Executive Summary

Net sales grew 26% year over year to $11.80M, with gross margin of ~69%; sequentially, revenue dipped ~4% on typical March-quarter seasonality per management .
Non-GAAP adjusted operating loss improved to $2.7M (from $4.9M YoY) on cost controls and higher gross profit dollars; GAAP net loss widened to $13.07M due to an $8.87M non-cash revaluation of earnout-share contingent liabilities as the stock price rose from $2.95 to $4.14 during the quarter .
Channel mix and KPIs remained solid: e-commerce was 71% of sales ($8.36M), wholesale rose 31% YoY to $3.44M, and Paw CBD grew 84% YoY to $1.42M; cash was $23.71M and working capital $27.88M at quarter-end .
Management initiated net sales guidance for Q1 FY2022 of $15.5–$16.25M, citing product launches, sponsorships, channel expansion (including U.K.), and ongoing margin discipline as catalysts .

What Went Well and What Went Wrong

Record March-quarter net sales with strong margins: “largest fiscal Q2 net sales in our history” at $11.8M; gross margin ~69% and expected to remain 65–70% going forward .
Channel and product momentum: e-commerce $8.36M (71% mix), wholesale $3.44M (+31% YoY), and Paw CBD $1.42M (+84% YoY); Botanicals launch “well received” .
Strategic and operational progress: U.K./EU novel food submissions, new ERP (NetSuite) live, renewed certifications (NSF, U.S. Hemp Authority) and new sports partnerships (CrossFit Games, Patrick Reed) .

Profitability still negative: GAAP operating loss of $4.17M (vs. $1.76M loss in Q1), with sequential OpEx up 15.6% (heavier marketing and non-cash stock comp); adjusted operating loss narrowed YoY but remains sizable at $2.7M .
Headline net loss driven by non-cash earnout revaluation ($8.87M) as share price rose; management addressed mechanics but the volatility continues to obscure core progress .
Cash used this quarter (approx. $5M) included adjusted operating loss, preferred dividends, working capital build, and a $0.75M incremental SPAC-sponsor investment (ADRA) .

Revenue, gross margin, operating loss vs prior two quarters (oldest → newest):

Metric	Q4 2020	Q1 2021	Q2 2021
Total Net Sales ($M)	$11.70	$12.33	$11.80
Gross Margin (%)	54.4% GAAP; 68% non-GAAP (inventory write-down impact)	72.2%	69.1%
Loss from Operations ($M)	$(4.50)	$(1.76)	$(4.17)

Earnings per share (oldest → newest):

Metric	Q1 2021	Q2 2021
Diluted EPS (Cont. Ops)	$(0.18)	$(0.24)

Channel and product mix (oldest → newest):

Metric	Q4 2020	Q1 2021	Q2 2021
E-commerce Net Sales ($M)	$8.60	$9.70	$8.36
Wholesale Net Sales ($M)	$3.10	$2.63	$3.44
E-commerce Mix (% of Net Sales)	—	78.7%	70.9%
Paw CBD Net Sales ($M)	—	$1.466	$1.415

Balance sheet and cash flow snapshots:

Metric	Q2 2021
Cash and Cash Equivalents ($M)	$23.71
Working Capital ($M)	$27.88
PPP Loan Balance ($M)	$1.46 (application submitted for 100% forgiveness)

Non-GAAP reconciliation highlight:

Metric	Q2 2020	Q2 2021
Adjusted Operating Loss ($M)	$(4.94)	$(2.77)

Net loss drivers (non-operating):

Item	Q2 2021
Increase in contingent liability (earnout) non-cash expense	$8.871M; stock price increased $2.95 → $4.14

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales ($M)	Q1 FY2022 (quarter ending Dec 31, 2021)	—	$15.5 – $16.25	Initiated

No other formal guidance (margins, OpEx, tax, segment) was provided in the materials reviewed .

Topic	Q4 2020 (Q‑2)	Q1 2021 (Q‑1)	Q2 2021 (Current)	Trend
Channel mix & DTC engine	DTC $8.6M; strategy emphasized	DTC 78.7% mix; record DTC sales	DTC 70.9% mix; wholesale rebound	Wholesale normalizing as reopenings progress
Gross margin outlook	FY20 non-GAAP 68% in Q4; GAAP affected by inventory write-down	Expect 65–70% if mix sustained	Reiterated 65–70% margin expectation	Stable within guided band
Regulatory & markets	—	U.K. DTC expansion	U.K./EU novel food submissions; broader regulatory path	Building international/regulatory beachhead
Product innovation	—	Launch of Botanicals; pipeline for water-soluble	New gummies (sleep, recovery), drink mixes; awards	Broadening portfolio
Sponsorships/brand	Joe Rogan exclusive; broader partnerships	TV expanded; continued sponsorships	CrossFit Games, Patrick Reed; Ken Block renewal	Sustained brand activation
Operations/ERP	Warehouse/lab upgrades; certifications	—	NetSuite ERP live; added merchant processors for $125–$175k/qtr savings expected	Process and cost improvements
Capital & cash	Cash ~$30M post preferred raise	Cash $28.8M	Cash $23.7M; working capital $27.9M	Strong liquidity but investing/cash use persists
Contingent liability	+$0.8M in Q4; volatile overhang	+$8.5M (stock price effect)	+$8.87M; addendum to reduce overhang volatility	Mechanically improved (quarterly issuance)

“We believe substantial net sales growth is achievable in the near term based on anticipated launch of a variety of new products, new partnerships and sponsorships, new channels of distribution and new international markets.”
“We expect to maintain our gross profit margins between 65% and 70%.”
“We officially filed our novel food application with the U.K.’s Food Standards Agency… A similar submission was simultaneously made to the European Food Safety Authority.”
“We added additional merchant processing relationships… we anticipate cost savings in the range of $125,000 to $175,000 per quarter.”
“In March 2021, 3.348 million earn-out shares were issued… remaining contingent liability shares were revalued… total non-cash contingent liability expense of $8.87 million for the quarter.”

The Q&A portion of the Q2 FY2021 call was not available in the accessible transcript; prepared remarks did, however, clarify: (a) PPP loan forgiveness application submitted (target 100% forgiveness), (b) merchant processing expansion and expected quarterly savings, (c) mechanics and revised schedule for earnout share issuance to reduce multi-quarter valuation overhang .

Wall Street consensus estimates (revenue/EPS) via S&P Global could not be retrieved due to data access limits, so we cannot assess beat/miss for the quarter. As a result, estimate comparisons are unavailable; management did not provide EPS guidance and only initiated net sales guidance for Q1 FY2022 .

Core trends are intact: high-60s gross margins and robust DTC engine with improving wholesale as retail reopens; Paw CBD continues to scale rapidly off a small base .
Non-GAAP operating loss trajectory is improving YoY on cost discipline; watch for sustained leverage as marketing normalizes and merchant fee savings flow through .
Headline GAAP net results are volatile due to non-cash contingent liability revaluations; the new quarterly earnout issuance schedule should reduce overhang effects over time .
Liquidity remains strong to fund growth (cash $23.7M, working capital $27.9M), supporting product launches, international expansion and brand activation .
Near-term catalysts: Q1 FY2022 net sales guidance ($15.5–$16.25M) implies a step-up vs recent run-rate; successful U.K./EU regulatory progress and new product introductions (gummies, drink mixes) could drive upside to wholesale and DTC .
Risk watchlist: continued cash use from operations, marketing efficiency, regulatory timing, and contingent liability valuation swings tied to share price .

Additional materials reviewed:

Q2 FY2021 8-K press release and 10-Q for detailed financials and non-GAAP reconciliations .
Prior quarters’ filings/transcripts for trend analysis (Q1 FY2021, Q4 FY2020) .

No other standalone press releases for Q2 FY2021 were found in the filing catalog for the covered date range.