Thanks, operator. Good morning, everyone, and thank you for joining us today.

Vext's first quarter 2025 financial results were released earlier this morning. The press release, financial statements and MD&A are available on SEDAR+ as well as on the Vext website at vexscience.com.

We would like to remind listeners that portions of today's discussion include forward-looking statements and that forward-looking statements are included in today's filings. There can be no assurance that these forward-looking statements will prove to be accurate or that management's expectations or estimates for future development circumstances or results contained therein will materialize.

Risks and uncertainties that could affect future development circumstances or results are detailed in the MD&A and Vext other public filings that are made available on SEDAR+ and we encourage listeners to read those risk factors in conjunction with today's call. As a result of these risks and uncertainties, the development circumstances or results predicted in forward-looking statements may differ materially from actual developments, circumstances or results.

This call also includes non-IFRS financial information and such non-IFRS financial measures are subject to the disclosure and reconciliations included in our press release disseminated earlier today as well as the MD&A. Forward-looking statements made during this conference call are made as of the date of this call.

Vext disclaims any intention or obligation to update or revise such information, except as required by applicable law. Those financial statements are presented in U.S.

Dollars and the results discussed during this call are in U.S. Dollars.

I will now pass the call over to Eric Offenberger, CEO of Vext.

Thanks, Priam. Good morning, everybody, and thank you for joining our first quarter 2025 financial results conference call.

I'm joined today by Trevor Smith, Vext’s CFO. I am pleased with Vext’s performance in the first quarter of 2025.

Our results validate the strategy we've been executing over the past several quarters, one that prioritizes operational discipline, capital efficiency and a focus on free cash flow generation. During our Q4 update, we indicated that the business had reached a turning point.

Our Q1 results confirm that shift with momentum building in Ohio and translating into stronger financial performance. We generated exceptional growth in quarter one with revenue increasing to $11.6 million thanks to our continued strength in the Ohio market.

Even more importantly, we generated robust operating cash flow of $3.1 million a significant achievement that nearly matches our entire operating cash flow for 2024 as our momentum picked up in the fourth quarter. Our cash flow margin exceeded 26%, placing us among the top cash flow producers across U.S.

Public multistate cannabis operators, including several significantly larger companies based on all reported financial metrics we've analyzed. Cash flow margin is a key operating metric for Vext and one we expect to continue to be a leader in amongst U.S.

Cannabis Operators for the foreseeable future. Many MSOs are vertically integrated.

That alone is not a point of differentiation. Our Vext model is designed from the ground up with retail at the forefront with upstream cultivation and manufacturing optimized to get products onto our own trust efficiently.

This ensures we are not exposed to long term development of both our markets and gives us far greater control over scaling the margins. Turning first to Ohio.

Ohio continues to be a high potential market for us and one where we are executing well. In Q1, the state reported $256 million in adult use sales, up 7% sequentially.

While Ohio demand remains strong, the adult use market is experiencing pricing compression similar to trends observed in more mature markets like Arizona. With consumers increasingly price sensitive, operators must remain disciplined on margins and optimize product mix.

This is exactly as we've outlined to the investment community over several quarters. It happens in every market.

It's economics 101 and it's why we see wholesale as only a very short term opportunity at market entry as retailers scale. Our discipline of retail first strategy is resonating with consumers and producing strong unit economics.

Next consolidated retail sales in Ohio grew by 7% in the first quarter of 2025 compared to the fourth quarter of 2024 underpinned by continued momentum at existing locations and the successful relocation of our Jackson Dispensary in February. This new centrally located facility doubled our retail and inventory capacity and introduced a drive thru feature enhancing both customer experience and throughput.

These results reflect more than just market tailwinds. They are a result of operational execution and strategic investment.

I am very proud of the team's efforts, which have led to our stores increasingly meeting or exceeding the state average. Third party wholesale on Ohio increased by 92% in quarter one 2025 compared to quarter four 2024.

As I have previously outlined, while wholesale is not a core focus, Ohio's regulations for manufacturing and cultivation create short term opportunities and we are positioned to benefit from that growth. To restate our strategy, remain centered on retail.

In Arizona, approximately 90% of revenue is generated through our retail operations and we expect Ohio to follow similar trajectory with retail being the dominant revenue driver potentially as early as 2026. Shortly after the quarter ended, we completed the acquisition of two dispensaries from Big Perm, adding retail locations in Athens and Jeffersonville.

Sales of these locations grew 18% sequentially in quarter one even before consolidation and we expect to consolidate them starting in quarter two. With these additions, our Ohio retail footprint has doubled to four locations and construction is underway on the fifth store in Portsmouth expected to open in the second quarter.

Our capital light model allows us to build out efficiently both in terms of cost and speed, enabling us to bring stores online quickly and begin generating cash flow almost immediately. This approach drives attractive returns on capital and gives us a meaningful advantage as we scale.

With full vertical integration and a clear path to expanding our retail presence to the state maximum of eight stores, we expect Ohio to remain a key growth engine for Vext driving revenue, margin, expansion and cash flow over the long term as we continue to drive same store economics and efficiencies across our platform just as we have done in Arizona. Turning to Arizona performance now.

The Arizona market remains pressured with total first quarter 2025 sales down 13% over the prior year according to state data. Against this backdrop, Vext Arizona sales only declined 8.5% over the prior year leading to further market share gains.

Our strategy in Arizona has been to drive traffic to our two dispensaries through targeted marketing campaigns, while maintaining strict cost controls across retail, manufacturing and cultivation operations. This was supported by continued improvements at our Eloy cultivation facility where average yield and potency now exceed industry averages.

While we continue to see the Arizona market returning to stability, consistent growth over the long term and would like to expand our retail footprint further, this isn't a near term priority. Pricing expectations remain misaligned with current market realities.

We expect more accretive opportunities to merge as weaker operators exit the market and we'll evaluate them as they arise. In closing, Vext is operating from a position of strength.

We've built a stable scalable platform in two key markets each with difficult profiles with solid fundamentals. With a solid capital structure, consistent cash flow and clear visibility into near term growth, we are positioned to expand in Ohio while systematically reducing debt.

Rather than chasing brands or overbuilding infrastructure, we are executing a focused retail strategy to order strong unit economics and sustainable returns, establishing Vext as one of the most operationally efficient and strategically disciplined operators in the industry, even when compared to others who are significantly larger in size. For the remainder of our year, our priorities are clear.

We expect to begin consolidated reporting of the two big term locations in Q2. In Ohio, we are focused on accelerating growth by expanding our retail footprint and serving both medical and adult use customers.

In Arizona, we will continue to optimize operations to preserve margin and drive efficiencies. Across the business, we remain committed to generating free cash flow, strengthening the balance sheet and creating long term value for our shareholders In recent years, The U.S.

Cannabis industry has been driven more by narrative than by performance with many operators pursuing rapid growth through expensive unsustainable financing. However, in the long run, it will be disciplined execution, prudent capital allocation and cash flow that will ultimately distinguish the winners from the rest.

With that, over to Trevor for a quick review of the financials. Trevor?

Thanks very much, Eric. 2025 is off to a strong start.

In the first quarter, we generated revenue of $11.6 million up 38% year over year. This performance was primarily driven by sustained growth in adult use sales in Ohio, which continued to offset market headwinds in Arizona.

As additional Vext dispensaries come online during the year, we expect Ohio to remain a key catalyst for top line growth. From an adjusted EBITDA standpoint, this is our strongest quarter in over two years.

Adjusted EBITDA was $3.4 million building on the $3.2 million generated in Q4. Our first quarter 2025 adjusted EBITDA margin of 29% was one of the highest reported by U.S.

Public multi-state cannabis operators, including several significantly larger companies. It is important to note that this margin was achieved despite carrying costs related to the two additional Ohio dispensaries we acquired on April 1 without yet being able to consolidate revenues from those same locations.

As we begin to consolidate those additional dispensaries starting next quarter, we expect meaningful upside to both top line and margin performance. Operating expenses remain flat compared to the same period last year and we expect them to remain relatively stable going forward.

As a percentage of revenue, operating expenses declined meaningfully from 54% in Q1 2024 to 38% in Q1 2025. This improvement reflects a sharp focus on cost discipline with lower SG&A expenses partially offset by amortization tied to our Ohio acquisitions.

As new dispensaries are consolidated and we continue to generate solid results at existing stores, we expect to benefit from additional operating leverage. Coupled with relatively low maintenance capital requirements, this positions Vext well to generate significant free cash flow going forward.

Cash flow from operations reached $3.1 million in the first quarter of 2025. This step change in cash flow which began in Q4 demonstrates our improving financial performance.

We expect this positive trajectory to continue through 2025 and into 2026. At Vext, we remain focused on directing our resources towards the markets where we see the strongest potential for long term value creation.

As part of that strategy, our wholly owned subsidiary, Fabian, Kentucky along with its local partner has entered into an agreement to sell its medical cannabis processing license in Kentucky for gross proceeds of $880,000 The transaction which is anticipated to close in Q2 will help strengthen our balance sheet and support the continued build out of our Ohio retail footprint. Vext ended the quarter with $4.8 million in cash with anticipated growth in both revenue and cash flow for the rest of the year.

We do not anticipate any capital raises whether for operational expenses or for the Ohio retail expansion plans. For the remainder of the year, our focus will remain on generating free cash flow, paying down debt and positioning Vext for continued growth.

Our vertically integrated model enables us to optimize price, preserve margins and remain agile in the face of challenging market conditions. And we are confident that our disciplined approach will enable us to drive strong financial performance in 2025 and beyond.

Thanks everyone for joining us for our first quarter 2025 financial results conference call. I'll now turn it over to the operator for your questions.

Good morning, everyone. Thanks for the questions here and good stuff on the Ohio progression that we're seeing.

I'm just wondering if you can unpack that a little more with respect to some of the dynamics that you have given that the two states that you're in are quite different. So we know that in in Arizona, we'll get to the more typical seasonal lows when the weather gets hot in the coming quarters, but then again solid progression in Ohio here.

So that on top of your exposure to what we're seeing, in the Ohio pricing pressure, I mean, I appreciate the guidance that you're expecting continued overall consolidated top line progression, but any noise or maybe peculiarities that you wanted to point out just in kind of forecasting this the rest of the year given that some of these things move in opposite directions?

Matt, thanks for the question. Trevor can elaborate a little bit more on the numbers side of it.

But from a commercial standpoint, it's no different to us of whether it's Arizona or Ohio. We have the same business philosophy and the same focus of what we're doing as far as running the business and the operation and the team we put in place.

So, we participate in the market, we don't set it. So we control our costs and the things that we can control and the top line will start to take care of itself and the margin profile remains relatively consistent because of the fact as we've said, we don't necessarily think it's all brand driven.

We think it's more of supply driven on a commodity basis. And what we put into the store, if we can control as much of it through our own footprint, our own production, then that gives us that protection we're seeking.

So we think the top line is relatively stable in Ohio right now on the resale pricing. We think it will stay that way.

Got it. And then just maybe just further to that on the wholesale side of things in that market, it clearly has been a pretty good growth driver for everyone that's been there from the onset of adult use, but every market has its volatility once the supply demand dynamics start to progress even further.

So anything you can share with respect to the cadence of some of these price declines on the wholesale regardless of how material is to you guys just for our information?

Yeah. You're seeing that.

But, again, it it's not significant as it was when it originally started. I mean, it's kind of stabilized a little bit more of where the pricing's finding its equilibrium at this point in time.

As more stores come online, I think you'll see some of that supply get balanced. So as we talked two years ago and have continued to talk about as we made the investment in Ohio, we thought that structure fit really well for the benefit of the consumer and the benefit of the investor that that market really had it right.

We don't see them changing or at least not in the immediate or that would make that, analysis different. So we think that the pricing is pretty much found its point on wholesale.

And you can get supply, so that's good. So there's not a mismatch right now.

Got it. And then just last one for me on the Arizona market.

So, is there any visibility you have with respect to anything meaningful with respect to cultivation coming offline from some of your competitors, sort of macro statement there? And then also kind of peculiar just on the M&A side of things in that state, and I guess it applies to others as well.

We're four years off now of kind of the valuation highs, but we're hearing on all these calls that the phones are ringing when it comes to maybe strategic tax, tuck in M&A when it comes to one stores or for some operators, small exposure in other states. But it just seems like particularly in the private sector, there's a stubbornness with respect to top ticking where valuations used to be or certainly a lot higher than they are today.

But it's been some time now, so I'm just wondering if you think there's anything in the near future where there's going to be a capitulation just given the lack of capital for a lot of these smaller players in in a lot of markets.

Yeah. I think from our perspective, the brokers we talk to in that cultivation might come offline, but it seems to find somehow to come back online.

There's still several for sale in Arizona. If you wanted to be a cultivator, you could do it.

People still think that they can come in and grow better than somebody else and do it. We still don't see that.

We see it as a distribution place. So if you have the retail store front, you can control it as long as you keep it balanced.

As far as private operators, I think a lot of them might be getting tired of the day to day battle of the business. But if they don't have the cultivation and the fixed cost overhead, then they're generating cash flow.

And depending on if that's their primary source of income and livelihood, I think they're thinking they'll wait it out. So that's kind of what we've seen.

We do think and we've made that comment in our MD&A and stuff that we do think that at some point in time that might change and it might become accretive. And we want our balance sheet and our financials to be in in a position so that we can execute on that.

Trevor might have some more color on that. I'll let him give you a little bit on it.

No. I I think Eric nailed it.

We're waiting on, the deals to align with market realities, and we're awaiting for capitulation to start occurring. We're optimistic it'll happen.

I don't know, thief in the night comes to mind. And I think once it starts, it'll really go, but we're just not quite there yet.

Okay. Thanks, guys.

I'll leave it there.

Thank you. Good morning, everyone.

Maybe in the case of Ohio, if you can just remind us a little bit about what is left in terms of expansion and the monetary side of it in terms of CapEx and payments that need to be made? Specifically, I'm talking in terms of production.

I know you're trying to balance demand and supply. But is there anything else left in terms of expanding the production side of Ohio?

And how much is that going to cost? And then in terms of the retail side of things, after the Fort Smith store, what is left this year and what type of payments you will need to make, either in cash or debt money.

But just a reminder of that if you can spell it out in more detail please. Thank you.

Yeah. We after the Portsmouth store, we can announce where the other stores are at.

At this point in time, we're still doing the stuff with the state of Ohio. But the pins are in the map.

One's going to be in Columbus, one's going to be in the Cincinnati area, and the other one we're getting nailed down. So we'll hit to the eighth.

We anticipate having seven for sure open by the end of the year. Open by the end of the year, given what we know at this point in time and the eighth month possibly by the end of the year early into 2026.

As far as production capacity, the manufacturing, we have fairly unlimited ability there. On the cultivation side, we're figuring what expansion looks like there and doing it in stages.

So the facility has the ability to expand and we built it with the intent to be modular and we could expand as we need it. So we're contemplating that right now with the idea that it would take us probably nine months before we would nine months to a year before you'd see anything.

So we are contemplating that looking at the market. But we'll do it like we did in Arizona.

We'll go slow with it. So if you guys remember in Arizona we only built out half of a building, closed the facility and sold it so that we keep that balance.

So we're projecting it and Trevor -- that's really an area that Trevor monitors and oversees a lot.

Got it. But in terms of payments, is there anything left for the Fort Smith store?

And what are we talking about for the other three stores in terms of spend, whether, again, it's debt notes or cash that you're paying for?

Nothing left than acquisition. So no licensing payments, nothing all that happened on April 1.

In terms of build out we're we'll call it 30% of the way through the $4 million guidance we gave on expansion CapEx previously. So that's underway.

We really appreciate our construction partner out there, worked with them for a long time and have no reason to believe there'll be any delays or significant overruns.

Got it. And then can you talk I don't know if you can break down a little bit more the performance of Ohio stores in terms of based on your numbers, how do we perform compared with the state average?

I think you mentioned your retail, your two stores grew 7%, but the ones that you are consolidating now were up 18%. Why that difference in performance?

If you can just give more color. Thank you.

Yeah. Right now, three of the four stores perform at state average or right within that band that we would consider acceptable.

The four store is through the insulated or office in Jeffersonville which is doing the large LG, Honda battery plant. We think that as that comes online and we potentially get some ability to sign and stuff along those lines that store.

So from our perspective, three of the four are performing where we want to see them. The fourth one is got a great team, it's got a good location and everything.

We just can't attract through letting people know where it's at. It's right off of a highway.

If we could sign it that would be a little bit better, but we're not concerned about it at this point in time.

And then just one more in Ohio. I know we keep waiting for the state to come out with a final adult use rules.

Where we are with that or we don't still have good visibility in terms of what the rules will be and when it happens?

Well, that's a good question and I'll give you what the in house counsel told us yesterday on the Board meeting. He said that there's three pieces of legislation moving through the Ohio legislation legislator on this stuff.

Two of them are very similar and the third one has some nuances and stuff along those lines. We still don't have visibility yet of when they're going to enact something or accomplish anything.

And as we've always talked about this, Pablo, that's beyond our control. We can just monitor it.

We're just staying focused on what we can control and what we can control and what we can do in the business and making sure we go to work every day, open up, take care of the customers, manage the inventory, just the basics is what we're focused on. When that comes in, it doesn't look like anything is going to hurt us.

There's some stuff on the hemp side that's positive out there, but again doesn't really impact us on a day to day basis.

Got it. Thank you.

Thank you and congrats on the solid Q1 results here. First question would just be going to some comments in the prepared remarks.

You noted a big increase in wholesale in Ohio this quarter. I'm also piecing that together with margins a bit lower than in the prior few quarters.

We had inventory down a fair bit Q on Q. Would it be fair to say that you're cleaning up some inventory balances in Ohio?

And if that is the case, is that activity done now?

Yeah, I think that's a fair statement. Inventory turnover rate is a very important metric for us.

It's how we've managed to maintain, cash flow in Arizona despite declining headwinds. Ohio is going to have the exact same expectations.

You know, we start on making sure the yields are right and we make sure we turn it correctly. So to some extent the Ohio wholesale is taking advantage of market timing and opportunity, but it's also the lever to do get rid of the overproduction or at least the excess production from the improved metrics in advance of the new retails coming online.

Got it. That's helpful.

And then just on operating costs this quarter, that's the lowest we've seen on operating costs in several quarters. Did you take any actions with respect to that?

And how are you feeling about being able to hold operating costs at where we saw them in Q1 levels? How should we be thinking about that for the remainder of the year?

I think you should think really Andrew of how we operate the business. So from my perspective, I never like to do any reductions in force and I never really have.

We manage that consistently day in and day out. So what's happening is the process and the models that we've built allow for expansion and to do it relatively fast and relatively economic.

So we run pretty lean. We have a lot of internal systems and data models and that that just basically operate based on the business.

So for us to add these additional dispensaries in Ohio is not going to cost us anything on the support side or on the production side. It's just going to be what we have to staff the store with, the direct labor.

So we watch variable versus fixed quite a bit and just basic stuff. I've always kind of told my team, look, if I ever have to come to you about a staff reduction then you haven't really been doing your job because that's kind of how we look at it.

So we watch that. It's just now the revenues get picked up for what we had to put in as the base as Trevor kept telling everybody is we're spending now a little bit getting ahead of those stores opening or Ohio going to adult use and you're just seeing that now accelerate.

Great. And maybe one more if I may.

Gross margins have been pretty volatile in between quarters here. Trevor, I know you mentioned in your prepared remarks that you are expecting margins to move higher with the consolidation of the two additional Ohio stores.

Do you have a level a level where you think that margins might settle in at? Would you be able to share that with us today?

I'm going to tiptoe a little bit. Look, we also have no uncertain tax liabilities on our balance sheet.

We have one of the best cash flow margins in the industry, and we have one of the worst gross margins in the industry. So for us, gross margin isn't really happening in the traditional sense given the tax regime and tax limitations.

But, as we have more stores and as we're able to recognize more of the Ohio cultivation output as retail revenue as opposed to wholesale revenue, you'll see some margin improvement.

Okay. Thanks for taking my questions.

I'll get back into queue.

Good morning, gents. Great quarter.

Can you guys disclose your gain on your Kentucky operations sale? And are we comfortable going forward to stay with the build state focus in Arizona and Ohio?

Yeah, the gain on Kentucky, we're still working through those numbers Paul. We don't think it's going to be anything material or significant from that standpoint.

Cash obviously is significant, but as far as like a book gain, no, don't really see that. I wouldn't anticipate that.

As far as staying on that footprint, yeah, for everything we see in front of us today, we don't have anything pending. But that said, we're focused on Ohio growth and everything.

If some opportunity presents itself and you have a balance sheet that will allow you to do those types of things, sure, we're going to take advantage of that and be opportunistic. But again, it's more of what we're seeing, what we're hearing, what we're listening to and keeping everybody focused on let's get those stores open in Ohio, let's pay down some of the debt, let's adjust the balance sheet accordingly and continue to finance responsibly and for the long term.

We just think balance sheet at the end of the day, a good balance sheet is going to win this game and when there's opportunities, if you got a good balance sheet, you can participate in it. And if you don't, it doesn't work unless you're going to raise equity.

And then good luck raising equity if your balance is not good. So that's how we see it, very simple.

Great. Going back to Arizona, any tangible implications of late for the recent state regulatory crackdown on hemp derived products?

And specifically, can you disclose what your average basket size is today and how that compares to previous quarters?

I'll let Trevor take the basket size. He probably knows.

I think it's slightly down, but not as much as it historically was versus where it dropped. But as far as the hemp side in that, it's too early to tell.

I know like Total Wine's taken beverages out of their store and we haven't really heard anything. I do know that there was something that the court ruled on the other day that was favorable where they're supporting the Attorney General's position.

So we think it's going to be a positive. It's you still have the black market to deal with and all of that.

It's just overcapacity is the biggest challenge in Arizona. Again, we're fortunate.

We have really great team members. They know what they're doing.

We have good store locations from the promotion, marketing, operations, they execute. And the Ohio team is doing the same thing.

It couldn't be happier with the whole team.

Great. And then just one debt pay down for the quarter and plans going forward?

Net to Trevor.

Yes. Well, I'll kick you back to the financial statements for exact status of each of the loans.

I will call out standby facility. I'm happy to make that final payment next week.

So that'll be gone on schedule. We're going to continue to pay things off as they come due and as the additional cash flow comes in from the Ohio ramp up, it's a build out Ohio retail or pay down debt.

So those are the two areas we're hyper focused on and as we indicated last quarter we're going to continue to execute on in 2025.

Great. Congrats guys.

Good job.

Thanks.