BNCWW

• The broader cannabis environment has continued to be volatile with pricing and inflationary pressures, and reduced investment and reorganization in the controlled environment agricultural sector, affecting net bookings and revenue. - Preemptively implemented cost - cutting initiatives reducing operating expenses by over 60% compared to the year - ago period, and took a disciplined approach to capital allocation. - Initiated a review of strategic alternatives including sale, merger or other transactions to protect and maximize shareholder value, with Board retaining Roth Capital Partners as financial advisor. - Despite reducing marketing spend, well - equipped to source and evaluate new opportunities and service current contracts while diversifying customer base across cannabis and traditional agricultural sectors. - Will be mindful of the challenging environment, seeking additional cost savings and new contract wins in cannabis and traditional agriculture verticals, and well - positioned with robust balance sheet, optimized cost structure, and prudent capital allocation.

• Continue to run the lean operation in the back half of the year. - Target new contract wins in both cannabis and traditional agriculture verticals. - Rely on robust balance sheet, optimized cost structure, and prudent capital allocation to navigate the challenging environment and deliver value to customers and shareholders.

Q2 revenue was $1.1 million, down from $3 million in the year - ago period. Net bookings in the second quarter were approximately $200,000 compared to $1.5 million in the same period in 2022. Quarter end backlog was $1.1 million versus $9.7 million in the year - ago quarter. 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 in the same period in 2022. Operating expenses in the second quarter decreased 62% to approximately $800,000, compared to $2.1 million in the year - ago quarter. 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.

• Volatility in the broader cannabis environment with prolonged pricing and inflationary pressures. - Reduction in investment in and reorganization within the controlled environment agricultural sector leading to reduced capital expenditures and delayed, reduced or eliminated construction projects.

Q: Are you planning to report updates on the strategic alternatives? And if so, how frequently?

A: We will provide updates on the process as our Board deems appropriate.

Q: On the M&A front, what characteristics are you looking for in a partner or a acquirer?

A: 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.

Q: Has your ability to win new contracts been impacted by the reduction in your sales and marketing investment?

A: 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.

Q: Given the challenges in the indoor agriculture and cannabis sectors, do you plan to pivot to any new - or any adjacent or new categories?

A: 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