ZeroStack Corp. Q2 FY2022 earnings call

Commercial Wholesale: Completed build-out of cultivation facility in Colombia, received 43 ton quota for high THC cannabis export, developed global supply chain and distribution networks. ### House of Brands: Acquired JustCBD and integrated it, expanded market penetration to over 10 countries, launched new products across brands, increased inventory position for holiday shopping. ### Life Sciences: Achieved milestones like preclinical research data submission for UK clinical trials, acquired Masaya brand, broke ground on custom formulation lab in Colombia.

Revenue for the first half of 2022 was $14.9 million, representing a 604% increase compared to the same period last year. Revenue was predominantly driven by 4 months of revenue contribution from JustCBD and full 6 months from Vessel. Revenue from Flora Lab and other brands outside of JustCBD and Vessel contributed 12% of the overall revenue. Gross profit increased to approximately $7 million, up 547% compared to the first half of 2021. This was attributed to higher gross margin profiles in most business lines, including white label operations and reduced focus on low margin food category. House of Brands supported a gross profit of 43%, while Flora Lab 1-4 had a blended gross profit over 54%.

Reiterated revenue guidance for 2022 of $35 million to $45 million. Expect growth in commercial wholesale as exports of dried flower and derivatives ramp up, and House of Brands to continue driving meaningful revenue.

Regulatory: Unpredictable changes in regulatory environment both domestically and globally. ### Supply Chain: Complex supply chain for cannabis products and derivatives, limited number of freight forwarders willing to work with cannabis companies. ### Execution: Doing new operations for the first time presents challenges as it takes time to figure out processes effectively.

Q: What is our M&A strategy?

A: Flora will continue to evaluate M&A opportunities, focusing on revenue generating and EBITDA positive companies that enhance human capital capabilities and potential for cash flow positive performance.

Q: Are you required to raise money as cash balance is $10 million?

A: No, we have a path to profitability with current structure, no debt, and expect cash burn to reduce significantly in second half and become cash flow positive next year without additional capital.

Q: What are top challenges for back half of 2022 and 2023?

A: Regulatory unpredictability, complex supply chain, and challenges of doing new operations for the first time.