Financial Data and Key Metrics Changes - For the third quarter of fiscal 2025, total revenue decreased to approximately $26,200,000, representing a decline of 12.7% or $3,800,000 compared to $30,000,000 in the same period last year [17][21] - Gross profit for Q3 was approximately $4,800,000, down from approximately $6,100,000 for the same period last year, with gross margins decreasing to 18.2% from 20.4% [19][21] - The net loss for Q3 was $10,900,000 or $0.19 per share, compared to a net loss of $5,900,000 or $0.11 per share for the same period last year [21] Business Line Data and Key Metrics Changes - Revenue from North America decreased by $3,600,000 or 28.9% to approximately $8,800,000, largely due to new tariffs on Chinese products and the transition of manufacturing to Malaysia [18] - European revenues slightly declined by $300,000 or 2.9% to approximately $13,200,000 [18] - Asia Pacific revenues decreased by $800,000 or 21.4% to approximately $3,000,000, primarily due to reduced demand in South Korea [18] Market Data and Key Metrics Changes - The company reported a focus on higher quality customers, which has impacted revenue but is expected to improve accounts receivable collection [19] - The pending increase in tariffs on Chinese-made goods has affected product pricing dynamics, but the company anticipates less impact due to manufacturing in Malaysia [8][18] Company Strategy and Development Direction - The company aims to become a leading manufacturer of precision dosing technology for global nicotine companies, with significant progress made in securing manufacturing licenses and optimizing pricing strategies [6][10] - The interim nicotine product manufacturing license in Malaysia is a key part of the global business strategy, allowing the company to market its capabilities externally [9][10] - The company is transitioning to FOB factory pricing to enhance flexibility and strengthen market position [8][23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about converting consumers from the black market to compliant products with the approval of new technology [28] - The company is focused on innovation, regulatory compliance, and financial stability to capitalize on market opportunities [24] - Management acknowledged the challenges posed by tariffs but highlighted successful renegotiations with customers to mitigate risks [47] Other Important Information - The company has launched new products, including the Sprout device for cannabis and the Vault platform for vaping, aimed at setting new industry standards [13][40] - The Malaysian facility is expected to feature 80 production lines, significantly expanding manufacturing capacity [10][34] Q&A Session Summary Question: Impact of FDA regulations on illicit vape supply in the U.S. - Management believes the new technology will convert consumers from the black market to compliant products, with estimates suggesting the black market could be worth between $5.5 billion to $70 billion [28] Question: EU disposable vape bans and supply constraints - Management is optimistic about benefiting from the EU's shift away from disposable products and does not foresee supply chain constraints due to the new manufacturing capabilities in Malaysia [32][33] Question: Customer reactions to new hardware devices and tariff alternatives - Management reported positive reactions to the new Sprout and Vault products, emphasizing their focus on safety and performance [40][43] - The company has successfully renegotiated contracts to FOB factory pricing to help customers manage tariff impacts [47]