Q1 2026 Ispire Technology Inc Earnings Call
Operator: Is being recorded. I now have the call over to Phil Carlson from KCSA Strategic Communications. Please go ahead.
Over to Phil Carlson from K C. S. A strategic communications. Please go ahead.
Hello, everyone and welcome to expire technologies earnings Conference call for the first fiscal quarter 2026 ended September 32025.
Philip Carlson: Hello, everyone, and welcome to Ispire Technology's earnings conference call for the first fiscal quarter of 2026, ended 30 September 2025. At this time, I would like to inform you that this conference call is being recorded, and that all participants are in a listen-only mode. Following the company's prepared remarks, we will be holding a question-and-answer session. With us today are Mr. Michael Wang, the company's co-chief executive officer, and Mr. Jay Yu, the company's chief financial officer. Mr. Wang will start by reviewing the company's key financial results and latest corporate highlights. Mr. Yu will then discuss the company's financial results for the first fiscal quarter 2026 in depth. Before we begin, I would like to remind you that this conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
At this time I would like to inform you that this conference call is being recorded and then all participants are in a listen only mode.
Following the company's prepared remarks, we will be holding a question and answer session with us today are Mr. Michael Wang The company's co Chief Executive Officer, Mr. Jay <unk>, the company's Chief Financial Officer, Mr. Wang who will start by reviewing the company's key financial results and latest corporate highlights. Mr. Yu will then discuss the company's financial results for the first fiscal quarter.
2026 in depth.
Before we begin I would like to remind you that this conference call contains forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
All statements other than statements of historical facts in its announcement are forward looking statements.
Philip Carlson: All statements other than statements of historical fact in its announcement are forward-looking statements. Forward-looking statements are based on estimates and assumptions made by the company in terms of its experience, its perception of historical trends, current conditions, and expected future developments, as well as other factors that the company believes are relevant. These forward-looking statements involve known and unknown risks and uncertainties, and many factors could cause the company's actual results or performance to differ materially from those expressed or implied by the forward-looking statements. Further information regarding this and other risk factors are included in the company's filings with the SEC. The company undertakes no obligation to update forward-looking statements to reflect subsequent or current events or circumstances, or to changes in its expectation, except as may be required by law. I will now hand the call over to Mr. Wang. Mr. Wang, please go ahead.
Forward looking statements are based on estimates and assumptions made by the company in terms of its experience and its perception of historical trends current conditions and expected future developments as well as other factors that the company believes are relevant.
These forward looking statements involve known and unknown risks and uncertainties and many factors could cause the company's actual results or performance to differ materially from those expressed or implied by the forward looking statements further information regarding this and other risk factors are included in the company's filings with the SEC.
The company undertakes no obligation to update forward looking statements to reflect subsequent or current events or circumstances or to changes in its expectation, except as maybe required by law I will now hand, the call over to Mr. Wong. This wrong. Please go ahead.
Thank you Phil and welcome to everyone, who has joined US today I am pleased to share all fiscal first quarter of 2026 financial results and our latest corporate highlights.
Michael Wang: Thank you, Phil, and welcome to everyone who has joined us today. I'm pleased to share our fiscal first quarter 2026 financial results and the latest corporate highlights. Over the first fiscal quarter of 2026, we made strong progress in strengthening our financial foundation and positioning the business for sustainable and profitable growth. Over recent quarters, we have shifted our strategic focus to higher quality customers and the higher value nickel sector. This has, in turn, allowed us to strengthen our cash flow, greatly reduce our operating expenses, and lower our account receivable balance. Our revenue decline year over year for Q1 of fiscal 2026 was the result of our deliberate strategic move away from the cannabis industry. However, the results achieved in Q1 of 2026 in other key metrics demonstrate that these steps are having the intended impact.
Overall, the first fiscal quarter of 2026, we made strong progress in strengthening our financial foundation and the positioning of the business for sustainable and profitable growth.
Over recent quarters.
Have shifted our strategic focus to higher quality customers and has a higher value nicotine sector.
This has in turn.
Allowed us to strengthen our cash flow greatly reduce our operating expenses and lower our accounts receivable balance.
Our revenue decline year over year for Q1 of his quotes on the 26 was a result of our deliberate strategic more away from the cannabis industry.
However, the results achieved in Q1 tend to tend to fix.
Other key metrics demonstrates that these steps.
<unk> intended impact.
We reduced total operating expenses substantially by approximately 39% year over year in Q1 from 12 $9 million in Q1 last year to $7 8 million in Q1 this year.
Michael Wang: We reduced total operating expenses substantially by approximately 39% year over year in Q1, from $12.9 million in Q1 last year to $7.8 million in Q1 this year. Our net account receivable reduced from $62.4 million in Q1 of fiscal 2025 to $44.5 million in Q1 of fiscal 2026. In addition, net loss improved from $5.6 million in fiscal Q1 2025 to $3.3 million for Q1 fiscal 2026. This improvement was a direct result of our focus on aggressive cost controls, disciplined expense management, and higher quality customers, while bringing our non-GAAP EBITDA to $600,000 for the quarter ended 30 September 2025. We expect this trend to continue through fiscal 2026. We are also pleased to report solid progress on the operational side, with our IKE Tech joint venture gaining significant traction.
Yeah.
Net accounts receivable reduced from $62 4 million in Q1, the physical 10 to 35 to $44 $5 million in Q1 fiscal 2026.
In addition.
Net loss improved from <unk>.
$5 6 million in fiscal Q1, 275 to $3 3 million for Q1 fiscal 2026.
This improvement was a direct result of our focus on aggressive cost controls.
Disciplined expense management and higher quality of customers, while bringing our non-GAAP.
EBITDA to $600000 for the quarter ended September 32025.
We expect this trend to continue through fiscal 2026.
We are also pleased to report solid progress on the operational side with all ice packs joint venture pending significant attraction.
This game changing technology with a blockchain based as verification.
Michael Wang: This game-changing technology with blockchain-based ACE verification requires frequent authentication at the point of use compared to the single verification used at the point of purchase in older systems. We are working with regulators across Europe, Southeast Asia, and the Middle East to adopt age-gating technology in mandatory standards. Through this initiative, Ispire is again demonstrating its commitment to leading the industry with safety and compliance. Further, we are in deep discussions with several large and medium-sized nicotine companies related to our proprietary and patented innovative GMASH technology solutions for next-generation vaping products. We are aiming to secure partnerships and our licensing agreements, which we aim to provide updates on in the coming month when possible. The build-out of our manufacturing facility in Malaysia is also progressing well, and we look forward to ramping up production in fiscal 2026.
Requires frequent authentication at the point of use.
Compared to the single verification used at the point of purchase in older systems.
We are working with regulators across Europe, South East Asia.
And the middle East.
Adopt age gating technology in mandatory standards.
Through this initiative is spire is again, demonstrating its commitment to leading the industry with safety and compliance.
Further.
We are in deep discussions with several large and medium sized the nicotine companies.
Related to our proprietary.
And the patent to the innovative <unk> mesh technology solutions.
For our next generation <unk> products.
We are aiming to secure partnerships and licensing agreements, which we aim to provide updates on <unk>.
In the coming months when possible.
The build out of our manufacturing facility in Malaysia is also progressing well.
And we look forward to ramping up production in fiscal 2026.
Windsor, Malaysia facility upgrade is completed.
Michael Wang: When the Malaysian facility upgrade is completed and at full capacity, we will go from the six lines currently in operation to 80 lines. As we have previously stated, this is a significant increase in capacity and will further position Ispire as a leading global manufacturer of precision dosing vaping products. We will continue to update the investment community on our progress throughout 2026, as additional production lines become operational. To conclude, the measures we have taken to improve our financial footing have resulted in significant improvements to our cash flow, operating expenses, and account receivable. We remain focused on creating a sustainable and profitable business, and are positioned well for future growth with our groundbreaking technological innovations. I will now turn the call over to Jay Yu, our Chief Financial Officer, to discuss our first quarter financial results in more detail. Jay.
And at a full capacity we.
We will go from the fixed lines currently in operation to 80 lines.
As we have previously stated.
This is a significantly increasing capacity and will further position ice buyer as a leading global manufacturer of precision dosing baking products.
We will continue to update the investment community on our progress throughout 2026 additional production lines become operational.
To conclude <unk>.
So we have taken to improve our financial footing.
Have resulted in significantly improvements to our cash flow operating expenses and accounts receivable.
We remain focused on creating a sustainable and profitable business and.
And are positioned well for future growth with our groundbreaking.
Technological innovations.
I will now turn the call over to Jay our Chief Financial Officer to discuss our first quarter financial results in more detail.
Okay.
Thank you Michael and thank you all for joining us.
Jay Yu: Thank you, Michael, and thank you all for joining us on the call today as we recap Ispire's financial results for the first fiscal quarter of 2026. As a reminder, I will refer to the first fiscal quarter 2026 as the quarter ended on 30 September 2025, among comparisons to the prior first fiscal quarter ended 30 September 2024, unless otherwise stated. Total revenue for the first quarter of fiscal 2026 was $3.4 million, a reduction of $9 million from $12.4 million compared to the first quarter of fiscal 2025. This was due to a decline in product sales with the shifting of our business away from cannabis customers, which we are confident will achieve long-term, stable growth and profitability. During the first fiscal quarter of 2026, gross profit reduced to $5.1 million from $7.7 million the quarter prior.
On the call today, as we recap our finance <unk> financial results for the first fiscal quarter of 2026.
As a reminder.
We referred to the first quarter turning to a six.
The quarter ended on September 32005.
Comparisons arent excuse.
He is a private first physical quota and data at September 32024.
Unless otherwise stated.
Total revenue for the first quarter of fiscal 2026 was.
Got it.
The reduction from 9 million from <unk> 3 million compared to the first quarter for fiscal 'twenty five.
Just for those two.
<unk> product sales.
With the shifting of our business away from candidates to customers, which we are confident we will achieve long term stable growth and profitability.
During the first physical quarter of $10 six gross profit reduced to five point of 5 million from $7 7 million.
Total price.
Gross margins were 70% for the cluster physical quarter, turning to the six declined from $19 five in first fiscal quarter Attunity to fight.
Jay Yu: Gross margins were 70% for the first fiscal quarter 2026, a decline from $19.5 million in the first fiscal quarter 2025. This was primarily due to changes in product mix, with lower margin products being sold during the period. For the three-month period to 30 September 2025, operating expenses were $7.8 million, down substantially from $12.9 million for the same period last year. This decrease was largely due to the expense management measures we have discussed above. Net loss for the first quarter of fiscal 2026 was $3.3 million, relative to $5.6 million in the first quarter of fiscal 2025. Turning now to the balance sheet, Ispire held cash of $22.7 million at 30 September 2025, compared to $24.4 million at 30 June 2025.
This was primarily due to changes in product mix with lower margin products sold during the period.
For the three months period to September 32 needs to do five operating expenses were $7 8 million.
<unk> substantially from.
<unk> 9 million for the same period last year.
This decrease was largely due to the expense management measures we have discussed above.
Net loss for.
First quarter of fiscal 2026 was $3 3 million.
Relative to $5 6 million in first quarter fiscal.
Physical Attunity fyfe.
Turning now to the balance sheet.
That's being held at castle.
$22 7 million at September 30 to 92 five.
Parents do.
For the full 24 million at June 32 engine advice.
Net cash flow used by operating activities or.
Jay Yu: Net cash flow used by operating activities was $1.2 million for the three months to 30 September 2025, compared to $3.6 million provided by operating activities in the prior corresponding period. Net cash used in investing activities for the first fiscal quarter of 2026 was $140,000, plus $925,200 used by investing activities in the same period last year. Net cash used by financing activities for the three months to 30 September 2025 was $319,000, compared to nothing used over the same period last year. That concludes the discussion of our financial results for the first quarter of fiscal 2026. I will now turn the call back to Michael for closing comments. Michael.
One 2 million for the three months.
At September 32, 95.
Compared to $3 6 million provided by operating activities in the prior corresponding period.
Net cash used in investing activities for the first fiscal quarter tending to be six war.
140000 does.
918, five 200 used by investing activities in the same period last year.
Net cash used by financing activities for that.
Three months to September 30, 25 was 319000.
Compared to nothing used a word that's impairing lofty.
That concludes the discussion of our financial results for the first quarter of physical 2026.
I will now turn the call back to Michael for closing comment.
Michael.
Step two.
To close operationally, we are pleased with the progress we have made to enhance our financial stability.
Michael Wang: Thanks, Jay. To close, operationally, we are pleased with the progress we have made to enhance our financial stability. Our strategic focus on high-quality nickel customers, and stringent cost and expense management, has achieved solid improvements in our cash flow, operating expenses, and account receivable, allowing us to improve our non-GAAP EBITDA to $600,000 for the first fiscal quarter. We expect this trend of reduced costs, improved P&L, and strengthened cash flow to continue through fiscal 2026. At the core of our business, we are a technology company. Our groundbreaking precision vaping technologies, such as IKE Tech and GMASH, are garnering attention from the big tobacco players. As we continue to accelerate our overseas manufacturing footprint, we envision our ODM partnerships to contribute substantially to revenue growth in future quarters. We continue to lead the space in our focus on safety and compliance.
Our strategic focus on high quality nicotine customers.
And stringent cost and expense management.
<unk> has achieved solid improvements in our cash flow.
Operating expenses.
And accounts receivable.
Allowing us to improve our non-GAAP EBITDA to $600000 for the fourth fiscal quarter.
We expect this trend of reduced costs.
Improved P&L and strengthened cash flow to continue through fiscal 2006.
At the core of our business.
We are a technology company.
Our groundbreaking precision weighting technologies such as <unk>.
<unk> Pak ended G mesh.
Countering that.
Pension from the books tobacco players.
As we continue to accelerate our overseas manufacturing footprint.
We envision our ODM partnerships to contribute substantially to revenue growth in future quarters.
We continue to lead the space in our focus.
<unk> and the top lines.
We are building a profitable and sustainable platform for growth.
Michael Wang: We are building a profitable and sustainable platform for growth, and I'm proud of our achievements this quarter that bring us closer to that goal. Thank you again for joining us today. Please email ir@ispiretechnology.com with any questions. This completes our prepared remarks, and I will now ask the operator to open for questions.
And I am proud of our achievements this quarter that bring us closer to that goal.
Thank you again for joining us today, please email IR at ice spire technology dot com with any questions.
This completes our prepared remarks and.
And I will now ask the operator to open for questions.
Yes. Thank you we will now begin the question and answer session.
Operator: Yes, thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you'd like to withdraw it, please press star then two. At this time, we will pause momentarily to assemble the roster. The first question comes from Nick Anderson with Roth Capital Partners.
I ask a question you May press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys.
Hi, My question has been addressed and you would like to withdraw it. Please press Star then two.
At this time, we will pause momentarily to assemble the roster.
And the first question comes from Nick Anderson with Roth Capital Partners.
Yes. Good morning, Thanks for taking the questions and congrats on the quarter.
Nick Anderson: Yeah, good morning. Thanks for taking the questions, and congrats on the quarter. First one for me, you mentioned the partnership and licensing opportunity. Some companies have partnered with JUUL or entered into licensing agreements to sell product here in the US, given JUUL's patent library. As some of these agreements expire, what's your sales pitch to potentially onboard these clients, given your offering does not infringe on any of JUUL's patents? Just your sense for that opportunity would be helpful. Thank you.
First one for me you mentioned the partnership and licensing opportunity. Some companies are partnering with juul or entered into licensing agreements to sell product here in the U S. Given jewels patent library as some of these agreements expire what's your sales pitch to potentially onboard these clients given your offering does not infringe on any of your patents is your sense of that opportunity would be held.
Thank you.
Nick Thank you for the question.
Ah, yes indeed.
Michael Wang: Nick, thank you for the question. Yes, indeed. Everybody is aware about the situation related to the JUUL patents. Our technology, specific to not only the GMASH itself, but also to overall product design, we have our own patents, and we certainly are far away from JUUL's patents. We are confident with that approach as we talk to the potential nickel partners. That is our angle because some of them are running on certain licensing agreements or royalty agreements with JUUL, and some agreements are coming to the end of their life cycle. We are aiming to capture some such customers. I hope I answered your question, Nick.
Everybody is aware about.
Situation related to the jewel of patents and our.
<unk> technology.
Specific to the.
Not only that <unk> itself, but also to overall product design.
We have our own patents and.
We certainly are far away from jaws patents. So we are confident with that approach as we talk towards a nicotine patanjali.
Potential midstream partners.
And certainly that is our angle.
Some of them are.
Ronnie.
Certain licensing agreement or a royalty agreement with juul and some agreements are coming towards the end there.
Lifecycle.
We are aiming to capture some.
Such customers.
I hope I answered your question.
Nick.
Yes, no I appreciate that color second for me on the Malaysian license you received the interim earlier. This year just wondering if you could update us on the timing of when do you expect to receive the final license and just how that changes the discussions youre potentially having with these larger strategic partners. Thank you.
Nick Anderson: Yep. No, I appreciate that, Carl. Second from me on the Malaysian license. You received the interim earlier this year. Just wondering if you could update us on the timing of when you expect to receive the final license, and just how that changes the discussions you're potentially having with these larger strategic partners. Thank you.
Yeah, a great question there.
Yes, we received.
Michael Wang: Yeah, great question there. Yes, we received our interim license, and that interim license is valid until October 2026. While we can operate under the interim license, we are in the process of getting this, let's call it, permanent license. We are making progress on that front. We just need to meet certain safety and compliance requirements from the Ministry of Trade and Ministry of Health. We are certainly making progress on that front, knocking down one requirement after another. I am very confident either before the end of this year or right around the new year, we should receive the permanent license.
Income license and.
Our interim license.
It's a valid until October of 2026, so but.
And from a license.
Well, we can operate under its income license we are in the process.
Getting this.
Let's call it permanent license.
And we are making progress on that front.
Yes.
Need to need certain.
The safety and the compliance requirements.
Administrative trade and administrative health.
We are.
Certainly making progress on that plan.
Knocking down one rig.
And after another so I am very confident.
Either before the end of this year or right around the new year.
Sure it receives a permanent license.
Great I appreciate that if I could squeeze just one more in you mentioned working with other countries to get this aid getting age gating technology off the ground.
Nick Anderson: Great, I appreciate that. If I could squeeze just one more in. You mentioned working with other countries to get this age-gating technology off the ground. What are the chances that these regions move before the US does? What are you hearing from these other countries about potentially adopting the technology? Thank you.
What are the chances that these regions move before the U S and just what are you hearing from these other countries about potentially adopting the technology. Thank you.
Oh.
Selling and based on the conversations we have had with those other countries.
Michael Wang: Our feeling, based on the conversations we have had with those other countries, is those countries could well, I would say, be ahead of the US in adopting such technology. In those countries, there is a strong tendency of making age-gating a mandate for all e-cigarettes sold in such countries. FDA certainly will take its steps in assessing the component PMPA that we submitted back in May. Even though that will move, in our opinion, faster than standard PMPA, those other countries we have been in conversations with, I feel strongly they could move much faster. Their regulatory process and the legislative processes are very different from the US. However, on the FDA side, I'm very optimistic about what's going to happen. Just last week, there was a conference held in Washington, D.C., attended by many key leaders from FDA, specifically the Center for Tobacco Products.
Those countries could well.
I would say ahead of the U S in adopting such technology.
And in those countries there is a.
Strong pendency of making <unk> a mandate.
For all E cigarette.
Sold in such countries.
So.
FDA certainly work take it's a steps in assessing the component to the MTA definitely submitted back in May.
Even though that will more.
Okay and faster than standard pmk.
Those other countries that we have been in conversations with.
I feel strongly that he could.
Faster.
The regulatory process.
Legislation processes are very different funds in the U S.
However on the FDA.
FDA side.
I'm very optimistic about what's going to happen.
Just last week, there was a conference held in Washington D C.
Attended by many key leaders from F D a.
Specific.
The center also.
<unk> products and we all know that agency plays the single most important role in PMT.
Michael Wang: We all know that agency plays the single most important role in PMPA approval. At the conference, everybody was talking about age-gating being the solution to solving the so-called flavor issue. From the speech, it sounded like FDA is embracing the idea of flavored e-cigarettes, and the only concern they have is youth access to such products. Age-gating at a point of use is widely discussed right now. I hope that builds some tailwind for our technology. Nick.
Approval.
And.
As the conference everybody was talking about age gating being.
The solution to solve and say so called the flavorings ship it from the speeds you sounded alike.
FDA is embracing the idea of a flavor of that E cigarettes, and so only.
Concerns they have is.
You access to such products. So age gating at Quanta News is so widely discussed right now so I hope that you'll have some tailwind for our technology Nick.
Great. That's it for me congrats on the quarter I'll pass it on.
Nick Anderson: Great. That's it for me. Congrats on the quarter. I'll pass it on.
Thank you.
Thank you and the next question comes from Hamzah <unk> with <unk> Associates.
Michael Wang: Thank you.
Operator: Thank you. The next question, Constance Helen Zuanek with Zuanek Associates.
Good morning, Collyn on for Pablo I have just two question more for the U S market.
Helen Zuanek: Good morning. This is Helen for Pablo. I have just two questions, more for the US market. First question, given the potential for new recreational cannabis market in the US, in Virginia and in Pennsylvania, and for Texas to be a large medical market, would you reconsider your US strategy and become to focus more on the US cannabis again?
Third question, given the potential of our new recreation of Kennedy's market in the U S and in Virginia, and in Pennsylvania and Florida.
Texas.
To be a notch medical market would you reconsider your strategy and become to focus more on the U S. Kennedy's again.
Hello, and thank you for the question.
Michael Wang: Helen, thank you for the question. As far as the US cannabis business, I think we all know, as an industry, we have waited and hoped for some federal-level changes. Right now, we really do not see any immediate change to descheduling, rescheduling, federal legalization, SAFER banking, all those things. The reason I mention all those things is because the industry is facing or has been facing cash flow challenges, whether we operate in California, New York, Michigan, Colorado, or I think ultimately Texas, for example. We are certainly very, very invested in the cannabis industry here. Until we see signs of financial support to the industry, we really are concerned about overall ability to be paid on a timely basis. To put it bluntly, that is our number one concern. We will keep our eyes on the developments on the cannabis side.
As far as a U S cannabis business.
No.
I think we all know.
As an industry, we have waited and hoped for some federal level.
The changes are.
And right now, we really don't see any immediate change to be scheduling rescheduling federal legalization safer banking, what all of those things.
And the reason I mentioned all of those things is because the industry is facing are has been facing.
Cash flow challenges.
Whether.
We operate in California, or New York, Michigan, Colorado are I think are ultimately, Texas for example.
So are.
We are certainly very very invested in the cannabis industry here.
But until we see signs of financial.
Our support to the industry.
We really are concerned about the overall overall our ability to.
Ah be paid.
Timely basis, so to put it bluntly that's our number one concern so we will keep our eyes on the developments on the candidate side.
On the first sign of a major Ah.
Michael Wang: On first sign of major change at the federal level, we will certainly double down and reinvest in this space. Until then, we will continue to take a cautious approach. We only will deal with, as we have been saying, high-quality customers, meaning customers who could actually pay on time. Obviously, cash flow is very important to us. That is the number one criteria for us. We will keep our eyes open. As more states legalize cannabis, and more importantly, as federal-level changes take place, we will double down. Helen?
Change at a federal level, we will certainly doubled down and reinvest in this space.
Until then we will continue to take a cautious approach.
We only will deal with.
As we have been saying high quality customers.
Customers, who could actually pay on time so.
Obviously cash flow is very important to us. So that's the number one criteria for us So we'll keep our eyes open.
As more states lethal.
Legalized cannabis and more importantly as.
A federal level.
Changes it takes place we will double that.
Talent.
Right. Thank.
Thank you so much I totally understand for our last question I know this is hypothetical and and but he's the Supreme Court, where it can reverse president Trump tariff policy, how would that make you change your supply chain strategy in relation to the U S market.
Helen Zuanek: Right. Thank you so much. I totally understand. For our last question, I know this is hypothetical, but if the Supreme Court were to reverse President Trump's tariff policy, how would that make you change your supply chain strategy in relation to the US market?
A great question.
If that indeed is the overturned.
Michael Wang: Great question. If that indeed is overturned, we will certainly diversify our supply chain. However, one key thing we are mindful of is the geopolitical conflict between the US and China will not get any better anytime soon. That's another key consideration of ours. In addition to the consideration for tariffs, we already have contract factories in China. We now have our own factories in Malaysia. If the tariff situation improves, we certainly will try to leverage both locations. Whichever advantage we can exploit, we will. Helen.
We will certainly diversify our supply chain.
However, one key thing we are mindful of is the Geo political conflict.
Between the U S and China will note or not.
Get any better anytime soon so thats another key consideration of ours.
In addition to as a consideration for tariffs.
Indeed.
We already have.
Ah contract factory factories in China.
We now have our own factories.
Malaysia.
If the tariff situation improves.
We certainly price leverage both locations.
<unk> locations.
Whichever advantage a weekend.
Exploit we will.
Hello.
Yes can I squeeze in one just one last question.
Helen Zuanek: Yeah. Can I squeeze in just one last question? I have not seen the full filing, but your press release discussed year-on-year changes, but there was also meaningful growth in sales and gross margin compared to the Q1 with the Q4. The Q to Q, there is significant meaningful growth, I mean. Can you discuss what drove that? Is it by product or by region?
The I have not seen the full filing by the press release discuss year on year changes, but there was also a meaningful growth in sales and gross margin compared to the Q with a full queue. So the Q to Q.
That is significant meaningful growth I mean can you discuss what drove that is it.
<unk> put out or.
By region.
Yes byproduct.
Really the change in product mix.
Michael Wang: Yeah, by product, it's really the change in product mix, minimizing or reducing our reliance on the cannabis business. That's a key change. However, on the other hand, on the nickel side, we did have, of course, in the long past, our revenue came from our branded products. Over the course of the last few quarters, we onboarded ODM customers. I think that part of the revenue will only grow in future quarters. Nickeling, ODM customer, our partnerships will be a key focus for us going forward. No matter what, from our point of view, we will continue to focus on quality revenue, and we will continue to focus on improving gross margin. More importantly, we will continue to focus on controlling our cost so that our profitability picture will change. As you heard from Jay, we reduced our net loss significantly.
Minimizing or reducing our reliance on the cannabis business.
So that's a key key change.
However on the other hand.
On the mixing side we.
We did.
Did have.
Of course in the long past Oh.
Revenue came from a branded products and over the course of the last few quarters, we on boarded.
ODM customers.
I think that.
The revenue will only grow in the future quarters.
So nicotine ODM customer.
Our partnerships.
It will be a key focus for us going forward.
But no matter what from our point of view.
We will continue to focus on.
Quality revenue and we'll continue to focus on improving gross margin and more importantly, we will continue to focus on controlling our cost so that our profitability.
Picture or change as you heard from Jay.
We reduced our.
Net loss figure.
It simply.
And on a non-GAAP basis, we have made over $600000 in profit for the quarter.
Michael Wang: On a non-GAAP basis, we made over $600,000 in profit for the quarter. That's unprecedented, and we expect that trend to continue with improved cash flow, improved P&L, and, of course, improved gross margin over time. Helen.
That's unprecedented and.
We expect that trend to continue.
With <unk>.
The improved cash flow improved P&L.
And of course.
Gross margin overtime.
Right.
Thank you so much and congratulations for the quarter.
Helen Zuanek: Thank you so much. Congratulations for the quarter.
Thank you.
Thank you.
Michael Wang: Thank you.
A question and answer session I would like to turn the call to Michael Huang for any closing comments.
Operator: Thank you. That concludes the question and answer session. I would like to turn the call to Michael Wang for any closing comments.
Once again I want to thank everybody for joining us today.
Michael Wang: Once again, I want to thank everybody for joining us today. As you heard, we have made stride in several key areas. I just look forward to sharing more information with everybody as we have more development, new development, and a new update, especially looking forward to the next quarterly call. Thank you all.
Uh huh.
We have made strides in several key areas I just look forward to sharing.
Sharing more information with everybody as we have more development.
Our new development and the new update, especially looking forward towards the next quarterly call. Thank you all.
Thank you.
France has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
Operator: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.