Q1 2025 cbdMD Inc Earnings Call

Gailen: Good afternoon. Welcome to the cbdMD, Inc. 31 December 2024 Q1 and 2025 earnings call and update. This afternoon, the company issued a press release that provided an overview of its Q1 results, which followed the filing of its quarterly report on Form 10-Q. Today's conference call is being recorded and will be available online, along with our earnings press release covering our financial results and non-GAAP presentation at cbdmd.com in accordance with cbdMD's retention policies. All participants on this call will be in a listen-only mode. The call will be followed by a question and answer session. At this time, I'd like to turn the conference over to Brad Whitford, the company's Chief Accounting Officer. Brad, please go ahead.

Good afternoon, welcome to the C V D. M D Inc. December 31st 2024 physical.

First fiscal quarter, and 2025 earnings call and update.

This afternoon, the company issued a press release that provided an overview of its first fiscal results.

First pardon me first fiscal quarter results, which followed the filing of its quarterly report on Form 10-Q.

Today's conference call is being recorded and will be available online along with our earnings press release, covering our financial results and non G. Eight non-GAAP presentation at C. B D. M D. Dotcom in accordance with G. P. D M DS retention policies.

Participants on this call will be in a listen only mode. The call will be followed by a question and answer session at that time I would like to at this time I'd like to turn the conference over to Brad Whitford, The company's Chief Accounting Officer, Brad. Please go ahead.

Brad Whitford: Thank you, Gailen, thank you all for joining cbdMD's 31 December 2024 Q1 of fiscal 2025 Earnings Call and Update. On the call today, we also have Ronan Kennedy, our CEO and Chief Financial Officer. We'd like to remind everyone that various remarks about future expectations, plans, and prospects constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995.

Speaker Change: Thank you Gail and thank you all for joining CVD <unk> December 31, 2024 first quarter of fiscal 2025 earnings call and update on the call. Today. We also have ronen Kennedy, our CEO and Chief Financial Officer.

Speaker Change: We'd like to remind everyone that various remarks about future expectations plans and prospects constitute forward looking statements for purposes of the safe Harbor provisions under the private Securities Litigation Reform Act of 1995 Bvd.

Brad Whitford: cbdMD cautions that these forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from those indicated, including risks described in the company's annual report on Form 10-K for the fiscal year ended 30 September 2024, and our other filings with the SEC, all of which can be reviewed on the company's website at www.cbdmd.com or on the SEC's website at www.sec.gov. Any forward-looking statements made on this conference call speak only as of today's date, Thursday, 13 February 2025, and cbdMD does not intend to update any of these forward-looking statements to reflect events or circumstances that would occur after today's date, except as may be required by federal securities laws. With that, I'd like to turn the call over to Ronan.

Speaker Change: <unk> cautions that these forward looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from those indicated including the risks described in the Companys annual report on Form 10-K for the fiscal year ended September 32024, and our other filings with the SEC all of which can be reviewed.

Speaker Change: On the company's website at Www Dot <unk> dot com or on the Sec's website at Www Dot FCC Dot Gov.

Speaker Change: Any forward looking statements made on this conference call speak only as of today's date Thursday February 13, 2025, and <unk> does not intend to update any of these forward looking statements to reflect events or circumstances that would occur after today's date, except as maybe required by federal securities laws.

Ryan: With that I'd like to turn the call over to Ryan.

Ronan Kennedy: Good afternoon, everyone, and thank you for joining us today. On our last call, we laid out two core priorities, achieving profitability and resolving our capital structure and listing challenges. I am thrilled to be speaking with you today, not only to report on a historic quarter, but to highlight the stronger foundation we built and the exciting opportunities ahead. This year marks cbdMD's operating subsidiary's 10th anniversary, and our progress over the last quarter underscores a significant turnaround moment for the company. We delivered on our commitment during the Q1. Revenue rebounded and grew sequentially over the Q4. Gross margins held strong, demonstrating the durability of our model. SG&A costs improved, reflecting disciplined expense management. Most importantly, we generated positive net income and for the first time in company history, achieved a positive non-GAAP adjusted EBITDA.

Ryan: Good afternoon, everyone and thank you for joining us today.

Ryan: Last call, we laid out two corporate priorities, achieving profitability and resolving our capital structure and listing challenges I'm thrilled to be speaking with you today not only to report on a historic quarter, but to highlight the stronger foundation, we built and the exciting opportunities ahead.

Ryan: This year marks CBD MTS operating subsidiaries, 10th anniversary and our progress over the last quarter underscores the significant turnaround moment for the company.

Ryan: We delivered on our commitment during the first fiscal quarter revenue rebounded and grew sequentially over the fourth quarter gross margins held strong demonstrating the durability of our model.

Ryan: SG&A costs improved reflecting disciplined expense management.

Ryan: Most importantly, we generated positive net income for the first time in company history.

Ryan: <unk> achieved a positive non-GAAP adjusted EBITDA.

Ronan Kennedy: This is a major milestone for cbdMD, and I want to recognize our entire team for their resilience, hard work, and focus over the last year in making this happen. Our focus remains on optimizing the business, strengthening our team, and enhancing our customer experience. We've been deliberate in ensuring we have the right talent in place. We've added key hires to our sales organization and marketing teams, bringing in deep expertise across CBD, hemp-derived beverages, and other consumer products. These moves position us well to accelerate growth. This quarter, we launched new and enhanced formulations on our sleep and calm products, improving both efficacy and taste. We believe innovation is a key driver of future revenue growth, and our pipeline to upgrade some of our products has us excited for what's ahead.

Ryan: This is a major milestone for CBD M D and I want to recognize our entire team for their resilience hard work and focus over the last year in making this happen.

Ryan: Our focus remains on optimizing the business strengthening our team.

Ryan: Enhancing our customer experience, we've been deliberate in ensuring we have the right talent in place. We've added key hires to our sales organization and marketing teams, bringing in deep expertise across CBD hemp drive beverages and other consumer products.

Ryan: These moves position us well to accelerate growth.

Ryan: This quarter, we launched a new and enhanced formulations on our sleep and calm products, improving both efficacy and taste.

Ryan: We believe innovation is a key driver of future revenue growth and a pipeline to upgrade some of our products has been fixed.

Ryan: And for what's ahead.

Ronan Kennedy: Our Oasis Social Tonic line has been well-received, confirming our belief in the enormous potential of this category. We are in final contract negotiations with multiple distributors, and we expect to make key announcements in the coming weeks. Additionally, we already have a national retailer ready to take the product as soon as distribution is secure. This is a huge growth opportunity, and we're committed to establishing Oasis as a major player in the fast-emerging hemp-derived beverage sector. We are entering 2025 with momentum, financial discipline, and a clear roadmap for sustainable profitability. This quarter is a foundation, not a peak, and we are focused on scaling our success to deliver a profitable full year in 2025. With that, I'll turn the call over to Brad, who will walk you through our financials.

Ryan: We're always the social tonic line has been well received confirming our belief and the enormous potential of this category.

Ryan: Final contract negotiations with multiple distributors and we expect to make key announcements in the coming weeks.

Ryan: Additionally, we already have national retail are ready to take the product as soon as distribution is secure.

Ryan: This is a huge growth opportunity, where we committed to establishing oasis is a major player in the fast emerging hub drive beverage sector.

Ryan: We are entering 2025 with momentum financial discipline, and a clear roadmap for sustainable profitability.

Ryan: This quarter is a foundation not a peak and we are focused on scaling our success to deliver profitable full year 2025 with that I'll turn the call over to Brad who will walk you through our financials.

Brad Whitford: Thanks, Ronan. Total net sales for Q1 of fiscal 2025 were $5.1 million, or a 5% decrease from the prior year comparative quarter, and a 12% increase from Q4. Our quarterly e-commerce direct-to-consumer business generated sales of $3.9 million in Q1 of fiscal 2025. This was a 10% year-over-year quarterly decrease. E-commerce represented 77% of our total net sales for Q1 of 2025 versus 82% in the prior comparative quarter. Our wholesale business generated $1.1 million of net sales for Q1 of fiscal 2025, up 22% as compared to $950,000 for the comparative quarter in fiscal 2024. During Q4 of 2024, we mentioned certain international wholesale customers were temporarily impacted due to certain re-registration issues. Revenue has since rebounded once this temporary issue was resolved.

Brad Whitford: Thanks, Brendan total net sales for the first quarter of fiscal 2025 were $5 1 million or 5% decrease from the prior year comparative quarter total of 12% and a 12% increase from the fourth quarter, our quarterly e-commerce direct to consumer.

Brad Whitford: Our business generated sales of $3 9 million in the first quarter of fiscal 2025. This was a 10% year over year quarterly decrease ecommerce represented 77% of our total net sales for the first quarter of 2025 versus <unk> 40, or 82% in the prior comparative quarter.

Brad Whitford: Our wholesale business generated $1 1 million of net sales for the first quarter of fiscal 2025 up 22% as compared to 950000 for the comparative quarter in fiscal 2024.

Brad Whitford: During the fourth quarter of 2024, we mentioned certain international wholesale customers were temporarily impacted due to certain re registration issues.

Brad Whitford: <unk> has since rebounded once this temporary issue was resolved.

Brad Whitford: Our gross profit remained at a healthy 66% for Q1 2025. Our SG&A expenses for Q1 fiscal 2025 totaled $3.4 million, compared to $4.6 million in the prior year comparative quarter. The expense reduction was focused on payroll, professional fees, marketing fees, and the elimination of the HQ lease, in addition to other cost-savings initiatives. Overall, this resulted in a loss from operations of approximately $86,000 for Q1 fiscal 2025, as compared to a $1.1 million loss from the prior year period. After adjustments to the fair value of the notes and interest expense, net income totaled $15,000 as compared to a loss of $977,000 in Q1 fiscal 2024.

Brad Whitford: Gross profit remained at a healthy 66% for the first quarter of 2025, our SG&A expenses for the first quarter of fiscal 2025 totaled $3 4 million compared to $4 6 million in the prior year comparative quarter.

This reduction was focused on payroll professional fees marketing fees and the elimination of the HQ lease in addition to other cost savings initiatives.

Brad Whitford: Overall this resulted in a loss from operations of approximately 86000 for the first quarter of fiscal 2025 as compared to a $1 1 million dollar loss from the prior year period.

Brad Whitford: After adjustments to the fair value of the notes and interest expense net income totaled 15000 as compared to a loss of 977000 in the first quarter of fiscal 2024.

Brad Whitford: Our non-GAAP adjustments to operating expenses for Q1 of fiscal 2025 include $3,000 in non-cash employee stock expense and $298,000 in depreciation and amortization expense, resulting in a non-GAAP adjusted EBITDA profit of $214,000 for Q1 of fiscal 2025 as compared to a $698,000 non-GAAP adjusted EBITDA loss in Q1 of fiscal 2024. The EBITDA improvement in non-GAAP adjusted operating income and loss over the prior year period is primarily attributed to management's focus on our cost structure and profitability. On our last call, we highlighted that during Q1, we had some larger prepaid balances due between our D&O insurance and our ERP and would be reducing some of our payables during Q1 as well. We continue to carefully manage working capital.

Brad Whitford: Our non-GAAP adjustments to operating expenses for the first quarter of fiscal 2025 include $3000 of noncash employee stock expense and 298000 in depreciation and amortization expense.

Brad Whitford: Resulting in a non-GAAP adjusted EBITDA profit of 214000 for the first quarter of fiscal 2025 as compared to a 698000 non-GAAP adjusted EBITDA loss in the first quarter of fiscal 2024.

David: David the EBITDA improvement and non-GAAP adjusted operating.

David: Income and loss over the prior year period is primarily attributed to a management focus on our cost structure and profitability.

David: On our last call we highlighted the first with the deal.

David: During the first quarter, we had some larger prepaid balances due between our D&O insurance and our ERP and would be reducing some of our payables in the first quarter as well.

David: We continue to carefully manage working capital.

Brad Whitford: We had cash and cash equivalents of approximately $2 million and working capital of approximately -$2.8 million as of 31 December 2024, compared to $2.4 million and a working capital deficit of approximately $2.2 million on 30 September 2024. The main difference that reduced our net working capital is the incremental $1 million of accrued preferred dividends that is a short-term liability on our balance sheet. Excluding the respective $5.7 million and $4.7 million of accrued dividends, we had positive adjusted net working capital of +$2.8 million as of December 2024 and $2.4 million as of September 2024. We anticipate slight increases in our operating cost in the current quarter related to the extension of our current warehouse and office lease. We also anticipate some increases in our marketing expenses during the quarter.

David: We had cash and cash equivalents of approximately 2 million and working capital of approximately negative $2 8 million as of December 31, 2024, compared to $2 4 million and a working capital deficit of approximately $2 2 million at September 32024.

David: The main difference that reduced our net working capital as the incremental $1 million of accrued preferred dividends that is a short term liability on our balance sheet excluding.

David: Excluding the respect of five seven and $4 7 million of accrued dividends, we had positive adjusted the adjusted net working capital of $2 8 million as of December 2024, and $2 4 million as of September 2024.

David: We anticipate slight increases in our operating cost in the current quarter related to the extension of our current warehouse and office lease. We also anticipate some increases in our marketing expenses during the quarter. The remaining balances of the Companys convertible notes were converted to common stock during January 2025, and the company is now debt free exclude.

Brad Whitford: The remaining balances of the company's convertible notes were converted to common stock during January 2025, and the company is now debt-free, excluding liabilities incurred in the ordinary course of business and accrued dividends. This frees up cash previously allocated for the notes' maturity date to be used for working capital purposes. With that, I'll turn the call back over to Ronan.

David: Liabilities incurred in the ordinary course of business and accrued dividends. This frees up cash previously allocated for the note's maturity date to be used for working capital purposes.

Ronan: With that I'll turn the call back over to Ronan.

Ronan Kennedy: Thank you, Brad. While we are pleased with our financial progress, the second key pillar of our focus for us has been addressing our capital structure and regaining compliance with the NYSE American continued listing standards. As part of this effort, we filed our proxy for our annual meeting today. While it includes standard annual meeting items, I wanted to highlight two critical proposals that represent a measured strategic solution for our shareholders and the company's long-term success. First, we are excited to nominate two new board members. Now that CBD is on a stronger financial footing, we believe these candidates bring valuable expertise and fresh energy to help us capitalize on growth opportunities and drive further success. Over the past year, we've actively engaged our shareholders, particularly our preferred class, to listen to and respond to their concerns from prior attempts at conversion.

Speaker Change: Thank you Brian well, we are pleased with our financial progress the second key pillar of our focus.

Speaker Change: But for US has been addressing our capital structure and regaining compliance with the NYSE American continued listing standards as part of this effort, we father and a proxy for our annual meeting today will include standard annual meeting items I wanted to highlight two critical proposals that represent a measured strategic solution for our shareholders and the company.

Speaker Change: Long term success.

Speaker Change: First we're excited to nominate two new board members now, let's see the B M D. As on a stronger financial footing. We believe these candidates bring valuable expertise and fresh energy to help us capitalize on growth opportunities and drive further success.

Over the past year, we've actively engaged our shareholders, particularly our preferred class Kulicke and.

Speaker Change: And respond to their concerns from prior attempts that conversion.

Ronan Kennedy: The two biggest priorities we heard were profitability and ownership. With respect to profitability, we believe we've delivered. Year over year, we have significantly improved our financial performance, culminating in positive net income and adjusted EBITDA this quarter for the first time. We have taken the ownership feedback seriously. To that end, this new proposal is an improvement over prior attempts. Our prior shareholder proposals to convert our Series A preferred did not pass at ratios of 1 to 3 and 1 to 6. As proposed under our preliminary proxy statement, we intend to ask our shareholders to approve a conversion ratio of 1 to 13, representing approximately 90% of the as-converted common stock. The reality is there is no perfect solution, and we are navigating a complex set of challenges in restructuring our capital base.

Speaker Change: The two biggest priorities, we heard about profitability and ownership with respect to profitability. We believe we would deliver year over year, we have significantly improved our financial performance, culminating in a positive net income and adjusted EBITDA. This quarter for the first time.

Speaker Change: Well, we have taken our fee ownership feedback seriously to that and this new proposal is an improvement over prior attempts.

Speaker Change: Our prior shareholder shareholder proposals to convert our series a preferred did not pass at ratios of one three and one to six.

Speaker Change: As proposed under our preliminary proxy statement, we intend to ask our shareholders to approve a conversion ratio wonder 13, representing approximately 90% of the as converted common stock.

Speaker Change: Reality is there's no perfect solution.

Speaker Change: Navigating a complex set of challenges and restructuring our capital base. However, we are committed to finding a balanced approach that benefits all stakeholders and alone.

Ronan Kennedy: However, we are committed to finding a balanced approach that benefits all stakeholders in the long run. This proposal represents a practical and equitable solution to clean up our capital structure, a superior option compared to past proposals based on direct shareholder and financial professional feedback, and we believe the best path forward to regain compliance with the NYSE American stockholder equity requirements well ahead of the December 2025 deadline. Without a resolution to our capital structure, the ability to fully unlock shareholder value remains at risk due to the potential delisting. The financial results of Q1 demonstrate that the profitability is achievable, and we are proving that a sustainable, thriving business model in this industry is possible. Just a few years ago, in fiscal 2021, we had a net loss of $23 million, and for fiscal 2022, a net loss of $70 million, which included goodwill impairment.

Speaker Change: This proposal represents a practical and echoed all solution to clean up our capital structure.

Speaker Change: A superior option compared to past proposals based on direct shareholder and financial professional feedback.

And we believe the best path forward to regain compliance with the NYSE American stockholder equity requirements well ahead of the December 2025 deadline.

Speaker Change: Without a resolution newer capital structure of the ability to fully unlock shareholder value remains at risk due to the potential delisting.

Speaker Change: Financial results of Q1 demonstrate that the profitability is achievable and we are proving that a sustainable thriving business model in this industry as possible just a few years ago in fiscal 2021, we had a net loss of $23 million and for fiscal 2020 to a net loss of 70 million, which included goodwill impairment today, we've transformed into a leaner more.

Ronan Kennedy: Today, we have transformed into a leaner, more disciplined organization that is resilient, adaptive, and focuses on long-term success. While the hemp and CBD category remains a challenging industry, we've demonstrated we can evolve, navigate volatility, and stay focused on delivering value to shareholders. We are in a pivotal moment in cbdMD's history. This vote is critical to ensuring we can fully leverage the progress we've made and operate as a NYSE-listed, profitable company poised for growth. We urge all shareholders to support their conversion proposal, which protects the company's future, enhances shareholder value, and keeps us on track to capitalize on the momentum we've built. With that, I'll open up the call to questions.

Speaker Change: Our disciplined organization that has a resilient adaptive and focuses on long term success.

Speaker Change: While the hemp and CBD category remains a challenge in the industry. We've demonstrated we can evolve.

Speaker Change: Navigate volatility and stay focused on delivering value to shareholders.

Speaker Change: Pivotal moment in <unk> history. This vote is critical to ensuring we can fully leverage the progress we've made.

Speaker Change: It is a NYSE listed profitable company poised for growth.

Speaker Change: We urge all shareholders to support there.

Speaker Change: <unk> proposal, which protects the company's future enhances shareholder value and keeps us on track to capitalize.

Speaker Change: On the momentum, we built and with that I'll open up the call to questions.

Gailen: Thank you. We'll now begin the question and answer session. Our first question is from Adam Waldo with Lismore Partners, LLC. Please go ahead.

Speaker Change: Thank you well now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad, you'll hear a tone acknowledging your request if youre using a speakerphone. Please pick up your handset before pressing any keys to withdraw your question.

Speaker Change: Star then two.

Speaker Change: Well pause for a moment as colors trying to kill them.

Speaker Change: Our first question is from Adam Waldow with Lismore partners LLC. Please go ahead.

Adam Waldo: Yes. Good day, Ronan and Brad. I hope you can hear me okay.

Adam Waldow: Yes, good day, rounding and Brad I Hope you can hear me okay.

Ronan Kennedy: Yes. Hey, Adam. How are you?

Brad Whitford: Yeah, Hey, Adam how are you.

Adam Waldo: I'm well, Ronan. Thanks. Hope you are as well. I wanted to just drill down a little bit more on the Herbal Oasis Social Tonics progress. Obviously, your press release that launch on 14 November, on your last quarterly call on 18 December, you weren't comfortable saying much about it yet in terms of the prospective revenue and margin structures, working capital, and the like that would be associated with it because it was very early days. What more can you say on those topics now?

Oh, well run and thanks all of you.

Brad Whitford: You are as well so I wanted to just.

Speaker Change: A little bit more on the herbal oasis social topics progress obviously in your press release that our launch on November 14th on your last quarterly call in December 18.

Speaker Change: Are you you weren't comfortable saying much about it yet in terms of the perspective revenue margin structures working capital like that would be associated with it because it was very early days what more can you say on those topics now.

Ronan Kennedy: Look, Adam, I think it's been a well-received product. The wholesale distribution side, I think is moving a little slower than we liked, and it's just I think the process of iteration on legal documents. I think we're continued to be excited about the product. We do see that the wholesale margin will not be the same as some of our wholesale products today, but we believe it is really incremental revenue for us and opens up the incremental contribution profit dollars that this category can bring us.

Speaker Change: They look at them.

Speaker Change: Oh, well received product, it's moving a little the wholesale distribution side I think is moving a little slower than we liked and its just I think the process of iteration on legal documents.

Speaker Change: I think you know we were continued to be excited about the product.

Speaker Change: We don't we.

Speaker Change: We do see.

Speaker Change: Some that the wholesale margin will not be the same in some of our wholesale products today, but we believe it is really incremental revenue for us and opens up the incremental contribution profit dollars that this category can bring us.

Adam Waldo: Right. I noticed on the website that you're also offering it DTC. How do you think the DTC margins will look on that versus the rest of the product portfolio?

Speaker Change: Alright, I have noticed on the website that you're also offering it do you see how do you think that would be it seems to me margins will look on that versus the rest of the.

Speaker Change: The rest of the product portfolio.

Ronan Kennedy: Look, on the DTC side, it is a little tighter than some of our other products, but we still see it as a very viable channel. We see others in the category very successfully growing profitably in this category as well, albeit it may not be as profitable as some of our higher-end SKUs that we have on the website.

Speaker Change: Look on the DTC side of it it is a little tighter than some of our other products, but we still see as a very viable channel we see others in the category very successfully growing profitably in this category as well, albeit it may not be as possible as some of our.

Speaker Change: Our hiring.

Speaker Change: Skus that we have on the website.

Adam Waldo: Okay. Did you book any revenue from Oasis in the Q4, or are you booking your first revenue here in the Q1? I mean, the Q1 or Q2.

Speaker Change: Okay did you book any revenue.

Speaker Change: Oh boy its just in the December quarter are you booking your first revenue here in the first quarter.

Speaker Change: It was supposed to come quarter, Yeah. We did book some in the in the December quarter, we've not disclosed that but it really only had.

Ronan Kennedy: Yeah, we did book some in Q4. We've not disclosed that. It really only had 5 or 6 weeks of revenue for the quarter, and we have not provided a disclosure on that.

Speaker Change: Five or six weeks.

Our revenue for the quarter.

Speaker Change: We have not.

Speaker Change: Providing disclosure on that.

Adam Waldo: Okay, that's fair. On the convertible notes, you achieved conversion of all the remaining principal and interest in January. What were the total shares of common stock outstanding as of the start of February pro forma for that final conversion?

Speaker Change: Okay, that's fair.

Speaker Change: On the convertible hooks you couldn't you achieve conversion of all the remaining principal on interest in January So what was the total shares of common stock outstanding.

Speaker Change: But that started February pro forma for that final conversion.

Ronan Kennedy: Yeah, it's just a tad over 6.2 million in total shares outstanding.

Speaker Change: Yeah, It's just a just a tad over $6 2 million in total shares outstanding.

Adam Waldo: Okay, thanks. Then my last question is on liquidity outlook in the working capital area. On the last quarterly call on 18 December, you guided for what you thought was a liquidity runway of at least 8 quarters, which would take you out through the end of fiscal 2026. Do you still hold that view as we sit today?

Speaker Change: Okay. Thanks, and then my last question is on liquidity outlook and the working capital area.

Speaker Change: And on the last quarterly call them to somebody came to you guys or what you thought was a liquidity runway of at least eight quarters, which would take you out through the end of fiscal 'twenty 26, you still hold that view as we sit today.

Ronan Kennedy: Look, we still believe we are in one of the best positions we've been in in a long time. When you look at the cash on hand balance, we're continuing to fight every day for profitability, and ensure that we can operate a positive EBITDA business, which should generate cash to the bottom line.

Speaker Change: Look we still believe we are in one of the best position, we've been in a long time.

Speaker Change: When you look at the cash on hand balance, we're continuing to fight everyday for profitability.

And and ensure that we can operate at a positive EBITDA business, which should generate cash to the bottom line.

Adam Waldo: Okay. You'd expect sort of normal working capital relationships in upcoming quarters? Because it's a little bit, obviously, you guided on 18 December on that call to expect a bit of an uptick in working capital needs here in the fiscal Q1, which is what eventuated. Would you expect more normal working capital relationships in upcoming quarters?

Speaker Change: Okay, and so you would expect sort of normal working capital relationships in upcoming quarters, because well have a little bit obviously, you guided on December 18th and I call. It expected better, but an uptick in working capital needs here in the fiscal first quarter, which is what eventuate. It what do you expect more normal working capital relationships in upcoming quarters.

Ronan Kennedy: Yeah. I think that's a fair statement.

Speaker Change: Yeah, Yeah, I think that's a fair statement.

Adam Waldo: Okay. Thanks very much. Best wishes moving forward. Good job.

Speaker Change: Okay. Thanks, very much a best wishes moving forward good job.

Ronan Kennedy: Thanks, Don.

Speaker Change: Thanks, Dan.

Gailen: Once again, if you have a question, please press star then 1. The next question is from Thomas McGovern with Maxim Group. Please go ahead.

Speaker Change: Once again, if you have a question. Please press Star then one.

Thomas Mcgovern: Next question is from Thomas Mcgovern with Maxim Group. Please go ahead.

Thomas McGovern: Hey, guys. Congrats on the quarter, and thank you for taking the time to answer my questions. Yeah, just high level, it's great to hear that you guys are receiving a lot of industry interest, it sounds like, for your Oasis beverage product line. Just want to kind of get a better idea of the trends you're seeing across your product categories. Back in fiscal year 2024, we saw retailers starting to pull back shelf space for a lot of these products. With the national retailer kind of already lined up for you guys once you figure out distribution, it seems that there might be great interest in this specific category, and I wanted to get an idea if that could be indicative of a category turnaround more broadly or if it's more specific to the beverages. Thanks.

Thomas Mcgovern: Hey, guys congrats on the quarter and thank you for taking the time to answer my questions. So yeah. Just high level you know it's great to hear that you guys are seeing a lot of industry interest it sounds like for your Oasis, our beverage product line.

Thomas Mcgovern: Just wondering kind of get a better idea of the trends you're seeing across your product categories.

Speaker Change: Back in fiscal year 'twenty, four we saw retailers starting to pull back shelf space for a lot of these products, but with a national retailer that had already lined up for you guys. Once you figure out distribution. It seems that there might be great interest in this specific category and I wanted to get an idea if that could be indicative of a you know category turnaround more broadly or if it's more specific to the.

Thomas Mcgovern: Beverages. Thanks.

Ronan Kennedy: Yeah. Thanks, Thomas. I would say, look, we see that the beverage market has grown significantly in 2024 and continues on that trajectory into 2025. I think, on a whole, it's probably the fastest growing category across sort of CBD and hemp. I think the national retailer only sells in some specific jurisdictions. It's not 50 states, just given some of the state-level rules. It also depends on sort of how fast we can build out our distribution. I think we're excited it gives credibility to what we're doing. I think it helps us participate and build inertia in the category. We're continuing to fight day in and day out about the core CBD business that we operate and continue to advance that forward.

Thomas Mcgovern: Yeah. Thanks, Thomas I think look we're seeing I would say look we we.

Speaker Change: He got the beverage market has grown significantly in 2024 and continues on that that trajectory into 2025.

I think on a whole, it's probably the fastest growing category across sort of CBD and hemp I think the the national retailer it is not.

Speaker Change: It is only only sells in some specific jurisdictions, it's not 50 states just given some of the state levels.

Speaker Change: And it also depends on sort of how fast we can build out our distribution. So I think we're excited that it gives credibility to what we're doing.

Speaker Change: And I think it helps us participate build inertia.

Speaker Change: In the category, we're continuing to fight day in and day out about the core CBD business that we operate in continue to advance that floor. So we still see opportunity for us to perform better than in sort of the broader category and in doing that.

Ronan Kennedy: We still see opportunity for us to perform better in sort of the broader category, and we're doing that and focused on doing that in a profitable way. Then we've got the Oasis beverage to provide us sort of another growth channel for our CBD business.

Speaker Change: It focused on doing that in a profitable way and then we've got the oasis beverage to two to provide us over another growth channel for for our CBD business.

Thomas McGovern: Understood. I appreciate that thorough answer.

Speaker Change: Understood I appreciate that there are after.

Gailen: This concludes the question and answer session. I'll turn the conference back over to Ronan Kennedy for any closing remarks.

Speaker Change: This concludes the question answer session I'll turn the conference back over to resonate Kennedy for any closing remarks.

Ronan Kennedy: Thank you again for attending today's call, and we look forward to our shareholder meeting in April. Have a great day.

Kennedy: Thank you again for attending today's call and we look forward to our shareholder meeting in April have a great day.

Gailen: This brings to a close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

Kennedy: This brings to a close today's conference call. You may disconnect. Your lines. Thank you for participating and have a pleasant day.

Kennedy: Yeah.

Kennedy: Mhm.

Kennedy: [music].