Financial Data and Key Metrics Changes - In Q2 2026, net revenues decreased to $4.6 million from $6.5 million in Q2 2025, representing a decline of approximately 29.2% [6] - Average active PaperPie brand partners fell to 5,800 from 13,900 year-over-year [6] - Losses before income taxes improved to $1.8 million from $2.5 million, while net loss decreased to $1.3 million from $1.8 million [6] - Year-to-date net revenues were $11.7 million compared to $16.5 million, a decline of approximately 29.1% [6] - Year-to-date losses before income taxes totaled $3.2 million, down from $4.2 million [6] Business Line Data and Key Metrics Changes - The PaperPie division experienced a significant decline in brand partner levels, attributed to a challenging sales environment and lack of new product introductions for 18 months [3][4] - The company is focusing on increasing brand partner counts and improving technology to attract younger demographics, specifically Millennials and older Gen Z [4][5] Market Data and Key Metrics Changes - The retail side of the business showed steady performance, particularly in specialty, toy, and gift markets, indicating a strong relationship with retail partners [12] - Despite a challenging broader selling environment, enthusiasm among brand partners remains high, contributing to a diversified revenue base [12] Company Strategy and Development Direction - The company is adopting a conservative phased approach to introduce new products, targeting a new generation of brand partners [4] - Efforts are being made to improve technology for a mobile-first impact and enhance the onboarding process for new brand partners [5] - The company is also focused on reducing costs and improving results, aiming for a return to revenue growth through increased brand partner recruitment [5] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging sales environment and the need for new product introductions to energize the sales force [4][28] - The company expects to complete the sale of its headquarters, which will help pay off bank loans and provide a foundation for future growth [13] - Management expressed confidence in emerging stronger and more resilient post-sale, with plans to explore financing options thereafter [13] Other Important Information - Inventory levels decreased from $44.7 million to $40.7 million, generating $4 million in cash flow used to pay down debts [8] - The bank has not renewed loan agreements, and the company is currently in default status, but continues to make payments [8][13] Q&A Session Summary Question: Is the buyer group related to Tenmark Holdings? - Yes, the buyer group has significant real estate holdings in Oklahoma and understands the area well [17] Question: How much earnest money is entitled? - The earnest money is $100,000, which will likely stay in escrow until closing [18] Question: What is the expected net from the property sale after costs? - The company expects to net enough to initiate their plans post-sale [19] Question: Confidence level in closing the sale at $32.2 million? - There is a very high degree of confidence in closing the sale at that level [21] Question: Status of establishing a new credit line? - The company is developing several options for financing, likely starting with a conservative $3 to $5 million [23] Question: What costs have been cut and what remains? - Major impacts on P&L include interest expenses and aggressive discounting; excess inventory and warehouse costs are also being addressed [25][26] Question: How much of the brand partner decline is due to lack of new titles? - The inability to introduce new titles has significantly impacted brand partner numbers, and new titles are expected to help stem losses [27][28] Question: Plans for reinstating dividends post-sale? - The company aims to generate positive cash flow and potentially reinstate dividends, but this is not expected for at least a couple of quarters [32] Question: What collateralized items are involved in the bank agreement? - The bank agreement cross-collateralizes all assets, including the building, accounts receivable, inventory, equipment, and land [36] Question: Plans for increasing brand partner count? - A multi-pronged approach is being implemented, including providing tools for current brand partners to recruit new ones and introducing new titles [40]