Good afternoon, ladies and gentlemen, and welcome to the CEA Industries Q2 2023 Earnings Conference Call. Joining us today are the Company’s Chairman and CEO, Tony McDonald, as well as the Company’s CFO, Ian Patel. At this time, all participants have been placed in a listen-only mode. And we will open the floor for your questions at the end. [Operator Instructions] Before we begin, please be advised that this call may contain statements of a forward-looking nature relating to future events. These forward-looking statements are based on what we believe are reasonable assumptions, which ultimately could prove to be inaccurate, and are subject to the inherent uncertainties in predicting the future results and conditions. These statements reflect CEA Industries’ current beliefs, and a number of important factors could cause actual results to differ materially from those expressed in this call, including the risk factors set forth in the Company’s Form 10-K, which was previously filed with the SEC. Please refer to their SEC filings for a more detailed discussion of the risks and uncertainties associated their business. The forward-looking statements that the Company has made are intended to be with the meaning of forward-looking statements in Section 27A of the Securities Act of 1933 as amended. Also, please note that the Company filed its quarterly report on Form 10-Q and issued a press release announcing second quarter results earlier today. These documents can be found on the Investor Relations section of the Company’s website at ceaindustries.com. If you would like to be added to the Company’s email distribution list, please send an email to info@ceaindustries.com. It is now my pleasure to turn the floor over to Tony McDonald, Chairman and CEO of CEA Industries. Sir, the floor is yours.

Thank you and good afternoon everyone. The volatility in the broader cannabis environment has continued as operators contend with the prolonged effects of pricing and inflationary pressures. We have also witnessed a reduction in investment in and reorganization within the controlled environment agricultural sector. As a result, capital expenditures across both sectors remain reduced, resulting in delayed, reduced or eliminated construction projects. These conditions have had an adverse impact on our net bookings and revenue over the last year. As a result of the challenges this year, we preemptively implemented a series of cost cutting initiatives that have reduced our operating expenses by more than 60% compared to the year ago period. We have taken a disciplined approach to capital allocation with respect to product development, marketing, and personnel. We plan to identify additional savings opportunities in the months ahead as we remain intently focused on maintaining this lean cost structure without compromising the high level of service our customers expect. Despite dialing back our marketing spend, we are well equipped to continue sourcing and evaluating new opportunities as well as servicing our current contracts as we further diversify our customer base across the cannabis and traditional agricultural sectors. As we announced alongside our Q2 results earlier today, we have initiated a review of strategic alternatives, including a sale, merger, or other potential strategic or financial transaction to protect and maximize shareholder value. Our Board of Directors has retained Roth Capital Partners as our financial advisor to assist in the review process. We are committed to executing on the best path forward for our shareholders, customers, and employees. We will not be commenting further on this until the Board has concluded that disclosure is appropriate or required. Looking ahead, we’ll be mindful of the challenging environment as we seek additional cost savings and secure new contract wins in the cannabis and traditional agriculture verticals. We have taken the necessary measures to navigate these uncertain times, and we believe these initiatives coupled with our strong balance sheet will enable us to continue servicing our customers while we seek to maximize shareholder value. I will now hand it over to Ian Patel, our Chief Financial Officer, to discuss financial highlights for the quarter before wrapping up with closing remarks. Ian?

Thanks Tony, and good afternoon everyone. Jumping right into our results. Q2 revenue was $1.1 million compared to $3 million in a year ago period. The decrease was primarily attributed to lower revenue recognition from our backlog and an overall reduction in capital expenditures by cannabis and controlled agricultural operators. Net bookings in the second quarter were approximately $200,000 compared to $1.5 million in the same period in 2022. Our quarter end backlog was $1.1 million compared to $9.7 million in the year ago quarter. The decrease in net bookings and backlog was again primarily driven by fewer capital projects and expenditures in the industry. Gross profit for the second quarter of 2023 was approximately $79,000 or 7.4% of revenue compared to $300,000 or 10.2% of revenue for the same period in 2022. The decrease in gross margin was primarily driven by an increase in fixed costs as a percentage of revenue, which includes the cost of services, engineering, manufacturing, and project management. Operating expenses in the second quarter decreased 62% to approximately $800,000, compared to $2.1 million the year ago quarter. The decrease was primarily driven by lower product development expenses, reduced personnel and marketing costs as well as a $632,000 goodwill impairment that occurred in the year ago period. It’s worth noting that our OpEx decreased 38% from Q1 of 2023, reflecting a continued benefit from the cost saving initiatives implemented over the past few months. Net loss for the second quarter of 2023 improved to approximately $700,000 or negative $0.09 per share compared to a net loss of $1.8 million or negative $0.23 per share in the year ago quarter. As of June 30, 2023, cash and cash equivalents were $14.2 million compared to $18.6 million as of December 31, 2022, while working capital decreased by approximately $900,000 during this period. At June 30, 2023, we remain debt free. This concludes my prepared remarks. I will pass it back to you, Tony.

Thank you, Ian. As we look to the back half of the year, we will continue to run the lean operation while targeting new contract wins in both the cannabis and traditional agriculture verticals, between our robust balance sheet, optimized cost structure, and prudent approach to capital allocation, we are well-positioned to navigate this challenging environment and deliver value to our customers and shareholders alike. Operator, at this time, we will open the floor for questions.

[Operator Instructions]

As we wait for people to enter the queue, I will field some questions received by email and the webcast. Question: Are you planning to report updates on the strategic alternatives? And if so, how frequently? The answer is, we will provide updates on the process as our Board deems appropriate. Question: On the M&A front, what characteristics are you looking for in a partner or a acquirer? Answer: We are casting a wide net to ensure the greatest outcome for shareholders, consistent with our Board’s established guidance. This includes partners both inside and outside the cannabis and CEA Industries. Question: Has your ability to win new contracts been impacted by the reduction in your sales and marketing investment? Answer: As we mentioned in our prepared remarks, we’ve seen a slowdown in contract opportunities and have -- as such have reduced our sales and marketing efforts accordingly. We will continue to evaluate new business opportunities, and we will of course continue servicing our customers for current and new projects. Question: Given the challenges in the indoor agriculture and cannabis sectors, do you plan to pivot to any new -- or any adjacent or new categories? Answer: As I mentioned earlier, the Board is casting a wide net for this strategic review process. That includes targeting opportunities in cannabis and agriculture as well as other industries that can drive the greatest shareholder value. That concludes the pre-submitted questions. Operator, are there any questions from the lines at this time?

There were no questions from the lines at this time.

Well, thank you very much. This concludes today’s conference call. We look forward to presenting our third quarter results in the coming months.

An audio replay of this call will be available on ceaindustries.com/investors, beginning on August 14th at 5:15 pm Eastern Time, and remain available until August 28, 2023. You may disconnect your lines at this time, and have a wonderful day. Thank you for your participation.