Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gross margins increased to 65% from 63% in the prior year comparative quarter.
- SG&A expenses decreased significantly from $5.7 million to $3.8 million.
- Sequential revenue growth improved by 18%.
- The company generated approximately $200,000 of cash during the third quarter.
- The wholesale business saw a 10% increase in net sales compared to the prior year.
Negative Points
- Total net sales for the third quarter decreased by 15% year-over-year.
- E-commerce direct-to-consumer sales dropped by 25% year-over-year.
- The company has negative working capital of approximately $567,000.
- Accrued dividends payable significantly impacted working capital, totaling $3.7 million.
- The company received notice from the NYSE American for falling below the minimum book value listing requirement.
Q & A Highlights
Q: Can you share the details of the plan you submitted to NYSE American to address the compliance issue?
A: We have several paths to stabilize our book value of equity, including working on balance sheet items and proposing another shareholder vote. We are exploring all viable solutions to bolster and stabilize our book value of equity. (Ronan Kennedy, CEO & CFO)
Q: Is the December 31, 2025 date for regaining compliance a typo? Should it be 2024?
A: No, the NYSE American asked us to present a plan to get back into compliance by December 2025. (Ronan Kennedy, CEO & CFO)
Q: Have you received a response from NYSE American regarding your compliance plan?
A: We have not received a response yet. (Ronan Kennedy, CEO & CFO)
Q: How much of the sequential sales growth can be attributed to the new strategy and sales personnel?
A: Some key new customer wins came from the new sales team, contributing positively to the quarter. Changes on the direct-to-consumer side also had a positive impact. (Ronan Kennedy, CEO & CFO)
Q: Can you discuss the recently published data and how it will be incorporated into your sales approach?
A: We are incorporating the results into our messaging, particularly for our broad-spectrum products. However, we must be careful as the study does not cover all SKUs. (Ronan Kennedy, CEO & CFO)
Q: Can you provide more details on the results of the study?
A: The study showed statistically significant data for pain reduction, improved mood, and reduced stress. We are assessing other opportunities to strengthen and leverage these claims. (Ronan Kennedy, CEO & CFO)
Q: What are the key areas you are focusing on to create shareholder value?
A: We are focusing on running a profitable business and streamlining our capital structure. We are making significant strides toward profitability and simplifying our equity structure to unlock full enterprise value. (Ronan Kennedy, CEO & CFO)
Q: What measures are you taking to control costs and enhance your balance sheet?
A: We have identified monthly efficiencies, renegotiated vendor terms, eliminated contracts, secured facility savings, reduced headcount, and tightened non-essential spending. These measures have significantly impacted our progress. (Brad Whitford, Chief Accounting Officer)
Q: How are you addressing the accrued preferred dividend impacting equity?
A: We are pursuing several parallel strategies to address the accrued preferred dividend and regain compliance with NYSE American continued listing standards by the December 2025 deadline. (Ronan Kennedy, CEO & CFO)
Q: What are your plans for the upcoming quarters?
A: We are excited about the efficiencies expected to materialize in the September and December quarters, which we believe will help us achieve profitability. We are committed to executing our strategic plan diligently to deliver meaningful value to our shareholders. (Ronan Kennedy, CEO & CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
