Forward-looking information provided in this call speaks only as of the date of this call and is based on the plans, beliefs, estimates, projections, expectations, opinions and assumptions of management as of today's date.

There can be no assurance that forward-looking information will prove to be accurate, and you should not place undue reliance on forward-looking information. The Parent Company undertakes no obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.

In addition, during the course of this call, there may be also references to certain non-GAAP financial measures, including references to adjusted EBITDA, which do not have any standard meaning under GAAP and, therefore, may not be comparable to similar measures presented by other companies. For more information about both forward-looking information and non-GAAP financial measures, including a reconciliation of adjusted EBITDA to the most directly comparable GAAP measures, please refer to the company's annual report on Form 10-K, including management's discussion and analysis available on the SEC's website and SEDAR.

And I would like to remind everyone that this call is being recorded today, Friday, March 31, 2023.

I'll now hand the call over to Mr. Troy Datcher, Chief Executive Officer of The Parent Company.

Please go ahead.

Hi, everyone. I think that was my walk-up music.

Is the walk-up music completed now? Hey, thank you for your patience, and hopefully, you can all hear me.

This is Troy. Thank you, operator, for correcting the issue, and thank you all for joining us on the call today.

I'll provide an overview of the strategic initiatives accomplished in 2022 and how they strongly position our business for success. Then I'll turn the call over to Chief Financial Officer, Mike Batesole, who'll review our fourth quarter and full year 2022 results in further detail.

Following this, I'll briefly discuss our transformative agreement with Gold Flora. Then we'll open the call, of course, up for questions.

Building a strong foundation for the future has been my top priority since joining the organization. And throughout the year, the team has taken numerous strategic actions that will enable our business to not only successfully compete in the complex California market but to lead in the long term.

Now to achieve this, we focus our attention on the most profitable areas of our business and work diligently to optimize those operations for growth while shifting away from areas of low margin and low strategic value. This significant work we've done is starting to pay off.

The impact is on our financial results this quarter and beyond. I'm pleased to share that our full year gross profit grew 99.8% in 2022 compared to 2021, improving our financial annual gross margin to 31% This is in line with our objective of expanding gross margin to more than 30% by the end of 2022, with additional improvements expected to come throughout the course of the year despite the potential for continuing headwinds in the marketplace.

This was accomplished in large part through the implementation of our profitability and optimization initiatives that we introduced throughout the year. These initiatives generated annual expense savings of approximately $13.6 million, reduced our annual base payroll by $17 million through a workforce reduction of approximately 40% and created an average of 27% cost savings through our outsourced product manufacturing.

In addition, we divested our nonstrategic wholesale extraction division which is a drag on our overall gross margin and impeded long-term profitability.

Finally, we optimized our delivery depot footprint, which resulted in approximately $500,000 in gross proceeds from sales, and annual cost savings was $1.8 million. In combination with these initiatives, we collaboratively restructured our relationship with Roc Nation for the betterment of The Parent Company and our shareholders.

Under this new arrangement, 7.1 million common shares were returned for cancellation, and approximately $33.5 million in top line cost are expected to be saved over an 8-year period.

We've maintained our exclusive and royalty-free license rights for 8 years to commercialize Monogram in California, and we firmly believe that our important relationship with Roc Nation will deliver tremendous new products and brands, leveraging cultural leaders and industry innovators in the coming years.

All of this great work has allowed us to focus on our expert brand building and omnichannel retail network. And recently, we shared a very exciting brand development and that is the extension of our partnership and licensing agreement with Mirayo by Santana, a line of premium cannabis products curated by Carlos Santana.

Carlos is an internationally renowned musician, a 10-time GRAMMY Award-winning guitarist and a long-time cannabis advocate. Mirayo is a top-selling celebrity brand in California and inspired by the Latin heritage and dedication to spiritual well-being.

We are thrilled to continue this relationship with our mutual commitment to authenticity and connection with consumers is a natural fit in our portfolio, and we continue to be excited about its development.

In fact, this May, Mirayo will launch a new line of solventless 10-milligram hash rosin Gummies made with all natural ingredients and available in fun flavors like guava, prickly pear and raspberry. The new gummies will be available in our retail locations across the state.

Driven by our in-depth retail insight, we also recently announced the launch of Cruisers, a new brand that offers deep value on premium cannabis products. This all-fun, no-frills brand is a combination of our existing Fun Uncle and DELI brands, which will streamline their top-performing products into a new consumer-centric mind.

We are dedicated to delivering value to consumers across the spectrum with increased -- as consumers are increasingly seeking high-quality products at a more competitive price point. At our own retail locations, Cruisers will be the best-priced offering in every category it participates in.

The name was inspired by the Fun Uncle Cruisers Vapes, which, following its launch, quickly became the #1 selling vape in our value segment. We'll continue to invest our time and effort in these unique brand opportunities and look forward to sharing further developments in the coming months.

Now before I turn the call over to Mike, I'd like to share with you latest developments on our social equity program. As you all know, this is at the heart of the organization and always been a part of what we would like to dedicate our success to, and we created a new program that we call [ Success Equity Ventures ].

And early in 2022, we announced the launch of this program, a 12-week program implemented to provide minority owned brands with guaranteed shelf space and individualized mentorship from our sales, marketing, retail and operations teams.

All inaugural participants, CRONJA, Substance & Skewville, Peakz and Disco Jays, will learn from our in-house industry experts on best practices and operational procedures to provide them with the knowledge and opportunities to scale their business, increase brand awareness, build customer loyalty and expand their retail presence. CRONJA is proven to be an early success story with the brand becoming an immediate favorite amongst our staff with its high-quality smooth smoke.

The compelling story behind the brand has resonated with consumers as well, as we're seeing 20% of purchases coming from new consumers who sought out their products to support a Black veteran-owned brand.

In fact, over the last month, CRONJA has elevated itself to our top 10 selling brands, and due to its high demand, we will expand availability to 10 of our retail stores. We're looking forward to continuing to work with all of our BSP brands and their teams and sharing the lessons we learned along the journey.

On a personal note, I'm pleased to share that Roz Lipsey, who joined our team as Executive Vice President of Operations and Wholesale in June of 2022, has been promoted to Chief Operating Officer effective March 31, 2023. Congratulations, Roz.

Roz has proven to be an instrumental player to helping us identify areas of business that require improvement and execution of operational challenges that have enabled our success. I look forward to continuing to benefit from the wealth of experience and expertise that she had to bring in her new role.

Over the course of the year, we fully revamped our business. We reduced our structural overhead costs and improved our gross margin.

Simplifying operations to better empower us to utilize our power brand building expertise and robust omnichannel retail platform to bring exciting new products to consumers and deliver value to shareholders. I'm very pleased with everything our team has accomplished.

And at this point, I'd like to turn the call over to Mike who will discuss the financial results for the quarter. Thanks, Mike.

Thank you, Troy, and good morning, everyone. In the press release issued earlier today, we announced that we will be discussing unaudited results on today's call.

While we believe these results discussed on today's call are final, we are working on completing all the final reporting and associated audit documentation pertaining to the results is not complete, and as such, values discussed on today's call are subject to change. We will request an extension with the Securities and Exchange Commission, or SEC, to file our annual audited financial statements, Form 10-K on Monday, April 3, 2023.

Our net sales from continuing operations were $20 million for Q4 2022 compared to $24.5 million in Q4 2021. Sequentially, net sales from continuing operations increased 2% compared to Q3 2022.

Annual net sales for the full year 2022 were $83.6 million, an increase of 4.6% compared to $79.9 million in 2021.

Our gross profit from continuing operations improved by 373% to $6.7 million or 33% of net sales compared to $1.4 million or 6% of net sales in Q4 2021. Annual gross profit from continuing operations increased 99.8% to $26 million or 31% of sales for 2022 from $13 million or 16% of net sales in 2021.

Significant improvement in gross profit as a result of our business transformation in 2022 and in line with our stating objective of achieving a gross margin in excess of 30% for the full year 2022. We continue our omnichannel retail operations as we expect sustained improvement in our gross profit and gross margin.

Total operating expenses for Q4 2022 were $30.7 million compared to $57.6 million in Q4 2021.

Operating expenses for the full year were $138.4 million compared to $171.4 million for the year ended 2021. Our adjusted EBITDA loss for Q4 2022 was $14.4 million compared to a loss of $28.1 million for Q4 2021 and a sequential decline compared with adjusted EBITDA loss of $15.9 million for Q3 2022.

We closed the year with cash and cash equivalents of $93.7 million as of December 31, 2022, which was largely in line with our expectations given the current market conditions and our strategic investments made in 2022 to fuel growth.

With that, I'd like to turn the call back over to Troy.

Thanks, Mike. And before we open the line up for questions, I'd like to take a moment to review our planned combination with Gold Flora, which we announced back in February.

This is truly a transformational opportunity for our 2 organizations, and I encourage everyone to review the full transaction details available in the press release as well as corresponding presentation, both available on our IR website. And I've said many times that -- and this remains true, we are not building this company for the next year -- for the next 2 years, but for the next 100 years.

Our combination with Gold Flora does not change its focus. It strengthens it.

We're confident that the transaction will deliver value to our customers and to shareholders. The merger of equals will leverage our complementary strengths such as The Parent Company's deep pool of diverse talent, our proven brand-building expertise, robust omnichannel retail platform and social equity leadership.

And Gold Flora's premier indoor cultivation, proprietary genetics, supply chain excellence and experienced team to build a stronger business that is positioned for long-term success.

Together, we'll lead the California market and capitalize on the incredible growth opportunity ahead of us. This is an exciting moment for both of our companies.

I want to sincerely thank the teams of both The Parent Company and Gold Flora that have brought this opportunity to us. We're all very excited to get started on everything that we can do together.

And with that, I'd like to open the call up for questions. Operator, please open the line.

Operator, please open the line for questions or continuing to play the walk-up music you played earlier.

Thank you. Joining me for the Q&A section will be Mike Batesole, our Chief Financial Officer, who you heard from on the call today; Roz Lipsey, our newly announced Chief Operating Officer; and Colin Brown, our Chief Legal Officer.

Thanks for your patience.

Yes. So I guess, maybe just let's talk about the merger, and I understand there's some nice cost synergies there.

And you guys have an attractive vertically integrated, fairly broadly reaching operation in the state as a result.

California has been a very challenging market for a lot of folks. I'm wondering maybe if you could just highlight where you think you've picked up some nice strengths here that allow you to be profitable in California.

What was the kind of key differentiator that the combined organization now is able to bring to the table?

Bobby, this is Troy. I want to first thank you for your patience dealing with the technical issues and hanging in here with us.

We appreciate that. And thank you for the question.

As you mentioned, we do believe that there is a tremendous amount of value in the scale that these 2 organizations will bring with their complementary assets. We've publicly stated that we believe that there's a $20 million to $25 million opportunity in terms of additional cost savings beyond what we've done over the course of the last year.

And that will allow us to have fuel to actually invest in the things that are going to be really important to compete in a challenging market like California.

And as I think about that, it's really 3 things. One, it gives us tremendous amount of scale across the state of California.

At the end of this transaction and at the end of the calendar year, we have projected a footprint of 20 retail outlets, which, as you're aware, puts us in one of the top retail footprints in California. That scale will matter in terms of our ability to stack margin from our partners as well as -- it drives scale through our operations.

And so we're excited about the scale that will be offered.

Secondly, as a brand builder at heart, I'm excited about the fact that we'll walk away from this opportunity combined with a top 10 portfolio of brands. And ultimately, our vision has always been that brands will have the power, and we are really bullish on the work that we're doing in that area.

And with 20 retail outlets, that scale allows us to get our brands in front of more California consumers. And as you're aware, we've been squarely focused on our first-party sales for brands, which has reached over 30% in our retail outlets.

That is a margin enhancer for us. And this additional scale will allow us to push our brands to more outlets and drive that number north of 30%, and we're excited about that.

And then finally, in California, what's going to be really important is the ability to invest, and so a strong balance sheet will be required to do that. And unfortunately, there are not many players in California that have that as an advantage.

It was important to us to find a partner with a low debt profile so that the dollars that we have in our balance sheet could go towards growth and not towards paying off debt.

We're excited about the fact that we found this partner. We are excited about the opportunity that we have in front of us.

And for those reasons, we are excited about this opportunity. And looking forward to sharing more details as our circular becomes public in the coming weeks.

Great. And then in terms of -- you guys did a good job exiting 2022 with the amount of cash on hand that you originally kind of were targeting.

And I'm wondering whether or not there's some guardrails we should think about for 2023 in terms of where you'd like the balance sheet to be. No one has a crystal ball, but I imagine that you'd like to continue to maintain some discipline there.

So any insights into where you think you could keep cash levels above that at minimum this year?

I'll jump in...

Yes, go ahead.

This is Mike. Thanks for the question.

We're in the process of evaluating the combined forecast with the 2 companies for the year. And so I think we'll be providing that type of insight in a subsequent call.

But to your point, we are continuing to be very expeditious on the cash that we're spending and making sure that we're focusing on cash savings. So we're continuing to reduce expenses internally and as planning for combined expense reduction, significant expense reduction as we merge these 2 companies together over the coming months.

Great. And where are those savings coming from that you guys identified?

What specific areas, synergies...

Yes. They're coming from across the board.

As we combine the 2 companies, there's going to be synergies that are going to be realized in virtually all departments. There's also going to be leverage on common types of expenses such as audit fees, tax fees, things of that nature, so structural type of fees.

And then there's also going to be additional synergies related to integrating our supply chain operations with the great work that Roz has been doing. There, we're going to be able to sell our brands with having vertically integrated flower, and we expect to see significant savings there, too.

First, I was hoping you could provide just a bit more color on some of the trends that you're seeing in your DTC business whether that's on market share metrics on either delivery or retail? And then just kind of any color you could provide on whether it's foot traffic or basket sizes just looking for some more color on that DTC and retail side of the business?

thanks for the question. Again, also thanks for being patient with us.

We're seeing the California marketplace continue to be a challenge overall. We have projected that the marketplace will be down between 2% and 5% overall.

We're expecting to actually buck that trend. But we do see that the challenges from 2022, largely being in place in 2023.

One of the trends that we're seeing, and we've addressed through our brand portfolio, is consumers looking for value. During my comments on the call today, I mentioned the fact that we actually have launched a new brand called Cruisers.

That brand is uniquely designed to be the best value brand across every segment that's offered in our retail outlet. It gives the consumer a high-quality product at a really great value.

And so we are addressing one consumer trend, which is the circular value with the in our own portfolio. So we're going to capture that consumer within our brands.

The second thing that we're seeing is, obviously, loyalty being a big part of what's important to consumers. And so we have instituted loyalty programs across our retail outlets to drive consistent communication and messaging to our consumers, and importantly, to impact the traffic trends.

We're making sure we're engaging them with proprietary data that we're leveraging based on their search history as well as obviously their buying habits. And so we're trying to meet them exactly where they are, offer them products and services that meet exactly their needs.

And so we're seeing those investments pay off for us, and we'll continue to do more of that throughout the course of the year. We do expect, again, that the challenges will remain, that thriving illicit market remains strong, taxes are still onerous in California as you're aware.

And those are all things that will continue to be headwinds in the coming year. But the great news for us is to plan for that.

The moves that we've talked about that we've implemented over the course of the last couple of quarters and including this merger of equals that go forward. We'll address a lot of those opportunities as we see them.

Okay. Great.

And that segues nicely into my next question. Understanding it is early days in the proposed merger with you and Gold Flora.

Can you give us a sense of kind of high level, how you're thinking about the target brand portfolio of the combined company, whether you're looking to over- or under-index in certain product categories or over- or under-index into value or premium? Just kind of help us understand the overall sort of target brand portfolio of the combined company here?

Yes. Eric, it's a great question.

The beauty of bringing our portfolios together is that we have a great starting point. And the hard work is starting now for us to evaluate our portfolios to determine what will stay and will lead into the course of the coming years.

That's a very exciting place to be. And the great news is that both organizations look at this opportunity through the lens of the consumer.

So we're very consumer focused in terms of making these choices. You'll hear more from us in terms of how we're planning to shape the portfolio in the coming months but know that we plan to offer consumers an option across everything important product category as well as price threshold in every category.

And so you'll see us make sure that we cover all bases when it comes to emerging trends as well as value that consumers are seeking. We'll also have high-end brands as well to appeal to those who are looking for the highest-quality products in all of cannabis.

We just share that we have our 8-year license agreement intact for Monogram, which is the most premium product in the category. And also we'll be announcing some great news in the coming months regarding new brands that we're bringing to the marketplace that will fit any consumer gaps that may exist.

So the work is under way. I'm excited about what I've seen so far.

And I'm thrilled to share that needs with you and the rest of our -- the folks who are our consumers, our customers in the coming months.

All right. Great.

And then last one for me here. How should we think about the target mix of retail versus wholesale revenues going forward with the combined company here?

Will you be looking to kind of push as many products into the vertical channel as possible? Or do you see wholesale remaining a meaningful mix?

And if you have any kind of target mix in mind, that would be helpful.

Yes, Eric, too early for us to share any projections in terms of revenue splits between those divisions. But I will tell you that we see both as big important components to our success.

We do believe that when consumers walk in to our 4 walls, our ecosystem, whether that's delivery or retail, we need to offer them the best products, the best price with the best experience. We'll continue to focus there.

We also have had conversations about leaning into building out a robust team for wholesale to get our products into winning quality dispensaries in California as possible. So you'll see a combination of both efforts over the course of the year.

Too early to tell you exactly the split at this point. As Mike mentioned earlier, we're in the early stages of looking at the financials as a combined organization in order to provide that kind of guidance.

Troy, just to add a little bit more to that...

Absolutely.

In addition to what Troy said, Eric, Gold Flora has invested pretty heavily in their wholesale channel. I believe they have about 15 or 16 sales reps at this point in time.

And so they have significantly bigger footprint to move our brands and ultimately combined brands through the channel at virtually the same cost as our products and their products go on the shelf, and we can provide dispensaries a more full line of products across multiple categories. So we do expect to see a substantial growth in the wholesale channel.

As Troy has mentioned before, it's critical for building brands. And also we expect to see an increase in first-party products in retail like TPCO has done over the -- under Troy's leadership, we've increased it as a percentage of sales, and we will expect to see that in the Gold Flora dispensaries, too.

Well, thank you, operator, and thank you to all of The Parent Company associates for all the hard work and attention to execution over the course of the year. Your efforts have transformed this company, and I'm incredibly proud to be a member of this team.

I want to thank you all for joining us today for the call. Thank you for your patience with our technical issues.

We look forward to sharing our Q1 results and progress against our key initiatives in the coming months. Thank you, and have a great day.