Financial Data and Key Metrics Changes - The company reported a GAAP net loss of $14.7 million for Q2 2025, compared to a net loss of $13.6 million in Q2 2024, primarily due to a $400,000 increase in gross loss and a $1 million increase in finance expenses, offset by a $400,000 decrease in operating expenses [34] - Revenue for the reported period was $3 million, with a gross loss of $3.2 million on a GAAP basis, compared to revenue of $2.7 million and a gross loss of $2.9 million in the comparable period [34] - Non-GAAP gross loss for the reported period was $600,000, representing a gross loss margin of approximately 21%, compared to 9% in the comparable period [35] Business Line Data and Key Metrics Changes - Revenue from teleradiology services for the reported period was $2.7 million, with a gross profit of $500,000, compared to revenue of $2.5 million and a gross profit of $400,000 in the comparable period, indicating a gross profit margin increase from 15% to 18% [35] - Revenue from imaging systems and OEM services amounted to $221,000, with a gross loss of $1.7 million, compared to revenue of $68,000 and a gross loss of $1.3 million in the comparable period [36] - Revenue from AI solutions for the reported period was $100,000, with a gross loss of $2 million, consistent with the previous period [36] Market Data and Key Metrics Changes - The company is focusing on expanding its commercial footprint in the U.S. market while also establishing a presence in European countries such as Romania and Greece following the CE Mark designation [6][22] - The company has installed systems in various facilities, primarily in small and medium-sized health clinics, with over 20 systems currently operating and scanning patients [45] Company Strategy and Development Direction - The company aims to install 100 Nanox ARC systems by the end of 2025, with a focus on disciplined execution and expanding its commercial footprint [5] - The strategy includes partnerships with academic institutions and clinical education initiatives to enhance the adoption of Nanox technology [7][10] - The company is developing a mobile imaging solution to improve access to diagnostic imaging services [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting revenue growth expectations for 2025, driven by increased installations and customer retention [7][40] - The company anticipates that operating expenses will remain stable, with a focus on efficiency while increasing sales and marketing efforts [60] Other Important Information - The company has entered into a multi-year volume supply agreement with Fabrinet to support scalable production of advanced medical imaging systems [33] - The company is actively pursuing collaborations with AI platform providers to enhance its offerings and expand its market reach [19][20] Q&A Session Summary Question: How many systems were operating during the quarter that resulted in $221,000 in imaging-related revenue? - More than 20 systems are currently operating and scanning patients, with a significant increase in the number of leads and installations expected [45][46] Question: Are you expecting any of the 100 leads to be capital sales? - A portion of the leads will be CapEx sales, particularly in the U.S. market [47] Question: How many states in the U.S. are you now approved in for users to operate a system? - The company is currently approved in eight states [48] Question: Could you talk about the current revenue model? - The leading model is the MTSS model, but there will be a mixture of CapEx sales and MSOS model in the U.S. market [53] Question: What should be expected for the AI Solutions revenue going forward? - Continuous growth is expected, with 2026 projected to be breakeven in terms of revenues and expenses for AI solutions [55] Question: Any trends expected in operating expenses? - Operating expenses are expected to remain consistent, with a focus on maintaining efficiency while increasing sales and marketing activities [60]

Liquidia Corp (LQDA) Q2 2025 Earnings Call August 12, 2025 08:30 AM ET Speaker0Good morning, and welcome everyone to the Liquidia Corporation Second Quarter twenty twenty five Financial Results and Corporate Update Conference Call. My name is Nadia, and I will be your conference operator today. Currently, all participants are in listen only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue for up for questions.I would ...

Financial Data and Key Metrics Changes - Total revenues for Q2 2025 were $8.5 million, down from $12.3 million in the prior year, primarily due to government budgeting processes impacting orders [18] - Product revenues decreased to $7.5 million from $11.1 million in Q2 2024 [18] - Funded research and development revenues fell by $900,000 to $300,000, attributed to the completion of the CR3 medical headset development [19] - The net loss for Q2 2025 was $5.2 million or $0.03 per share, compared to a net loss of $5.9 million or $0.05 per share in Q2 2024 [21][22] Business Line Data and Key Metrics Changes - R&D expenses increased to $1.9 million, up approximately $100,000 from the previous year, with internal R&D expenses rising by $300,000 [20] - SG&A expenses were $7.9 million in Q2 2025, compared to $7.3 million in Q2 2024, primarily due to a decrease in legal fees [20] Market Data and Key Metrics Changes - The European nations and NATO allies are projected to spend over $1 trillion in defense spending, making this region critical for growth [6] - The partnership with Theon is expected to drive increased revenue and market share in Europe, Southeast Asia, and with NATO allies [5][6] Company Strategy and Development Direction - The company is focusing on application-specific solutions and has a strategic partnership with Theon International to enhance its market position [5][9] - A three-year strategic plan has been developed with Theon for revenue growth and technology sharing [9] - The company aims to capitalize on macro trends in defense spending and technology advancements [7][10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that Q2 2025 did not meet expectations due to government budget uncertainty but noted that the order book is recovering [10] - The company is optimistic about future revenue recognition from delayed orders and expects significant R&D awards soon [11] - Management emphasized the importance of their technology in enhancing soldier safety and the evolving nature of warfare [16][47] Other Important Information - The company introduced its first phase of optical inspection, which is expected to save significant operating expenses and improve throughput [11] - The new AI-enabled neural display hardware prototype is a significant technological advancement for the company [12] Q&A Session Summary Question: Size of the opportunity with Theon - Management indicated that there are multiple opportunities, including internal spending on microdisplays and application-specific solutions like DayVAS and DarkWave [27][28] Question: Book to bill number for Q2 - Management confirmed a positive book to bill ratio for Q2, although it was lower than expected, with a significant amount of funded R&D orders anticipated [32] Question: Automation and gross margin advantages - Management reported that the introduction of optical inspection solutions is expected to yield operational expense recovery and further automation is planned for Q4 [36][37]

Financial Data and Key Metrics Changes - Net product revenues for the second quarter were $18.1 million, and for the first half, they were $35.5 million, both slightly higher compared to the same periods in the prior year [4][28] - The company reported a net loss of $56.6 million for the second quarter, compared to a net loss of $36.5 million in the same period of 2024, primarily due to one-time restructuring and impairment costs [29] - Total operating expenses for the quarter were $47.8 million on a non-GAAP basis, representing an 8% increase over the prior year, driven by higher R&D costs [28][29] Business Line Data and Key Metrics Changes - The company is focusing on the commercialization of ZENLANTA, which has shown promising data in clinical trials, particularly in combination with glufetamab [5][10] - The LOTUS-seven trial data presented at conferences indicated a complete response rate of 86.7% across 30 efficacy evaluable LBCL patients [5][27] - The company plans to expand enrollment to 100 patients at the selected dose to support regulatory discussions [6][9] Market Data and Key Metrics Changes - The company estimates that ZENLANTA could reach peak sales of $600 million to $1 billion in the U.S. market, with significant opportunities in both DLBCL and indolent lymphomas [11][12] - The DLBCL treatment landscape is divided into complex therapies and broadly accessible therapies, with the latter expected to grow as ZENLANTA is positioned as a preferred option [12][13] Company Strategy and Development Direction - The company is strategically focusing resources on ZENLANTA commercialization and has discontinued early development efforts for other preclinical programs in solid tumors [8][9] - The company aims to position itself for long-term growth by reducing operating expenses and extending its cash runway into 2028 through a recent private placement [9][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the unmet medical need in the second line plus DLBCL landscape and the potential of LOTUS trials to address this need [38] - The company anticipates multiple data catalysts in the remainder of 2025 and 2026, with potential regulatory submissions and approvals expected [31][32] Other Important Information - The company incurred $13.1 million in restructuring and impairment costs related to the closure of its UK facility [29] - The company plans to engage with regulatory authorities regarding the LOTUS trials and explore potential pathways for approval [56][58] Q&A Session Summary Question: Impact of Roche's complete response letter on DLBCL market - Management noted that while details of the CRL are unknown, they remain confident in the unmet medical need in the second line plus DLBCL landscape and the positioning of LOTUS trials to address this need [38][39] Question: Status of LOTUS V overall survival analysis - Management indicated that it is difficult to speculate on the maturity of overall survival data by year-end, but they will provide updates once the pre-specified number of PFS events is reached [42][44] Question: Durability of responses in LOTUS trials - Management highlighted the unprecedented complete response rates observed in LOTUS trials and expressed confidence in the durability of these responses, with plans to share more data as it matures [48][50] Question: Communication of LOTUS-seven data - Management stated that they are considering the best way to communicate LOTUS-seven data, whether through a company update or at a medical congress, depending on data maturity [59][60] Question: Indolent lymphomas and NCCN inclusion - Management expressed confidence in the ongoing Phase II IIT for MZL and noted that a CR rate of 40% or above would be significant for NCCN inclusion [64][65]

Financial Data and Key Metrics Changes - Net investment income (NII) per share was $0.39 for the quarter, corresponding to an annualized return on equity (ROE) of 10.5% [11] - GAAP net income per share was $0.19, corresponding to an annualized ROE of 5.2% [11] - Net asset value (NAV) per share was $14.75, down 1.2% compared to the prior quarter [11] Business Line Data and Key Metrics Changes - MFIC made $262 million of new commitments across 29 transactions during the quarter [12] - The weighted average spread on new commitments was 538 basis points, with a slight increase compared to the prior quarter [12][23] - The weighted average net leverage on new commitments was 4.0 times, down from 4.2 times in the prior quarter [23] Market Data and Key Metrics Changes - The quarter began with heightened volatility due to U.S. tariffs, but market sentiment improved as tariffs were paused and trade deals were struck [20] - The labor market showed resilience with steady unemployment, and the Federal Reserve kept its policy rate unchanged [20] - The weighted average yield at cost of the direct origination portfolio was 10.5%, down from 10.7% in the prior quarter [35] Company Strategy and Development Direction - The company is focused on lending to the core middle market on a first lien senior secured basis, which offers attractive risk-adjusted returns [22] - The reduction in exposure to Merx is expected to provide capital for deployment into first lien middle market loans, which are believed to deliver higher returns [17] - The company intends to redeploy capital repaid from Merx to enhance earnings power and strengthen dividend coverage [18] Management's Comments on Operating Environment and Future Outlook - Management noted that the M&A pipeline is building, with sponsors remaining active despite previous uncertainties [55] - The company expects a busy second half of the year with plenty of opportunities to deploy capital [55] - Management expressed confidence in covering the declared dividend of $0.38 per share through net investment income, despite potential base rate pressures [90] Other Important Information - The company reported total investment income of approximately $81.3 million, up 3.2% compared to the prior quarter [33] - Total principal debt outstanding was $2.05 billion, with total net assets standing at $1.3 billion [38] - The company received an $8.5 million pay down from Merx during the quarter [24] Q&A Session Summary Question: Can you clarify the structure of the remaining investment in Merx? - The remaining investment consists of four aircraft and a servicing platform, with 40% of the remaining exposure related to servicing contracts [43][44] Question: What are the expectations for investment activity in the second half of the year? - The company anticipates a busy second half with a growing M&A pipeline and active sponsors, which should provide ample opportunities for deployment [55] Question: How does the company view the current leverage levels? - The company is comfortable with the current leverage levels and expects them to remain within target ranges, especially with anticipated M&A activity [56][58] Question: What is the expected impact of the Merx transactions on NAV? - The Merx transactions are expected to result in a positive impact to NAV in the high single-digit per share range, specifically between $0.06 to $0.09 [94]

Financial Data and Key Metrics Changes - The company reported record quarterly revenue of $6.3 million, a more than six-fold increase compared to the same period last year and up 50% sequentially [7][23] - Gross profit was $3.3 million, representing a 53% gross margin, compared to a gross loss of $200,000 in Q2 2024 [23] - Operating expenses increased to $12.6 million from $8.1 million in Q2 2024, primarily due to increased human resource costs [24][28] Business Line Data and Key Metrics Changes - Ondas Autonomous Systems (OAS) generated approximately $6.1 million in revenue, a more than six-fold increase from the same period in 2024 [43] - OAS secured over $39 million in orders in the last twelve months, with a backlog of $22 million at the end of Q2, up from $10 million at the end of 2024 [12][65] - Ondas Networks advanced its long-term strategy with significant milestones, including the selection of its DOT-16 protocol by the Association of American Railroads [11][33] Market Data and Key Metrics Changes - OAS is expanding its footprint in defense and homeland security markets in Europe, the Middle East, and the United States [8] - The company is experiencing strong interest in its Iron Drone radar system, which has been combat-proven with leading military customers [8][10] - The backlog growth is translating into revenue, with operational footprints expanding in the U.S. and Europe [12][28] Company Strategy and Development Direction - The company aims to build a scalable, well-capitalized operating platform, converting backlog into revenue and creating visibility for continued growth into 2026 [15][30] - The partnership with Mistral is expected to accelerate U.S. government adoption of IronDrone and Optimus [14] - The company is pursuing a strategic M&A program to enhance capabilities and market reach [14][60] Management's Comments on Operating Environment and Future Outlook - Management believes the drone sector is benefiting from significant policy tailwinds, including new FAA rulemaking processes [15][16] - The company anticipates a record year of revenue growth primarily driven by OAS, reaffirming its full-year revenue target of at least $25 million [7][65] - Management expressed confidence in capturing significant strategically important orders from new customers in 2025 [7][65] Other Important Information - The company ended Q2 with $68.6 million in cash and fully retired the remaining balance of convertible notes through equity conversion [12][28] - Shareholders' equity increased to $90.8 million as of June 30, 2025, compared to $16.6 million at the end of 2024 [29] Q&A Session Summary Question: Can you clarify the source of the $23 million bookings confidence and the balance between international and U.S. demand? - Management indicated that new customer programs typically start with small orders, which can expand into larger infrastructure build-outs over time, leading to larger orders in the future [71] Question: Are the two control acquisitions in addition to the recent acquisition of Zikle? - Yes, these acquisitions are in addition to the Zikle transaction and are expected to be revenue-generating [73] Question: Is the gross margin a good reflection of what the OAS business looks like at scale? - Management believes that while the current gross margin is strong, there is potential for improvement as the business scales [75] Question: Can you provide more details on the Kestrel win with the Urban Public Safety Agency? - The Kestrel system is part of a layered security approach, and there is significant demand for counter UAS technologies [79] Question: Are there other police departments in the U.S. interested in your technologies? - There is significant interest from various defense and public safety organizations, but specific names cannot be disclosed at this time [83]

Financial Data and Key Metrics Changes - The company reported a 19% increase in operating earnings for Q4 and a 15% increase for the year [9] - EPS grew by 13% in Q4 and over 9% for the year [9] - Adjusted free cash flow for the year was $2.5 billion, exceeding expectations by $500 million [10] - Total company revenue was $60.2 billion, relatively flat on a reported basis, but increased by 21% when adjusting for contract expiration [10][11] - Gross profit grew 17% to $2.2 billion, with a gross margin improvement of approximately 50 basis points [11] Business Line Data and Key Metrics Changes - Pharmaceutical segment revenue was flat at $55.4 billion, but increased by 22% excluding customer contract expiration, driven by brand and specialty pharmaceutical sales [14] - The GMPD segment saw a 3% revenue increase to $3.2 billion, with segment profit reaching $70 million, its highest profit quarter [16] - Other growth businesses reported a 37% revenue increase to $1.6 billion, with segment profit increasing 44% to $160 million [17] Market Data and Key Metrics Changes - The company experienced strong pharmaceutical demand across all business areas, including brand, specialty, generics, and consumer health [14] - The At Home Solutions segment, including the ADS acquisition, saw significant growth, contributing to the overall revenue increase [18] Company Strategy and Development Direction - The company is focused on driving simplification and operational efficiencies while making strategic investments for growth [5] - The acquisition of Solaris Health is expected to enhance the company's position in the specialty market, particularly in urology [6][35] - The company aims to expand its distribution capabilities and modernize its technology platforms to support long-term growth [33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for fiscal year 2026, expecting EPS growth of 13% to 15% [21] - The company remains confident in its resilient business model and ability to navigate regulatory changes [46] - Management highlighted strong demand across the business and a positive outlook for the upcoming fiscal year [62] Other Important Information - The company completed four strategic acquisitions during the year, including Green Specialty and At Home Solutions [10] - The ending cash balance for fiscal year 2025 was $3.9 billion, reflecting strong cash flow generation [20] Q&A Session Summary Question: Can you discuss the updated guidance for the Pharmaceutical and Specialty Solutions division? - Management confirmed that the guidance was raised by $0.20, with half attributed to liability classification and the other half to higher expectations for Pharma and other businesses [50] Question: What are the drivers of the SG&A increase quarter over quarter? - Management indicated that the increase in SG&A was primarily due to recent acquisitions, with ongoing efforts to simplify and optimize operating costs [55] Question: Can you elaborate on the gross profit performance in the quarter? - Management noted that the margin expansion was driven by a favorable mix, particularly from specialty distribution and MSO acquisitions [66] Question: What are the utilization trends across the GMPD segment? - Management stated that utilization remains consistent, with ongoing efforts to increase penetration of Cardinal Health branded products [72] Question: What capabilities does Solaris Health bring to the company? - Management highlighted that Solaris Health adds over 750 providers and diverse revenue streams, enhancing the company's MSO structure [81]

Financial Data and Key Metrics Changes - Total revenues for Q2 2025 were $5.4 million, down from $6.3 million in Q2 2024 and $6.8 million in Q1 2025, reflecting a decline due to the non-renewal of a large national health plan and a strategic shift towards a SaaS-like revenue model [29][30] - GAAP gross margin increased to 65% from 44% year over year, while non-GAAP gross margin was maintained at around 80% in the core B2B2C channel [10][30] - Operating expenses were reduced by 36% to $12.2 million from $18.9 million in Q2 2024, resulting in a narrowed operating loss of $9.2 million, down from $16.2 million [30] Business Line Data and Key Metrics Changes - The company signed 21 new clients year-to-date, with 80% of these accounts focused on multi-condition programs, aligning with the company's strategy [8][12] - Committed annual recurring revenue (CARR) increased by $5 million, with a pipeline totaling $53 million, indicating strong future revenue potential [9][17] - The B2B2C business continues to operate at over 80% gross margins on a non-GAAP basis, demonstrating the efficiency of the business model [10][30] Market Data and Key Metrics Changes - The company serves over 100 clients, including four national health plans and six regional health plans, indicating a diversified client base [13] - The pipeline includes more than 25 qualified health plans for 2026, a significant increase from three health plans in the pipeline a year ago [19] - The company is expanding into the $150 billion sleep health market through a partnership, which is expected to enhance its multi-condition model [21] Company Strategy and Development Direction - The company is focusing on sustainable annual recurring revenue (ARR) growth, emphasizing the importance of differentiated solutions and disciplined execution [12] - The strategy includes leveraging AI to enhance operational efficiency and member engagement, which is expected to reduce operating expenses by 15% over the next year [36] - The company aims to build a scalable financial profile with a clear pathway to cash flow positivity, focusing on high-margin, recurring revenues [32][36] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that Q2 revenues were below expectations due to short-term headwinds but expressed confidence in the company's growth trajectory and the quality of new client acquisitions [7][8] - The company is optimistic about closing the revenue gap and accelerating growth, supported by strong metrics in client quality and recurring revenues [10][11] - Management highlighted the importance of AI in driving future growth and operational efficiency, positioning the company as a leader in the digital health space [36] Other Important Information - The company has undergone a full review of its channel partner network, resulting in revitalized partnerships and a stronger value proposition [15] - The company is transitioning from one-time revenues to recurring revenues, which is expected to enhance long-term financial stability [20] - The company ended Q2 2025 with $22.1 million in cash and short-term deposits, bolstered by recent debt restructuring [30] Q&A Session Summary Question: Was there any churn that contributed to the revenue decline in Q2? - Management confirmed that there was no churn in annual recurring revenue, attributing the decline primarily to the non-renewal of a large health plan contract [39][40] Question: Can you provide more details on the services that the health plan decided to discontinue? - The health plan discontinued a Medicaid maternity program, opting to insource it, which was not a reflection of the company's performance [42][43] Question: What differentiates the current health plan reductions from future wins? - Management clarified that the non-renewal was an isolated incident and emphasized the diversification of their client base, with new significant accounts being signed [46][48] Question: Can you elaborate on the restructuring of the partnership program? - The company is focusing on strategic partnerships to enhance service offerings without expanding internal capabilities, particularly in areas like sleep health [49][50] Question: What are the expectations for operating expenses in the next 12 to 15 months? - Management anticipates a 15% reduction in operating expenses, aiming for quarterly expenses to be around $8 million by the end of next year [52][53] Question: What benefits does the claims-based billing infrastructure provide? - The addition of claims-based billing allows the company to tap into a larger profit pool by rendering services as claims, which is a significant shift from the current administrative budget billing [58][60]

Financial Data and Key Metrics Changes - The company ended Q3 with approximately $4.9 billion in backlog, having added about $1.1 billion in contracts since June 30, including two significant contracts in Australia worth approximately $700 million [9][24]. - Revenue for Q3 was approximately $603 million, which was about $100 million or 15% below expectations due to delays in ramping up production at the U.S. manufacturing facility [10][26]. - The adjusted gross profit margin for Q3 was 15.4%, exceeding the target for the quarter, and annual recurring revenue increased to $124 million [10][28]. - The company closed the quarter with over $900 million in liquidity, including approximately $460 million in cash, providing financial strength and flexibility [10][30]. Business Line Data and Key Metrics Changes - The company signed two contracts in Australia, marking the largest contract in its history, contributing significantly to the backlog [7]. - The U.S. manufacturing facility faced ramp-up issues, impacting revenue generation, but recovery milestones have been met, and production rates are expected to improve by the end of the fiscal year [26][27]. Market Data and Key Metrics Changes - The U.S. market is showing signs of recovery as tariff-related uncertainties ease, with all previously halted contracts now reactivated [16][24]. - The energy storage market is becoming increasingly competitive, with battery storage now recognized as a superior solution for meeting capacity needs compared to gas turbines [19][20]. Company Strategy and Development Direction - The company is focusing on domestically produced energy storage systems, supported by recent legislation that enhances its competitive position [11][13]. - The company is actively engaging with suppliers to ensure compliance with new regulations and is exploring multiple options to meet domestic content requirements without significant capital raises [15][49]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term prospects of energy storage, particularly in light of supportive federal legislation and easing tariff uncertainties [34][35]. - The company anticipates that the demand for battery storage solutions will grow significantly, especially driven by the needs of AI and data centers [21][22]. Other Important Information - The company expects to recover revenue lost due to production delays in fiscal 2026 as manufacturing rates improve [10][32]. - The company has reaffirmed its annual recurring revenue target of $145 million and adjusted EBITDA guidance of $0 to $20 million for fiscal 2025 [32]. Q&A Session Summary Question: Guidance for Q4 and margin outlook - Management indicated that Q4 margins are expected to be affected by U.S. revenue and tariff impacts, with efforts to mitigate these costs ongoing [39][40]. Question: Impact of recent policy actions on business - Management reassured that the U.S. battery storage market is expected to remain a domestic content market, and they are working on compliance with new regulations [43][46]. Question: U.S. demand trends post-legislation - Management noted that demand is picking up, with previously halted contracts now moving forward, and they are seeing more opportunities arise [65][66]. Question: Ramp-up issues at the Arizona facility - Typical ramp-up issues have been encountered, but management believes they are under control and expects to meet production targets by year-end [67][68]. Question: Pricing dynamics and ASPs - Management acknowledged that while there may be some pricing pressure due to tariffs, new contracts will reflect the updated cost structure, and margins are expected to return to normal levels [85][87].

Financial Data and Key Metrics Changes - Net sales for Q2 2025 were $39.2 million, down 28.4% year over year, primarily due to a 27.9% decline in volume mix and a 0.4% decline in pricing [15][21] - Gross profit in Q2 was $2.8 million, or 7.1% of net sales, compared to $10.9 million, or 19.8% of net sales in the prior year [17] - Adjusted EBITDA was a loss of $2.3 million in Q2, with a sequential improvement compared to Q1 2025 [21] Business Line Data and Key Metrics Changes - Consumable products accounted for approximately 80% of sales in Q2, outperforming durable products [17] - The company initiated a restructuring plan to rationalize over one third of SKUs and brands, focusing on higher-margin proprietary brands [10][19] Market Data and Key Metrics Changes - International sales improved year on year, particularly in select European and Asian countries [8] - The company faced industry headwinds, including oversupply challenges and minimal government progress on banking regulations, impacting demand [6][8] Company Strategy and Development Direction - The primary strategic priority is to drive diverse, high-quality revenue streams, with a focus on proprietary consumables [9][13] - The restructuring plan aims to streamline the product portfolio and reduce costs, with expected annual savings exceeding $3 million [10][19] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about an eventual demand turnaround in the industry despite current challenges [23] - The company is focused on managing tariff impacts and optimizing its product portfolio to improve profitability [12][13] Other Important Information - The company achieved positive free cash flow of $1.4 million in Q2, with expectations to maintain positive free cash flow for the last nine months of 2025 [22] - Cash balance as of June 30, 2025, was $11 million, with total liquidity of $20 million [22] Q&A Session Summary Question: Impact of tariffs and expectations moving forward - Management acknowledged the difficulty in predicting tariff impacts but noted success in managing incremental costs thus far [25][26] Question: Product portfolio optimization and its impact - Management clarified that while they are reducing third-party products, they will maintain a broad offering and focus on high-margin proprietary brands [29][30] Question: Growth in non-cannabis business - Management confirmed ongoing efforts to grow the non-cannabis segment, with positive performance in international sales and e-commerce [34][35] Question: Potential reclassification of cannabis - Management expressed cautious optimism regarding potential reclassification, noting it could positively impact the industry [38][39]