Financial Data and Key Metrics Changes - Total revenue for fiscal year 2025 declined from $151.9 million to $127.5 million, a decrease of $24.4 million compared to fiscal year 2024 [12] - Gross profit decreased to $22.7 million from $29.8 million year-over-year, with gross margins at 17.8%, down from 19.6% [13][14] - Net loss for fiscal 2025 was $39.2 million, compared to $40.8 million in fiscal 2024 [15] Business Line Data and Key Metrics Changes - The company shifted focus from cannabis to the higher-value nicotine sector, resulting in a decline in cannabis-related revenue [4][11] - The cannabis sector's revenue in Q4 2025 was noted to be at a low point, with expectations of improvement as new customer relationships are established [44] - The company reduced net accounts receivable by over 21% year-over-year, marking the first decline in history [7] Market Data and Key Metrics Changes - European revenue increased by 13.6% to approximately $74.1 million, while North American revenue dropped from $63.1 million to $32.6 million [13] - Revenue from Asia-Pacific decreased from $17.6 million to $12.3 million, while revenue from other countries rose to $8.5 million [13] Company Strategy and Development Direction - The company is investing in manufacturing capabilities in Malaysia, aiming for up to 80 production lines, significantly increasing from the current six [5][6] - A strategic pivot towards the nicotine sector is intended to build a more sustainable and profitable business model [4][11] - The company is focused on regulatory compliance and advancing PMTA activities for its devices, positioning itself as a regulatory leader [9][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future growth opportunities in the nicotine market, particularly through international ODM partnerships [10][18] - The company is committed to maintaining financial discipline and expects continued cost reductions in the coming quarters [8][11] - Management acknowledged the challenges in the cannabis industry due to cash flow issues and indicated a potential return to the sector if federal legalization occurs [30][45] Other Important Information - The company has made significant cost optimization measures, resulting in an estimated annual savings of $10.2 million [8] - The appointment of Jay Yu as CFO reflects the company's commitment to strong financial stewardship during its transformation [10] Q&A Session Summary Question: Key milestones for age gating technology approval - Management indicated that the FDA accepted the component PMTA application within four weeks, which is unprecedented, and the review is expected to be expedited [21][22] Question: Approval timelines in other major markets - Management expressed optimism about potential approvals in two unnamed countries that are moving quickly with the technology [24] Question: Details on the $22 million provision for receivables - Management clarified that the provision was a cumulative effect from various customers rather than a single client [32] Question: Future of cannabis revenue - Management noted that Q4 cannabis revenue is expected to be the lowest point, with new customer relationships and product launches anticipated to drive future growth [44] Question: Feedback on U.K. supply agreement - Initial feedback from the U.K. ODM client has been encouraging, with a backlog of $18 million tied to this customer [37] Question: Tariff landscape and supply chain diversification - Management confirmed an increase in inquiries from brands looking to diversify supply chains, with plans for a third facility in Malaysia to accommodate growth [40][41]