Financial Data and Key Metrics Changes - The second quarter sales increased by 28% to $12.1 million compared to $9.4 million in the prior year period, driven by increased production and sales from the Georgia facility and new facilities in Texas and Washington [14] - Adjusted gross margin percentage improved to approximately 30%, up from 29% in the prior year period, marking the highest quarterly adjusted gross margin in recent quarters [15] - Adjusted EBITDA loss improved to $6.5 million compared to a loss of $8.3 million in the prior year period and $8.8 million in the first quarter [15][16] Business Line Data and Key Metrics Changes - The Texas facility is now operating at full harvestable capacity, allowing for increased revenue generation from both cut and living full head products [37] - Cost reduction initiatives have resulted in approximately $7 million in annualized savings across operating expenses and cost of goods sold, with an additional $2.5 million to $3 million expected in the second half of the year [10][16] Market Data and Key Metrics Changes - The company is experiencing strong momentum in customer discussions, with several significant opportunities progressing that could drive capacity utilization improvements in the Washington and Texas facilities [13] - Retail partners are increasingly recognizing the value proposition of the company's technology, leading to a growing demand for CEA products in the market [13] Company Strategy and Development Direction - The company aims to build a streamlined organization with a focus on sustainable profitability, leveraging its Stack and Flow technology to capture opportunities in sustainable food production [5][6] - The addition of a new Chief Commercial Officer is expected to enhance strategic relationships with existing customers and expand retail presence [12][28] Management's Comments on Operating Environment and Future Outlook - Management expects revenue run rates to ramp up later in 2025, with modest sequential growth anticipated in the third quarter, accelerating into the fourth quarter [19] - Positive adjusted EBITDA is projected to be achieved in early 2026 as the company scales alongside retail deployment schedules [20][21] Other Important Information - The company ended the quarter with cash and cash equivalents of $13.2 million, following a $10 million debt reduction and a $1 million financing through a convertible note [18] - The company is in the planning phases for a Midwest facility, alongside expansions of existing facilities in Georgia, Washington, and Texas [30][31] Q&A Session Summary Question: Can you help us understand how gross margin expands throughout the year? - Management indicated that several factors impact margin, including tower upgrades, pricing, product mix, and cost reductions [25] Question: What are the goals for the new Chief Commercial Officer? - The focus will be on expanding strategic relationships with customers and enhancing the existing commercial team's efforts [28] Question: Is the Midwest facility still in the two-year horizon? - Management confirmed that the Midwest facility is still in planning phases, along with expansions of existing facilities [30] Question: What gives confidence in retailer engagement despite delays in EBITDA targets? - Management highlighted that the Texas facility is largely sold out and that engagement with retailers is at an all-time high, which supports confidence in future growth [41]

Industry Challenges & Opportunities - Traditional farming in Hong Kong faces challenges due to limited land (only 1.27% used as farmland) and high water import costs (20 million tons annually costing 200 million HKD) [1] - Hydroponics offers a revolutionary solution for efficient and sustainable crop cultivation with minimal resources [2] - Brownfield lands in Hong Kong present an opportunity for conversion into vertically spread greenhouses for hydroponics [8][9] Hydroponics Advantages - Hydroponics allows precise adjustment of pH values and nutrients for optimal plant growth [5] - Hydroponics has a high water efficiency, with about 90% of the water being reused [5] - Hydroponics can be set up vertically or in a compacted way, saving space [6] Comparative Analysis - Netherlands, despite its small size (41,850 square kilometers, one-quarter of Guangdong), produces 54 tons of vegetables per hectare, exceeding the US and China [6] - Hong Kong has a population density nearly 13 times higher than the Netherlands, suggesting hydroponics could maximize food production to meet shortages [8] Implementation & Call to Action - Setting up hydroponics is remarkably simple, requiring minimal materials [3] - Individuals can start hydroponics at home to inspire wider adoption and promote self-sufficiency [11][12]