Cuộc họp công bố kết quả kinh doanh Quý 3 năm tài chính 2026 của CBDMD (YCBD): Doanh thu tăng 20%, đặt mục tiêu cắt giảm chi phí

Thông tin trọng tâm

• Doanh thu thuần quý 3 năm tài chính 2026 tăng 20% so với cùng kỳ năm ngoái lên 5,6 triệu USD. Doanh thu 9 tháng tăng 12% lên 16,2 triệu USD.
• Doanh số bán buôn tăng 61% và chiếm khoảng 30% doanh thu quý, tăng từ mức 22% của một năm trước đó. Bluebird Botanicals đã đóng góp hơn 500.000 USD.
• Biên lợi nhuận gộp giảm xuống 54,7% từ mức 61,5%, phản ánh tỷ trọng bán buôn lớn hơn, chi phí đóng gói lại liên quan đến quy định pháp lý và khoản tăng 187.000 USD dự phòng giảm giá hàng tồn kho.
• Lỗ hoạt động tăng lên khoảng 1,1 triệu USD, nhưng lỗ EBITDA điều chỉnh đã thu hẹp xuống khoảng 507.000 USD từ mức 624.000 USD.
• Ban lãnh đạo đang hướng tới mục tiêu tiết kiệm chi phí bằng tiền mặt từ 100.000 USD đến 150.000 USD mỗi tháng, tương đương 1,2 triệu USD đến 1,8 triệu USD hàng năm. Công ty hiện ước tính doanh thu hòa vốn tiền mặt hàng quý nằm trong khoảng từ thấp đến giữa 6 triệu USD.
• Mức tiêu thụ của nhà phân phối OASIS đạt kỷ lục trong tháng 7, tăng 35% so với mức trung bình của quý 3 năm tài chính, trong khi tháng 8 đang trên đà tăng hơn gấp đôi. Ban lãnh đạo cảnh báo rằng những thay đổi quy định của liên bang và tiểu bang vẫn là nguyên nhân chính gây ra sự không chắc chắn.

Dữ liệu tài chính quan trọng

Kết quả Kinh doanh và Hoạt động

OASIS tiếp tục là động lực tăng trưởng chính. CBDMD đã bổ sung kênh phân phối tại South Carolina và chuyển sang một nhà phân phối mới tại Texas, làm tăng hơn gấp bốn lần số lượng cửa hàng mà thương hiệu có thể tiếp cận tại thị trường đó. Ban lãnh đạo cho rằng mức tiêu thụ mạnh hơn là nhờ cả các điểm bán lẻ mới và tốc độ bán hàng được cải thiện tại các điểm hiện có.

Công ty cũng đề cập đến đà tăng trưởng tích cực từ OASIS Mixer. Vào ngày diễn ra cuộc họp báo cáo kết quả kinh doanh, CBDMD đã ra mắt đồ uống Kava OASIS không cồn như một phần trong chiến lược mở rộng sang các sản phẩm thảo dược không chứa cannabinoid. Ban lãnh đạo cho biết một hoặc hai công thức thảo dược bổ sung đang được phát triển, dự kiến sẽ có thông báo trước khi kết thúc năm 2026.

Bluebird Botanicals đã hoàn thành quý trọn vẹn đầu tiên dưới sự quản lý của CBDMD và tạo ra doanh thu hơn 500.000 USD. Ban lãnh đạo kỳ vọng doanh nghiệp được mua lại này sẽ đóng góp vào doanh thu và lợi nhuận khi công ty giới thiệu các sản phẩm mới và khai thác được các hiệu ứng cộng hưởng về chi phí.

Kênh bán buôn chiếm khoảng 30% doanh số hàng quý. Ban lãnh đạo cho biết khung pháp lý tương tự như phân phối đồ uống có cồn có thể chuyển nhiều doanh thu THC chiết xuất từ cây cần sa công nghiệp (hemp) sang các kênh bán buôn theo thời gian, mặc dù cơ cấu kênh bán hàng cuối cùng vẫn phụ thuộc vào kết quả quy định pháp lý.

Dự báo của Ban lãnh đạo

CBDMD đã khởi động một chương trình cắt giảm chi phí hướng tới mục tiêu tiết kiệm tiền mặt từ 100.000 USD đến 150.000 USD mỗi tháng. Các biện pháp bao gồm cắt giảm quỹ lương, đàm phán lại hợp đồng thuê nhà kho, thay đổi hợp đồng với nhà cung cấp và tiết kiệm chuỗi cung ứng. Ban lãnh đạo mục tiêu đạt được phần lớn khoản tiết kiệm vào cuối quý 4 năm tài chính 2026, với việc sửa đổi hợp đồng thuê nhà kho có hiệu lực vào tháng 10.

Trong phần hỏi đáp với nhà phân tích, ban lãnh đạo cho biết mô hình hiện tại của công ty xác định doanh thu hòa vốn tiền mặt hàng quý nằm trong khoảng từ thấp đến giữa 6 triệu USD. Công ty dự định tiếp tục thận trọng trong chi tiêu tiếp thị và tập trung các đợt ra mắt theo kế hoạch vào các kênh phân phối và cơ sở khách hàng hiện có trong khi sự không chắc chắn về quy định pháp lý vẫn tiếp diễn.

Ban lãnh đạo kỳ vọng các biện pháp cắt giảm chi phí và sáng kiến cải thiện biên lợi nhuận sẽ bắt đầu mang lại lợi ích cho kết quả kinh doanh trong quý tới. Công ty cũng đang theo đuổi các thương vụ thâu tóm nhằm đa dạng hóa doanh thu và đóng góp vào dòng tiền nhanh nhất có thể, nhưng không đưa ra thời điểm giao dịch hoặc dự báo tài chính.

Rủi ro và các Lĩnh vực Cần theo dõi

Mục 781 của Dự luật H.R. 5371 dự kiến có hiệu lực vào ngày 12 tháng 11 năm 2026, thu hẹp định nghĩa liên bang về cây cần sa công nghiệp (hemp) và áp đặt các giới hạn THC nghiêm ngặt hơn trên mỗi bao bì. Ban lãnh đạo đã nhấn mạnh các biện pháp liên bang được đề xuất có thể trì hoãn hoặc thay thế các hạn chế đó, nhưng mô tả triển vọng của mình là lạc quan một cách thận trọng và thừa nhận rằng công việc lập pháp vẫn chưa hoàn tất.

Các hạn chế vận chuyển cấp tiểu bang, thay đổi nhãn mác, yêu cầu thử nghiệm và hạn chế sản phẩm tiếp tục làm tăng chi phí tuân thủ. Các hạn chế đối với việc vận chuyển đến một số tiểu bang bổ sung đã làm giảm doanh thu bán hàng trực tiếp đến người tiêu dùng trong quý 3 năm tài chính khoảng 150.000 USD.

Biên lợi nhuận gộp vẫn chịu áp lực từ tỷ trọng bán buôn mở rộng và chi phí làm lại liên quan đến quy định pháp lý. CBDMD cũng đã tăng dự phòng giảm giá hàng tồn kho thêm 187.000 USD để chuẩn bị cho các thay đổi quy định tiềm ẩn.

Mức sử dụng tiền mặt từ hoạt động kinh doanh gia tăng do tăng trưởng doanh thu đòi hỏi nhiều khoản phải thu khách hàng và hàng tồn kho hơn. Trong 9 tháng đầu năm, khoản phải thu khách hàng tăng khoảng 691.000 USD và hàng tồn kho tăng khoảng 283.000 USD.

Điểm nổi bật trong phần Hỏi & Đáp với Nhà phân tích

• Tiết kiệm tiền mặt và hòa vốn: Ban lãnh đạo xác nhận rằng mục tiêu tiết kiệm từ 100.000 USD đến 150.000 USD mỗi tháng là dựa trên tiền mặt. CBDMD hiện ước tính hòa vốn tiền mặt ở mức doanh thu hàng quý nằm trong khoảng từ thấp đến giữa 6 triệu USD.
• Đà tăng trưởng của OASIS: Sự tăng trưởng phản ánh cả mạng lưới phân phối rộng hơn và tốc độ bán hàng mạnh mẽ hơn. Việc chuyển đổi nhà phân phối tại Texas diễn ra vào gần cuối tháng 6 và kể từ đó đã hỗ trợ thêm các điểm bán lẻ và đà tăng trưởng doanh số.
• Chiến lược sản phẩm: CBDMD có kế hoạch sử dụng các sản phẩm thảo dược như Kava OASIS để lấp đầy các khoảng trống tiềm ẩn trên kệ hàng bán lẻ do sự không chắc chắn liên quan đến THC tạo ra. Các đợt ra mắt sản phẩm thảo dược tiếp theo có thể được thông báo trước cuối năm.
• Kỷ luật tiếp thị: Công ty có kế hoạch hạn chế chi tiêu lớn và ưu tiên các sản phẩm có thể tận dụng mạng lưới bán lẻ và cơ sở khách hàng hiện tại cho đến khi các quy định của liên bang trở nên rõ ràng hơn.
• Tiếp cận M&A: Ban lãnh đạo vẫn cởi mở với các thương vụ thâu tóm bất chấp sự không chắc chắn về mặt quy định và đang ưu tiên các giao dịch mà họ tin rằng có thể làm tăng giá trị và tạo ra dòng tiền nhanh chóng.

Toàn văn Biên bản Cuộc họp Báo cáo Kết quả Kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Good afternoon. Welcome to CBDMD, Inc.'s June 30, 2026, 3rd Fiscal Quarter of 2026 Earnings Call and Update. This afternoon, the company issued a press release that provided an overview of its first quarter results, which followed the filing of its quarterly report on Form 10-Q. Today's conference call is being recorded and will be available online, along with our earnings press release covering our financial results and presentation at cbdmd.com in accordance with CBDMD's retention policies. All participants on this call will be in a listen-only mode. The call will be followed by a question-and-answer session. At this time, I would now like to turn the conference over to Brad Whitford, the company's Chief Accounting Officer. Brad, please go ahead.

Bradley Whitford

Thank you, Tiffany, and thank you all for joining CBDMD's June 30, 2026, third quarter of fiscal 2026 earnings call and update. On the call today, we also have Ronan Kennedy, our chief executive officer and our chief financial officer. We'd like to remind everyone that various remarks about future expectations, plans, and prospects come constitute forward-looking statements for purposes of safe harbor provisions under the Private Securities Litigation Reform Act of 1995. CBDMD cautions that these forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from those indicated, including risks described in the company's annual report on for the third quarter into June 30th, 2026, and there are other filings with the SEC, all of which can be reviewed on the company's website at www.cvdmd.com or on the SEC's website at www.sec.gov. Any forward-looking statements made on this conference call speak only as of today's date, Thursday, August 13, 2026, and CBDMD does not intend to update any of these forward-looking statements to reflect events or circumstances that would occur after today's date, except as may be required by federal securities laws. Thank you.

Unknown Speaker

With that, I'd like to turn the call over to Ronan. Thanks, Brad. Good afternoon, everyone, and thank you for joining us. The third quarter of fiscal 2026 was another quarter of top-line growth and one of the most active periods we've had both in our own business and across the regulatory landscape we operate in. Let me start with the headline. Net sales grew 20% year over year to 5.6 million. For the first nine months of fiscal year, the revenue is up 12% to 16.2 million. That growth was led by our wholesale channel, which is up 61% year over year, reflecting continued momentum and oasis and ongoing execution in our core CBD MD brand in the first full quarter of contribution from Bluebird Botanicals.

Excluding revenue from Bluebird, our business grew approximately 10% year-over-year during the third quarter, something we're proud of, especially considering the regulatory headwinds. I want to be direct with you about the quarter because transparency matters. We grew top line, but we were not satisfied with our bottom line. Our operating loss was wider than a year ago, and that was largely by design. We made a series of deliberate investments and absorbed some one-time costs that will walk through. But underneath those items, the business is healthier and importantly, our adjusted EBITDA actually narrowed year over year. Brian, we'll take you through the detail.

Let me spend a few minutes on parts of our business that are working with us. Oasis, our hemp-derived THC brand, continues to accelerate. We recently added distribution in South Carolina and transitioned to a new distribution partner in Texas. It changed it more than quadrupled the number of stores where Oasis has access to in the market, and we're already seeing that translate into market growth in the fourth quarter. Our recently launched mix Oasis Mixer has been very well received and is contributing to brand growth as well. The The fourth quarter is off to a strong start. Depletions from distributors, which is unit sales from our distribution, hit record in July, up 35% over the third quarter average.

And August is on pace to more than double. We continue to monitor shelf space, ordering patterns, and tracking inventory carefully going into the end of the year. Today we are also excited to announce the launch of our zero-proof Cava Oasis beverage, and I want to be clear why it matters strategically. As we move closer to the regulatory deadlines, we are seeing real gaps begin to open on the THC beverage shelf, and we believe those gaps represent a meaningful opportunity to capture shelf space with compliant, tasting product that retailers and consumers still want. Kava is a natural fit for that opening. Unlike many functional and botanical beverages that promise calm but deliver little, Kava produces a real, fast-acting sense of ease and a gentle lift, yet it carries none of the impairment or regulatory complexities that come with THC and other cannabinoids. That lets us keep our partner shelves productive, regardless of how the THC rules ultimately evolve.

TAVA is one of several botanicals we are building line extensions around specifically to create revenue visibility into 2027 and to help mitigate the regulatory uncertainty. Functional non-alcoholic products that help people relax and unwind are one of the clearest growth vectors we have, and Oasis is increasingly the tip of the spear. Turning to Bluebird, this was Bluebird's first quarter, full quarter as part of CVDMD, and it contributed more than a half a million in revenue. You'll recall the acquisition was earnings drag last quarter, and we absorbed transition and integration costs. This quarter drove additional revenue, and we expect Bluebird to contribute both revenue and earnings going forward as we roll out additional products and capture costs. synergies. Just importantly, Bluebird validates our M&A thesis. A loyal customer base, a brand not defined solely by CBD, meaningful SG&A synergies, and self-grasped status on its full spectrum products.

We continue to evaluate additional discipline acquisitions. We can use our infrastructure, marketing engine, and NYSE American Listing to unlock value. Let me address the costs directly because I don't want to gloss over them. During the quarter we incurred legal and due diligence expense pursuing additional M&A opportunities that would further diversify our revenue and reduce regulatory exposure. We continue to invest in new product development, the carbon beverage innovation I just described. We work through supply chain and state-level compliance issues, including repacking and testing costs, and an increase in inventory reserves as we prepare for pending regulatory changes. We continue to invest behind our clinical healthcare initiatives, including our GRAS, for our broad-spectrum CBD formulations.

Those are choices, but we've also taken hard action on costs. Beginning in the fourth fiscal quarter, we implemented a cost reduction program targeting $100,000 to $150,000 in monthly savings through payroll reductions, renegotiation of warehouse leases, negotiating exit vendor contracts, and we've identified additional supply chain savings, which we expect to begin to realize later this quarter. is straightforward. Improve EBITDA and contribution margins and make sure we enter post-regulation world leaner and more flexible than we are today. Let me turn to the regulatory environment, which has been remarkably dynamic. As a reminder, Section 781 of H.R. 5371, signed into law last November, is currently scheduled to take effect this November 12, 2026. It would narrow the federal definition of hemp and impose strict per container THC limits. The single most important recent development is the Senate Stock Gap Appropriations Proposal. would, through December 11, 2026, temporarily exempt natural occurring cannabinoids from those revised restrictions.

The point that I want to stress is that it's not just about buying time to comply. The greater value is the extent is the procedural runway it creates for Congress to put durable industry-wide framework in place so that the fix is permanent rather than temporary. The continuing resolution, H.R. 6500, now moves to House of Representatives for a vote by the end of September. And we are engaged constructively to help advance a lasting solution. And the activity to build durable framework is growing. There's now meaningful and growing number of bipartisan bills aimed at repealing, delaying, or replacing Section 781. In July, Representative Barr and Craig introduced the White House supported Lawful Hemp Protection Act, which would establish a permanent federal framework.

Just this week on August 10th, representatives Van Duyn and Lansman introduced the Bipartisan Beverage Regulatory Parity Act, which would regulate hemp-derived beverages much like alcohol with age restrictions, testing, permits, and federal excise framework. That bill is directly relevant to OASIS and reflects the kind of sensible regulation we've been advocating for on Capitol Hill. CBDMD believes a ban on full-spectrum hemp derived, dealt in mind, would be bad for public health. Demand exists, and as the saying goes, you can't put the toothpaste back in the tube. If the legitimate industry is banned, consumers will be driven to unregulated black market products, especially in areas where no legal cannabis access exists. We applaud Washington, D.C. leadership focused on finding a sensible way to continue to prevent full-spectrum hemp products millions of Americans use on a regular basis. Our view has not changed. As regulatory clarity emerges, it favors the operators built for it. low capitalized, compliance focused, with strong quality, safety, and clinical standards.

That is the company we built and we are actively engaged in Washington to help shape the outcome. At the same time, I'd be remiss not to flag state-level environment, which remains a genuine headline. Changing roles across multiple states continue to drive packaging changes, repacking, new testing requirements, and they continue to narrow what we can sell and where. During the quarter, state level shipping restrictions, label changes and other rules impacted both wholesale and more tangibly our direct to consumer revenues. managing through it, but it's a real cost of operating in the category today. And it's part of what makes the federal pathway I've described so important. With that, I'll turn the call back over to Brad.

Bradley Whitford

Thanks, Ronan. Turning to the financials for the third quarter of fiscal 2026, net sales increased to $5.6 million, representing a 20% increase compared to $4.6 million in the prior year period. In the first nine months of fiscal 2026, net sales totaled $16.2 million, up 12% compared to $14.5 million in the prior year period. The increase reflects growth across both our direct-to-consumer and wholesale business. We continue to see particularly strong momentum in wholesale. Wholesale sales increased approximately 629,000, or 61%, during the quarter, and represented approximately 30% of our total sales, compared with 22% in the prior year quarter. For the first nine months, wholesale represented approximately 30% of sales versus 23% last year. reflecting the continued expansion of our distribution business. The Bluebird acquisition also contributed to the growth, generating more than $500,000 of revenue during the quarter.

We believe the acquisition continues to provide us with an attractive customer base, a complementary brand, and additional opportunities to leverage our existing infrastructure. Gross margin was 54.7% for the quarter compared to 61.5% in the prior year period. And for the first nine months, gross margin was 57.3 compared to 63.5 last year. The decline was primarily attributable to the continued shift towards wholesale, which generally carries lower margins, as well as higher warehouse labor associated with product repacking required by changing state regulations. We also recorded an additional 187,000 increase in inventory reserves during the quarter as we prepare for pending regulatory changes. We recognize that improving gross margin is an important component of our path to profitability and we We are continuing to evaluate pricing, product mix, manufacturing and supply chain opportunities while also working to improve product quality and documentation and streamline our response to changing regulatory requirements. Operating expenses were approximately $4.2 million for the quarter, an increase of approximately $432,000, or 12% from the prior year period.

A significant portion of that increase reflects investments associated with new-to-product development and additional warehouse staffing required to support higher sales and regulatory-related rework. We also incurred approximately $200,000 of additional professional fees during the quarter associated with the Medicare initiative, Bluebird valuation work, settlements, other M&A activity, and our gross report. The loss from operations was approximately $1.1 million compared with a loss of approximately $905,000 in the prior year period. While the quarter was impacted by these investments in regulatory-related costs, we have already begun implementing actions to reduce our fixed cost structure. In particular, beginning in the fourth quarter, we implemented a cost reduction and right-sizing program targeting approximately $1,000 to $150,000 of monthly savings or approximately $1.2 to $1.8 million on an annualized basis. These initiatives include payroll reductions, renegotiating our warehouse lease, and renegotiating or exiting certain vendor contracts, as well as identifying additional supply chain savings. adjusted non-GAAP EBITDA loss for the quarter was approximately $507,000 compared with approximately $624,000 in the prior year quarter. For the In the first nine months of fiscal 2026, adjusted EBITDA loss was approximately $764,000.

The order included approximately $120,000 of additional inventory reserve expense, $53,000 of regulatory and legal matter, $126,000 of M&A and financing related expenses, and $65,000 of an employee and director stock compensation. Importantly, we believe the cost actions we've initiated should provide a meaningful benefit to adjusted EBITDA and contribution margin as we move through the fourth quarter. Net loss attributable to common shareholders was approximately 1.2 million or 11 cents per share compared to a net loss of approximately 1.2 million or 21 cents per share in the prior year quarter. While the absolute net loss remained relatively consistent, the improvement in the per share result reflects the significant increase in our weighted average common share count following the conversion of our former Series A preferred stock and other equity activity. From a cash flow perspective, cash used in operating activities was approximately $2 million for the first nine months compared with $1.2 million in the prior year period. The primary working capital uses were accounts receivable and inventory as the business has grown. Accounts receivable increased approximately 691,000 and inventory increased approximately 283,000 during the nine months.

By June 30, we had approximately $2.1 million in cash and $4.7 million of working capital, compared with $2.3 million of cash and $3.4 million of working capital at September 30, 2025. We also generated approximately $2 million of financing cash during the nine months, primarily from the issuance of preferred stock earlier in the year. Looking ahead, we are encouraged by the underlying revenue momentum while maintaining very focused on profitability and cash generation. We are also taking a proactive approach to the changing regulatory environment. During the quarter, restrictions on shipping certain products to additional states affected approximately 150,000 of direct-to-consumer revenue. At the same time, we are actively evaluating product reformulation, channel diversification, and other alternatives to mitigate the potential impact of the November regulatory changes. Overall, we remain encouraged by the continued double-digit revenue growth, the expansion of our wholesale distribution footprint, and the contribution from Bluebird and the opportunities we see in new product categories.

Just as importantly, we are taking decisive action on our cost structure. Our focus in the fourth quarter is on converting the revenue growth we are generating into improved contribution margin, lower fixed costs, and stronger adjusted EBITDA, while maintaining disciplined working capital and inventory management. We believe these initiatives combined with continued revenue diversification and the opportunities created by our expanded distribution platform to position CBDMD to navigate the current regulatory environment and continue progressing towards sustainable profitability. With that, I'll turn the call back to Ronan.

Unknown Speaker

Thanks, Brad. Stepping back, let me leave you with how we're thinking about the balance of fiscal 2026 and beyond. First, the core business in OASIS. We're going to keep pushing on what's working, driving OASIS sell-through in our distribution footprint, building on the mixer momentum and COVA launches, and driving disciplined customer acquisition across CBD, MD, PAW, and Blue. Second is M&A. We continue to pursue acquisitions that will deliver a revenue base, grow our customer database and retail relationships, and de-risk the business against regulatory change. We'll continue to evaluate creative, disciplined opportunities that broaden our portfolio at durable revenue and reduce our exposure to any single product competition. category or regulatory outcome. Third, cost and margin. The cost reduction program we put in place is a deliberate step to improve profitability. We had to invest in the short term to position the business for changes in the coming months in 2027, and we are now tightening down.

Combined with our margin initiatives, we expect these actions to show through in our results in the next quarter. On the regulatory front, I would describe our view as cautious optimism. There's real work still ahead. first securing a House vote on the extension before the end of September, and then a more comprehensive and durable solution before the end of the year. With the midterm elections approaching, the politics may also be moving in a constructive direction. The growing body of polling included national surveys of likely voters and more recent statewide polls in Louisiana show that more than 70% of voters favor sensible regulation of Hemp derived THC rather than an outright ban. And that support is consistent across Democrats, Republicans, and Independents. We believe this is an issue that the candidates in competitive races will find increasingly hard to ignore.

We are generally encouraged by the growing leadership in Washington and by a widening slate of bipartisan bills that approach this category the way it should be approached, with common sense and data rather than hyperbolic tactics that too often get used to scare people. That shift matters. Are there bad actors in this industry? Of course there are, as there are in any young category. But they do not represent the supermajority of the industry that was built to help consumers. An industry of responsible operators who invest in quality, safety, testing, and science. We believe that the more conversation is grounded in evidence, the better the outcome will be for consumers and for operators like CBMD who have built their business the right way. We're going to keep making the case constructively everywhere we have a seat at the table. Let me close with this. We understand that we're in a very dynamic environment, and we are treating it as an opportunity rather than simply a risk.

We are actively pursuing opportunities to capture market share, in many cases, while others in our category are pulling back. As regulation moves in our direction, we believe CBMD is positioned not just to participate but to accelerate growth meaningfully. If that path proves slower or less certain, we are not standing still. We are building toward durable 2027 revenue and a revenue base with the scale, product flexibility and diversification to absorb and manage the impact whatever regulatory outcomes emerge. Either way is intent the same, to come out of this period stronger, more diversified, and with a larger share of the market than we hold today. We like our position. I want to thank our employees, partners, and shareholders for their continued support. With that, I'm happy to take questions.

Operator

At this time, if you would like to ask a question, press star, then the number 1 on your telephone keypad. To withdraw your question, simply press star 1 again. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Adam Waldo with Lismore Partners, LLC. Please go ahead.

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Adam Waldo

Hi, Adam. Happy to. So when we chatted last quarter on the results conference call, you were feeling fairly good about your ability to have a cash flow break even with, level with revenue in a given quarter, as you put it, somewhat below $7 million. You posted 5.6 million this quarter, obviously a noisy quarter with a lot of non-cash charges, but, uh, And obviously, you have the cost reductions you implemented in the July quarter. So as we put all together, a couple questions. First, on the guidance you gave for OPEX reduction, is the $100,000 to $150,000 a month that you're setting as the guidance range, on a cash basis or an accrual accounting basis? And if there's a major difference, can you just give us a better sense for what the cash op-ec savings would be? Yes, those numbers were cash related, Adam.

Unknown Speaker

So, and they come mostly out of our operating expenses with some identified cost savings through our supply chain, which we think will start in, being realized for more so in September, the supply chain savings.

Adam Waldo

Okay, and so they're being phased in over the quarter. Is it fair to say, Ronan, would you expect by the end of the current fiscal fourth quarter that those cash,.

Unknown Speaker

operating expense savings would be fully captured? For the most part, it would be the warehouse lease up date occurs in October when the legacy sort of lease sort of flips into the new amendment.

Adam Waldo

Okay, all right, so there will be some bleed over probably into the middle of the fiscal first quarter of 27. Is that fair in terms of the timing of fully realizing those savings? That's about 10 grand a month on the lease debt. Oh, okay. So pretty small. Okay, all right, fair enough. So lion's share call it 90 plus percent captured by the end of the current fiscal fourth quarter, fair? We are working very hard to get that in place by end of fully as much as we can by the end at the end of this month. Okay, so that's encouraging. So that leaves us at a point where absent meaningful change in the revenue run rate where our cash burn is in the couple hundred thousand a quarter range, if we're doing the math right. And so obviously that gives you a pretty good runway to see how things will progress on the federal regulatory development side. And so my final question is, from a product strategy standpoint and a marketing spend standpoint, Is it fair to infer that you intend to be fairly cautious on major new marketing initiatives and product launches until you'll get much better federal regulatory clarity, hopefully, before the election? Yes.

Unknown Speaker

I think that's fair. We do have a few new launches that we're planning, but I think it's leveraging existing distribution channels that we have and existing customer bases that we're focused on, but I think we are being… as cautious as we can in sort of the marketing spend as we sort of look to the end of the.

Adam Waldo

Okay, so final comment. So as I sort of take all of your commentary, which is very helpful on the call to build on what you put in the press release, it seems that back of the envelope, the break-even quarterly revenue run rate now from a cash standpoint is now in the low six millions a quarter. Is that directionally correct?.

Unknown Speaker

Correct, low six millions to mid six millions? That is how we are modeling this out right now. Our goal is clearly to get it as low as possible.

Adam Waldo

Great, okay, thank you very much and best wishes on perhaps achieving break even here in the near term.

Operator

Thank you, Adam. I appreciate it. Your next question comes from the line of Thomas McGovern with Maxim Group. Please go ahead.

Unknown Speaker

Yes, thanks for taking the question here. So we're seeing a lot of momentum with the Oasis brand. I was just curious if you could dive a little bit deeper into what's driving the acceleration and depletions. You know, how should we look at this? Is this more of a story of, you know, the know, expanding distribution points, or is it reflective of just a higher sell-through rate at existing doors?.

Unknown Speaker

A great, great question, Thomas. I think it's a little bit of both. I think we've been very focused on our territory. in investing in sales resource and programming within our distributors and retailers. So it's a conscious effort of making sure that we're aligned with the right Right partners, I can cast as wide of a net as possible in the territories we're in. and then making sure that we're driving sell-through through those accounts as well.

Unknown Speaker

Got it. Right. And speaking of finding the right partner, right? It's great. You guys have the new distribution partner down in Texas. It seems that that will make a substantial difference, at least in the state. I'm curious, you know, as you guys are expanding these additional distribution points, I think you said it was quadruple what the prior distributor had you at. Can you comment? I mean, first of all, when did you sign with this new distributor? And then how have you seen sell-through rates at this point with them? You know, it's great to get into the doors, but I'm just curious at, you know, kind of what the momentum is of the product once they're on the shelves.

Unknown Speaker

Yes, great question. Look, I think we made that move right at the end of June, so I think some revenue from the quarter came from some of that, from the, post move, but since then we've seen kind of things strengthen and are seeing good results both in adding doors and self-healing some of the doors as well. I think especially in Texas they've had some updates since August 1 where they've restricted sort of categories, um, and synthetic cannabinoids. So I think you could actually see the, uh, sales of sort of hemp-derived THC that's sort of just THC and CBD in demand in those products accelerated as some of the other categories have been restricted since then.

Unknown Speaker

Thanks for that, Collar. And speaking of products that are compliant with existing regulations, you guys recently launched the CABA 08. You mentioned just high level that it's performing well, but I'm curious, how did that go-to-market strategy look different being that it's not a cannabinoid-derived product? Have you guys thought about, does it change the demographic, does it change the marketing? And just high level, also, I'm not sure.

Unknown Speaker

was mentioned earlier, but was that also launched during the quarter? Is that, you know, subsequent to quarter end? Tom, that was launched today. So today is sort of the first day that that product is available. And where that, you know, that came from is we have been looking at a number of other botanicals to help support the herbal oasis this brand, knowing that, you know, customers have moved into the, you know, there's been a strong movement into the hemp-derived THC sort of beverage space, and part of that is they're seeking a non-alcoholic solution that's going to help them, you know, relax and unwind. And Kava is one of those ingredients that you're able to do that. It's a different experience. But I think what we've spent extra time on this year is making sure that we can get the flavor correct. Some of these botanics are challenging to flavor mask. And I think we've worked with our our partners and processes to create a really what we think is one of the best tasting flavors of kava product out there.

And then as we look to kind of the problem that we're seeing at the retailers and distribution footprint right now is with the looming regs, people are starting to pull back. Retailers are starting to pull back shelf space, are sort of not reorder be more disciplined than what they're ordering, and that's creating opportunities of empty shelf space. So it's really sort of how do we find another product That is mildly euphoric. It helps you relax. And it's a natural botanical. And it's a product that we think can help fill the need of our retail partners as well. And allow us to capture some shelf space as the regs create further uncertainty.

Unknown Speaker

Absolutely. I mean, that makes a ton of sense to me. Just kind of position yourselves have a little bit of protection against potential regulatory shifts. So that's great to hear. You just commented on it, right? So you guys are going to be examining or evaluating other botanicals or functional ingredients that are not intoxicating. So I'm just curious, do you have any expectation of a timeline and whether or not these products would be developed in-house or so.

Unknown Speaker

salt through an acquisition. As mentioned, we have one or two other ingredients that we're working on formulations with. So we, you know, we're moving as aggressively as we can. Part of this is making sure we get the right flavor, and some of these are a little bit more challenging. It's newer categories to do that with. So I would expect before the end of the year, you know, some announcements around some other botanicals. We're always open for discussions on acquisitions around this category as well. And we're looking beyond just sort of a functional beverage from an acquisition standpoint.

Unknown Speaker

Understood. And then last question for me is on the wholesale side of the business. So we saw a meaningful growth year over year there. It accounted for about 30% of your revenue mix. And it was common on at least twice as you guys are kind of shifting to more wholesale revenue versus you're historically very strong in DTC. I'm just curious, how should we should we look at this from a company-wide level? Once you, as you see it currently, how do you think this will kind of shake out? Will we start to see the mix at some point favor wholesale, or is it going to settle around 50-50? I mean, just any kind of call you can give there would be helpful so that we can kind of better understand how we should look at.

Unknown Speaker

margins and just the business on the whole? Yes. Look, I wish I could give you great clarity, but someone that's relying on sort of regulatory changes, I think it would be prudent to think that as a, As regulators, when you look at some of the regulation that's coming out, like the Hemp Parity Bill that came out this week, what they're fundamentally doing is saying, look, if people are concerned about keeping these products away from kids, you using the traditional alcohol industry is a very logical way to think about regulating this product. And that means it could end up ultimately going through a three-tier system which would, by result force more of the revenue into sort of a wholesale type business. for intoxicating kind of Delta 9 level products. So I think you are seeing a shift at states as well, like Tennessee made some changes where they banned sort of the sale direct to consumer of, you know, TSC-containing products, but it's able to go through registered distribution. So we're seeing a little bit more shift in that. being driven by regulatory pressure.

Unknown Speaker

Got it. And it makes sense as well. Well, I appreciate you taking the time to so thoroughly answer all my questions. I'll hop out of queue.

Operator

Thanks, Thomas. Your next question comes from the line of Adam Waldo with Lismore Partners LLC. Please go ahead.

Adam Waldo

So Ronan, given the commentary you gave in both your prepared remarks and then in response to Thomas's questions around M&A, a couple follow-ups on that topic to conclude. How should we think about your thought process or philosophy with respect to structuring acquisition consideration? AMIDST THE CURRENT UNCERTAINTY ON THE REGULATORY FRONT ON THE ONE HAND AND ALL THE MOVING PARTS WITH RESPECT TO YOUR accelerating revenue growth and cash cost reductions on the other.

Unknown Speaker

Look, I think we are trying to be as flexible and opportunistic as we can. I think, you know, I can appreciate, as you highlighted, some of the noise. I think we are looking at opportunities where we think our infrastructure can create a one-on-one equals three opportunity. and continue to pursue those in ways that we believe create value for the targets as well as for our shareholders.

Adam Waldo

Sorry, to just draw you up slightly more on that. is it fair to say that you're, you, Would you rather see more regulatory clarity before moving further on the M&A front, or are you Are you at a point where you feel you can structure potential M&A transactions in such a way that there's significant upside? for your equity and you can minimize the share of that that's that goes to the target given your one plus one equals three strategies. I think we are focused on getting transactions done that we think will be accretive.

Unknown Speaker

Irrespective of changes in regulation and we're on a mission to drive shareholder value and have to make decisions in light of some uncertainty, you know, looking out over the next 12 months.

Adam Waldo

Okay, and so you're targeting, are you targeting immediate cash flow accretion in one to two quarters after closing in your, the way you're approaching M&A? Okay. We are trying to drive short-term cash flow as quickly as we can.

Unknown Speaker

as quickly as possible and both in the core business and and with any M&A that we.

Adam Waldo

Okay. Thank you very much and best of luck. All right. Thank you, Adam.

Operator

That concludes our question and answer session. I will now turn the call back over to Ronan Kennedy for closing remarks.

Unknown Speaker

Thank you, everyone, for attending the call today. We will continue to update the company as we have updates, and we look forward to jumping on our e-mail.

Operator

year-end call in December. Have a great evening. Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

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