Q4 2023 Organigram Holdings Inc Earnings Call

Good morning. My name is Krista, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Orgran-Wagam Holdings fourth quarter and fiscal 2023 earnings conference call. All lines have been placed on mute to prevent any background noise.

Good morning, My name is Krista and I'll be your conference operator today at this time I would like to welcome everyone to the granite Gan Holdings fourth quarter and fiscal 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a key.

After the speaker's remarks, there will be a question-and-answer session. We ask to please limit yourselves to one question and one follow-up question. You may recue if you have further questions. Thank you. Match works. You may begin your conference.

Question and answer session. We ask you. Please limit yourself to one question and one follow up question you May re queue. If you have further questions. Thank you not just works you may begin your conference.

Thank you. Good morning, and thank you for joining us today. As a reminder, this conference call is being recorded and recording will be available on our game website 24 hours after today's call. Listeners should be aware that today's call include estimates and other forward looking information from which the company's actual results could differ. So please review the cautionary language in our press release dated December 19th, 2023 on various factors. Assumptions and risks that could cause our actual results to differ.

Speaker Change: Thank you good morning, and thank you for joining US today as a reminder, this conference call is being recorded and a recording will be available on organic web site 24 hours. After todays call listeners should be aware that today's call will include estimates and other forward looking information from which the company's actual results could differ. So please review the cautionary language in our press release dated December 19 2020.

Speaker Change: Three on various factors assumptions and risks that could cause our actual results to differ.

Further, reference will be made to certain non-IFRS measures during this call, including adjusted EBITDA, pre-cash flow, and adjusted gross margin, among others. These measures do not have any standardized meaning under IFRS and are intended to provide additional information and as such, should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Our approach to calculating these measures may differ from other issuers, so these measures may not be directly comparable. Please see today's earnings report for more information about these measures.

Speaker Change: Further references will be made to certain non <unk> measures during this call, including adjusted EBITDA free cash flow and adjusted gross margin among others.

Speaker Change: I just do not have any standardized meaning under Ian Ratner intended to provide additional information and as such not be considered in isolation or as a substitute for measures of performance prepared in accordance with IRS. Our approach to calculating these matters may differ from other issuers. So these matters may not be directly comparable please see today's earnings report for more information about these measures.

Listener should also be aware that the company relies on reputable third-party providers when making certain statements relating to market share data, unless otherwise indicated, all references to market data are sourced from high fire in combination with data from weed crawler provincial boards, retailers, and our internal sales figures. I will now turn it. I will now introduce being a Goldenberg Chief Executive Officer of Organic Grid Holding Inc. Please go ahead, Ms. Goldenberg.

Speaker Change: Listeners should also be aware that the company relies on reputable third party providers, when making certain statements relating to market share data unless otherwise indicated all references to market data are sourced from high fire and combination with data from we've color provincial boards retailers and our internal sales figures I'll now turn I will now introduce being a goldenberg chief exec.

Goldenberg: They've officer of Oregon, Inc. Please go ahead Ms Goldberg.

Goldberg: Thank you and good morning, everyone.

With me today is our Chief Commercial Officer, Tim Enberg, and Chief Strategy Officer and Interim Chief Financial Officer, Carlos DeLuca.

Speaker Change: With me today is our chief commercial officer, Ken and Burton and Chief strategy Officer, and interim Chief Financial Officer, Paolo de Luca by.

By way of reminder, Paolo served as the company's CFO for over two years, including calendars 2018 and 2019.

Speaker Change: By way of reminder, Palo served as the company's CFO for over two years, including calendars 2018 in 2019.

I'd like to take a moment to thank Barrick West for his contributions to Organogram in his time as our Chief Financial Officer.

Speaker Change: I'd like to take a moment to thank Derrick west for his contributions to organic grant and his time as our Chief Financial Officer.

All of us at Organogram wish him the best of luck as he takes time to focus on his health and recovery following a recent surgery.

All of us at organic and wish him. The best of luck as he takes time to focus on his health and recovery following a recent surgery.

Additionally, as you likely saw in our press release yesterday, we are pleased to announce the appointment of Greg Guyot as our new CFO as of January 8, 2024. Greg joins us from FINA, where he held the positions as CFO and CEO .

Speaker Change: Additionally, as you likely saw in our press release yesterday, we are pleased to announce the appointment of Greg Guyett as our new CFO as of January eight 2024.

Speaker Change: Greg joins us from Dana where he held the position of CFO and CEO.

Previously, he was CFO at Green Space Brands and held various senior finance positions at King's Set Capital and Fierce Canada.

Speaker Change: Previously he was CFO at Green space Bran and held various senior finance positions at Kings that capital and Tears, Canada.

We look forward to welcoming Greg to the team in January , and would like to thank Paolo for stepping in as interim CFO in Derek's app.

We look forward to welcoming Greg to the team in January and we'd like to thank Paolo for stepping in as interim CFO and derek's absence.

We will now discuss organograms performance for Q4 and full year fiscal 2023.

Speaker Change: We will now discuss organic <unk> performance for Q4 and full year fiscal 2023.

We are pleased with Organogram's progress throughout fiscal 23, and I'm proud to say that we have continued to differentiate ourselves as Canada's leading peer-to-play cannabis company. Despite a challenging regulatory and competitive landscape, which did contribute to a reduction in our bottom line during the second half of fiscal 2023, we have grown Organogram's market share through an unwavering focus on the consumer, our strong marketing and sales expertise, and of course, our team focus on industry leading innovation.

We are pleased with organic <unk> progress throughout fiscal 'twenty, three and I'm proud to say that we have continued to differentiate ourself as Canada's leading pure play cannabis company.

Speaker Change: By the challenging regulatory and competitive landscape, which did contribute to a reduction in our bottom line. During the second half of fiscal 2023, we have grown organic rent market share through an unwavering focus on the consumer our strong marketing and sales expertise and of course, our keen focus on industry leading innovation.

As you may have heard, Organogram won the coveted KIND Magazine Innovation of the Year award once again this year with our revolutionary ripstrip hash. We previously won this award for our Jolt's Ingestible Extract product. These awards are truly a testament to our strength in developing disruptive new products that are designed specifically to meet the needs of our consumers.

As you May have heard organic ground won the coveted kind magazine innovation of the year Award once again this year with our revolutionary Rip strip cash. We previously won this award for adults Ingestible extract product. These awards are truly a testament to our strength in developing disruptive new products that are designed specifically to meet the needs of our consumers.

As anyone in the industry will tell you, branding and marketing are challenging in the Canadian landscape due to regulations, and as a result, the consumer has been predominantly motivated by price and THC potency.

As anyone in the industry will tell you branding and marketing are challenging in the Canadian landscape do deregulation and as a result, the consumer has been predominantly motivated by price and THC potency.

This is one of the many difficulties that every LP in Canada faced.

Speaker Change: This is one of the many difficulties that every LP in Canada faces.

However, the engagement Organogram is seeing with its shred brand stands out with a community of loyal consumers who affectionately refer to themselves as shred heads.

Wherever the engagement organic grandma's seeing within shred brand stands out with a community of loyal consumers, who affectionately refer to themselves as shred heads.

Shred is even in the final round for ADCAN's social media brand of the year, an accomplishment we're very proud of. The success of this brand is owed to online and retail marketing and continued product innovation within the brand, including our revolutionary ripstrip hash, whole flower-derived THCZ gummies, and our continued success in milled flour, where we command over 50% of the market.

Speaker Change: Shred as even in the final round for <unk>, social media brands of the year, an accomplishment, we're very proud of.

Speaker Change: The success of this brand is owed to online or retail marketing and continued product innovation within the brand, including a revolutionary rich strip hash whole flower derived T. C V Gummies and our continued success in milled flower, where we command over 50% of the market.

Consumers are increasingly seeking quality, novel, and differentiated experiences which Shred has built its reputation of consistently delivering.

Speaker Change: Consumers are increasingly seeking quality novel and differentiated experiencing experiences with shredding has built its reputation of consistently delivering.

We have seen an impressive growth in several categories in fiscal 23 compared to the prior year. Ship sales and gummies have doubled, propelling organogram to the number one position in this category during Q4, and a leading position in pure CBD gummies, achieving over 50% market share nationally.

Speaker Change: We've seen an impressive growth in several categories in fiscal 'twenty three compared to the prior year chip sales and gummies have doubled propelling organic granted to the number one position in this category during Q4, and a leading position in pure CBD gummies, achieving over 50% market share nationally.

Earlier this year, we challenged the Health Canada determination stating that our jolts ingestible extracts, one of our higher margin products, were improperly classified and subsequently removed from the market. The company made an application for judicial review. The federal court granted the application and determined that there was a breach of procedural fairness by Health Canada.

Speaker Change: Earlier this year, we challenged our health, Canada determination, stating that our Joel Ingestible extracts one of our higher margin products were improperly classified and subsequently removed from the market.

Speaker Change: The company made an application for judicial review the Federal Court granted the application and determined that there was a breach of procedural fairness by health, Canada. The matter was remitted back to health, Canada for Redetermination in the meantime, and pending the outcome of final Redetermination, Joel which are now a patented organic brand product as of September.

The matter was remitted back to Health Canada for redetermination.

In the meantime, and pending the outcome of final redetermination, Jolt, which are now a patented organogram product as of September , are back in market.

Speaker Change: Our back end market.

Earlier this year we shifted our focus to growing our share of pre-roll category as ready to consume cannabis products are rapidly gaining momentum with Canadian consumers.

Speaker Change: Earlier this year, we shifted our focus to growing our share of pre roll category as ready to consume cannabis products are rapidly gaining momentum with Canadian consumers.

To achieve this, part of our 2023 CAPEX plan included commissioning Kanto's rolling and CME packaging machines, which together are capable of producing over 2.8 million pre-rolls per month.

Speaker Change: To achieve this part of our 2023 Capex plan included commissioning Qantas Rolling and see any packaging machine, which together are capable of producing over two 8 million pre rolls per month.

The response to our tube-style pre-rolls has been incredible. Consumers are impressed with everything from the aroma, packaging and flavor, down to the rolling tightness and airflow of these joints. As a result, our pre-roll ship sales rose between 2022 and 2023 with 54 percent, bringing us from the number 10 market position in Q3 2023 to the number three market position in the category by the year end.

Speaker Change: The response to our tube style pre rolls has been incredible consumers are impressed with everything from the aroma packaging and flavor down to the rolling tightness and airflow are these joints as.

As a result, our pre will ship sales growth between 2022, and 2023 was 54%, bringing us from the number 10 market position in Q3 2023 to the number three market position in the category by the year end.

The pre-roll category has seen 21.5% year-on-year growth. This growth has been driven primarily by two segments, infused pre-rolls, which grew 125%, and tube-style pre-rolls, which have grown 30%.

Speaker Change: Pre roll category has seen 21, 5% year on year growth. This growth has been driven primarily by two segments infused pre rolls, which grew 125% and tubes that pre rolls, which have grown 30% looks.

Looking at the sales over the last three months, ending November 30th, Organicram had the second best sales per skew of two-style pre-rolls, indexing it nearly two times the market leader. And since launching IPRs in Q3, we have achieved the number four market position in the month of November .

Looking at the sales over the last three months ending November 30th organic <unk> had the second best sales per SKU of two two styled pre rolled index thing at nearly two times the market leader and since launching <unk> in Q3, we have achieved the number four market position in the month of November.

Now, we did absorb some order fulfillment challenges and cost inefficiencies during the ramp up in the second half of 2023, due to a decision we made to accelerate the launch of these products to hit key seasonality.

Speaker Change: Now we did absorb some order fulfillment challenges and cost inefficiencies during the ramp up in the second half of 2023 due to a decision we made to accelerate the launch of these products to hit key seasonality.

Given our clean balance sheet and cash position, we were able to make this competitive decision to increase penetration of the shred branch into these key growth segments.

Speaker Change: Given our clean balance sheet and cash position, we were able to make this competitive competitive decision to increase penetration of the shred brands into these key growth segments.

We are already seeing improved fulfillment and throughput in our pre-roll production processes. Our aim is to continue to expand our pre-roll share while optimizing production to improve our margins in fiscal 2024.

Speaker Change: We are already seeing improved fulfillment and throughput in our pre well production processes. Our aim is to continue to expand our pre will share while optimizing production to improve our margins in fiscal 2024.

As we have said, consumer preferences are evolving and we are beginning to see purchasing decisions that are driven more and more by preference for differentiated experiences. As the Canadian leader in innovation, we are extremely excited about our lineup of new products for 2024. Part of this lineup is supported by our first U.S. strategic investment into Filos, conducted earlier this year.

Speaker Change: As we have said consumer preferences are evolving and we are beginning to see purchasing decisions that are driven more and more by preference for differentiated experiences as the Canadian leader in innovation. We are extremely excited about our lineup of new products for 2024 part of this lineup is supported by our first U S strategic investment into.

Files conducted earlier this year.

With exclusive access to Phylos' whole flower-derived THCV, we plan to bring this novel cannabinoid to consumers in a variety of formats.

Speaker Change: With exclusive access to <unk> whole flower derived T. HCV, we plan to bring this novel cannabinoid to consumers in a variety of formats.

It's important to note this is not synthetic THCV, our THCV products will be enhanced by the natural entourage effect we see with other minor cannabinoids derived from extraction or included in flour with high enough concentration.

Speaker Change: It is important to note this is not synthetic THC.

Speaker Change: Our team CEB products will be enhanced by the natural entourage effect, we see with other minor cannabinoids derived from extraction or included in flower with high enough concentration.

In 2024, Organogram Customers will be able to experience whole flower-derived THCV in edible, vape, and flower form.

Speaker Change: In 2024 organic ground customers will be able to experience whole flower derived T HCV in edible vape and file format.

Our Shreddin's THCV gummy have been in market for only five months, and we are already our seventh most popular gummy out of a portfolio of 13 by the end of the year. The experience of THCV is reported to be characteristically different from THC in that it has appetite suppressing qualities and a more focused and energizing sensory experience.

Speaker Change: Our shredding THC the gummy <unk> have been in market for only five months and we are already seven smoke.

Speaker Change: We are already our seventh most popular coming out of a portfolio of 13 by the end of the year.

Speaker Change: Variance of <unk> reported to be characteristically different from THC in that it has appetite suppressant qualities and a more focused and energizing sensory experience, we anticipate that the introduction of PCB and additional formats will help familiarize. This novel cannabinoid for Canadian consumers and according to can attract a large.

We anticipate that the introduction of THC-B in additional formats will help familiarize this novel cannabinoid for Canadian consumers. And according to CanadaTrack, a large consumption tracking study, THC-B awareness is already starting to build in Canada, which is very exciting.

Speaker Change: Consumption tracking study T. <unk> awareness is already starting to build in Canada, which is very exciting.

Beyond the benefit of THC-B, our investment of phyllos has enabled us to begin the process of transitioning a portion of our facility to more advanced seed-based production through the completion of trials. Seed-based production is the preferred growth method in mature agricultural industries as it results in lower cost grow operations and more robust stabilized genetics.

Speaker Change: Beyond the benefit of PPD, our investment in <unk> has enabled us to begin the process of transitioning a portion of our facility to more advanced feed based production through the completion of trials.

Speaker Change: Based production as the preferred growth method and mature agricultural industries as it results in lower cost grow operations and more robust stabilized genetics orgs.

Organigram intends to establish itself as a Canadian leader in seed-based cannabis production as we roll out this initiative.

Speaker Change: Organic <unk> intends to establish itself as the Canadian leader in seed based cannabis production as we rollout this initiative.

Our goal is to convert 30% of a garden to seed base by the end of fiscal 2024, delivering significant cost savings to the organization.

Speaker Change: Our goal is to convert 30% of our garden to seek base by the end of fiscal 2024, delivering significant cost savings to the organization.

Another target area for organogram of fiscal 2024 is growth in the VAPES category.

Speaker Change: Another target area for organic revenue in fiscal 2024 is growth in the vapor category organic rent made a strategic investment in green tank in fiscal 'twenty, three and exchange for 18 months of exclusivity for the revolutionary hardware.

Organogram made a strategic investment in Green Tank in fiscal 23 in exchange for 18 months of exclusivity for the revolutionary hardware.

We are gearing up for launch of our whole flower drive THCV vape, as well as vape outfitted with green tanks cutting edge vaporization technology, which reduces clogging, improves flavor and performance, and which we believe will increase the perceived potency of our vape compared to other products in the market.

Speaker Change: We're gearing up for launch of our KOL flower drive <unk> as well as bait outfitted with green tanks, cutting edge vaporization technology, which reduces quaggy improves flavor and performance and which we believe will increase the perceived potency customer base compared to other products in the market.

There's a tremendous opportunity for organogram tick cell invasives. We intend to compete much more aggressively in this category in 2024.

Speaker Change: There is a tremendous opportunity for organic growth <unk> selling data, we intend to compete much more aggressively in this category in 2024.

Part of Organogram's corporate DNA as a leader in innovation has been supported by BAP's $221 million investment into Organogram in 2021, and the resultant product development collaboration taking place in our mountain facility. I'm pleased to say that we continue to make progress on fundamental science and formulations that will form the basis of our products moving forward.

Speaker Change: Part of organic <unk> corporate DNA as a leader in innovation has been supported by <unk> $221 million of investment into organic ground in 2021, and the resultant product development collaboration taking place in our mountain facility I.

Speaker Change: I am pleased to say that we continue to make progress on fundamental science and formulations that will form the basis of our products moving forward.

Our nanotechnology formulation is being studied in a clinical setting with pharmacokinetic studies underway, which will provide Organogram with the ability to make claims regarding the onset and half-life of these products.

Speaker Change: Our nanotechnology formulation is being studied in a clinical setting with pharmacokinetics studies underway, which will provide organic ground with the ability to make claims regarding the onset and half life of these products.

Other work streams are also underway to develop innovative technologies in the edible, vape, and beverage categories in addition to new disruptive inhalation formats.

Speaker Change: Work streams are also underway to develop innovative technologies in the edible vape and beverage categories and then in addition to new disruptive inhalation formats.

VAT support has been a critical differentiator for Organigram. We have observed other strategic investors in the space over the years deploy significant capital only to sit on the sidelines.

Speaker Change: VIP support has been a critical differentiator for organic ground.

Speaker Change: <unk> other strategic investors in this space over the years deploy significant capital only to sit on the sidelines.

Furthermore, many large strategic investors elected to opt out of providing further capital. On the other hand, we have seen our relationship with BAT evolve into something far more collaborative and complement

Speaker Change: Furthermore, many large strategic investors elected to opt out of providing further capital on the other hand, we have seen our relationship with BHP evolve into something far more collaborative and complementary.

This support was further demonstrated by BAP's recent follow-on investment of $124.6 million into organogram announced on November 6. Approximately $83.1 million of this new investment is earmarked for Jupiter, a strategic investment pool managed by organogram to increase its global footprint, while the remaining $41.5 million is allocated to general footprint for Jupiter.

Speaker Change: To support was further demonstrated by the recent follow on investments of 140, $124 $6 million into organic ground announced on November six.

Speaker Change: Approximately $83 $1 million of this new investment is earmarked for Jupiter, our strategic investments will manage by organic ramp to increase its global footprint, while the remaining $41 $5 million is allocated to general corporate purposes.

This investment is a win for organogram, its shareholders, and the industry in general, as we have shown that strategic capital is available to companies that show strong governance and discipline capital stewardship.

Speaker Change: This investment is a win for organic Brian its shareholders and the industry in general as we have shown that strategic capital is available to companies that show strong governance and disciplined capital stewardship.

with no debt, capital for global expansion, and general corporate purposes, as well as improving operational efficiencies, organogram is positioned for long-term sustainable growth on the global cannabis stage.

Speaker Change: With no debt capital for global expansion and general corporate purposes, as well as improving operational efficiencies organic brand is positioned for long term sustainable growth on the global cannabis stage.

Now I'd like to provide an update to the guidance we previously gave regarding our intention to achieve free cash flow by the end of calendar 2023.

Speaker Change: Now I'd like to provide an update to the guidance. We previously gave regarding our intention to achieve free cash flow by the end of calendar 2023.

This timeline has been impacted by the acceleration of THC inflation in the Canadian marketplace, and delays in international shipments that we believe would resume in Q4.

Speaker Change: This timeline has been impacted by the acceleration of THC inflation in the Canadian marketplace and delays in international shipments that we believed would resume in Q4 rigs.

Regarding THC inflation, we are still seeing an alarming level of fraudulent THC levels in flower products supported by selective testing and lab shopping.

Speaker Change: Regarding the inflation, we're seeing we're still seeing an alarming level of fraudulent THC levels and flower products supported by selective testing lab shopping.

Some milk flour products are now claiming over 30% THC, which we know is truly an unbelievable claim.

Speaker Change: <unk> milk flower products are now cleaning over 30% THC, which we know is truly an unbelievable claims org.

Organogram continues to work with industry-straight stakeholders to raise awareness of the THC inflation issue and to advocate for the consumer by working to establish guidelines for THC testing that contribute to a fair and even playing field for licensed producers.

Speaker Change: Organic AUM continues to work with industry stakeholders to raise awareness of the THC inflation issue and to advocate for the consumer by working to establish guidelines for Tc testing that contribute to a fair uneven playing field for licenses licensed producers.

We applaud both Health Canada for their cannabis data gathering program and the OCS for their recently announced temporary THC testing efforts to uncover THC fraud. And we look forward to seeing positive changes taking place in the market because of our joint efforts to address this growing concern.

Speaker Change: We applaud both health, Canada for their cannabis data gathering program and the Ocs for their recently announced temporary THC testing efforts to uncover THC fraud, and we look forward to seeing positive changes taking place in the market because of our joint efforts to address this growing concern.

On the International Front, Organigram had a record year shipping $18.9 million in flower versus $15.1 million in 2022, an increase of 25%.

Speaker Change: On the international front organic room had a record year shipping $18 $9 million in flower versus $15 1 million in 2022, an increase of 25%. However.

However, in fiscal Q3, we experienced a slowdown in international exports due to newly enforced testing requirements in Israel.

Speaker Change: However in fiscal Q3, we experienced a slowdown in international exports due to newly enforce testing requirements in Israel.

We believed historical export volumes would resume in Q4. However, we experienced delays relating to cultivar selection and shipping challenge.

Speaker Change: We believe historical export volumes would resume in Q4, however, we experienced delays relating to cultivar selection and shipping challenges.

Our lower Q4 international sales did impact our margins, but we anticipate stronger demand for our products on the international stage as shipments to Australia and Israel are expected to resume in fiscal 2024.

Speaker Change: Our lower Q4 international sales did impact our margins, but we anticipate stronger demand for our products on the international stage as shipments to Australia, and Israel are expected to resume in fiscal 2024.

We will also begin building our export volumes to Europe as we sign two new supply agreements with Sanity Group in Germany and 4C Labs in the UK. The potential for distributing our exclusive THCV cultivars abroad is also very exciting.

We will also begin building our export volumes to Europe, as we signed two new supply agreements with <unk> group in Germany, and <unk> labs in the U K.

Speaker Change: The potential for distributing our exclusive THC cultivars abroad is also very exciting.

Lastly, our EU GMP application for our monk and facility has been submitted and we are expecting an audit process to begin in the new year. This is expected to shorten the turnaround time to get products in the hands of international medical patients while expanding opportunities to new markets.

Speaker Change: Lastly, our EU GMP application for our Moncton facility has been submitted and we are expecting an audit process to begin in the new year. This is expected to shorten the turnaround time to get product in the hands of international medical patients, while expanding opportunities to new markets.

Beyond direct international sales, the creation of the Jupiter Investment Pool is expected to reward us with additional exposure to international markets by providing us with a wider array of strategic investment opportunities in the U.S. and other legal jurisdictions.

Speaker Change: Beyond direct international sales the creation of the Jupiter investment pool is expected to reward us with additional exposure to international markets by providing us with a wider array of strategic investment opportunities in the U S and other legal jurisdiction.

Operationally in Monkton, fiscal 2023 was transformative. We harvested 87,000 kilograms up from 54,000 kilograms in fiscal 2022, a 61 percent increase, and executed game-changing CAPEX. We have invested in a variety of efficiency-improving and cost-cutting projects that will result in significant savings in fiscal 2024.

Operationally and Moncton fiscal 2023, what's transformative we harvested 87000 kilograms up from 54000 kilograms in fiscal 2022% to 61% increase and execute a game changing capex, we have invested in a variety of efficiency improving in cost cutting project.

Speaker Change: That will result in significant savings in fiscal 2024.

To recap on some of these initiatives, we have internalized some of our testing requirements. We implemented remediation.

To recap on some of these initiatives given internalize some of our testing requirements, we implemented remediation in house with.

We commissioned rapid drying machines, which has decreased drying time from 7 to 10 days to 2 days, while increasing the available footprint in our facility for hangdried flowers. We automated our shred packaging, which reduced headcount. Our new Kansas pre-roll machine is producing tube-style pre-rolls at scale. And our new speed mixer has allowed us to infuse our milled cannabis for infused pre-rolls with distillate, diamonds, and botanical terpenes in a one-step process.

Speaker Change: We commissioned rapid drawing machines, which has decreased drawing time from seven to 10 days to two days, while increasing the available footprint in our facility for hanged dried flower we.

Speaker Change: Automated our shred packaging, which reduced head count our new campus pre rule machine is producing tube style pre rolls at scale and our new speed mixer has allowed us to infuse our milk candidates for infuse pre rolls with distillate diamonds, and botanical chirping and a one step process.

With this $29 million 2023 CapEx spend behind us, we are now focusing on dialing in some of the newer processes we have put in place to drive further efficiencies.

With this $29 million 2023, capex spend behind US we are now focusing on drilling in some of the newer processes. We have put in place to drive further efficiencies in.

In fiscal 2023, we realized approximately $4.3 million in savings related to these initiatives. In fiscal 2024, these enhancements will deliver an additional $4.6 million, and the conversion of a portion of our garden seed-based production, along with other initiatives, are estimated to realize an additional $5.3 million in savings to bring the total aggregate savings in fiscal 2024 to $10 million.

Speaker Change: In fiscal 2023, we realized approximately $4 $3 million in savings related to these initiatives in fiscal 2024 of these enhancements will deliver an additional $4 6 million and the conversion of a portion of our garden seed based production along with other initiatives are estimated to realize an additional $5 3 million.

Speaker Change: And savings to bring the total aggregate savings in fiscal 2000 $24 million to $10 million.

At our Hash and Crafts Cannabis Facility and Lack Superior, we just completed our first harvest, resulting from the expansion of the facility. The 30,000 square foot expansion is complete with four net new grow rooms, three drying rooms, a 5,000 square foot warehouse, and large packing area.

Speaker Change: At our Hashman craft cannabis facility and lacked superior we just completed our first harvest, resulting from the expansion of the facility.

Speaker Change: <unk> 30000 square foot expansion is complete with four net new grow rooms, three drawing room, a 5000 square foot warehouse and large packing area.

We launched Shred RIP strips, Holy Mountain and Woola pressed hash, Tromblon black afghan hash, and high Alpen's hash in fiscal 2023. Our hash production earlier this year was about 100 to 150 kilograms of hash per month, up to a peak of 350 kilograms per month in Q4.

Speaker Change: Launched shred Rip strips, Holy Mountain and rollout press cash trombone, black Afghans hash and high Alpine smash in fiscal 2023.

Speaker Change: <unk> production earlier this year with about 100 to 150 kilograms attach per month up to a peak of 350 kilograms per month in Q4.

Our focus at Lake Superior for fiscal 2024 will be on our continued performance in hash and optimizing our garden to produce high quality, high margin craft flowers.

Speaker Change: Our focus at like superior for fiscal 2024 will be on our continued performance and hash and optimizing our garden to produce high quality high margin craft flower.

And on that note, I'd like to turn the call over to Paolo to discuss our financial results for Q4 and fiscal 2024. Thank you, Vina.

Speaker Change: And on that note I'd like to turn the call over to Paulo to discuss our financial results for Q4 and fiscal 2024.

Paulo: Thank you Bettina.

I'm pleased to be speaking here to you today.

Before I go any further, I'd like to remind everyone that OrganiGraph made a decision earlier in the year to change its fiscal year end from August 31st to September 30th.

Paulo: Before I go any further I'd like to remind everyone that organic ground made a decision earlier in the year to change its fiscal year end from August 31 to.

At September 30th.

We made this decision for a few reasons, including to align our quarters with more traditional fiscal quarters, which allows better comparisons to our other public peers and also to ease operational efforts around shipping cutoffs and inventory.

Paulo: We made this decision for a few reasons, including to align our quarters with more traditional fiscal quarters.

It allows better comparisons to our other public peers.

Paulo: It also to ease operational efforts around shipping cutoffs in inventory counts.

we believe that this change will streamline the natural reporting efforts over

Paulo: We believe that this change will streamline financial reporting efforts overtime.

As a result of the company's change in its fiscal year end from August 31st to September 30th, and in order to bridge fiscal 2023 to fiscal 2024.

Paulo: As a result of the company has changed its fiscal year end from August 31 to September 30.

Paulo: And in order to bridge fiscal 2023 months of fiscal 2024.

The financial information presented here for the current quarterly period is for the four months from June 1st, 2023 through September 30th, 2023, and for the basically 2023 year consists of the 13 months from September 1st, 2022 through September 30th, 2023.

Paulo: Financial information presented here for the crew quarterly period is for the four months from June one 2023 through September 32023.

Paulo: For the fiscal 2023 year consists of 13 months from September one 2022 through September 32023.

Whereas the comparative periods for 2022 are for the three months from June 1st 2023 through August 31st 2023.

Whereas the comparative periods for 2022 or for the three months from June one 2023 through August 31st 2023.

and the 12 months from September 1st, 2021 through August 31st, 2022, respectively.

Paulo: And the 12 months from September one 2021 through August 31 2022, respectively.

Going forward, our quarters will now end with December , March, June , with September being our year end.

Paulo: Going forward our quarters will now end with December March June with September being our yearend.

Year-over-year, gross and net revenue increased by 12% and 11% respectively are primarily due to net increases in the recreational revenue of $15.1 million and net increases in international revenue of $3.7 million, partially offset by a decrease in domestic medical sales.

Paulo: The year over year gross and net revenue increased by 12% and 11% respectively, primarily due to net increases in the recreational revenue of $15 1 million.

Paulo: Increases in international revenue of $3 7 million, partially offset by a decrease in domestic medical sales.

In fiscal Q4, gross revenue increased by 9% and net revenue increased by 1% compared to Q4 fiscal 2022.

Paulo: In fiscal Q4 gross revenue increased by 9% of net revenue increased by 1% compared to Q4 fiscal 2022.

The increases over the comparative periods were primarily due to the extended current period offset by a decrease in international revenue in fiscal Q3 and Q4, as Beena mentioned. Price compression as a result of THC inflation did have an impact on this order.

The increases over the comparative periods were primarily due to the extended for a period of.

Paulo: The decrease in international revenue in fiscal Q3, and Q4 as Peter mentioned price compression as a result, the PUC inflation did have an impact on the border.

Year-over-year cost of sales increased to $136.4 million from $119 million in fiscal 2022.

Paulo: Year over year cost of sales increased to $136 4 million from $119 million in fiscal 2022.

Organograms cost of sale in Q4 pistol 23 was 42.9 million compared to 36.7 in Q4, 22, an increase of 16%.

Paulo: Organic cost of sale in Q4 fiscal 'twenty three was $42 9 million compared to $36 seven in Q4 2022, an increase of 16%.

The increase in the cost of sales over the same prior year period was primarily due to an increase in inventory provisions and sales volume in the adult use recreational cannabis market.

Paulo: The increase in the cost of sales over the same period. Prior year period was primarily due to an increase in inventory provisions and sales volume in the adult use recreational cannabis market.

Included in Q4 fiscal 233s cost of sales was 4.8 million of inventory provisions that primarily related to NRB adjustments for whole flower now being used for derivative productions, including for Keith, for example, Keith and extraction with a smaller amount related to unsayable inventory.

Paulo: Included in Q4 fiscal 'twenty three <unk> cost of sales was $4 $8 million of inventory provisions that primarily related to NLP adjustments.

Paulo: For whole flower now being used for derivative productions, including for Chief for example, Keith and extraction with a smaller amount related to unsalable inventories.

We harvested approximately 28,000 kilos of flour during Q4 fiscal 23 compared to 16,000 kilos in Q4 2022, which represents an increase of 74 percent.

We harvested approximately 28000 kilos of flowers during Q4 fiscal 'twenty three.

Paulo: Third to 16000 kilos in Q4, 2022, which represents an increase of 74%.

The increase was primarily attributable to the extra month of cultivation but also the availability in 23 of increased cultivation, planting and additional grow rooms being available.

Paulo: The increase was primarily attributable to the extra months of cultivation, but also the availability in 'twenty three increased cultivation pricing and additional grow rooms being available.

In Q3, we accelerated a change in the operational conditions for plant care to increase THC level.

Paulo: In Q3, we accelerated or changed in the operational conditions for client care to increase THC levels.

This resulted in a decrease to plant yields, which had a negative impact to our cost of cultivation, and which temporarily reduced the company's gross margins and gross margin rate.

Paulo: This resulted in a decrease to plant yields which had a negative impact to our cost of cultivation, and which temporarily reduced the companys gross margin and gross margin rate.

By the end of Q4, plant yields increased over 16% to 163 grams of plant from 141 grams of plant at the end of Q3 and average THC increased by 14% since fiscal 2022.

Paulo: By the end of Q4 yields increased over 60% to 163 ground to the plant from $114 41 grams with clients at the end of Q3 as average THC increased by 14%.

Paulo: 2022.

We continue to optimize growing conditions during Q4. While yields and THC content will fluctuate over time, the trend we have seen over the last six months has been larger yields and higher potency.

Paulo: We continue to optimize growing conditions during Q4.

Paulo: While yields and THC content will fluctuate over time the trend we've seen over the last six months has been larger yields and higher potency.

these higher yields will reduce the cost of cultivation in the long run, as will the cost-saving production initiative's BINA Outline earlier.

These higher yields will reduce the cost of cultivation in the long run.

Paulo: Well the cost saving production initiatives beta outlined earlier.

As this flower is sold, we will achieve a higher gross margin rate, and we expect to be able to have an overall lower cost of cultivation for fiscal 24 as a whole.

Paulo: As this flowers sold we will achieve a higher gross margin rate, but we expect to be able to have an overall lower cost of cultivation for fiscal 'twenty four as a whole.

As I mentioned, months to months and quarter to quarter harvest yields and cost of cultivation will fluctuate for a variety of reasons.

Paulo: As I mentioned month to month and quarter to quarter harvest yields and cost of cultivation will fluctuate for a variety of reasons, but the overall long term trend has been clear improvement.

but the overall long-term trend has been clear and proof.

In fiscal 23, which includes the extra month, we harvested just under 90,000 kgs of flour, which even normalized for 12 months would be 83,000 kgs.

Paulo: In fiscal 'twenty, three which includes the extra months, we harvested just under 90000 cases flower, which even normalized for 12 months would be 83000 <unk>.

That works out to approximately 6.9,000 kgs a month.

Paulo: That works out to approximately $6 9000 page views a month.

Our goal is in 2024 to improve upon that 6.9,000 average kilos a month average we saw in 2023.

Paulo: Our goal is 24 to improve upon that $6 9000 average a.

Paulo: Among the average we saw in 2023.

Year-over-year adjusted gross margin increased to 25 percent or 40.2 million up from 23 percent or 33.4 million in fiscal 22.

Year over year, adjusted gross margin increased to 25% or 42 2 million up from 23% or $33 4 million in fiscal 'twenty two.

Paulo: The increase was primarily due to an increase in the recreational revenue international revenue, partially offset by a decrease in license sales.

Paulo: The temporary cessation of Joel sales between April and September.

On an adjusted basis, Q4 gross margin was 7.9 million or 17% of that revenue compared to 10.4 million or 23% in Q4 fiscal 22.

Paulo: On an adjusted basis Q4, gross margin was $7 9 million or 17% of revenue compared to $10 4 million or 23% in Q4 fiscal 'twenty two.

The compression and adjusted gross margin was primarily attributable to price reductions that lowered net revenue.

Paulo: The compression in adjusted gross margin was primarily attributable to price reductions lowered net revenues.

Temporary higher flower costs, a decrease in international sales, and higher cost of sales per unit, which was correlated to higher inventory provisions for unfillable inventories and net RV adjustments.

Paulo: Emperor temporary higher flour costs, a decrease in international sales and higher cost of sales per unit, which was correlated to higher inventory provisions for Unsalable inventories and then there'll be adjustments.

On a year-over-year basis, SG&E increased to $71.8 million compared to $59.8 million in fiscal 2022.

Paulo: On a year over year basis, SG&A increased to 71 8 million compared to $59 8 million in fiscal 2022.

The increase in expenses mainly relates to the extended fiscal period, higher employee costs due to more GNA full-time employees to support the company's growth, general wage.

Paulo: The increase in expenses, mainly relates to the extended fiscal period.

Paulo: Employee costs due to more G&A fulltime employees to support the company's growth <unk>.

Paulo: General wage increases.

and higher professional fees and higher technology costs, which included 7.7 million in ERP installation costs for the year.

And higher professional fees and higher technology costs, which included $7 7 million, an ERP installation cost for the year.

By way of comparison, ERP installation costs in fiscal 22 were 3.2 million.

Paulo: By way of comparison ERP installation costs in fiscal 'twenty, two were $3 2 million.

SGMA, excluding non-cash share-based compensation, increased to $21.6 million in Q4-23 from $15.7 million in Q4-22.

Paulo: SG&A, excluding noncash share based compensation increased to $21 $6 million in Q4, 2003 from $15 7 million in Q4 2002.

The increase in expenses was primarily due to the extended fiscal period and to a lesser degree higher professional fees.

Paulo: The increase in expenses was primarily due to the extended fiscal period and to a lesser degree higher professional fees.

ERP is also factor in explaining Q423 increase over Q422.

Paulo: ERP is also a factor explaining Q4 'twenty three increase over Q4 2002.

In 2023, Q4 ERP costs were 2.4 million in the period versus 1.8 million in the prior period.

Paulo: In 2023, Q4, ERP costs were $2 4 million in the period versus $1 8 million in the prior period.

We are pleased to report that the heavy lift on our current ERP implementation is mostly behind us and we have just over 1.1 million 1 million budgeted for fiscal 2024 mostly in Q1 2024.

Paulo: We are pleased to report that the heavy lift on our current ERP implementation is mostly behind us.

Paulo: We have just over 1 million $1 million budgeted for fiscal 2024, mostly in Q1 2024.

In fiscal 24, we anticipated some fluctuations in adjusted EBITDA between quarterly periods with stronger adjusted EBITDA metrics expected in the second half of the year as the company's production optimization of recent high growth categories such as tube style pre-rolls and

Paulo: In fiscal 'twenty, four we anticipated some fluctuations in the dust.

Paulo: We anticipate some fluctuations in the adjusted EBITDA between quarterly periods with stronger adjusted EBITDA metric is expected in the second half of the year as.

Paulo: As the company's production optimization of recent high growth categories, such as tube style pre rolls and infused pre rolls is fully recognized in the financials.

However, we remain confident in the upward trajectory of our earnings on an annualized basis as seen over the last recessal year.

Paulo: However, we remain confident in the upward trajectory of our earnings on an annualized basis I've seen over the last three fiscal years.

supported by newly enhanced production processes and cost-faving initiatives being outlined.

Paulo: Supported by the newly enhanced production processes and cost saving initiatives <unk> outlined.

and beginning international shipments to Germany and the UK while continuing to supply Australia and Israel.

Paulo: Beginning international shipments to Germany, and the UK, while continuing to supply Australia.

Paulo: In Israel.

In the quarter, while adjusted EBITDA was negative 2.4 million compared to positive 3.2 million in Q4 2022, on an annual basis adjusted EBITDA and fiscal 23 increase to positive 6 million compared to positive 3.5 million in fiscal 22, an increase of 71 percent.

Paulo: In the quarter, while adjusted EBITDA was negative $2 4 million compared to positive $3 2 billion in Q4 of 2022.

On an annual basis adjusted EBITDA in fiscal 'twenty, three increased to positive $6 million compared to positive $3 5 million in fiscal 'twenty, two an increase of 71%.

On a year-over-year basis, SG&A increased to $72.4 million compared to $59.8 million in fiscal 2022.

On a year over year basis, SG&A increased to $72 4 million compared to $59 8 million in fiscal 'twenty two.

Net loss in fiscal 23 was $248.6 million compared to $14.3 million in fiscal 22.

Net loss in fiscal 2003 was $248 6 million compared to $14 3 million in fiscal 'twenty two.

The vast majority of the net loss for the year is attributable to full year impairment charges of 210 million consisting of 165 million on property plants and equipment and 45 million on intangible assets in Goodwill.

Paulo: The vast majority of the net loss for the year is attributable to full year impairment charges of $210 million, consisting of $165 million on property plant and equipment and $45 million on intangible assets and goodwill.

Of these impairments, 191 million of the impairments were taken in Q3, an announced last quarter of which 38 million related to intangibles and goodwill and 153 million was attributable to PP&E.

These impairments of $191 million of the impairments were taken in Q3 and announced last quarter of which $38 million related to intangibles and goodwill and 153 million was attributable to PP&E.

The impairment test completed in Q3 was warranted by the company's market capitalization trading significantly below its shareholders' equity, combined with Q3's operational results.

Paulo: The impairment test completed in Q3 was warranted by the company's market capitalization trading significantly below its shareholders' equity combined with Q3's operational results.

A meaningful contributing factor to the quantum of the impairment charge was related to the impact of flower sales and margins due to THC inflation.

Paulo: A meaningful contributing factor to the quantum of the impairment charge was related to the impact of flower sales and margins due to THC inflation.

When considering the significant sales in margin, that flower product categories collectively contribute to organograms financial results, this is a key drive to the amount of the impairment loss.

Paulo: When considering the significant sales and margin.

Paulo: Flower product categories collectively contribute to organic growth financial results. This was a key driver to the amount of the impairment loss.

It should be noted that all things remaining equal, impairment losses recorded on the company's PPE will result in improvement to the gross margin rate going forward.

Paulo: It should be noted that all things remaining equal impairment losses recorded on the Companys PP&E will result in an improvement to the gross margin rate going forward.

In Q4, additional impairments were taken in the amounts of 11.6 million on PT and E and 7 million on intangibles, mainly due to refinements in the impairment model related to macro sector and company specific assumption.

Paulo: In Q4 additional impairments were taken in the amounts of $11 6 million on PP&E.

Paulo: $7 million of intangibles, mainly due to refinements in the impairment model related to macro sector. The company specific assumption inputs.

During Q4-23, organograms net loss was $33 million compared to a net loss of $6.1 million in Q4-22.

Paulo: Drink during Q4, 'twenty three organic revenue and net loss was $33 million compared to a net loss of $6 1 million in Q4 22.

The increase in net losses primarily due to the aforementioned impairment losses, I collectively totaled 18.

Paulo: The increase in net loss was primarily due to the aforementioned impairment losses.

Paulo: Collectively totaled $18 7 million in the quarter.

and to a lesser extent lower international revenue than previous quarters, and the lingering effects of price compression.

Paulo: And to a lesser extent lower international revenue in the previous quarters, and the lingering effects of price compression.

From a standard cash flows perspective, net cash used in operating activities after working capital changes was $38.8 million in fiscal 2023 compared to $36.2 million in the prior year.

Paulo: From our statement of cash flows perspective, net cash used in operating activities. After working capital changes was $38 8 million in fiscal 'twenty, three compared to $36 2 million in the <unk>.

Paulo: Higher year.

The increased year-over-year includes higher R&D costs and higher ERP implementation costs, both of which are investments in the company's long-term success.

Paulo: The increase year over year includes higher R&D costs, and higher ERP implementation cost both of which are investments until the company's long term success.

Cash provided by investing activities in fiscal 23 was 4.9 million compared to cash provided of 44 million in 22. Much of the explanation for the positive figures in both years is the redemption of short-term investments into cash.

Paulo: Cash provided by investing activities in fiscal 2003 was $4 9 million compared to cash provided of $44 million in 'twenty two.

Paulo: Much of the explanation for the positive figures in both years as the redemption of short term investments into cash but.

But on the overall side, OrganiGram deployed 29 million in PP&E during the year and another 10 million relates to the investments in green tank and pylos.

Paulo: But on the ultimate side organic brand deployed $29 million of PP&E during the year.

And another $10 million relates to the investments in green taken titles.

These expenditures are all geared to obtaining long-term competitive advantages and to drive productivity gains.

Paulo: These expenditures are all geared to obtaining long term competitive advantages to drive productivity gains.

In the previous fiscal year of 2022, our Grandagram had invested 48.7 million in PPNE.

Paulo: In the previous fiscal year 2022, organic on had invested $48 $7 million in PP&E.

Thus, 2023 represented in a reduction in PPE investment and 2024 will be a further reduction of the CAPEX programs almost entirely complete now.

Paulo: Thus 2023 represented a reduction of the PPE PP&E investment and 2024, it will be a further reduction of the capex programs almost entirely complete now.

This is a good news story for the company as we will now be in harvesting mode as we optimize all these additions to the company and are on the path to long term sustainable margin.

Paulo: This is a good news story for the company.

Paulo: We will now be in harvesting mode as we optimize all of these additions to the company.

We're on the path to long term sustainable margins.

In terms of our balance sheet, we are pleased to state that we have one of the healthiest balance sheets of the space.

Paulo: In terms of our balance sheet. We are pleased to state that we have one of the healthiest balance sheets in the space.

As of September 30th, 2023, and by way of reminder, none of this takes into consideration, recently announced deal with the AP on the Jupiter private place.

Paulo: As of September 32023.

Paulo: By way of reminder, none of this takes into consideration.

Paulo: Certainly announced deal with BP on the Jupiter private placement.

We had unrestricted cash of $33.9 million and restricted cash of $17.9 million for our total cash position of $51.8 million with negligible debt.

Paulo: We had unrestricted cash of $33 9 million and restricted cash of $17 9 million for a total cash position.

Paulo: $51 8 billion with negligible debt.

While the company expects to report, expects to continue to report growth in year-over-year, adjusted EBITDA, curious work when the company achieves significant increases in sales will result in increases in the receivables and this will negatively impact cash from operating activities.

Paulo: While the company expects to report.

Paulo: We expect to continue to report growth in year over year adjusted EBITDA curious when the company achieves significant increases that sales will result in increases to receivables and this will negatively impact cash from operating activities.

However, given that our major Catholic spends are now behind us, we are seeing increased yield, improving production efficiency, and are anticipating increases in international sales.

Paulo: However, given that our major capex spends are now behind US we are seeing increased yields improving production efficiency.

Paulo: And are anticipating increases in international sales.

Achieving free cash flow positivity in fiscal 2024 is an achievable target, which we are currently budgeting for in the second half of the year.

Paulo: Achieving free cash flow positivity in fiscal 2024 is it achievable targets, which we are currently budgeting for in the second half of the year.

Our existing cash balances already have a strong position.

Paulo: Our existing cash balances.

Paulo: Already have us in a strong position.

The BAT private placement, expected to close in January , will only buttress the company further.

Paulo: The private placement expected to close in January will only buttress the company further.

We believe that balance sheet strength will be one of the key determinants of the long term winners of the space along with market share strength operational efficiencies and investment in R&D and product innovation.

Paulo: We believe that balance sheet strength will be one of the key determinants of the long term winners in the space along with market share strength operational efficiencies.

The investment in R&D and product innovation.

We also believe that balance sheet strength will offer financial flexibility as M&A and commercial opportunities increase in Canada.

Paulo: We also believe that balance sheet strength will offer financial flexibility is M&A and commercial opportunities increase in Canada.

Players struggle with debt loads, stretch payables, including unpaid exact taxes, and the inability to invest in automation and other production efficiencies needed to get down the cost curve in a highly competitive market.

Players struggle with debt loads stretching payables, including unpaid excise taxes, and the inability to invest in automation and other production efficiencies needed to get down the cost curve in a highly competitive market.

In short, many of the recent financial and strategic transactions that we've announced are geared with a view to sustainable, long-term competitive advantages.

Paulo: In short many of the recent financial and strategic transactions that we've announced.

Paulo: Our geared with a view to sustainable long term competitive advantages.

This concludes my comments I will now turn the call back Davina.

Thanks, Paolo. And as Paolo just said, the Canadian industry continues to grow, yet it's saddled by high excise taxes and restrictive regulations. We've seen LPs shuttering operations and entering creditor protection, while others are seeking short-term extensions on their maturing debts.

Davina: Thanks, Paolo and as Paolo just said the Canadian industry continues to grow yet is saddled by high excise taxes and restrictive regulations.

Davina: Lp's shuttering operations and edit entering creditor protection, while others are seeking short term extensions on their maturing debts.

Davina: They're an astonishing number of Lps are in arrears on their excise taxes, and we are beginning to see the CRA hold these Lps accountable given these issues. It is not surprising that some mlps with mislabeled products to artificially inflate THC levels to increase sales.

Davina: However, this was simply not sustainable and we expect to see more of our peers struggle to survive in the coming year Org.

Organic ground continues to fortify itself as current market forces put pressure on the industry and is positioned to be highly opportunistic to summarize our success against this backdrop, we've seen impressive growth in several product categories throughout 2023, despite the industry challenges, we defended our market share as our brands and market leading.

Davina: Innovations are continuing to resonate with consumers organic ground ended the year and the number two position among Lps in the recreational market. We were number one milled flower number one in cash number one and gummies number three in flour and number three and pre rolls, we invested heavily in cost cutting and efficiency driving project.

Davina: And in our facilities to help us realize additional savings for fiscal 2024, we also invested strategically to acquire rights to technologies like Green tanks, vaporization hardware and followed to see based genetics.

Our focus is now on further strengthening our pre-roll offerings and shifting towards winning in the vape category while introducing products in the higher margin craft flower market.

Our focus is now on further strengthening our payroll offerings and shifting towards winning in the vape category, while introducing products in the higher margin craft flower market.

The recently announced $124.6 million dollar follow-on investment from the AT is designed to better assist us in capitalizing on opportunities in domestic and international markets.

<unk> announced $124 $6 million follow on investment from the <unk> is designed to better assist us and capitalizing on opportunities in domestic and international markets. While the product development collaboration continues to work on the development of novel Cannabinoid innovation and formulations that will support our product pipeline in years to come.

while the product development collaboration continues to work on the development of novel cannabinoid innovation and formulations that will support our product pipeline in years to come. We are set up to achieve an improved margin profile on fiscal 24 supported by production efficiencies, better fulfillment, and expansion into more international markets.

Davina: We are set up to achieve an improved margin profile in fiscal 'twenty four supported by production efficiencies better fulfillment and expansion into more international markets.

We have effectively no debt, sufficient cash, and an industry-leading portfolio of products and brands that consumers love, supported by industry-leading production capabilities. And with that, I want to thank you for joining us today. Operator, you may open the call for questions.

Davina: We have effectively no debt and sufficient cash and an industry, leading portfolio of products and brands that consumers love supported by industry, leading production capabilities and with that I want to thank you for joining US today, operator, you may open up the call for questions.

Thank you. As a reminder, if you would like to ask a question, please press star followed by the number one on your telephone keypad.

Speaker Change: Thank you as a reminder, if you would like to ask a question. Please press star followed by the number one on your telephone keypad.

And if you would like to withdraw your question, please press star one again.

Speaker Change: And if you would like to withdraw your question. Please press star one again.

Your first question comes from the line of Erin Gray from Alliance Global Partners. Please go ahead. Hi, good morning and thank you very much.

Speaker Change: Your first question comes from the line of Aaron Grey from Alliance Global Partners. Please go ahead.

Hi, good morning, and thank you very much for the questions.

Speaker Change: So first for me I just wanted to touch on gross margins.

So you call out a couple of things that impacted some of the gross market pressure, including pricing from the higher flyer costs, higher costs per unit.

Speaker Change: Called out a couple of things that impacted some of the gross margin pressure, including pricing some higher flier cost higher cost per unit as.

as well as the inflation impact and international. So, just we think sequentially, you know, down 200 basis points, 90 percent, 70 percent can help to quantify maybe a rank order, which one has been, you know, the biggest impact.

Speaker Change: Well as you see inflation impact in international So because you would think sequentially down 200 basis points, 90%, 70% can you help to quantify maybe rank order, which one has been the biggest impact to that margin pressure and then how we think about the margins on the near term can you spoke to international backhaul.

to that margin pressure, and then how we think about the margins on the near term, because you spoke to international, you know, back up in fiscal year 2024.

Speaker Change: In fiscal year 2024 is that more of a next quarter dynamic or do you think it would be more in the back half and then how do we think about the impact in terms of the Canadian marketplace on gross margin.

Is that more of a next quarter dynamic or do you think it'll be more of a back half?

And then how do we think about, you know, the impact in terms of the Canadian marketplace on Ghost Margin as T8's place remains, so.

Speaker Change: Keith question remains so.

Any color on your close market and expectations in the near to medium term would be helpful. Thank you. Perfect, Paolo, I'll put that one over.

Speaker Change: Color on your gross margin expectation in the near to medium term would be helpful. Thank you.

Speaker Change: Perfect Palo Alto I'll put that one over to you.

Great: Great. Thanks, Dana Thanks for the question Erin.

On margin, look, the highest margin opportunity for us always is international, so to the extent that we have international sales, that's going to drive.

Great: On margin lift.

Great: The highest margin opportunity for us always is international so to the extent that we have the international sales thats going to drive.

margin and that's obviously going to depend on the mix of the size of that of those sales and you know comparison to the sales that we have in the rec market and so just by nature historically you know international sales have been lumpy and that's something that we're working to address and we're working to address that by.

Great: Margin then that's obviously it would depend on the mix of the size of that of those sales and comparisons to the.

Great: The sales that we have in the rec market and so just by nature historically.

Great: <unk> sales have been.

Great: Lumpy and that's something that we're working to address and we are working to address that by diversifying.

diversifying the country that we sell to to have more than two countries or moving to four countries that we we hope to expand that even further. And then we're possible to diversify within the customers within those countries and then also to spread out the ship.

Great: The countries that we sell to to have more than two countries or moving to four countries.

Great: We hope to expand that even further.

And then where possible to diversify within.

Great: With the customers within those countries and then also to spread out the shipments so by doing that over time will avoid the issue that we've had historically, which is essentially lumpy margins.

So by doing that over time, we'll avoid the issue that we've had historically, which is essentially lumpy margins.

at least, I would say at least half of that is related to international sales. So to answer your question, international by far is the most important thing in terms of determining margin mix for the quarter.

Great: At least I would say at least half of that is related to international sale. So to answer your question International as far as the most important thing in terms of determining margin mix for the quarter.

Um, all of the products that were now, um, you know, growing,

Great: All of the products that we are now.

Great: Growing in.

good margin profiles for us when they are operating and when we're producing them at a steady state and avoiding all the ramp-up issues that we have, you know, as almost any other people have with their, you know, the initiation of those products. So, you know, we touched, we spent a lot of time on the call and compared comments talking about infused pre-rolls and tube-solve pre-rolls.

Have good margin profiles for us when they are operating in when we're producing at a steady state.

Great: And avoiding all the ramp up issues that we have.

Almost ideal people out there.

Great: The initiation of those products. So we touched we spend a lot of time on the call in the prepared comments talking about pre rolls and tube saw pre rolls I could tell you that right now, but we that we're producing them right now is a lot better than the way, we're producing them three or four months ago.

I can tell you that right now, the way that we're producing them right now is a lot better than the way we were producing them three or four months ago. And so while we could have made a decision to just optimize and not be in market, we would have lost the opportunity to gain market share. And I think it's very important that, especially in growing categories that you get in there when you can. And I think where we're happy with.

So while we could have made the decision to just optimize and not be in market. We would have lost the opportunity to gain market share and I think it's very important.

Great: Especially in growing categories that you get in there when you can and I think where we're happy with.

we're happy with the way that we can kind of clean space and that clean share in those spaces and that's going to continue to grow.

Great: We're happy with the way that we can kind of clean space.

Great: <unk> share of those spaces, and thats going to continue to grow and so I would say if you wanted to look at the margin.

And so I would say, if you want to look at the margin,

profile of our quarters in 2023 versus the way that we expected to play it on 2024, it's almost a mirror image. So whereas in 2023, we started off strong with margin and then it declined.

The profile of our quarters in 2023 versus the way that we expect that to play out in 2024, it's almost a mirror image. So whereas in 2023, we started off stronger with margin and a decline.

in 2024 will be the exact opposite. So I think that we certainly in our budget and I don't want to make this forward guidance but the way we've planned the year out our margins should get back to the same levels they were historically and it's not even better.

In 2024 will be the exact office opposite so I.

Great: I think that we see.

Great: Certainly our budget.

Great: And I don't want to make this forward guidance, but our the way we planned the euro our margins should get back to the same levels. They were historically thats not even better.

Okay, great. Thanks for that color that was really helpful. Second question for me.

Um, I know still relatively early days, just in terms of, you know, the Jupiter initiative and the potential investments there, you know, any color in terms of what you're seeing in the marketplace and how you might have narrowed in on some opportunities, particularly, you know, geographically, some catalysts ahead on the international front with Jeremy medical reform.

Great: I know, it's still relatively early days just in terms of.

The Jupiter initiative and the potential investments there any color in terms of what youre seeing in the marketplace and how you might have narrowed in on some opportunities.

Great: Particularly geographically some catalysts ahead on the international front with Germany Medical reform.

And they'll use down the line with phase two and then obviously in the US we're potential rescheduling as well. So any color in terms of, you know, what you're seeing out there in the marketplace.

Great: Potential adult use down the line, where phase II and then obviously in the U S where potential rescheduling as well so any color in terms of what youre seeing out there in the marketplace U S internationally or maybe even potentially in Canada that might be appealing to you where you might be able to deploy some capital first and investment opportunities.

U.S. internationally, or maybe potentially in Canada, that might be appealing to you where you might be able to deploy some capital for some investment opportunities.

Thanks, Erin. So I'll start and then I'll hand it over to Powell as well on this one, but just to start with, certainly our intention on Jupiter, I would say at, you know, 60 to 75% of the investment will be focused on the US market. That is an area that we dipped our toe in a slightly this year with the final investment. So we understand the complexities and making sure we do something that is compliant with our NASDAQ.

Speaker Change: Thanks, Darren So I'll start and then I'll hand that over to Paul as well on this one but just to start with.

Paul: Our intention on Jupiter I would say.

Paul: 60% to 75% of the investment will be focused on the U S market that is an area that we dipped our toe in.

Paul: Slightly this year with the <unk> investment so we understand the complexities and making sure. We do something that is compliant with our NASDAQ listings, but we are significantly.

listings, but we are significantly focused on the US and the inbound that we received after the announcement of this Jupiter pool has been just a testament to the opportunities out there and we are currently narrowing down, you know, the areas that we're going to focus.

Focused on the U S and the inbounds that we received after the announcement of this Jupiter pool has been just a testament to the opportunities out there and we are currently narrowing down the areas that we're going to focus.

I would say there's a portion of that investment looking at other international markets, but again, the priority is U.S. first and then, you know, what is the best opportunity globally moving forward from there?

Paul: I would say there is a portion of that investment looking at other international markets.

But again the priority is is U S. First and then what is the best opportunity globally moving forward from there.

So that's in terms of the focused pillow, if there's anything else you want to add.

Speaker Change: So that's in terms of the focus pelo, if theres anything else you want to add.

No, the only other thing that I would add is that I would say it's relatively early days, and the fact that some of the expected changes that people have called for, whether it be in countries like Germany or in the U.S.,

No. The only other thing that I would add is that I would say it's relatively early days.

Speaker Change: And.

Speaker Change: The fact that the.

Some of the expected changes that.

Speaker Change: People have called for whether it be in countries like Germany or in the U S. They haven't manifested as quickly as anticipated I think bodes well for us.

they haven't manifested as quickly as anticipated, I think it bodes well for us for a couple of reasons. One, it just allows us more time to expand our scouting and develop relationships with all the people and all the participants in those markets.

For a couple of reasons one it just allows us more time to expand our our scouting and.

Develop relationships.

Speaker Change: With all the people and all the participants in those markets and to as though as these markets have been slow to move in terms of the initial expectation.

And two, as these markets have been slow to move in terms of the initial expectation.

the capital markets have been hampered as a result for Canada's companies.

Speaker Change: The capital markets have been.

Have been hampered as a results for Canada companies.

We're lucky because we're one of the few companies to pull off a very large investment at a very favorable valuation to where we were trading at. And I think that will set us up well, because I don't think there's that much capital floating around for companies that need capital. So, I think we're in a very good position. And I think we'll have a lot more to announce on that in the calendar 2024 year.

Speaker Change: We are lucky because we were one of the two companies to pull off.

A very large investment at a very favorable valuation to where we were trading that and I think that will set us up well because I don't think there's that much capital 48 around for companies that need capital. So.

Speaker Change: I think we're in a very good position and I think we will have a lot more to announce on that in the.

Speaker Change: The calendar 2020 full year.

Okay, great. Thanks, very much for the detail and I will go and jump back into queue.

Your next question comes from the line of Federico Gomes from ATB Capital Markets. Please go ahead. Hi, good morning. Thank you for taking my question.

Speaker Change: Your next question comes from the line of Federico <unk> from <unk> capital markets. Please go ahead.

Federico: Hi, Good morning, Thank you for taking my question.

Federico: My first question is just going back to the.

your comments on international and that being the largest margin opportunity for you. So I'm just curious, no time, that's your free cash flow guidance for the second half of fiscal year 2024.

Federico: To your comments on international and that being the largest a margin opportunity for you.

Federico: So I'm just curious no tying that to your free cash flow guidance for the second half of fiscal year 2024.

Does that guidance sort of relies on international growth and if you could, you know, unpack a bit of the drivers behind that guidance and how much of it is about, you know, in terms of the sales mixing of domestic sales international, that would be great.

Federico: Does that guidance relies on international growth and if you could unpack a bit up the drivers behind that guidance and how much of it is about.

Federico: Now in terms of the sales meeting.

Federico: Domestic sales international that would be great. Thank you.

Yes, sure. No problem, Fred. So our intention as we said in the script earlier today was that we are working on our EU GMP certification, which we expect to get in the back half of the year.

Speaker Change: Sure no problem tread.

Speaker Change: So.

Speaker Change: Our intention as we said in the script earlier today was that.

Speaker Change: We are.

Speaker Change: Working on our EU GMP certification, which we expect to get in the back half of the year. So while the first half of the year in international shipments, we will expand outside of just Australia and Israel.

So while the first half of the year on international shipments, we will expand outside of just Australia and Israel, we will add the two new countries. We already announced supply agreements. That's to Germany and to the UK.

We'll add the two new countries, we already announced supply agreements, that's to Germany and to the U K, but our goal as we look forward is to leverage the EU GMP certification to get into.

But our goal as we look forward is to leverage the EU GMP certification to get into more countries and as regulations continue to change, there are more opportunities out there. So we do see the international sales growing sort of phasing further into the back half.

Speaker Change: More countries and as regulations continue to change there are more opportunities out there. So we do see international sales growing sort of phasing further into the back half.

as we grow out new international opportunities.

Speaker Change: As we grow out new international opportunities.

Thank you. My second question is just looking at the Canadian rack market and

Speaker Change: Thank you.

Speaker Change: My second question is just looking at the Canadian Rec market.

I guess in your outlook, you mentioned the many old fees are behind the payment of their taxes.

I guess in your outlook you mentioned the many Lps are behind the payment of taxes and Theres, obviously, a lot of challenges to raise capital and some bankruptcies happening, but at the same time. It just seems that notice process.

And there's obviously a lot of challenges to raise capital and some bankruptcies happening, but at the same time, it just seems that this process of rationalization among LP's is always around the corner and never arrives.

Speaker Change: Rationalization among LP is always around the corner and never arrived so just curious on your perspective here for next year why could it be different from this year, how do you see that playing out is going to be.

Just curious on your perspective here for next year, why could it be different from this year? How do you see that playing out? Is it going to accelerate into 2024? It's going to be more of a gradual process. How do you see that happening? Thank you.

Speaker Change: Is it going to accelerate into 2024, it is going to be more of a gradual process. How do you see that happening. Thank you.

Right, so thank you Fred. You know, it is, we have been saying for a while now that this industry is primed for consolidation and it hasn't happened because honestly, the

Speaker Change: Great. So thank you Fran.

Speaker Change: It is.

Speaker Change: Have been saying for a while now that this industry is prime for consolidation and it hasn't happened because honestly.

The fact that the CRA has allowed companies to be in arrears.

Speaker Change: The fact that the CRA has allowed.

Speaker Change: Companies to be in arrears.

Speaker Change: As you know unbelievable to last we've seen.

to a bunch of LPs, like the arrears are astonishing, you know, and CRA has started to clamp down. We have heard that they've been in upon license renewal and asked for actual payment plans to get back in, you know, to get the people back. And I think there are some companies that will never be able to do the payment plan getting back. So we've seen some closures as CRA has clamped down. We've also seen some closures as, you know, debts have come due and not been extended further. So banks have shut down LPs. So it's starting to happen. You know, we have companies not only going into CCAA.

Speaker Change: And we've talked to a bunch of lp's like the arrears are astonishing and CRE has started to clamp down we have heard that they have been in upon license renewal and asked for.

Speaker Change: Actual payment plans to get back in to get the people back in I think.

Speaker Change: There are some companies that will never be able to do the payment plan getting back. So we've seen some closures at CRA has.

Speaker Change: Has clamped down and we've also seen some closures as you know.

That have come due and not been extended further so banks have shutdown LP. So it's starting to happen we have companies not only going into <unk>, but bank at companies just going into bankruptcy and shutting their doors and.

It's starting to happen, you know, we have companies not only going into CCAA, but thank companies just going into bankruptcy and shutting their doors. And it has to happen, right? And I mean, there's just the dynamics right now are unsustainable.

Speaker Change: It has to happen right I mean, there is just.

The dynamics right now are unsustainable.

by having testing on THC inflation, which gave some LPs an extra year of runway by claiming they had products that were, you know, 30 to 35% THC, that when we tested it, were sitting on average between 17 and 21 potency. It gave them runway. So what you have is companies out there.

Speaker Change: By having testing on THC inflation, which gave some Lps an extra year of runway by claiming they had products that were.

Speaker Change: 30% to 35% THC that when we tested it was sitting on average between 17 and 21.

Speaker Change: Potency.

Speaker Change: It gave them runway. So what you have is companies out there.

You know, really pressuring what is, you know, approved regulations just because they're doing it to survive and they've been able to survive an extra period of time, but it's not sustainable. This is, you know, it's, it's crashing in on them. Well, access to new capital isn't available. So, you know, is it happening as soon as we thought, no, is it continuing to happen? Absolutely. So you're hearing about it. You're seeing these changes.

Speaker Change: Really.

Speaker Change: Pressuring what is.

Speaker Change: No.

Speaker Change: Approved regulations, just because they're doing it to survive and they have been able to survive an extra period of time, but it's not sustainable this is.

Crashing in on them, while access to new capital isn't available so.

Is it happening as soon as we thought no.

Speaker Change: Is it continuing to happen absolutely. So you are hearing about it youre seeing these changes.

over the next, you know, whether it takes 12 months or 24 months, what we know is that we're sitting on cash.

Speaker Change: The next whether it takes 12 months or 24 months, what we know is that we're sitting on cash.

We have strong brands and we have innovations and we will be here on the other side of it. And in the short term, while there's an unfair playing field because people are exaggerating their THC potency or aren't paying their taxes, that's going to come to an end at some point. They're going to go away and the strongest will survive and we're going to be one of them. And that's how we see it.

We have strong brands and we have innovation and we will be here on the other side of it and in the short term. While there is an unfair playing field because people are exaggerating their THC potency or aren't paying their taxes.

To come to an end at some point, they're going to go away and the strongest will survive and we're going to be one of them.

Speaker Change: How we see it.

Speaker Change: Thank you very much.

Your next question comes from the line of Yi-Wan Kang from Khan Accord Genuity. Please go ahead.

Your next question comes from the line of Ivan Kang from Canaccord Genuity. Please go ahead.

Hi, good morning. This is Yohann King on behalf of Math Bottomley. Thank you for the question. I just wanted to shift gears back to the Canadian adult use market and wanted to ask about the THC innovation that you guys have been rolling out recently.

Ivan Kang: Hi, Good morning. This is <unk> on behalf of Matt Bottomley. Thank you for the question.

Matt Bottomley: I just wanted to shift gears back to the Canadian adult use market and wanted to ask about the THC innovation that you guys have been rolling out recently.

I wanted to ask if there is a dollar premium that you're able to attach to these THDP products versus non-canabinoid THDP products.

Matt Bottomley: I wanted to ask if there is a $1 premium that you're able to attach to these JCB products versus non can have an OTC products.

And as well, I was also curious to see how you guys have been thinking about the cost-benefit analysis of how these THV products have been performing, although it's early days against the investment dollars that you guys have spent on filers for the partnerships so far.

Matt Bottomley: And as well was also curious to see how you guys have been thinking about the cost benefit analysis of how the CATV products have been performing although it's early days against the investment dollars that you guys have spent on phyllo split partnership so far.

So, thank you for the question. First, I'll pass it over to Tim Emberg, our Chief Commercial Officer, to answer the question on THCV and other products that we have in market, Tim.

So thank you for the question first of all I'll pass it over to Tim <unk>, Our Chief commercial officer to answer the question on THC V and other.

Tim: Products that we have a market Tim.

Sure, thanks for being in it. So apparently we have two PHEV gummy products in the market, one under the Trail Abilities brand and one under our Shredham's brand.

Tim: Sure. Thanks, Peanuts. So currently we have two <unk> gummy products in the market one of them is trailblazer brand and one under our <unk> brand.

And we don't have it as a premium currently from a pricing perspective, but the reception in the market is

Speaker Change: We don't have it as a premium currently from a pricing perspective.

The reception in the market is quite strong so as Bina mentioned earlier, we've got 13, Strydom skus in the market and it's sitting in about the seventh position.

So, as being mentioned earlier, we've got 13 stratum skews in the market, and it's sitting in about the seventh position from a performance perspective in early days into the market. So, TTV also, for us, it requires a lot of education to not only the consumer, but to the bud tender.

Farmers perspective early days into the market. So GTD also for us.

Speaker Change: It requires a lot of education to not only the consumer but to the Bud tenders. So part of our mandate from a commercial perspective right now is to really educate the consumer and educate the bud tender onto HCV. So they understand.

Part of our mandate from a commercial perspective right now is to really educate the consumer and educate the bud tender on THCV so they understand the attributes of THCV and be able to recommend it comfortably. And as we ramp up to our next portion of our THCV launch, which is our THCV vape, which we're launching very shortly, we expect a significant lift in the THCV section of our portfolio.

Speaker Change: The attributes of <unk> and be able to recommend us comfortably and as we ramp up to our our next portion of our <unk> launch, which is our <unk>, which are launching very shortly we expect a significant lift in the <unk> section of our portfolio.

And just to thank you, Tim, and just to build the second part of your question, which is, you know, the payback on the investment with our Philos investment. I want to remind you that it was really strategically twofold that it was not only access to THCV, but it was also the ability to move our production to seed-based production. Now, Philos.

Speaker Change: And just to thank you, Tim and just to build this.

Speaker Change: Second part of your question, which is the payback on the investment with our Filose investment I want to remind you that it was really strategically twofold that it was not only access to THC.

Speaker Change: But it was also the ability to move our production to seed based production now Paolo is known for being able to develop excellent hybrid seeds that will give us significant cost savings by converting a portion of our garden over to see based production our plan for fiscal 'twenty four.

is known for being able to develop F1 hybrid seeds.

that will give us significant cost savings by converting a portion of our garden over to seed-based production. Our plan for fiscal 24 is that we'll have 30% of our garden converted over to seed-based by the end of the year.

Speaker Change: Is that we will have 30% of our guarding converted over to see base by the end of the year and what that does is not only does it shorten the cycle time in the garden, but it gives us more robust flowers more predictable.

And what that does is not only does it shorten the cycle time in the garden, but it gives us more robust flowers, more predictable attributes to the flower. And when you have F1 hybrid seeds,

Attributes to the flower and when you have <unk> hybrid seeds, we could take those to other markets around the world to deliver the exact same cultivar and experience and other.

we could take those to other markets around the world to deliver the exact same cultivar and experience in other markets. So it just gives us some stability and predictability. So we're very excited about that. And truly the payback on the Plylo

Speaker Change: Other market. So it just gives us some stability and predictability. So we're very excited about that and truly the payback on the silos and very much links back and it is.

very much links back and is, you know, a huge payback based on the conversion to the seed-based production.

Speaker Change: A huge payback based on the conversion to the seat based production.

And sorry, Ben, I'll just answer one more point is that there is a lot of interest on THCV from an international perspective. So we've been in discussions with our current partners, but also potential future partners on exporting THCV into their potential markets as well.

Speaker Change: And sorry, I'll just add one more point is that there is a lot of interest on <unk> from an international perspective. So we've been in discussions with our current partners, but also potential future partners on bringing exporting <unk> into their potential markets as well.

Great, thank you for the color. And just my second question on the international shipments for fiscal 24 going forward. I know that you guys are going through an audit to get your facility, EUDMP certified. So is it fair to expect that the international exports will likely, the sales will likely accelerate in the back of fiscal 24?

Great. Thank you for the color and just my second question on the international shipments for fiscal 'twenty four going forward.

Speaker Change: No doubt you guys are going through an audit to get.

<unk> facility <unk> certified so.

Is it fair to expect that the international exports will likely.

Speaker Change: The sales will likely accelerate in the back half of fiscal 'twenty four.

As you guys received the UGMP certification for Schoenitz going to the UK and Germany, thanks.

Speaker Change:

Speaker Change: You guys received that you GMP certification.

Speaker Change: Shipments going to the UK and Germany.

Speaker Change: Tim why don't you take that one as well.

Yeah. So that's the idea. You know, we're going to the EGMP certified process right now. We expect, you know, to set up the audit fairly soon. And once we, once we established the certification, we will be able to expand. And it's not only about market expansion. It's about turnaround time. You know, when we go into a country like Australia, it takes longer if you don't have EGMP to convert.

Tim: Yes. So that's the idea we're going through the GMP certified process right now we expect to set up.

Tim: As the audit fairly soon and once we once we establish the certification we will be able to expand and it's not only about market expansion.

Tim: About turnaround time, when we go into a country like Australia.

Tim: It takes longer if you don't have EOG E&P to convert to <unk> and get into the marketplace. So it will it will allow us to get a quicker turnaround and reorder process, because we will be able to ship finished goods versus bulk into the into this market, which will put it into the hands of the patients sooner and then they get real.

to EGMP and get into the marketplace. So it'll allow us to get a quicker turnaround and reorder process.

because we'll be able to ship finished goods versus bulk into this market, which will put it into the hands of the patient sooner and then get reorders in a more timely fashion versus taking eight weeks or so. So we expect it to benefit us from a market expansion perspective, it opened doors, but also to eliminate some of that lumpiness that Paolo referred to earlier.

Tim: In a more timely fashion versus taking eight weeks or so so we expect it to benefit us from a market expansion perspective, it opened doors, but also to eliminate some of that lumpiness that Paul referred to earlier.

But let me let me just build on Tim's comment, which is.

But let me let me just build on Tim's comment, which is we wont be audit ready we are dependent on getting an auditor over from Germany to certify the facility and while we hope to have that early in 2024, we are.

we will be audit ready. We are dependent on getting an auditor over from Germany to certify the facility. And while we hope to have that early in 2024, we are, you know, this isn't something that we could tie down. So we'll continue to drive towards that. But we do believe that even without the certification in the first

Tim: This isn't something that we could tie down so we will continue to drive towards that but we do believe that even without the certification in the first half of the year just resuming some of our shipments.

half of the year, just resuming some of our shipments.

to partners as well as adding the new supply agreement. So our agreement with both Sanity Group and with 4C Labs that we announced.

Tim: Two partners as well as adding the new supply agreement. So our agreement with both Sanity group and with four see labs that we announced are predicated on us selling out of our non EU GMP facility. So they will go through a conversion.

are predicated on us selling out of a non-EUGMP facility, so they will go through conversion, whereas in the fact half, if we should get the certification, that should go faster as well. So we will see increase even if there is delay in the certification, but because of new customers, but we do hope to see the certification because we believe there's even more upside by the end of the year once we get that.

Tim: Whereas in the back half if we should get the.

Tim: Certification that should go faster as well so we will see increased even if there is delay in the certification, but but we because of new customers, but we do hope to see the certification because we believe there's even more upside at <unk>.

By the end of the year once we get that.

Speaker Change: Great. Thank you for the color I'll jump back into the queue.

And we have no further questions at this time. I will now turn the call back to Bnet Goldenberg for closing remarks.

Speaker Change: And we have no further questions at this time I will now turn the call back to Vienna Goldenberg for closing remarks.

Thank you everybody for joining the call today. I know that we're coming up on the holidays so I want to wish everybody a happy and healthy holiday season and I look forward to sharing with you more updates as we report our Q1 in mid-February. Thank you for joining the call.

Vienna Goldenberg: Thank you everybody for joining the call today I know that we're coming up on the holiday. So I want to wish everybody happy and healthy holiday season, and I look forward to sharing with you more updates as we report our Q1 in mid February. Thank you for joining the call.

This concludes today's conference call. Thank you for your participation and you may now disconnect.

Vienna Goldenberg: This concludes today's conference call. Thank you for your participation and you may now disconnect.

Please wait. The conference will begin shortly. Please stand by. Please stand by. Please stand by.

Speaker Change: Please wait the conference will begin shortly.

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