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00:44 Thank you, operator and good afternoon, everyone. Welcome and thank you for joining us for Avant Brands third quarter fiscal twenty twenty one results conference call.

My name is Alyssa Barry, Investor Relations for Avant Brands. Speaking on our call today is Avant’s Founder and Chief Executive, Norton Singhavon; and Chief Financial Officer, Kendra Blackford; Avant’s Chief Operating Officer, David Lynn is also present and will be participating in our Q&A session.

01:11 Our third quarter fiscal twenty twenty one results were disseminated yesterday and are available on SEDAR and on our website at www.avantbrands.ca. 01:22 Before we get started, I wish to remind everyone that some statements made on today's call are forward-looking in nature and therefore are subject to certain risks and uncertainties, which are all outlined in detail in our regulatory filings available on SEDAR.

On this call, we will refer to the company as Avant Brands or Avant. We recognize that most of you have already reviewed our results issued yesterday.

So being mindful of your time, Kendra and Norton will keep their comments brief and we will then transition to our Q&A session. 01:52 With that, I will turn the discussion over to Kendra to share the company's financial highlights and then over to Norton to provide a strategy update.

Please go ahead, Kendra.

02:04 Thank you, Alyssa, and good afternoon, everyone. Touching on the key highlights for the third quarter ended August thirty one twenty twenty one compared to the second quarter ended May thirty one twenty twenty one.

We reported another solid quarter of revenue growth through our three distinct channels, recreational, medical and export. For the second quarter in a row, we achieved record gross revenue of three point one million dollars and net revenue of two point seven million dollars.

Our gross margin increased slightly for the quarter to forty percent and gross margin dollars increased fourteen percent to one point one million dollars. 02:39 We sold five twenty five kilograms of cannabis during the third quarter, compared to three ninety four kilograms, representing a thirty three percent increase.

Our recreational cannabis sales in Canada accounted for seventy one percent of total sales compared to ninety two percent. Thanks to our initial global export shipment to Israel which shipped over two hundred kilograms of dry cannabis.

03:01 While the company's medical sales also increased significantly, this business is still emerging and accounts for less than five percent of total gross sales. As export shipments typically have a lower average selling price compared with Canadian recreational sales, given the large initial export shipment, our overall weighted average selling price decreased by twenty percent to five point seven eight dollars per gram.

However, the cost of sales is also lower on export. Therefore, the margins remain attractive and are within the range provided by our recreational product portfolio.

03:36 During the quarter, sales for our Tenzo brand increased with the launch of new cultivars and packaging. The Tenzo brand has a lower weighted average selling price over our Black Market brand, and as a result, the recreational weighted average selling price decreased five percent to six point nine seven dollars per gram.

Operating expenses, excluding non-cash items was one point five million dollars representing an increase of three hundred and eleven thousand as the company had various one time non-recurring expenses such as fees related to the TSX graduation and associated professional fees. 04:11 Net loss from operations was two point nine seven million dollars compared to a loss of one hundred and twenty four thousand as the company recorded a non-cash loss of two point three million dollars on fair value changes of biological assets.

This was a result of the company decreasing the fair value price per gram of flower in order to be more consistent with the current weighted average selling price that the company is receiving for the product mix and various sales channels. As the fair value price per gram is represented by the company's estimates, by nature, they are subject to change on differences from anticipated yields or market value and will be reflected in the gain or loss on biological assets in future periods.

04:52 Our positive cash flow from operation of eight hundred and thirty one thousand indicate significant growth within our operations and demonstrates our ability to generate positive cash flow. Adjusted EBITDA loss of two hundred and sixty seven thousand dollars compared to a loss of twenty eight thousand dollars as the company had various one time non-recurring expenses as previously noted.

05:15 Overall, we are pleased with the results we have achieved and our strong capital position with approximately sixteen point three million dollars of cash and twenty six point seven million dollars of working capital and no debt. This provides the flexibility to be strategic and opportunistic as we continue to grow our business.

05:33 We also have our preliminary base shelf prospectus which we filed in August for up to an aggregate offering of fifty million dollars to provide the company with the flexibility to capitalize on financing opportunities and favorable market conditions during the twenty five month period that it remains active. 05:50 With that, I'll pass it over to Norton for his remarks.

05:54 Thank you, Kendra. And good afternoon, everyone.

Further to Kendra comments, we believe we're well positioned to continue building upon the foundation we have in place and to further propel our business as we maintain our market leadership position as a premium producer in the cannabis industry. 06:08 Our summer was a busy one to say at least, as it relates to a number of key areas including our graduation to the Toronto Stock Exchange, new board members and our re-brand to Avant Brands which is all resulted in Avant be included in the NASDAQ listed Global X Cannabis ETF, which will continue to elevate our profile and visibility with our consumers and investment community.

06:28 Our initial feedback to our new name and image has been quite positive. We would like to acknowledge our consumers and investors for their continued support.

In addition, our 3PL Ventures Inc. facility, a purpose built sixty thousand square foot facility received its Standard Cultivation, Standard Processing and Medical Sales Licences in August, which will enable us to build on our positive momentum and revenue growth.

06:50 On the sales and marketing side, as Kendra mentioned, we successfully initiated a global cannabis export shipment of over two hundred kg to Focus Medical Herbs, which is a wholly owned subsidiary of IM Cannabis Corp, a NASDAQ listed company. We continue to expand international client portfolio by signing additional export agreements with customers in Israel and Australia.

Our Black Market brand continues to be a top selling premium brand in all Canadian provinces and our Black Market one gram pre-rolls have rapidly emerged as a top seller in British Columbia and are steadily increasing market share in Ontario. 07:22 Also finally, we have achieved a steady increase in B2C medical clients, while expanding the product offering in terms of cultivars and package size formats.

Subsequent to the quarter, we enhance our portfolio of rare and unique cultivars, with the addition of over eighty genetics, most of which are not currently available within Canada’s legal supply chain. These products are expected to launch under Avant’s recreational brands Black Market, Cognoscente and Tenzo during the first quarter of next year.

07:47 We also executed manufacturing agreements with multiple extraction companies, leveraging the company’s cultivation expertise and brand equity to execute our strategy within the concentrate segment. We entered into the concentrates category with the debut of Tenzo vapes which have received strong initial feedback from the market.

08:04 As we look ahead, our key areas of focus are as follows. One, continued gaining market share by increasing production, refining our prices and packaging, maintaining our flower quality and increasing overall brand awareness; two, further expansion into the global cannabis export market; three, actively pursue acquisitions or contract role opportunities as we do believe we'll acquire more production in order to fulfill our expected demand in Canada and globally; four, new product innovation to increase our competitive edge; five, offering in a cost efficient manner across organization to ensure efficiency and maximize output; six, enhance our Investor Relations program to increase visibility and shareholder engagement as we evolve and become a more organization.

08:49 What that, now I will turn it over for Q&A.

09:41 Hi, Nord. A quick question.

So about those eighty different strains that you guys are working on, that are -- most of them aren't in the market. Are those -- I want to say from like, were they existing strains that you somehow acquired?

Or are they from your research and development team, from like cross -- you know what I mean, like combining two different strains that are existing to create a new strain?

10:12 Yes. So back in twenty eighteen we signed an agreement with a consultant who would basically lead to charge on a genetic library.

I think the question what you're asking is that, are we cross breading internally or are these new cultivars? And to answer that, there are completely new cultivars.

Some may have been bread from existing genetics that we have, but we were not the ones that led this process, our consultant does.

10:38 Okay. Thank you.

11:05 Thank you again everyone for joining us. As a reminder, we'll be hosting our virtual AGM on Friday, November five at 2:00 PM Pacific Standard Time, 5:00 PM Eastern Standard Time.

Details are in our management infill circular, which is available on SEDAR and on our website. Or feel free to reach out to us directly and we'll be happy to send the details.

Thank you, everyone, have a great rest of your week.