Executive Summary

Q2 2025 was sharply down year over year as revenue fell 88% to $1.86M and gross margin contracted to (7%) on lower volumes and elevated occupancy costs; sequentially, revenue declined vs Q1 and margins swung negative due to production delays and labor constraints that pushed shipments into July .
No quantitative guidance was issued; management emphasized stabilized operations, fulfilled Halloween shipments in July, accelerating retail momentum (Five Below, Albertsons), and early international success in the UAE as setup for 2H reacceleration .
Liquidity remains tight: cash ended Q2 at $0.96M with inventory at $20.81M; management is “right‑sizing” occupancy costs and targeting cash flow breakeven “before the end of the year” .
Estimate context: S&P Global shows no Q2 Street consensus for revenue or EPS; no beat/miss assessment is possible. Coverage appears minimal; any future estimates likely need to reflect lower volume run‑rate and margin rebuild timelines (S&P Global data).*

What Went Well and What Went Wrong

What Went Well

Completed production/packaging/shipping of holiday inventory and fulfilled Halloween shipments in July; partnerships deepened with Five Below and Albertsons (SKU and order volume expansions) .
Early international traction: UAE launch exceeding expectations, driving repeat orders and SKU expansion, validating global appetite for the brand .
Cost focus and operational stabilization: management reduced bonus expense, is right‑sizing occupancy, and re‑aligning production with demand; OpEx fell YoY to $3.9M .
- Quote: “Operations continued to stabilize… demand accelerated—outpacing output due to temporary labor shortages. We’re actively scaling our workforce” .

What Went Wrong

Severe top‑line and margin compression: revenue fell to $1.86M from $15.65M YoY and gross margin declined to (7%) from 58%, primarily on lower sales and higher occupancy costs .
Competitive pressure from major CPG entrants and production delays (labor shortages) constrained output and pushed shipments out of Q2 .
Liquidity tightness: cash declined to $0.96M (from $1.62M in Q1 and $3.72M at YE), with high inventories ($20.81M) and continued negative Adjusted EBITDA of $(2.69)M .

Financial Results

Quarterly trend (oldest → newest)

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$1.38	$2.48	$1.86
Gross Margin %	(88)% (reported); ~31.8% ex-reserve	45%	(7)%
Operating Expenses ($USD Millions)	$2.9	$3.51	$3.94
Net Income (Loss) ($USD Millions)	$(4.17)	$(2.57)	$(4.19)
Diluted EPS ($)	$(0.40)	$(0.23)	$(0.36)
Adjusted EBITDA ($USD Millions, non‑GAAP)	$(2.75)	$(0.79)	$(2.69)
Cash and Cash Equivalents ($USD Millions)	$3.72	$1.62	$0.96
Inventory, net ($USD Millions)	$20.31	$21.14	$20.81

Q2 year-over-year

Metric	Q2 2024	Q2 2025
Revenue ($USD Millions)	$15.65	$1.86
Gross Margin %	58%	(7)%
Operating Expenses ($USD Millions)	$4.12	$3.94
Net Income (Loss) ($USD Millions)	$3.34	$(4.19)
Diluted EPS ($)	$0.29	$(0.36)
Adjusted EBITDA ($USD Millions, non‑GAAP)	$6.22	$(2.69)

Notes:

Non‑GAAP Adjusted EBITDA excludes D&A, interest, taxes, share‑based compensation, and loss on early extinguishment of debt; management provides limitations to non‑GAAP measures .

Segment and KPI detail

Segments: Not disclosed/applicable in filings/press materials for Q2 2025.
Additional KPIs: Retail partner expansion (Five Below, Albertsons), UAE launch; new product pipeline (caramel, yogurt snacks) highlighted qualitatively .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY/Q3‑Q4 2025	None provided	None provided	N/A
Gross Margin %	FY/Q3‑Q4 2025	None provided	None provided	N/A
Operating Expenses	FY/Q3‑Q4 2025	None provided	None provided	N/A
Tax Rate	FY 2025	None provided	None provided	N/A
Segment/Other	FY 2025	None provided	None provided	N/A

Management emphasized operational stabilization, cost optimization, and demand acceleration, but issued no quantitative ranges for revenue, margins, OpEx, or other metrics .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q‑2: Q4 2024)	Previous Mentions (Q‑1: Q1 2025)	Current Period (Q2 2025)	Trend
Competitive landscape	Quality issues and increased competition weighed on Q4; inventory reserve hit margins .	“Increased competitive pressure” cited for lower revenue; strengthened liquidity via note exchanges .	Competition from major CPG entrants drove softer demand; initial surge fading as consumers return to brand .	Stabilizing; competition still elevated but intensity moderating per mgmt.
Supply chain & labor	Summer heat/quality issues resolved with packaging and temp‑controlled shipping .	Improved operations; expanding retail doors .	Temporary labor shortages delayed shipments into July; operations now stabilized .	Improving; near‑term bottlenecks easing.
Cost/occupancy	Higher facility/occupancy weighed on Q4 margins .	Focus on cost efficiency; right‑sizing footprint .	“Right‑size occupancy,” lower bonus expense, G&A trending down .	Cost discipline improving, occupancy still a headwind.
Distribution & retail partners	Expanding footprint into new doors .	Everyday launches at Winn‑Dixie, Ace, “Orville/Orgill,” Holiday at Albertsons .	Deeper Five Below/Albertsons partnerships; Ace/Orgill steady; national grocer review stage 3 .	Broadening and deepening.
International	N/A in Q4 release.	N/A.	UAE launch exceeding expectations; building for Q4 expansion .	Positive early traction.
Innovation pipeline	Preparing adjacent categories (jerky, yogurt melts) .	Continued innovation emphasis .	Caramel line and yogurt snacks; new soft chew; seasonal SKUs .	Accelerating pipeline.
Liquidity/financing	Raised equity in 2024; cash $3.7M YE .	Note exchanges to extend maturities; cash $1.6M .	Cash $1.0M; mgmt expects cash flow breakeven “before the end of the year” .	Tight but managed; breakeven targeted.

Management Commentary

Strategic focus: “With operations now stable… we’ve refocused on scaling as a category leader… deepened our partnerships with Five Below and Albertsons… launched in the UAE… advancing strategic conversations [for] shelf space, private label, and category growth” .
Execution priorities: “Optimizing our cost structure and conserving cash… right size our cost base… streamlining storage… demand‑driven growth model” .
International: “Results [in UAE] are exceeding expectations—validating global appetite for our brand” .
Innovation: “Early excitement around our freeze‑dried yogurt snacks and caramel offerings… new soft chew version” .
CFO tone: “Approaching the second half… drive top line growth, improve operational leverage, and rebuild from a more resilient foundation” .

Notable quotes

CEO: “Demand accelerated—outpacing output due to temporary labor shortages. We’re actively scaling our workforce and streamlining operations” .
CEO: “With Halloween and holiday shipments complete, we are positioned to… stabilize the supply chain and execute on growth” .
CFO: “We ended the quarter with cash… of $1.0 million… [we will] drive the top line growth, improve operational leverage” .

Q&A Highlights

Inventory and financing needs: Management highlighted long shelf life and discounting two SKUs (Sweet Geeks, Sweet Worms) through discount channels; at current run rate, financing needs are manageable while occupancy right‑sizing continues .
Cash flow breakeven: CEO indicated “before the end of the year” for cash flow breakeven; CFO concurred .
Analyst participation: Limited Q&A (one analyst), consistent with minimal coverage .

Estimates Context

Consensus availability: No S&P Global consensus was available for Q2 2025 revenue, EPS, or target price; historical actuals only are reflected. As such, no beat/miss can be determined (S&P Global data).*
Implications: Given the magnitude of YoY declines and negative EBITDA, any future Street models would likely reset revenue run‑rate lower and embed a gradual margin rebuild as occupancy is right‑sized and volumes recover.

Key Takeaways for Investors

Execution over outlook: With no quantitative guidance, the near‑term setup hinges on executing against stabilized operations, labor scaling, and the holiday sell‑through that was shipped by July .
Liquidity watch: Cash at $0.96M and inventory at $20.81M warrant close monitoring; progress on occupancy reductions and working capital conversion is critical in 2H .
Demand signals improving: Retail partnerships are expanding (Five Below, Albertsons), a major national grocer review is advancing, and UAE traction is strong—potential 2H catalysts if fulfillment keeps pace .
Margin rebuild path: Gross margin recovery depends on volume throughput, occupancy right‑sizing, and labor stabilization; Adjusted EBITDA likely remains sensitive to mix and utilization .
Competitive intensity: Management suggests the initial surge from large CPG entrants is fading; sustained brand differentiation and innovation cadence (caramel/yogurt) remain key .
Breakeven goal: Management’s target of cash flow breakeven before year‑end is a tangible milestone to track, contingent on cost actions and revenue acceleration .
Risk/reward: Stock will be sensitive to any tangible evidence of revenue reacceleration, gross margin inflection, and capital structure/liquidity updates; conversely, delays in sell‑through or further working capital drag could pressure the equity.

Footnotes:

Values retrieved from S&P Global.

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