Good afternoon, and welcome to cbdMD, Inc.'s Fiscal Year 2025 Earnings Call and Business Update. Earlier today, the company issued a press release discussing results for the fiscal year ended September 30, 2025, following the filing of its annual report on Form 10-K. Today's call is being recorded and will be available on the company's website along with the earnings release and supplemental materials. I will now turn the call over to Brad Whitford, Chief Accounting Officer of cbdMD.

Thank you, and thank you all for joining us today. Before we begin, I'd like to remind everyone that today's remarks contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our annual report on Form 10-K for the year ended September 30, 2025, and our other filings with the SEC for a discussion of these risks. All forward-looking statements are made as of today, and the company undertakes no obligation to update them, except as required by law. With that, I'll turn the call over to Ronan Kennedy, our CEO and CFO.

Good afternoon, everyone, and thank you for joining us. Fiscal 2025 was a year of disciplined execution and meaningful progress for cbdMD. It marked our third consecutive year of operating improvement, continued balance sheet strengthening and a repositioning of the company toward categories and regulatory frameworks that we believe offer long-term durability. While we are not yet where we ultimately want to be financially, the direction of travel is clear, lower operating losses, a cleaner capital structure, restored exchange compliance, and improving commercial momentum. Over the past several years, cbdMD has executed a deliberate reset focused on reducing fixed costs and simplifying our operations, rationalizing our product portfolio toward higher-margin and volume SKUs, repairing and strengthening our balance sheet, investing in categories supported by science, quality, and regulatory readiness. Fiscal 2025 represented an important execution year in that reset. For the year, we reduced our operating loss by $1.2 million to approximately a $2.1 million loss. That represents our third straight year of improved operating results. Our adjusted non-GAAP EBITDA improved from a $1.7 million loss in 2024 to a $900,000 loss in 2025. These gains were driven by disciplined cost control, more efficient marketing spend, supply chain optimization, and tighter focus across our core brands while investing in growing a new beverage brand, Oasis. We now have distribution across 9 states, including North Carolina, Florida, Alabama, Texas, Tennessee, Georgia, South Carolina, and Minnesota with additional markets under evaluation. We are seeing improving case sell-through in core markets and growing distributor engagement as the brand gains awareness. We believe Oasis positions cbdMD in one of the fastest-growing segments of the beverage market, functional alcohol alternative to social beverages supported by shifting consumer preferences. Across our core cbdMD and Paw CBD brands, we focus on SKU rationalization, margin protection, and prioritizing higher velocity products. This discipline allows us to stabilize the business while preserving strong gross margins relative to our peers. A major focus in fiscal 2025 was restoring balance sheet strength and capital flexibility. Through the Series A preferred equity conversion and the financing completed at the end of September, net book value increased from under $2 million to over $7 million. Over $7 million in annual accrued preferred dividend obligations were eliminated, working capital improved materially year-over-year, and our capital structure complexity was significantly reduced. As we announced earlier today, we recently closed $2.25 million in additional financing. This transaction resulted in a temporary halt in our stock trading until the material event was publicly disclosed. Given the heightened trading activity this past week, we received numerous interests to raise substantially more capital. However, we remain mindful of dilution and associated fees. We believe we were able to secure the financing at favorable valuation and established a $20 million equity line of credit with minimal fees, providing us with significant flexibility to raise capital prudently under favorable market conditions. We continue to engage with several strategic opportunities that could help add revenue, contribution dollars, and bolster our product offering. We believe our strong balance sheet could help position us as a more attractive strategic partner with the wherewithal to weather regulatory uncertainty. In December 2025, cbdMD received formal confirmation from the NYSE American that all prior compliance deficiencies had been fully resolved. This milestone removes a significant overhang and reflects the progress we've made in restoring financial stability and governance discipline. Yesterday, the White House issued a significant executive order directing federal agencies to modernize federal cannabis policy, including accelerating the rescheduling of cannabis and expanding research and access pathways for cannabinoids. Importantly, for the hemp and CBD industry, the administration also highlighted support for exploring Medicare reimbursement pathways for legal full-spectrum hemp-derived CBD products under appropriate medical supervision. While these initiatives require additional administrative action and are not yet law, we view this executive order as an important directional signal that federal policy is evolving towards science-based evaluation and health care integration. This is particularly notable given the uncertainty created by the restrictive hemp language, including H.R. 5371 legislation enacted in November. The executive order underscores that federal policy is not monolithic and that there is active work underway to reconcile public health, consumer access and scientific evidence. We believe cbdMD is exceptionally well positioned in this evolving environment. We were founded on THC-free and broad-spectrum CBD, which remains the majority of our revenue. We operate with cGMP manufacturing, rigorous testing, and conservative formulas. We've invested years in safety, documentation, and compliance, not shortcuts. As regulatory clarity improves, we believe well-capitalized, science-driven operators like cbdMD stand to benefit while less compliant competitors face increasing pressure. I'll now turn the call over to Brad for more details on the financials.

Thank you, Ronan. Total net sales for the fourth quarter of fiscal 2025 were $4.7 million or a 2% increase from the prior year comparative quarter total. For the 2025 fiscal year, net sales totaled $19.1 million as compared to $19.5 million in the prior year. Our quarterly e-commerce direct-to-consumer business generated sales of $3.5 million in the fourth quarter of fiscal 2025. This was a 6% year-over-year quarterly decrease. Some of the year-over-year decline is tied to a shift in consumer to the hemp beverage category. E-commerce represented 75.1% of our total net sales for the fourth quarter of 2024 versus 81% in the prior year comparative quarter. For fiscal year '25, e-commerce generated $14.7 million of net sales compared to $15.7 million for the comparative prior fiscal year, or a 6% decrease. E-commerce represented 77% of our total net sales for the fiscal year ended 2025. For fiscal 2025, our marketing spend to direct-to-consumer revenue totaled 30% as compared with 27% in the prior year. We continue to test and iterate to find out the right marketing spend to revenue ratio and position the company to grow in fiscal 2026. Our wholesale business generated $1.2 million of net sales for the fourth quarter of fiscal '25, up 25% as compared to $900,000 for the comparative quarter in fiscal 2024. Ongoing state-level regulatory changes did impact our business during the quarter. But despite this, our core wholesale business continues to improve while we are able to expand our Oasis business. For the fiscal years ended September 30, 2025 and 2024, our wholesale business generated net sales of $4.5 million and $3.8 million, respectively. Our gross profit as a percentage of net sales came in at 59% for the fourth quarter of fiscal 2025 as compared to 54% in the prior year comparative quarter. During the fourth quarter, we wrote off approximately $113,000 related to legacy products that had aged out as compared to $588,000 in 2024 related to legacy botanical products and outdated packaging that was over 2 years old. For fiscal 2025 and fiscal 2024, gross margins totaled 63% and 62%, respectively. Our SG&A expenses for the fourth quarter of fiscal 2025 totaled $3.4 million compared to $2.7 million in the prior year comparative quarter. 2024 included a $700,000 gain related to the settlement of our headquarters lease liability. Management continues to focus on our costs and profitability. For the full 2025 fiscal year, SG&A expenses dropped $1.2 million from $15.3 million to $14.1 million. Overall, this resulted in a loss from operations of approximately $600,000 for the fourth quarter of fiscal 2025 as compared to a $300,000 loss for the prior year period. Our increase in warehouse lease cost was a key driver of this change. The full fiscal year operating loss totaled $2.1 million as compared to an operating loss of $3.3 million in 2024. Our non-GAAP adjustments to operating expenses for the fourth quarter of fiscal 2025 included $8,000 in noncash employee stock expense, $262,000 in depreciation and amortization expense, and $113,000 in inventory write-downs, resulting in a non-GAAP adjusted operating loss of $301,000 for the fourth quarter of fiscal 2025 as compared to a $131,000 non-GAAP adjusted operating loss in the fourth quarter of fiscal 2023. The change in non-GAAP adjusted operating loss over the prior year period is primarily attributable to slightly lower revenue and the increase in our warehouse expense. For the 2025 fiscal year, our non-GAAP adjusted EBITDA loss totaled $900,000 as compared to $1.6 million for fiscal 2024, driven by lower G&A costs in 2025. We have negotiated further cost savings during the first quarter of 2026, including insurance and other SG&A items and continue to focus on reducing overhead while we grow revenue. We had cash and cash equivalents of approximately $2.2 million and working capital of approximately $3.3 million on September 30, 2025, as compared to $2.4 million in working capital of approximately negative $1 million on September 30, 2024. The main driver of the working capital improvement was the elimination of the accrued preferred dividend, a short-term liability on our balance sheet and proceeds from the sale of our Series B preferred stock. Our current assets as of September 30, 2025, improved slightly to approximately $6.6 million. As of September 30, 2025, the company's total current liabilities were $3.1 million. Considering our cash balance, including the recent Series C preferred financing, we believe we are entering into calendar 2026 with a very strong liquidity position and are focused on driving P&L performance. With ongoing regulatory volatility ahead, our focus is to ensure we have a strong flexible balance sheet and maintain a nimble organization to effectively and efficiently react to changing market dynamics. With that, I'll turn the call back over to Ronan.

Thanks, Brad. As we enter calendar 2026, cbdMD is fundamentally stronger than it was 2 years ago. A cleaner balance sheet, lower operating losses, restored exchange compliance, exposure to high-growth beverage category and encouraging regulatory signs. Our priorities remain clear. Scale Oasis responsibly as distribution matures; drive efficient, profitable D2C growth through disciplined marketing execution; preserve margins and capital discipline; and evaluate strategic opportunities aligned with our regulatory strength and diversification. We believe the heavy lifting of the turnaround is largely behind us and fiscal 2026 is about continuing to convert that foundation into improved financial performance and capitalizing on the dynamic regulatory environment. We are still absorbing the President's announcement of potentially $30 billion and 60 million Medicaid consumers that could be turned into CBD starting in April. We know many of these Americans are already buying, but the potential demand increase for quality product could be staggering. This should be an exciting quarter to watch as the details and downstream impact of the executive order unfolds. I want to thank our employees, partners, and shareholders for their continued support. And with that, operator, we're happy to take questions.

Your first question comes from Thomas McGovern with Maxim Group.

So first, do you see 2026 as a return to growth for your company after completing the heavy lifting of restructuring and executing the turnaround strategy in 2025? As you look ahead to 2026, which brands do you believe will be the key driver of growth from a revenue standpoint? Will it be the expansion of Herbal Oasis into new states or perhaps some innovations within the cbdMD core brand? Could you elaborate on what you consider will be the biggest growth driver in 2026?

Sure, Thomas, thank you for the call. We believe there is still potential for growth with the core cbdMD brand. Our team has undergone a significant transformation this year, and we are starting to optimize our operations. We feel optimistic about the core business. However, we also recognize that there are substantial growth opportunities in the beverage sector that we can see, at least through November, and our progress will depend on how the regulatory framework develops over the year.

Understood. And when we look at your direct-to-consumer business, we did see a year-over-year decline there. Just kind of maybe if you could unpack that a little bit for us, trying to get us an understanding if that's a reflection of some of the SKU reduction you guys have executed or if it's maybe some declining KPIs in terms of returning customers or customer acquisition? Just kind of any insight you can provide on that would be helpful.

Sure. If we analyze our 24-month trend, we see that the business is currently showing a slight increase compared to the previous year in the direct-to-consumer segment. The changes we implemented in our organization early in 2025 required some time to fully understand and stabilize, but we are beginning to move back in the right direction.

Understood. And then last question for me. Obviously, there's a lot going on in the regulatory environment. Just curious if you had any insight on a possible timeline for Medicare coverage of CBD or hemp-derived products? And then also maybe just on a higher level, how you guys have adjusted your strategy just given the dynamic environment we're facing currently?

Sure, sure. I will say, Thomas, there's a little bit of change in sort of the script over the last 24 hours, given what happened yesterday. But look, I think what we understand is they are trying to pilot a program starting on April 1. And I think with his commitment to trying to use the category to help consumers, right now it gives most of the industry, I think, encouragement that they're going to solve for some of the language restrictions that was in the bill in November. I think everybody is still very much for smart regulations around safety, around labeling, around packaging, around quality. I think it's just a matter of how do we use the right limits to make sure that there's a viable effective product for adult consumers.

The next question comes from Mark Taci, private investor.

I'm curious if you could provide some clarity on the recent executive order and how it might impact your business. Do you think the reactions to it are justified, or is the situation being exaggerated? What have you all discussed regarding its potential effects on your business going forward? Is it a significant change, or is the excitement surrounding it overstated?

Mark, thanks for the call. Look, I mean, I think we're still trying to just sort of digest sort of his statements. And I think the devil is going to be in detail on how it all gets enacted. But I mean, clearly, the way we viewed it is he made a statement that he wanted to make CBD product available as an alternative solution for people in Medicare. From what we understand, there's over 60 million consumers on Medicare. And as part of the statements, they spoke about potentially up to $500 a year in reimbursement for CBD products. So when we do the math, that works out to $30 billion of potential Medicare spend that has the potential to help drive demand for the CBD category. Now will we get there in April? No. But I think what it shows is that over the next couple of years, there could be a very significant increase in demand for safe, effective, high-quality product. How do we model that into our business? I think in 24 hours, I think we still don't know. I think we will approach it as aggressively as we can to position ourselves, but at the same time, making sure that we are being prudent and careful with our balance sheet and build our business without that demand into a profitable long-term organization.

Okay. Listen, one comment I'd like to make before I hang up is my dad has neuropathy of the feet and he tries the CBD products. So he's paying out of pocket because it actually helps him, the cream and the internal. And so he's paying out of pocket, but he has Medicare. It looks like even with older people, they're up for it, and the Medicare could kick in to help them purchase it. So that's all I wanted to say. But thanks for making those comments. I appreciate it.

Sure. And thank you for your comment about your father, and we're glad that he was able to find relief.

Your next question comes from Adam Waldo with Lismore Partners, LLC.

I would like to clarify something from the press release. The section referencing the executive order from yesterday discusses the support for full spectrum hemp for seniors under Medicare. A few sentences later, it mentions 60 million seniors on Medicaid. Was that a mistake? Do you believe the executive order signed yesterday will address both Medicare and Medicaid seniors?

Adam, I believe you may have noticed a typo. We would approach it by considering that if it works for Medicare and consumers are experiencing benefits, and if the administration can demonstrate a positive return or cost savings with better efficacy, then it might also be expanded to that program, although I don't think it's as large as Medicare.

Fair enough, yes. So potentially centers for Medicare and Medicaid might extend it to Medicaid over time, but the executive order language explicitly only addresses Medicare at this time. Is that a fair statement on my part?

To the best of our knowledge, that's correct. I apologize for the typo.

No worries. I want to clarify that it's only been 24 hours, but both of these are significant potential markets. You've only had a short time to take this in, and you likely put together an operating plan for fiscal '26 back in September that didn't account for any of this. You raised Series B convertible preferred at the end of September, and now you've raised Series C, so liquidity looks promising in the near term. How are you prioritizing growth investments for the remainder of fiscal '26 between your traditional core business and Herbal Oasis, considering that the executive order signed yesterday only impacts the traditional business?

It highlights a lot more of the traditional business. However, there are some conflicting regulations now, particularly between the bill from November and the statements made by Trump. Two weeks ago, the change in the definition of hemp that occurred in November has prompted the industry to come together and unite. This change was made without following the usual process or allowing for public commentary and review. While I won't delve into the specifics of how or why it happened, that's the reality we face. The industry is beginning to unify. We've seen the introduction of the Wyden bill, which proposes more reasonable THC limits for hemp-derived cannabinoid products. However, I don't think they fully grasped the potential negative impact this could have come next November if the language isn't revised, as it could eliminate 100% of the revenue for many firms. The economic analysis of the November changes seems to have been overlooked, but as people realize the true financial consequences, I believe there are better regulatory approaches, exemplified by the Wyden bill. Furthermore, with Trump's recent statements, we are hopeful for a resolution regarding the language in the November bill soon. We are proceeding with caution and have contingency plans prepared. While we need to be discreet, especially since many competitors are listening, we do have a strategy in place and are optimistic that the regulations will eventually be clarified. The key question will be the upper limits on THC content. In the meantime, we have a strong core business that we are continually enhancing, and our THC business remains robust, allowing us to expand and build on that foundation.

At a high level, are you focusing your additional working capital investment in the Herbal Oasis business for the next few quarters, as you did for most of last year? Or are you considering putting more working capital into inventory for the traditional CBD product side, which is the non-beverage area? Or is the situation so fluid right now that it's difficult to determine where to prioritize the additional working capital investment in your operations?

I would say probably for the next quarter, it will be a little bit more weighted on the Oasis side. And then there will be constant evaluation with respect to where the regs are moving to try to readjust that as we move through 2026.

Yes, that's very fair. Okay, for my last question, regarding share count, can you quickly provide the fully diluted share count pro forma for the closing of the Series C preferred yesterday? Additionally, is there any new executive compensation plan being considered due to the regulatory changes that might significantly affect the common shares outstanding in the future?

Sure. I believe we closed with approximately 8.9 million outstanding shares, including 1.7 million in the B series and 1 million in the C series. Additionally, at the end of November, the Board approved a new employee compensation plan for 2025, which will be subject to a shareholder vote at our upcoming annual meeting.

Okay. And those details would be forthcoming in the proxy and/or in the Q for the quarter?

I believe there might have been an 8-K at the end of November.

This concludes the question-and-answer session and we will conclude today's call. We thank you for joining. You may now disconnect.