brazil, Germany.

<unk>.

Speaker Change: You know, and but beyond that, you know, it's getting steady. So it's not only past, but it's getting steady. You know, governments are understanding how this works, how the products have to flow. So that's, you know, basically a a a much.

And but beyond that you know, it's getting steady so it's not only passed but its getting steady governments are understanding how this works how the products have to slow.

So that's basically a much.

Much stronger much well defined I shall say a regulatory framework, we helps companies like us because we will know exactly what we need to do to get the products from one place to the other.

Speaker Change: much stronger, much well-defined, I shall say, regulatory framework really helps companies like us because we will know exactly what we need to do to get the product from one place to the other.

Number two.

The product requirements have changed significantly so.

Speaker Change: the product requirements have changed significantly. So while, you know, this today, I think it's a clear competitive advantage for Cleverleafs as we really understand our markets and we really know both in flowers and extract watches which market is looking for. Now, I would say during the evolution of time, it wasn't clear, it was ever changing, both from a technical perspective, as well as from a market needs and likes perspective.

While this today I think it's a clear competitive advantage for clever leaches, we really understand their markets and we really know both in flowers and extra what each market is looking for no I would say during the evolution of time it wasn't clear.

Changing both from a technical perspective, as well as from a market needs and likes perspective.

Speaker Change: But now I would say it's a lot more stable and you know again, we build that competitive advantage

But now I would say, it's a lot more stable.

Again, we've built our competitive advantage.

Speaker Change: I would say, you know, the other thing we've noticed is that at the beginning, many companies thought it was going to be very fast and very easy, you know, simply to enter the international cannabis business, but the reality is it requires time, it requires quality, it requires investment.

I would say you know what.

Other thing with notice just at the beginning many companies thought it was going to be very fast and breeze. He simply to enter the international cannabis business, but the reality requires times require cars quality requires investment.

Speaker Change: But now, I believe, you know, that the tide's changing, you know, one of the things we've learned and that has actually shaped our strategy is the importance of focus. We're now focusing on five key geographies, as we've mentioned, so we have Australia, we have Germany, we have Brazil, we have Israel, and the United States, and that's where we're focused. Why is that so important? Because we need to work on our commercial, you know, capabilities, our commercial agreements. We have to know clients in each of these geographies.

Now I believe that the.

Titan changing.

One of the things we've learned in the past actually shaped our strategy is the importance of focus.

We're now focusing on five key geographies as we've mentioned so we have Australia, Germany, Brazil, we have this one in the United States and that's where we're focused why is that so important because we need to work on a commercial.

Capabilities or commercial agreements, we have no clients each of these geographies. We also have to work on the product because the technical requirements and what the market likes for example in terms of flower is very different among the markets and third regulatory pathways are complex in a very different I would say that one of the things. We learned is when you try to have it.

Speaker Change: We also have to work on the product because the technical requirements and what the market likes, for example, in terms of flour, is very different among the markets.

Speaker Change: And third, the regulatory pathways are complex and are very different. I would say that one of the things we learned is when you try to, you know, have a very ample, let's say, geographic coverage, you might lose the risk of losing effectiveness in each of those geographies. And hence, you know, Claire Bernice has decided to focus its strategy to be able to be much more effective on the revenue side of things, but again, at the same time, much more efficient on the cost side.

Very ample let's say geographic coverage you might boost the risk of losing effectiveness in each of those geographies and hence.

Clarity has decided to focus its strategy to be able to be much more effective on the revenue side of things, but again at the same time much more efficient on the cost side of things.

Great. Thank you for the color on this.

Speaker Change: Great. Thank you for that, Paul or Andres. And just one more, if I can. I just wanted to follow up on the announced partnership with Endicure. I know that was part of the prepared remarks, but in terms of, you know, the timing of the transaction,

And just one more if I can just wanted to follow up on the announced partnership with Nick here I know that was part of the prepared remarks, but in terms of the time of the transaction.

Speaker Change: you know, to an adult-use market in Israel is still, or sorry, terming the transition to an adult-use market in Israel is still pretty fluid. And it's great that you're partnering with the market share leader in that medical market. But could you touch upon kind of how the supply agreement complements other deals that Intercure has with some of the other operators, such as Toray? You know, are there like volume implications, allocations in place, or is this more of a market opportunity? And if you win with this,

Two an adult use market in Israel is.

There's still time.

The transition to an adult use market in Israel is still pretty fluid.

And it's great that you're partnering with a market share leader in that vertical market, but could you touch upon kind of how that supply agreement complements other deals like nuclear has with some of the other operators.

So just tell right now are there like vitamin.

Locations allocation in place or is this more of a market opportunity and if you win with this with this agreement delivering a white label quite a temperature does that in turn impacted their portfolio mix.

Speaker Change: with this agreement delivering a white label product signature, does that in turn impact their portfolio?

Yeah, I would say that more than a supply agreement we see this as a real strategic partnership because it has several elements to it number one you know and <unk> will have axis.

Speaker Change: I would say that more than a supply agreement, we see this as a real strategic partnership because it has several elements to it.

Speaker Change: Number one, Entrecure will have access to flour that we produce in our different production facilities in Portugal and Colombia, and that will certainly help broaden their portfolio in Israel, help them solidify their presence over there. And frankly, for us, it's working with a marquee.

Two flower we produce.

No production facilities in Portugal in Colombia, and that will certainly help broaden their portfolio in Israel helped them solidify their their presence over there and frankly for us its working with Marty.

Speaker Change: partner to enter the Israeli flower market. So as you said, the market leaders have wide distribution. So from that standpoint itself, it provides a very significant opportunity for our very wide portfolio, which as I mentioned, is produced, sold in Portugal and Colombia. That's number one.

Partner to enter them.

Israel.

These really flower market. So what you said the market leaders have wide distribution.

So from that standpoint itself provides a very significant opportunity for a very wide portfolio, which as I mentioned has produced sold in Portugal in Colombia, that's number one but it will take we're looking at the strategic partnership beyond that we're looking at this.

Speaker Change: But I would say we're looking at the strategic partnership beyond that. We're looking at this, you know, as a way for us to work together.

The way for us to work together, so that we can.

Speaker Change: so that we can, you know, help, you know, intercure in their internationalization process beyond Israel. And how can we be that partner that helps them really take.

Help.

Enter Q in their internationalization process beyond Israel, how can we be that partner that helps them really take the great success, they've had in their own country and take it beyond their own geography. So that's another key element and I would say lastly, combined T. A.

Speaker Change: the great success they've had in their own country and take it beyond their own geography. So that's another key element.

Speaker Change: And I would say lastly, it combines a very tight, you know, technical and, you know, genetics and, you know, in general, a

Very tight technical and.

Genetics and you know in.

In general a no.

Capability sharing capability co building that he is very very oh.

Speaker Change: you know, capability sharing and capability co-building that is very, very.

Beneficial for both companies right as we look to enter each willing as we look to help.

Speaker Change: beneficial for both companies, right, as we look to enter Israel and as we look to help.

Okay.

Uh huh.

Uh huh.

Uh huh.

No.

Yes.

Sure.

Awesome.

Both in Israel and beyond.

Understood.

For the color ultra banking.

Our next question comes from the line of Bobby Burleson with Canaccord. Please proceed with your question.

Speaker Change: Our next question comes from the line of Bobby Burleson with Canaccord.

Alright, thanks for taking my questions.

Bobby Burleson: Alright, thanks for taking my questions. So I guess the first one is just, you know, if we understand that that kind of three

So I guess the first one is just if we understand that that kind.

Kind of three and a half times CRO.

For your cannabinoid or THC business actually.

Bobby Burleson: growth for your cannabinoid, your THC business actually.

Bobby Burleson: in 2022 guidance. First of all, a THC is that all cannabinoid.

And 2022 guidance first of all as a ph D is that all cannabinoid.

But to clarify that.

Sorry, sorry can you repeat the question I My connection got lost just for one second okay.

Speaker Change: Sorry, sorry, can you repeat the question? My connection got lost just for one second. Okay.

Speaker Change: So the cannabinoid guidance, the tripling of that, can we think about that from the perspective of how much?

So think of it.

Capital guidance, the tripling of that.

Can we think about that from the perspective of how much existing.

Speaker Change: capacity that uses up like what kind of capacity utilization you would expect yourselves to be at kind of exiting the year.

Capacity that uses up like what kind of capacity utilization that you would expect yourself to be a kind of exiting the year.

Perfect. So so in effect we are thanks.

Speaker Change: Perfect. So, so in effect, we are. Thanks for your question. Apologies for the issue with the connection. Our guidance, you know, references a growth in our cannabinoid business of around two to five times.

For your question apologies for it for the issue with the connection.

Our our guidance you know references.

Growth in our cannabinoid business of around 225 times.

And.

Speaker Change: And basically, one of the very interesting things where we think we are as a company that we are at the end of our CAPEX cycle. At this moment, to be able to reach the revenue, we're going to have sufficient capacity going into 2023. And that would not require significant.

And basically you know one of the very interesting things, where we think we are as a company. We are at the end of our Capex cycle.

At this moment to be able to reach the revenue.

Going to have sufficient capacity going into 2023.

And that would not require significant.

Speaker Change: capacity expansion or CapEx. So while we don't know disclose specifically, you know, our capacity utilization numbers, what we can say is the current capacity allows us to basically fulfill our 2022 plans as, as,

Capacity expansion or Capex, so while we don't.

Disclose specifically.

Our capacity utilization numbers, what we can say is the current capacity allows us to basically fulfill our 2022 plans as well as.

As released in our guidance and beyond.

Speaker Change: as released in our guidance and beyond. I would say that, of course, you know, the philosophy we're assuming, which I think is very important, is we're investing as the market demands a product. So it may happen that if we, you know, exceed all of our forecast and, you know, demand is picking up, we have the possibility to very quickly expand both our Portuguese and Colombian operations, but we will not do it unless the demand.

I would say that of course you know.

The philosophy, we're assuming which I think is very important is we're investing as the market demands of products. So it may happen that if we exceed all of our forecast and demand is picking up we have the possibility to very quickly expand both our Portuguese and Colombian operations, but we will not do it unless the demand.

Speaker Change: is there. So absolutely no issue for 2022 or 2023 as we're planning right now, but of course, we're always ready and could very easily trigger expansions in either of those two geographies.

Is there so absolutely no issue about 2022 or 'twenty 'twenty.

'twenty three as we're planning right now but of course, we're always ready and could very easily trigger expansion. So neither of those two geographies.

Yeah.

Okay and in terms of that kind of a chicken and egg dynamic.

Speaker Change: In terms of that kind of chicken and egg dynamic, are some of your prospective customers, before they commit to even larger scale agreements, interested in seeing more capacity?

One of your prospective customers before they commit to larger scale agreements interested in seeing more capacity put in place because they want that guaranteed capacity or are they largely willing to make large commitments.

Speaker Change: Do they want that guaranteed capacity or are they largely willing to make large commitments?

Speaker Change: without you guys making that upfront additional investment.

Without you.

Are you guys, making that upfront additional investment.

I will take two or three things number one is we are absolutely sure that we can fulfill alert our customers our agreements with the capacity that we have installed so that's number one.

Speaker Change: I would say two or three things. Number one is we are absolutely sure that we can fulfill our customers agreements with the capacity.

Speaker Change: that we have installed. So that's number one, you know, and that's an assurance. We work with our customers so that they may have that clarity. Number two, you know, remember that, you know, for instance, in Colombia, we have, you know, 1.8 million square feet of active cultivation. So that's, you know, way sufficient capacity for what we are.

In insurance, we worked with our customers. So that they may have that authority number two.

Remember that for instance, in Colombia, we have one 8 million square feet of active cultivation. So thats way sufficient capacity for what we are looking.

Speaker Change: looking at in terms of the revenue and the potential new product that we sell.

Looking at in terms of the revenue and the potential new product that we sell in Portugal. We've just expanded last year to 2.4 hectares cultivation, we have a brand new post harvest with the ability to manage significantly more cultivation space and basically you know when our claims go they see your capacity base your facility there right.

Speaker Change: In Portugal, we've just expanded last year to 2.4 hectares in our cultivation. We have a brand new post-harvest with the ability to manage significantly more cultivation.

Speaker Change: And basically, you know, when our clients go, they see our capacity, they see our facilities, they are right there, and they feel very confident, one, that the capacity is there to serve their contracts, but two, you know, that we have the capacity or the ability to expand very rapidly if required.

They're and they feel very company one that the capacity is there to serve their contracts but to.

We have the capacity or the ability to expand very rapidly if required and they have seen what we did last year in our Portugal operations was very remarkable.

Speaker Change: And they have seen, you know, what we did last year in our Portugal operations was very remarkable, you know, we did the expansion very, very swiftly, very high quality standards, working with all of our vendors, as well as with the regulators.

Expansion very very swiftly very high quality standards, working with all of our vendors as well as with the regulators to be able to get that facility up and running and in very short periods of time.

Speaker Change: to be able to get that facility up and running in a very short period of time.

So in general I would add that our are our clients on a global level are looking at.

Speaker Change: So, in general, I would add that, you know, our clients at a global level are looking at.

Speaker Change: you know, safe and sound capex, safe and sound cost, something that's actually attractive, you know, from their vantage point.

Safe and sound Capex safe and sound cost something that's actually attractive.

From their vantage point, because that signals to them nowhere, where sustainable company, we're looking to be a sustainable partnering the long term, but actually something defined off quite a peak.

Speaker Change: signals to them, you know, we're a sustainable company. We're looking to be a sustainable partner in the longterm. And that actually is something they find quite appealing.

Okay, Great and then just maybe one last one with respect to the Colombian flower export opportunity you guys are waiting on the final kind of resolution there out of the Colombian government, but curious.

Speaker Change: Okay, great. And then just maybe one last one with respect.

Speaker Change: to the Colombian flower export opportunity. You guys are, we're waiting on the final kind of resolution there out of the Colombian government, but curious what kind of qualification timeline.

What kind of qualification timeline.

Would be associated with.

Speaker Change: be associated with getting that flower.

Getting that flower.

Speaker Change: into some of your export markets once exports are approved.

And to some of your export markets at once exports are approved.

Speaker Change: Yeah, we are, we have, you know, we have announced that we are targeting our first export, you know, of high-quality, reliable, smokable cannabis flower, probably for Q4 of this year. And I want to emphasize that because, you know, we might end up, you know, exporting some flower for extraction or other purposes. But I'd say the big potential for us is really the high-THC smokable cannabis flower, and we believe that to have consistent product.

Yeah. We are we have a we have announced that we are targeting our first exports Oh.

High quality reliable smokable cannabis flower.

Before our Q4 of this year and I want to emphasize that because you know we might end up exporting some flower for extraction or other purposes, but I take the big potential for US is really the high THC smokable flower and we believe that to have consistent product going out towards different markets. We're looking at all.

Speaker Change: going out to our different markets. We're looking at starting that in Q4 of this year. And something that you have to bear in mind is, one element is to get the commercial agreements, which I would argue we have in many cases for our Colombian flour. But in addition, there are a couple of other things. One is regulation, you mentioned it.

Starting that in Q4.

This year and something that you have to bear in mind is it's one element is to get the commercial agreements, which I would argue we have and in many cases, where our Colombian flower.

But in addition, there are a couple of other things one is regulation you mentioned it.

And from our Colombian standpoint, we're very comfortable with less a resolution is going to be issued soon of course, we don't control that but that's the signal we've been receiving but then you have to work with the receiving countries you have to work with the authorities to really.

Speaker Change: And from a Colombian standpoint, we're very confident that the last resolution is going to be issued soon. Of course, we don't control it, but that's the signal we've been receiving.

Speaker Change: But then you have to work with the receiving countries, you have to work with the authorities to really, you know, pan down what they're going to require for our flour.

Penned down what theyre going to require for our flower.

Speaker Change: Uh, you know, and third has to do with the product. And, uh, you know, one thing that's very important and we've learned through our Portuguese operation is growing, uh, smokable cannabis flower in a very consistent way.

And third has to do with the product and you know one thing that's very important and we've learned through our Portuguese operation is growing smokable candidates flower in a very consistent waste not easy.

Speaker Change: not easy. It is something that's very different from growing flower from extraction, which is what Colombian companies have been doing. So we have been working day in, day out to, you know, get our product out there, get our, you know, THC contents where they need to be, and work on all of those other characteristics of the product, which are of the essence, right? What we call the organoleptic characteristics, which is, you know, size, size of the bud, trimming, you know, the terpene, the smell, look and feel in general. So

It is something that's very different from growing flower from extraction, which is what Columbia companies had been doing so we have been working day in day out to get our product out there get or THC content, where they need to be and working all of those other characteristics of the project will turn up the essence right will be called you are going to lift the characteristics which is.

As Bob types at the Bod.

Trimming the turbines and smell the look and feel in general. So we believe we're gonna have prime product out in the market again by Q4, and it's more than a matter of regulation or even the commercial contract is really getting a product that's sustainably sellable in the market and that's the product we're aiming for.

Speaker Change: We believe we're going to have prime product out in the market again by Q4, and it's more than a matter of regulation or even the commercial contracts, it's really getting a product that's sustainably sellable in the market, and that's the product we're aiming for.

Right.

Okay.

Thank you very much.

And again as a reminder, if anyone has any questions you May press star one on your telephone keypad to join in the Q&A queue.

Our next question comes from the line of Pablo Atlantic with Cantor Fitzgerald. Please proceed with your question. Yes. Thank you. So maybe a question for you first.

Speaker Change: Yes, thank you. So maybe Hank, a question for you first. In terms of that guidance of negative EBITDA of minus $20 million to minus $23 million, and CAPEX of $2 to $3 million,

So our guidance of a negative EBITDA of 22 minus 20 million to minus 23 million in Capex of two to 3 million.

What does that mean in terms of your usage of the ATM I'm. Just wondering you know based on the agreement we've got the lean and how that can play out and your financial guidance should we assume that you will need to make use of that ATM in a sizable way this year. Thanks.

Speaker Change: What does that mean in terms of your usage of the ATM? I'm just wondering, based on the agreement with Catalina and how that can play out, and your financial guidance, should we assume that you will need to make use of the ATM in a sizable way?

Well. Thank you for your question.

Speaker Change: Pablo, thank you for your question. We're constantly modeling out our cash flow projections.

We're constantly modeling out our cash flow projections.

Speaker Change: and evaluating opportunities to bring in additional capital to improve our balance sheet and improve our liquidity. The ATM facility is a tool that we may use.

And evaluating opportunities to bring in additional capital.

To improve our balance sheet and improve our liquidity.

The ATM facility is a tool that we may use.

But it's not the old mutual.

Thank you.

Okay, but I'm, sorry to maybe an assistant that wish him, but he said when you talk about other returns of capital. We are talking about equity right. So the idea would be that you would need to raise equity.

Speaker Change: Okay, but I'm sorry to maybe insist on the question, but so the idea is that when you talk about other alternatives of capital, we are talking about equity, right? So the idea would be that you would need to raise equity sometime during the rest of this year, correct?

Sometime during the rest of this year correct.

That is correct.

No. That's good thank you.

Speaker Change: And then maybe also for you, Hank, you know, two to five times on the cannabinoids, I know there's a lot of moving parts, but just maybe walk us through the mechanics of, you know, unbundle that two times or five times, low-end, high-end, what are the main drivers of whether you hit the low-end or the high-end?

And then maybe also for you Hank you know two to five times when they kind of you know I know, there's a lot of moving parts, but just maybe walk us through the mechanics of our you know.

Bundled up two times from five times low end high end what are the main the main drivers of whether you hit the low end or the high end there.

Certainly Pablo as Andreas mentioned during his opening remarks in sections, we have a number of geographies that we are actively engaged in and focusing in on.

Hank: Certainly, Pablo. As Andres mentioned during his opening remarks and sections, we have a number of geographies that we are actively engaged in and focusing in on. So, Germany is one, Brazil is another, Israel is another. Andres, would you like to add any particular color in there?

So Germany's one Brazil is another Israel is another Andrew would you like to add any particular color on there.

Speaker Change: No, I think, I mean, I'm sorry to interrupt, but maybe the question is more.

No I think with.

Without I mean, I'm, sorry to interrupt but maybe the question is more <unk>.

Speaker Change: You touched on it in the prior question, right? But you're saying Colombian flower maybe by end of the year, okay? So that can get you to a five times, I suppose. Portugal flower, maybe when, right? I'm just trying to understand, you know, it's a big, I mean, you're starting from 1 million, so it can be 2 to 5 million, right, compared to Chile, it's still a small number on an annualized basis. But for you, it's a big jump in terms of growth, right? So I'm just trying to unpack, and I know there's many moving parts, right? But I'm just trying to unpack.

I just wanted on the prior question right, but you are saying Colombian flower maybe by the end of the year. Okay. So that can get you to a five times I suppose Portugal flower maybe went right I'm just trying to understand you know it should be.

I mean, just starting with one 1 million. So it can be two to 5 million right compared to deal with a small number on an annualized basis, but for you. It's a big jump industrial growth right. So I'm, just trying to unpack and I know, there's many moving parts right, but I'm just trying to unpack you know.

What are the basics to get you a 2 million on what other yeah.

Speaker Change: what are the basics to get you to 2 million, and what are the big jumps to get to 5 million.

The big jumps to get to a $5 million.

Yes.

Speaker Change: Yes, Paolo, let me address that question briefly. I would say, again, there are three elements, you know, as we've really come to understand in the...

Let me address that question briefly I would say again there are three elements.

We've really come to understand in the end.

Yes.

Yeah.

Right.

Okay.

Yeah.

Okay.

Okay.

Oh.

Oh, Yeah announced but we have in place. So I would say that's the first part of it but the first question would be do we have the agreements in place to be able to get to 25.

Speaker Change: we have in place. So I would say that's the first variable. The first question would be, do we have the agreement in place to be able to get to 25 million? And I would say, yes, that's one thing we do have. Now, there are two other key things. Number one,

<unk> 5 million I would say, yes. That's one thing we do have now there are two other key things number one.

Speaker Change: the regulation. And that's really what is one of the main drivers of this variability, right? For, you know, let's take the different countries. I think that's important. Brazil, you know, we have some product registered already on RBC 327. We're navigating through the final processes of actually exporting some of that product and getting it to the market, you know, in Q2, as I mentioned.

The regulation and that's really what is one of the main drivers of this variability right.

For Oh, let's take the different countries, you're going to see I think that's important Brazil, we have some product registered a radio and RBC at 327, we're navigating through the final processes are actually exporting some of that product and getting it to the market in Q2 US I mentioned, but again there are things there that depend on mb's, how can be delayed a couple of months and Andy.

Speaker Change: But again, you know, there are things there that depend on a visa can be delayed a couple of months and any delay basically driven by regulation could have an impact. That's the for example, in the case in Brazil case, Germany, part of Israel, for example, Israel, as you all know, is a regulation that changes relatively swiftly.

<unk> basically driven by regulation could have an impact that's the for example, the case U K, Germany.

Part of me Israel for example, Israel is as you all know as he regulation that changes.

The Swift and changes may delay some of the exports you know further requirements changes today.

Speaker Change: And, you know, changes may delay some of the exports, you know, further requirements, changes to the, you know, GACP requirements, to the pesticides, et cetera, which have happened in the past. And we're quite fast at adapting, but it might have an impact on the regulation.

G ACP requirements to the pesticides et cetera, which have happened in the past and we're quite fast in adapting but it might have an impact on the regulation.

Uh huh.

Speaker Change: And the third key variable is the product. So I would say that this year, our flowers, I mean, our extras from Colombia have been in the market. We know where they are. We know where they're going. It's pretty predictable from a product perspective.

And the third third key variable is the product. So you know I would say that this year.

Our flower.

Our exports from Colombia had been in the market, we know where they are we know where they're going it's pretty pretty good predictable from a product perspective, our flowers from Portugal, I would say that we invested significantly most of last year getting our product up to par and we have already exports to countries like Australia, we know no.

Speaker Change: Our flower from Portugal, I would say that we invested significantly most of last year getting our product up to par and we have already exported to countries like Australia. We know the patients over there value our product and are seeing it as a very attractive go-to possibility. We're entering Germany and we'll have more of that feedback in the coming weeks and months.

The patients over there value of product and they are seeing it as a very attractive go to.

Possibility.

We were we're entering Germany, you will have more of that feedback in the coming weeks and months and similar even though that's happening where Portuguese flowering Israel. So is there a little bit of a potential I would take a risk there of how how well probably because we see you sure. So we're routines there really.

Speaker Change: And similarly, you know, that's happening with our Portuguese flower in Israel. So is there a little bit of a potential, you know, I would say.

Speaker Change: risk there of how well a product is received? Sure. So we're working there, you know, really to get our product, you know, to the standard of each market. Not a technical standard. The product's there from a technical standpoint. We're really, particularly in flower, adapting to the patient, you know, needs and preferences in each of the markets. So I would say, from a commercial perspective,

To get our product to the standard of each market. Another technical standards. The publics there from a technical side, but they're really particularly flowers adapting to the patient.

Need some preferences in each of the markets. So I would say from a commercial perspective, we have the agreements from a regulatory pathway. We've tested them right and we feel comfortable that things may be delayed and things might change them from a product perspective, there's going to be a great year for Portuguese flower, it's already selling it selling willing Australia, but it's being sent.

Speaker Change: We have the agreements from a regulatory pathways. We've tested them, right? And we feel comfortable, but things may be delayed and things might change.

Speaker Change: I'm from a product perspective, it's going to be a great year for Portuguese flower. It's already selling. It's selling well in Australia, but it's being sent to Germany and Israel imminently.

Sure is Germany, and Israel imminently.

Speaker Change: And how the market's going to receive that is, of course, going to be a key element of feedback for us. And remember, in Flower, we're also bringing new strengths to the market consistently.

And how how how the market is going to see if that isn't always going to be a key element of feedback for us and remembering flower. We're also bringing new strengths to the market consistently.

Speaker Change: in Portugal. We have several trains coming online from there.

Fortunately, we have several strains coming online from there.

Speaker Change: And last, you know, you mentioned the Colombian flower, frankly, while we expect our exports to begin in Q4 for our Colombian flower.

And lastly, you mentioned the Colombian flower frankly, while we expect our our exports to begin in Q4 for a Colombian flour we are.

Speaker Change: We are seeing our exports of Columbia flour as probably.

We are seeing our Rx.

Our exports of Columbia flower is probably.

Speaker Change: you know, something that is a,

Something that is a I.

I would say.

A potential good price as opposed to an integral part of getting to those 25 million because.

Speaker Change: a potential good surprise as opposed to an integral part of getting to those 25 million because we understand that there is still work that needs to be done there.

Because we understand that there is still need work.

Needs to be done there.

Speaker Change: Got it. Thank you. One last one. I know it's been a long call, but...

Got it thank you.

And last one I know, it's been a long call but.

You know I guess, what I struggle with and maybe some investors struggle with it said we understand you know the potential based on your local structure in Colombia, and also Portugal facilities right. But then we look at the end markets I mean look at Germany. For example, Rachael Ray very dominant on oil something shortly and then the flower Mart kids, you've heard a bunch of people bedroom count I mean, everybody's there right, but it's two or three players.

Speaker Change: You know, I guess what I struggle with, and maybe some investors struggle with, is that we understand, you know, the potential based on your low-cost structure in Colombia and also...

Speaker Change: right? But then we look at the end markets and I look at Germany, for example, right? Tilray, very dominant on oils and thin shirts. And then the flower market, you have a bunch of people, Bedrocan. I mean, everybody's there, right? But it's two or three players that have maybe 70, 80 percent.

As I have maybe 70 80 per cent to a market. So you know from our side you know in terms of our what we call the right to win or the assumption that you should be able to gain sizable penetration in those markets I mean help us out I mean, if you'd want to be more socially that'd be fun relationship. When the oil is you want to be because you gotta be grateful I would run rate kind of I mean.

Speaker Change: So, you know, from our side, you know, in terms of what we call the right to win or the assumption that you should be able to gain sizable penetration in those markets, I mean, help us out. I mean, is it going to be more because of the Epifarm relationship on the oils? Is it going to be because you have a great flower, Brown and Icana? I mean, we have to give you...

We hope to give you created for the potential opportunity of course, but I'm just trying to understand why.

Speaker Change: credit for the potential opportunity of course but I'm just trying to understand you know it's quite I know it's still a very embryonic market anyway but there are people that are very well established already there so why should we

I know, it's still a very embryonic market anyway, but there are people that are very well established ready there. So why should we believe would assume that you'd be able to gain penetration. There. If you can just maybe I'm bundle that also a little bit both on the flower side.

Speaker Change: would assume that you'll be able to gain penetration there if you can just maybe unbundle that

Speaker Change: both on the flower side and the oils and things your side.

Oil something shoreside.

Sure Paolo absolutely and I would tell you the first thing.

Speaker Change: Sure, Pablo, absolutely. And I would say, you know, the first thing, you know, that you have to remember, and we've discussed this in the past, is we're a company that's geared to do this. Our objective is really to penetrate these markets. That's our focus. We're not, we don't have our own local markets. And this is the overall, we're focused on this. We're paying a lot of attention to our commercial agreements or product on the regulation.

You have to remember and we've discussed this in the past is we're a company that's geared to do this our objective is really to penetrate these markets.

That's our focus we're not we don't have our own local markets and this is the overall we're focused on this we're paying a lot of attention to our commercial agreements or perhaps on the regulation. So we believe that those capabilities are going to give us the right to win let's but it changes by country. So that's a quick quick rundown by country.

Speaker Change: So we believe that those capabilities are going to give us the right to win. Let's, but it changes by country. So, so let's, let's do quick, quick run them by country.

Speaker Change: Let's begin with Brazil. One of the countries I believe is going to be, you know, one of the most interesting drivers of growth and surprises I would say, because it's a market, it's an extract market, it's a market that's being served by the compassionate use, but it's moving on to the RDC-327. And it's very hard to get a product registered there. You have to have the certifications, you have to have the dossiers, et cetera, and we have that. Now, it's going to change because compassionate use is important for a specific patient. RDC-327 is product available in the pharmacies of the country. So.

Let's begin with Brazil, one of the countries I believe is going to be you know one of the most interesting drivers of growth and surprises I would say because it's a market. It's a it's an extra market today, it's a market that's being served by the compassionate use but it's moving onto the RBC at 327, and it's very hard to get our product registered there you have to have the certifications you have to have the dose.

And we have that now it's going to change because compassionate use is important for a specific patient RBC three Chinese have any product available in the pharmacy in the country.

You know.

Speaker Change: What do you need to do? You have to open the path. You have to get the product and you have to get the right partners. And we believe we have the right partner partners lined up in Brazil really to grow that market which is really untapped or very limited to be tapped for RDC 327. So huge avenue of growth built based. How are we going to win based on the capabilities we've built in the past developing a product in our commercial agreements and of course our certification.

What do you need to do you have to open the path you have to get the product and you have to get the right partners, whom we believe we have the right partner.

Partners lined up in Brazil really to grow that.

That market, which is really untapped or very limited be tapped for RBC at 327, So huge avenue growth built base, how are we going to win based on the capabilities. We're building the passing of a product and leverage our commercial agreements and of course, our certifications Israel. It's a matter of partnerships we have to acknowledge we're never going to win there.

Speaker Change: Israel. It's a matter of partnerships. We have to acknowledge we're never going to win there. The market is very dynamic. It's quite sophisticated. Distribution, you know, is a key element of success there and it's proven.

It is very dynamic it's quite sophisticated distribution.

A key element of success, there and its proven.

Speaker Change: And, you know, we've worked to be able to partner with the market leader there, you know, working on getting them additional product, trying to, you know, help them go beyond Israel, becoming a real partner for them. So we see absolutely, you know, a possibility of winning in Israel. Could we do it alone? No. Can we do it with one of the greatest partners available there or in our interview the best? Sure. We believe we have the right to win because we have the products, we have the cost, we have the reliability, we have the right partners as well.

And we've worked to be able to partner with the market leader there.

Our team on getting them additional product trying to help them go beyond Israel, becoming a real partner for them. So we see absolutely with possibility of winning in Israel could we do it alone no can we do it with one of the greatest partners available there.

In your view the best sure. We believe we have the right tweak because we have the products. We have the costs. We have the reliability, we have the right partner Cisco.

Germany, You mentioned I think Germany is hey, you C C.

Speaker Change: Germany, you mentioned, I think Germany is a very interesting market because you cannot win, it's a blanket win in Germany. You have to really segment your approach and that's what we've done. On the one hand, we have our extracts with Etifarm. We think we cannot win by ourselves in the extract market. We need a true pharmaceutical company getting to the physicians, generating that demand and eventually helping us expand our portfolio. That's why we are partnering with such a company.

Very interesting market, because you cannot wind its blanket winning German half to really segment, you're approaching it and that's what we've done on the one hand, we have our extra we've had before them. We think we cannot win by ourselves and the extra market, we need a true pharmaceutical company getting to the physicians generating that demand and eventually.

This expanded portfolio. That's why we are a partner with such a company.

Speaker Change: And in Flower, we believe in a B2B model and we have partners and we've shown some of those deals.

And in flower now we believe in that model and we have partners and we've shown some of those deals partners, who have you know a significant appetite for flower. When you go to Germany, Yes, there are a lot of companies producing power, but you actually go to the pharmacy.

Speaker Change: partners who have a significant appetite for flour. When you go to Germany, yes, there are a lot of companies producing flour, but you actually go to the pharmacies, they're very unsatisfied. Availability is if something's spotty. Quality is if something's spotty. We're focused on generating products specifically for the German market, trying to fulfill exactly that reliability of supply, that quality, and that consistency.

They're they're very unsatisfied no.

<unk> ability is if something spotty quality isn't something spotty, we're focused on generating specific product specifically for the German market trying to fulfill exactly that.

The ability to supply the quality and consistency.

Speaker Change: And third, we have a team in Germany. They've been doing their work for quite some time. And that's why in Germany we believe that ICANA could be a winner. And remember, Colombia is EUGMP certified and we're working on EUGMP certification in Portugal.

Third we have a team in Germany, they've been doing their work for quite some time and that's why in Germany. We believe you know that.

Kind of could be a winner and remember Colombia, SKU GMP certified and we're working on the Eugene P certification in Portugal during the next.

A few months that will give us a unique footprint that nobody else has frankly to win there is it going to be any suffice for sure, but we have the cost we have the infrastructure. We have the team in place in Germany, and we have no everything required to win in that market and Australia I will tell you the same Australia. It's growing it's emerging we entered very early bird.

Speaker Change: a few months, that will give us a unique footprint that nobody else has, frankly, to win there. Is it gonna be an easy fight? For sure, no. But we have the cost, we have the infrastructure, we have the team in place in Germany, and we have everything required to win in that market. And Australia, I would say, it's the same. Australia, it's growing, it's emerging. We entered very early. We have very nice business there in our extract site.

We have very nice business there.

Our extra sites the flower business with cannot trick on atg.

Speaker Change: The flower business with Canatric and ANTG and others is picking up very nicely. Again, it's a matter of availability, high-quality flower, reliable with partners who trust it.

There is picking up very nicely again, it's a matter of availability high quality flower reliable with partners, who trust us. So so we believe we have and actually another term rates when they use it every day here.

Speaker Change: So we believe we have, and actually I love the term right to win and use it every day here, because that's what we have.

Because that's what we have this is what we built that right to win the differentiation. We're not just one more company a company that's geared to actually serve those markets and that's how we're setting ourselves up.

Speaker Change: This is what we've built, that right to win, that differentiation. We're not just one more company, we're a company that's geared to actually serve those markets and that's how we're setting ourselves up.

Got it thank you.

Thanks, Paul.

At this time. This concludes our question and answer session I'll now like to turn the call back over to Mr. Arnell for closing remarks.

Speaker Change: And at this time, just conclude our question and answer session.

Well, thank you very much.

Speaker Change: Well, thank you very much, and I'd like to thank everyone that attended the call today. And we look forward to speaking with our investors and analysts when we report our first quarter results in May. Thank you very much.

What I'd like to thank everyone that attended the call today, and we look forward to speaking with our investors and analysts when we report our first quarter results saw me.

Thank you very much.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.

Speaker Change: ? ? ? ?

Okay.

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