Good afternoon, everyone, and thank you for joining us. Welcome to Leaf Brands first-quarter 2026 earnings call.

Joining me today are Micah Anderson, our Chief Executive Officer, and Kevin Wilson, our Chief Financial Officer. Please note that today's discussion will include forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from what we discuss today.

For a full discussion of these risks, please refer to our filings at SEDAR+ and at our website. Our financial results and press release for the quarter are available at leafbrands.com in the Investor Relations section.

On today's call, Micah will begin with key operational highlights and what drove the strong performance this quarter. Kevin will then walk through the financial results in more detail, and after that, Micah will return to discuss the exciting opportunities ahead.

With that, I'll turn the call over to Micah.

Thanks, Jesse, and good afternoon, everyone. For transparency, just want to call it out, Kevin and I are both recovering from being sick, we both sound under the weather.

It's not that we're not excited, we are, but I just want to call it out. I'm going to do this one a little different today.

I'm going to give you guys the headlines on the quarter, and then I want to spend the bulk of my time talking about where this company is going. The recent rescheduling announcement is the biggest thing that's happened in this industry in 50 years, and I'd like to cover a few ways it may impact Leaf.

Kevin will do a deeper dive on the numbers from the quarter, and then I'll share a few thoughts on how the recent announcement could affect our business. As a quick recap of who we are and what we do, at our core, Leaf is a vertical extraction company.

We operate extraction facilities in both California and New York, where we produce concentrates for many of the largest companies in the industry. Concentrates as a category makes up over 50% of the addressable market in the US, and this number is climbing.

In California, we operate one of the largest cultivation sites in the state, where we grow input material for extraction at a fraction of the cost from what we can purchase it for on the open market. In 2025, we consumed over 200 acres worth of input material and grew 65 acres of our own 180-acre permit.

Q1 2026 was the best quarter in Leaf's history. Gross profit more than doubled year over year.

Gross margins went from 22% to 49%. Adjusted EBITDA was over $2 million.

Plus, this is the third consecutive quarter of positive operating cash flow. The ranch is delivering exactly what we said it would, and the model is working.

We closed the first $4.5 million of our Mindset Capital financing during the quarter and expect to close the second tranche on May 8th, just later this week. This new capital will allow us to complete the build-out of our Santa Barbara farm, complete improvements to our extraction facility, and invest into our team by bringing on a few key new hires to help us scale over the coming years.

We added Jamie Mendola to our board, and after the quarter, we announced the acquisition of Himalaya, which I will come back to. After receiving the first tranche of capital, we immediately went to work on the farm.

We've already been awarded 14 new DCC licenses, in addition to what we had last year, and are completing planting them as we speak. We will harvest these acres in June and replant them in July for two main harvests in 2026.

Construction is underway with fencing and the irrigation for the rest of the 180-acre local permit, and we intend to add more acres in the coming months to be able to increase canopy size by the summer. As I've stated before, 180 acres is a starting point.

We're already exploring ways to expand upon this number to ensure Leaf is able to truly seize the opportunity I believe is coming. Leaf is building one of the largest medical-grade, pesticide-free supply chains in a state that has international recognition for cannabis and agriculture.

This fits perfectly into the more medical direction it seems the industry is headed and provides optionality for us in the coming years once fully built and at the scale I want Leaf to achieve in California. Our audience on these calls for the most part is investors, people trying to figure out which horse to bet on.

If I'm in your shoes, I want to bet on a company that has the ability to scale on the face of what looks like is now coming, can win in the high-quality, low-cost-to-produce category, and most importantly, in my opinion, has the battle-scarred team that can execute and is driven to win. Leaf has all of these.

With that said, I'm going to pass it over to Kevin to run through the numbers from the quarter, and then I'll jump back in afterwards to go over a couple of things I'm excited about and cover where I believe we are headed.

Thanks, Micah, and good afternoon, everyone. Apologies again for sounding terrible today.

I really am excited for this quarter, despite not sounding like it. Building on the success of the latter half of 2025, Q1 was the quarter where the strategic transition that we've been executing on for the better part of two years started to show up in the financials in a real way.

Net revenue for Q1 was $9.4 million, essentially flat against the $9.4 million we delivered in Q1 of 2025. On the surface, that looks like a quarter where nothing moved on the top line.

However, underneath that flat headline, our three core extraction lines, which are the manufacturing platform that we've built our wholesale concentrate strategy around, grew unit volumes by approximately 60% year over year, with revenue from those lines up roughly 15%. The gap between the unit growth and the dollar growth reflects the pricing environment in the California wholesale market, which remains compressed and to which we've spoken about before.

To put a finer point on the variance, our largest production line is our ethanol extraction line, and it makes up approximately 48% of revenue in the quarter, and average selling price on that line was down approximately 32% year over year. The units we're moving through that line are working harder for every dollar of revenue.

That makes the gross margin expansion all the more meaningful, because we delivered it through the headwind, not around it. Flat at the top is masking real growth in the core and intentional discipline in the rest of the portfolio.

Gross profits are where the quarter really differentiates itself. Gross profit was $4.6 million, up from $2.1 million in Q1 last year.

Gross margin came in at 49%, compared to 22% in Q1 of 2025, a 27 percentage point expansion in a single year. This is a direct reflection of the impact our internal cultivation at Salisbury Canyon Ranch has had.

Building on the momentum in Q4 of 2025, this quarter was almost fully fueled by internal biomass production on the main ethanol line. A year ago, we were buying that same input from third parties at market prices.

Today, we're growing it ourselves on land we control. That shift, more than anything else we've done, is what's driving the cost of sales improvements and the margin expansion.

What I'd emphasize is that we delivered this margin expansion against the backdrop of continued price compression in the California wholesale market. This isn't margin coming from a favorable pricing environment; it's margin from a structural change in our cost basis.

What's exciting about this is the opportunities that are arising from rescheduling, and what that could mean from a sales price perspective as things unfold here shortly. Operating income for Q1 was $1.3 million, compared to an operating loss of $1.9 million in Q1 of 2025, a $3.2 million favorable swing.

Adjusted EBITDA was $2.4 million, compared to a negative $730,000 in Q1 2025, a $3.1 million favorable swing. That's now multiple consecutive quarters of positive adjusted EBITDA, and it reflects the operating model we've been building towards.

The GAAP net loss for the quarter was $426,000, compared to net income of $266,000 in Q1 of 2025. I want to be clear about what's driving that change, because that optic is misleading.

The swing is entirely attributable to a non-cash $3.9 million unfavorable change in the fair value of derivative liabilities related to warrants and certain convertible instruments. That number moves with our share price and Black-Scholes inputs and has nothing to do with the operating performance of the business.

Strip it out, and the operating trajectory that I just walked you through is what's actually happening. We ended the quarter with $5.8 million in cash, compared to $2.2 million at the end of 2025.

We finished Q1 with a working capital surplus of $5.9 million, compared to a working capital deficit at year-end. The principal driver of that improvement was the $4.5 million equity raise we completed in March, but it's also worth noting that we generated $395,000 of cash from operations during the quarter, a $2.2 million favorable swing from Q1 last year, and the third straight quarter of positive operating cash flow.

We achieved this despite heavily investing in this year's cultivation in the first quarter, which includes almost $1.2 million in licensing and other seasonal start-up costs. We've also continued to clean up the capital structure.

The convertible debentures that sat on the balance sheet at the start of last year were fully resolved in '25, and the net debt is materially lower than it was a year ago. Looking forward, there's a few things to flag for the rest of 2026.

On SCR, what we delivered in Q1 was built on a biomass-led product mix from the prior cultivation cycle. We have the option this year to lean into higher-margin fresh frozen production, and we expect that mix optionality to be a contributor as this year develops.

The point I want to leave you with is that the 49% gross margin we just delivered was achieved with the lowest-margin version of our cultivation output, there's room to build on that. As you're aware, we closed on our acquisition of Himalaya Vape on April 27th, it isn't in the Q1 numbers we're discussing today.

Integration work is now underway, and we expect to begin to see the impact through the P&L, specifically the margin impact, in Q3 as we bring production together, and to see it more fully in Q4 as we start to realize the impact of SCR on the brand's products. One thing I do want to flag: Q2 margins will compress.

We're between harvests right now and processing third-party biomass until our own crop comes in this summer. This is seasonal, and it's temporary, and it's the last time we expect it to happen as we continue to scale the ranch.

Our first 2026 harvest hits in June, and meaningful volumes will be running through the extraction facility in early Q3. To summarize, in Q1, our three core extraction lines grew unit volumes by 60% and revenue by 15%.

Gross margins nearly doubled to 49% as SCR became the primary biomass source. Adjusted EBITDA was $2.4 million, and we had positive operating income and positive operating cash flow.

With that, I'll hand it back to Micah for closing remarks before we open it up for questions.

Thanks, Kevin. Yes.

All right. Let me tell you guys what I've been spending my personal time thinking about.

Having three good quarters in a row is great, but that's not actually what I'm most excited about. Starting with the rescheduling announcement: this is a big deal for the industry and for Leaf.

This is the most significant federal policy change for our industry since 1970. A quick history lesson for you guys: the Controlled Substances Act, enacted in 1970, created the federal drug scheduling system, Schedule I through V.

Nixon signed it. Cannabis was placed as a Schedule I alongside drugs like heroin, meaning the federal government classified it as having no accepted medical use and high potential for abuse.

That single classification made cannabis federally illegal, triggered 280E taxation, and made commercial interstate commerce impossible. Every problem the cannabis industry has dealt with for 55 years traces back to that one decision.

With the news on rescheduling, this just went away for medical license holders, and we expect it to soon be going away for adult-use license holders. What does this mean for Leaf?

Leaf currently holds both medical and adult-use licenses in California and adult-use licenses in New York. There's interesting language in the recent order that states that if companies hold a medical license, there's a pathway to allow for interstate and international export.

We are actively exploring all options regarding this opportunity. To help us navigate the legal process and setting up our DEA licenses for both domestic and international export, we have engaged Shane Pennington, who has been the tip of the spear in fighting on behalf of the industry to force the DEA to allow for these licenses.

Most of the licenses we have in California have the medical designation, and we have started the process of adding the designation to the licenses that don't. We have already submitted for a DEA license, we are fully prepared in the event export is able to take place in the near future.

Leaf is now profitable selling our products in a market where the average price per gram is significantly cheaper than every other market in the world. We have done this prior to seeing the full impact of a fully scaled 180-acre cultivation permit, and when we are still burdened with 280E taxes.

What happens when Leaf turns top MSOs into clients and is able to sell into high-value markets? Leaf is now producing pounds for under $10, and this number will decline over time.

Will the large MSOs be able to survive without working with a company like Leaf? I believe that California is going to become very relevant again to a lot of the larger companies that have exited and avoided California.

Or what happens when we are able to start exporting into the international markets? What does this do to our home state of California if a significant amount of the supply chain is now able to exit the state in search of higher margins?

If this happens, I believe California will have an increase in pricing across the board, and companies who are not positioned for this will be in a tough spot. Does this unlock M&A opportunities for us?

Will this unlock less expensive capital in the near future, provide ways for us to further improve our balance sheet? Will we be able to ship directly to our own New York business?

Will we be able to ship Himalaya CPG products directly into global markets? These are all questions going through our minds, and we are actively working on answering them.

Up until very recently, these have all been what-if questions, or imagine-when statements, made throughout the industry, which finally seem to be becoming a reality. The thesis we have spent a decade preparing for remains the same, but suddenly, it's happening more quickly.

To be clear, the recent news does not allow for us to do this today, and there are still a lot of unknowns. I do believe that this is where we are headed, and we are going to do everything that we can to make sure that we're positioned when it does.

Himalaya: this is also why the Himalaya acquisition matters. Himalaya is a premium vape brand with real customer loyalty in California.

It gives us something we've never had before, which is a branded product platform with a built-in sales and distribution system. This provides a ton of optionality for us in the future.

We now own a brand that we can put our own clean concentrates into and sell at retail margins. When interstate opens up, we're not just shipping bulk concentrates to another state; we're shipping branded finished product.

That's a fundamentally different margin profile and a fundamentally different company. Himalaya has a great, battle-tested team who have done an excellent job navigating a very tough landscape.

We're very happy to welcome them to our team and excited about how we can help them build their brand over the coming years. In closing, four years ago, we looked at our business and saw the truth.

We had built one of the largest extraction companies in California, but we didn't have the supply chain to sustain it. We were buying biomass on the open market, competing with everyone else, and that's not a business that you can defend.

We knew we had to fix it, or we wouldn't survive. We went out and bought a ranch in the middle of nowhere at a time when everyone in the industry told us we were crazy for doing cultivation in California.

It worked. You can see it in the numbers: record gross profit, margins that doubled year over year, three straight quarters of positive operating cash flow.

It's not just a story; it's math. Here's what makes this moment different: Leaf is now profitable and growing in what is arguably the worst cannabis market in the world from a pricing perspective.

Think about that for a second. We figured out how to win in California at these prices.

The question becomes, what does Leaf look like when this all changes? What happens when interstate commerce opens up, and Leaf can produce superior products at a fraction of the cost of operators in other states?

What types of companies are going to be interested in what we've built? For the first time in the history of this industry, the federal government is moving in a direction that makes what we built more valuable, not less.

Pathways to global export are becoming a reality. We're sitting on 180 acres of pesticide-free cultivation with the lowest cost of production, fully built extraction infrastructure, and now a branded product platform to sell it through.

For years, this company had to be reactive, thinking day-to-day, surviving quarter-to-quarter. Finally, we have the resources, the team, and the runway to go back to thinking in decades the way that we did when we first started Leaf.

If you believe in what we're building, please take a position and stay with us for the long term. I do truly believe that the best is ahead of us.

With that, I'm going to turn it back over to Jesse, and we'll open up the lines for questions.

Thanks, Micah. Operator, please open the line for questions.

Sorry, I was just coughing a minute there. Micah, I think I heard in your opening remarks that the funding is potentially closing as of May 8th.

Is that so, the total balance, or are you guys even contemplating oversubscription?

Let's see here. First off, Morgan, good to hear your voice.

Thanks for showing up. Am I legally allowed to answer that question?

Yes,

the first part here is, yes, it is closing on the 8th. It is looking very strong.

I don't know what I'm supposed to say there, to be honest with you, Morgan, from a legal perspective. Our goal is to be oversubscribed, I'll say that.

That's definitely the goal, and it is definitely closing on the 8th.

Morgan, we took in the $4.5 million last month and we're just getting the final subscriptions in for this round, and we should have news out in the next day or two on that, but yeah, thankfully, the demand has been strong.

As a question about the oversubscribing interest, have you noticed any increase in investor interest with all the news that's been going on?

Yeah. Short answer is yeah, we have more interest, for sure.

We're definitely getting phone calls that we weren't receiving for the last three years. Conversations that we had had with people over the years that were really waiting on some sort of rescheduling announcement to actually happen.

We've circled back with a lot of those groups, had a lot of people reach back out to us wanting to get an update of where we're going. I won't say that it's just been crazy to where everyone's just begging to invest in the cannabis side of thing, for Leaf or even for other companies as well, but it does seem like the sentiment and the mood has definitely changed in that positive direction.

Morgan, it's Jesse. My observation on the IR side is that it takes a process of telling people what you're going to do operationally like we did with the farm, delivering on those results, that we executed the first phase of the build-out, did 65 acres last year, and people saw the results.

They see the transformation that's happening in the numbers, not just because of the farm, but the farm being a major contributor, along with other factors with our extractions lines, the team we have, and some favorable trends in the industry. I think, Morgan, it takes executing operationally and then showing people those results.

Now we're in our third consecutive quarter of posting really strong results, pushing 50% margins in a really tough market in California. I think from my IR lens, we're getting to the point now where we have a compelling story, and it's now being verified by the third consecutive quarter of really strong results.

I think that's marginally increasing interest. As you're well aware, there's been a lot of head fakes in the cannabis industry, and so people have been burnt, and so I think people are less reactive to reform news.

We think this news is super exciting, not just on Schedule III, but especially on the export opportunities for a business like Leaf. I think that that's added to some additional interest.

Then I'd say the last part is, as you also know very well, Morgan, it takes fantastic partners to succeed in this industry, and we've been really fortunate to work with Aaron and the team at Mindset Capital, and he has a fantastic network that's obviously been very helpful to us as well.

Said.

Hey, guys. Jesse, you're going to make me blush.

You give me compliments like that. I wanted to congratulate you.

I read in the press release that there was price compression. I had no idea that you put up this quarter with 32% price compression.

You can hear me okay? [Somebody burped out his?]

microphone this morning. I can hear you, Aaron.

Oh,

okay, great. So 32% price compression with this quarter.

Congratulations to you and the whole team. Just kind of shows the proof of how important Salisbury Canyon Ranch is.

I kind of wanted to address my questions just to the timeline to get all 180 acres. Can you walk me through kind of quarter by quarter?

I think I understand that third quarter, you're going to turn on some amount, then you're going to try to turn on all of the fourth—you're going to finish the farm in the fourth quarter. When do you expect the full power of the 180 acres to be producing?

Aaron, you broke up pretty bad on my end. Was that—I'm assuming that question's directed at me, right?

Yes.

No problem. To answer your question just in one sentence, it would be spring of 2027 is when the full power of the farm will be activated.

Like I said in the earnings call, we've already got 14 additional acres added. Those are already planted.

We'll be harvesting those at the tail end of June going into July, replanting those immediately, and then harvesting them again in October into November. We're in the back part of the ranch right now, which is where we're calling it Phase 2, which is where the rest of the 180-acre permit is.

In Santa Barbara County, the way it works is you have to build out the entire thing, the fencing, the cameras, the irrigation, to get sign-off from the building department. That's all happening as we speak.

We will be built and signed off by the summertime. That's the goal, at least.

What we're pushing towards is to have 84 of the licenses activated this year. That's an additional—let me do my math here real quick—roughly an additional 15 acres that will get activated this year in 2026 in the fall.

We'll get one harvest out of those acres. Then the following year, we will then plant the entire thing in the spring.

The entire permit will be planted, and we'll do two harvests next year, just like we did this year: so plant in the early spring, harvest throughout the summer, replant, and then harvest again in the fall.

You made comments in your prepared remarks that you're looking to expand beyond the 180 acres, because Salisbury Canyon Ranch is 1,900 acres, but 180 are permitted. Can you give some comments

of

even growing the 180 acres?

Sure. What we have right now, it's called a land use permit, an LUP.

That land use permit basically gives us the ability to plant up to 180 acres on the farm. It's a 1,900-acre ranch, and there's easily over 100 acres of additional prime ag land that can be planted.

We're already working with the county right now to go through the conditional use permit process to add to the existing LUP. Now, that doesn't guarantee anything.

It does need to go in front of the board. The board has to vote on it and say, "Yes, you can do this," or "No, you can't."

We feel confident that we'll be able to work with the board and get them to approve it. We'll go through the CUP process at some point, the latter part of this year going into next year, and add as many acres as we can.

I don't know how many that will be. We've got surveying going on, and we have to do calculations on water and all the rest, so.

That's the goal. If we can add another 100 acres, the area that we had designated to the hemp permit, in light of what's going on right now with these announcements and the way it looks as if the industry is now headed, I think it's going to be a lot more economical or beneficial to the business to not plant hemp, forget the hemp license, let's turn that into a cannabis field instead.

That's 100 acres right there. My goal is to get an extra 100.

If we can get more than 100, that'd be great. That's on our farm.

That's the plan on our farm. There's a process there; we're working on that process.

Then I'm also having other conversations with a couple other groups that have local permits in the state to expand off of our farm as well. That way, we've got a couple shots on goal to make it happen.

Kind of last question, just a simple kind of rule to use, is annually, per acre, how much cannabis biomass can 1 acre produce? When I think about either 180 acres or an additional 100 acres, what does that translate to in terms of cannabis biomass?

I'm going to keep it very simple, and I'm going to speak in dry terms here, just for the listeners. The numbers are drastically different if we freeze everything.

The weight is obviously—it's got all the water in it, it's a much larger number. If you dry everything, it's obviously a smaller number.

In dry terms, I can say that what we did last year was over 7,000 pounds an acre per run. If you have two harvests, you're going to times that by two.

In our modeling, our assumptions is we assume that we'll do 5,000 pounds per acre per run, so that's 10,000 pounds of dry material per acre if you're running it twice.

If you were to get another 100 acres, in your rough math, it could mean an additional million pounds of biomass. Am I doing that math correct?

Yep. You're following.

Okay. Hey, great job, guys.

Keep up the great work. Turn on that farm.

All right. Thank you, Aaron, appreciate it.

Micah, you used the term, or maybe it was Aaron, full power of the farm. Let's say we have full power 1, which is the 180, full power 2 with the additional 100 acres.

What does the business look like at steady state in terms of revenue and cash flow?

You're asking if both of those things were to happen, what would it look like?

Like these two scenarios.

I'll be honest with you, Mariusz, I don't have that number on the top of my head, but I can tell you that it's dramatically more impressive than what we're currently doing now. I think at that point, you're seeing significant top-line growth and not just Q1 was great for us.

From a unit economics standpoint, we sold 60% more units than we did the year prior, which is great. From a top-line standpoint, it was relatively flat.

More importantly, the bottom-line impact to what we're doing continues to get better and better. I think that continues to just improve.

Not breaking vacuum when it comes to sales momentum is super, super important. The more material that we have in our coffers in large blocks of the same material, the easier that it is for the sales team to build momentum.

I think that there's a pathway forward to definitely doubling the size of our business in California once we've accomplished these two things. That's me talking about selling concentrates in California at today's pricing, not taking into account what I do think is going to come sometime in the near future.

In the next year or two, we're talking about shipping into markets where even if we can double the value of what we're currently selling, obviously it makes the P&L look drastically different and to the positive.

This is Jesse, Mariusz. Just to add a bit of color there.

In California, for even numbers, distillate is around $1 a gram. It'll fluctuate 20% either way, but call it for easy numbers, $1 a gram.

That same gram of oil in most markets in the US is anywhere from $2 to $10 a gram, and similar in international markets. What we're doing today pushing 50% gross margins is in the lowest-price concentrate market in the world.

You talk about the scale and what happens if we increase the acreage, that would be a big driver. In addition, there's a lot of assumptions about at what prices those products are sold.

We think there's an avenue for higher prices through this DEA export program, potentially, through interstate commerce, selling to other markets, other operators in those markets, through global export to places like Germany, Australia, across the EU, the UK. Then there's also the other piece where Micah talked about Himalaya and adding that brand to our portfolio, where now we can capture higher margins on those pieces of businesses as well.

Personally, I'm excited about the expansion opportunity and more acreage, but I'm also excited about the optionality potentially in what to do with the output from that field and sell it at much higher prices than we have currently today in California.

How does all of this now impact your national expansion plans? Because I know you wanted to go into different states, but now are you just going to sit in California and wait for you to be able to ship into other states or other countries?

That's a very good question. It's one of the questions that I didn't necessarily rattle off in what we just went over, but it's one of the things that's definitely in our mind and we're weighing out the options.

I think that there's enough of an opportunity for us to win and grow our business right here in California. Again, Mindset and the other groups that came in to help lead this round, can't thank you guys enough because you guys saw what we saw and bought into the vision.

If we can double the size of the business and win in our own backyard, that's a lot of an easier lift than it is to move into a new market, get new licenses, basically ground up, restart of a company. I do think that we can be successful in the event that we do go that direction.

New York is a great use case, and we can point to it and say, "Look, we've done it once. We know it can work."

The question does become what happens if, by the end of the year if they're like, "Yes, you guys can now start shipping into other markets," then, of course, I think we would plant flags in other states or other markets in a different way than what we were originally thinking. It's a good pivot to be looking at, but it is a pivot.

It wouldn't make sense for us to go build out tons of cultivation and extraction overhead in one of these markets if you're able to do that in California. One thing I'll add, this is just something that we have real-world experience in this now, is that we can see that 1 acre in New York and 1 acre in California coming out of the field, they do not perform the same.

There's a reason why all the food is grown in California and why it's not grown in New York. It's the environment that's here lends towards high yields, high quality, high-potent product, and companies aren't going to be able to ignore that in the future when they're trying to compete.

If you're doubling your output just coming out of cultivation as opposed to doing it in one of these other states, you're at a 50% disadvantage than the people that are in California. That's a big number to overcome.

Then you take that same material and you move it into extraction, and the material performs worse because the input material is a lesser quality than what you have coming out of California. Again, you're having another headwind, and I think all of that stuff is going to matter at some point in time here in the near future.

When it happens, I don't know, but yeah, long-winded way of answering your question, I think that it definitely has given us a pause on the sense of maybe we want to wait a year, 18 months, before we start making any serious decisions of new licenses, new extraction facilities in another markets. Let's just see what happens.

Okay. If the focus is for now, more California, I think many investors have a hard time because there's a certain capacity that you have on your extraction lines.

How much capacity do you have, how much revenue can you generate from that current extraction infrastructure before you need to increase CapEx?

I think, round math, roughly, we're running at about 50% capacity today. For us to—

5-0?

5-0. Yeah.

To be clear, we ran 230 acres roughly in 2025 through that facility. We grew 65 acres, we put a dent in what we went through, but the facility is running at about 50% capacity, and we already ran over a couple hundred acres worth of product through that facility.

Round math, 400 acres could go through that facility at 100%.

Now,

I do think that somewhere between a half a million dollars and a million dollars buys us a significant increase in capacity from where we're at today. I don't think that running at 100% is smart.

There's just too many things that break over time and what's not, and it's hard on the team. We would tailor the facility for not a lot of money for what you're going to get out of it, and just kind of try and keep the facility as we continue to add acres, if we go from 180 to 280 to 380 to 500, this is the trajectory of where I believe that we're headed.

We're going to keep improving in bite-size chunks the facility along the way so that we're always in this 50, 60% capacity range, and just it just works good for the extraction facility, if that makes sense.

Okay. My final question is about your acquisition, Himalaya acquisition.

Before you acquired them, were you the supplier of the ingredients to them?

We were one of the suppliers. Himalaya has been a client of ours for close to 6 years now.

About 50% of their products were purchased from us, and then they were buying other products from other extraction companies. Now, obviously, it's 100%.

Great team. We're already having conversations around what can we do to get you guys into even more stores.

They're really strong in Northern California, not so strong by way of retail sales in Southern California, and fortunately, we have a lot of these relationships down in Southern California, we're already talking to up to 50 doors that we think that we can get them into relatively quickly.

If you grow a pound for, let's say, $10, and you resell it through Himalaya, how much are you reselling that $10 worth of pound?

That's a good question. I'm going to do the math a little differently than the way you did it just because it's the way my brain works.

Let's just say that we're selling a gram of oil for a dollar. When you're selling that same gram through a CPG product, and man, I should know this off the top of my head, I don't, I want to say it's $2.50 to $3.50, $2.50 to $3.50 versus $1.

There's a dramatic increase in how much more value you're getting out of that gram of oil.

Okay. All right.

Thank you. I don't have any more questions.

No problem. Thanks.

Thanks, Operator, and thank you to everyone for joining us today. We look forward to updating you again when we report our second-quarter results.

Have a great evening.