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Release – Xcel Brands, Inc. Announces Second Quarter 2024 Results

Posted on by dburczyk@noblecapitalmarkets.com

Research News and Market Data on XELB

  • Net income of $0.2 million for the quarter compared with a net loss of $3.5 million for the prior year quarter, which included a $3.8 million gain on the divestiture of the Lori Goldstein brand.
  • Net licensing revenues grew 16% from the second quarter of 2023, driven by new licenses and new brand launches.
  • Direct Operating Costs and Expenses of $3.1 million for the quarter, a reduction of $2.1 million or 40% from the prior year’s quarter.
  • Adjusted EBITDA for the quarter approaches break-even for the quarter, compared with Adjusted EBITDA of negative $1.3 million for the prior year quarter.

NEW YORK, Aug. 14, 2024 (GLOBE NEWSWIRE) — Xcel Brands, Inc. (NASDAQ: XELB) (“Xcel” or the “Company”), a media and consumer products company with significant expertise in livestream shopping and social commerce, today announced its financial results for the quarter ended June 30, 2024.

Robert W. D’Loren, Chairman and Chief Executive Officer of Xcel commented, “I am very pleased by our results for the quarter. We have emerged from the discontinuance of certain businesses under our Project Fundamentals plan and anticipate that we will grow strongly heading into 2025.”

Second Quarter 2024 Financial Results

Total revenue for the second quarter of 2024 was $3.0 million, representing a decrease of approximately $3.8 million (-56%) from the second quarter of 2023. This decline was almost entirely driven by the decrease in net product sales due to the Company’s discontinuance of all of its wholesale businesses as part of its Project Fundamentals plan in 2023. Partially offsetting the decrease in net product sales was an increase of approximately $0.4 million (+16%) in net licensing revenue, driven by new licensing agreements entered into in 2023 and new brand launches.

Net income attributable to Xcel Brands for the quarter was approximately $0.2 million, or $0.01 per share, compared with a net loss of $3.5 million, or ($0.18) per share, for the prior year quarter. The current quarter includes a $3.8 million gain on the divestiture of the Lori Goldstein brand as well as non-cash charges of $1.2 million related to the exit and sublease of our prior office space which was completed in the first quarter of 2024.

After adjusting for certain cash and non-cash items, results on a non-GAAP basis were a net loss of approximately $0.3 million, or ($0.01) per share for the current quarter and a net loss of approximately $2.1 million, or ($0.10) per share, for the prior year quarter.

Adjusted EBITDA improved significantly on a year-over-year basis to nearly break-even for the current quarter as compared with negative $1.3 million for the prior year quarter, primarily as a result of the restructuring of our business and entry into the new long-term license agreements in 2023 for our Halston, Judith Ripka, C Wonder, and Longaberger brands.

Six Month 2024 Financial Results

Total revenue for the current six-month period was $5.1 million, representing a decrease of approximately $7.7 million (-60%) from the prior year’s six-month period. This decline was almost entirely driven by the decrease in net product sales due to the Company’s discontinuance of all of its wholesale businesses as part of its Project Fundamentals plan in 2023. Partially offsetting the decrease in net product sales was an increase of approximately $0.4 million (+8%) in net licensing revenue, driven by new licensing agreements entered into in 2023 and new brand launches.

Net loss attributable to Xcel Brands for the six months ended June 30, 2024, was approximately $6.1 million, or $(0.28) per share, compared with a net loss of $9.1 million, or ($0.46) per diluted share, for the prior year comparable period. The current six-month period includes a $3.8 million gain on the divestiture of the Lori Goldstein brand as well as non-cash charges of $3.5 million related to the exit and subleasing of our prior office space which was completed in the first quarter of 2024.

After adjusting for certain cash and non-cash items, results on a non-GAAP basis were a net loss of approximately $2.1 million, or ($0.10) per share for the current six-month period and a net loss of approximately $5.6 million, or ($0.28) per share, for the prior year six-month period.

Adjusted EBITDA improved significantly on a year-over-year basis to negative $1.6 million for the current year period as compared with negative $3.3 million for the six months ended June 30, 2023, primarily as a result of the restructuring of our business in prior year and entry into the new long-term license agreements for our Halston, Judith Ripka, C Wonder, and Longaberger brands.

Balance Sheet

The Company’s balance sheet at June 30, 2024, reflected stockholders’ equity of approximately $44 million, cash and cash equivalents of approximately $0.9 million, and working capital, exclusive of the current portion of lease obligations and deferred revenue, of approximately $1.1 million.

As of June 30, 2024, the Company had $4.5 million of term loan debt outstanding, net of deferred finance costs of $0.2 million, of which $1.0 million is recorded as short-term debt.

Conference Call and Webcast

The Company will host a conference call with members of the executive management team to discuss these results with additional comments and details at 5:00 p.m. Eastern Time on August 13, 2024. A webcast of the conference call will be available live on the Investor Relations section of Xcel’s website at www.xcelbrands.com. Interested parties unable to access the conference call via the webcast may dial 800-715-9871 or 646-307-1963 and use the conference ID 7639516. A replay of the webcast will be available on Xcel’s website.

About Xcel Brands

Xcel Brands, Inc. (NASDAQ: XELB) is a media and consumer products company engaged in the design, licensing, marketing, live streaming, and social commerce sales of branded apparel, footwear, accessories, fine jewelry, home goods and other consumer products, and the acquisition of dynamic consumer lifestyle brands. Xcel was founded in 2011 with a vision to reimagine shopping, entertainment, and social media as social commerce. Xcel owns the Halston, Judith Ripka, and C. Wonder brands, as well as the Tower Hill by Christie Brinkley co-branded collaboration, and holds noncontrolling interests in the Isaac Mizrahi brand and Orme Live. Xcel also owns and manages the Longaberger brand through its controlling interest in Longaberger Licensing LLC. Xcel is pioneering a true modern consumer products sales strategy which includes the promotion and sale of products under its brands through interactive television, digital live-stream shopping, social commerce, brick-and-mortar retail, and e-commerce channels to be everywhere its customers shop. The company’s brands have generated in excess of $5 billion in retail sales via livestreaming in interactive television and digital channels alone, and over 20,000 hours of live-stream and social commerce. Headquartered in New York City, Xcel Brands is led by an executive team with significant live streaming, production, merchandising, design, marketing, retailing, and licensing experience, and a proven track record of success in elevating branded consumer products companies. www.xcelbrands.com

Forward Looking Statements

This press release contains forward-looking statements. All statements other than statements of historical fact contained in this press release, including statements regarding future events, our future financial performance, business strategy and plans and objectives of management for future operations, are forward-looking statements. We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “ongoing,” “could,” “estimates,” “expects,” “intends,” “may,” “appears,” “suggests,” “future,” “likely,” “goal,” “plans,” “potential,” “projects,” “predicts,” “seeks,” “should,” “would,” “guidance,” “confident” or “will” or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements regarding our anticipated revenue, expenses, profitability, strategic plans and capital needs. These statements are based on information available to us on the date hereof and our current expectations, estimates and projections and are not guarantees of future performance. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors, including, without limitation, the risks discussed in the “Risk Factors” section and elsewhere in the Company’s Annual Report on form 10-K for the year ended December 31, 2023 and its other filings with the SEC, which may cause our or our industry’s actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time, and it is not possible for us to predict all risk factors, nor can we address the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained in any forward-looking statements. You should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

For further information please contact:
Seth Burroughs
Xcel Brands
sburroughs@xcelbrands.com

Non-GAAP net income and non-GAAP diluted EPS are non-GAAP unaudited terms. We define non-GAAP net income as net income (loss) attributable to Xcel Brands, Inc. stockholders, exclusive of amortization of trademarks, income (loss) from equity method investments, stock-based compensation and cost of licensee warrants, gains on sales of assets and investments, gain on lease termination, asset impairment charges, and income taxes. Non-GAAP net income and non-GAAP diluted EPS measures do not include the tax effect of the aforementioned adjusting items, due to the nature of these items and the Company’s tax strategy.

Adjusted EBITDA is a non-GAAP unaudited measure, which we define as net (loss) income attributable to Xcel Brands, Inc. stockholders before depreciation and amortization, income (loss) from equity method investments, interest and finance expenses (including loss on extinguishment of debt, if any), accretion of lease liability for exited lease, income taxes, other state and local franchise taxes, stock-based compensation and cost of licensee warrants, gains on sales of assets and investments, gain on lease termination, asset impairment charges, and losses from discontinued businesses.

Management uses non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA as measures of operating performance to assist in comparing performance from period to period on a consistent basis and to identify business trends relating to our results of operations. Management believes non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA are also useful because these measures adjust for certain costs and other events that management believes are not representative of our core business operating results, and thus these non-GAAP measures provide supplemental information to assist investors in evaluating our financial results. Adjusted EBITDA is the measure used to calculate compliance with the EBITDA covenant under our term loan agreement.

Non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA should not be considered in isolation or as alternatives to net income, earnings per share, or any other measure of financial performance calculated and presented in accordance with GAAP. Given that non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA are financial measures not deemed to be in accordance with GAAP and are susceptible to varying calculations, our non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA may not be comparable to similarly titled measures of other companies, including companies in our industry, because other companies may calculate these measures in a different manner than we do. In evaluating non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA, you should be aware that in the future we may or may not incur expenses similar to some of the adjustments in this document. Our presentation of non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA does not imply that our future results will be unaffected by these expenses or any unusual or non-recurring items. When evaluating our performance, you should consider non-GAAP net income, non-GAAP diluted EPS, and Adjusted EBITDA alongside other financial performance measures, including our net income and other GAAP results, and not rely on any single financial measure.

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Release – Unicycive Announces Second Quarter 2024 Financial Results and Provides Business Update

Posted on by dburczyk@noblecapitalmarkets.com

Research News and Market Data on UNCY

– On Track to Submit OLC New Drug Application (NDA) by End of August 2024 –

LOS ALTOS, Calif., Aug. 14, 2024 (GLOBE NEWSWIRE) — Unicycive Therapeutics, Inc. (Nasdaq: UNCY) (the “Company” or “Unicycive”), a clinical-stage biotechnology company developing therapies for patients with kidney disease, today announced its financial results for the three months ended June 30, 2024, and provided a business update.

“Achieving successful results from our oxylanthanum carbonate (OLC) pivotal trial was a significant milestone for the company and brings us one step closer to becoming a commercial organization,” said Shalabh Gupta, M.D., Chief Executive Officer of Unicycive. “Importantly, the trial confirmed tolerability of OLC in patients with hyperphosphatemia on dialysis which is the final data component needed to support submission of a New Drug Application (NDA) to the FDA utilizing the 505(b)(2) regulatory pathway. In addition, we were able to achieve phosphate control in 90% of patients at the end of their titration. Our recent pharmacokinetic analysis of samples from the pivotal study revealed that the systemic exposure of our drug is minimal and, as expected, the serum lanthanum levels are similar to that seen with Fosrenol®. With this data, we believe that we have completed all the necessary requirements from this pivotal clinical trial to fulfill the FDA’s requests. We remain on track to submit our NDA by the end of this month, and we maintain a high degree of confidence in the potential for OLC to be a best-in-class commercial product, if approved.”

“In July 2024 we were granted a new patent for UNI-494 by the USPTO which is an important component of our development strategy to target patients with acute kidney injury (AKI), a serious condition resulting from a sudden loss of kidney function. We have completed enrollment in the UNI-494 Phase 1 dose-ranging study and expect to report results in the third quarter of this year. With assets targeting both chronic and acute kidney conditions, we remain steadfastly focused on improving treatment options and overall quality of life for patients living with renal diseases,” concluded Dr. Gupta.

Key Highlights

  • Reported positive topline data from the pivotal clinical trial of OLC with regard to both safety and tolerability endpoints. The study established promising tolerability of OLC at clinically effective doses in chronic kidney disease (CKD) patients on hemodialysis. In terms of tolerability, OLC had a low rate of discontinuation due to adverse events (AEs) with only 5/86 patients (6%) discontinuing from the Study. The primary endpoint was defined as the rate of discontinuations due to treatment-related AEs leading to discontinuation in the maintenance period. In the UNI-OLC-201 trial, the discontinuation rate was 1.4%, as there was only 1 discontinuation due to a treatment-related AE in the Evaluable Population (n=71). In the full Safety Population (n=86), a total of 3 patients discontinued due to treatment-related AEs, a rate of 3.5%. There were no treatment-related serious adverse events (SAEs).
  • Announced initial results from the patient reported outcome survey conducted during the UNI-OLC-201 pivotal clinical trial. In the survey, OLC consistently outperformed the other phosphate binders in all categories: 79% of patients preferred OLC while 18% preferred their prior therapy, 98% of patients said that OLC was easy to take compared to 55% for their prior therapy, 89% of patients said they were satisfied with OLC while 49% were satisfied with their prior therapy.
  • Enrollment in the UNI-494 Phase 1 study is complete, and the Company expects to present the data in Q3 2024.
  • Granted a patent on UNI-494 to treat AKI by the United States Patent and Trademark Office (USPTO). The patent, valid until 2040, secures protection of a method of treating a disease or a condition selected from AKI or contrast induced nephropathy by administering the UNI-494 compound.
  • Included in the Russell Microcap® Index effective July 1, 2024. Membership in the Russell Microcap® Index, which remains in place for one year, means automatic inclusion in the appropriate growth and value style indexes.
  • Delivered multiple presentations on OLC and UNI-494 at the 61st European Renal Association (ERA) Congress including two oral presentations and trial-in-progress posters on OLC and UNI-494. An oral presentation demonstrated a significant reduction in urinary phosphate excretion for OLC compared to vehicle treated animals. A second oral presentation evaluated the in vivo efficacy of UNI-494 and showed that a single oral dose of UNI-494 significantly reduced important kidney functional markers.
  • Presented two posters related to OLC at the National Kidney Foundation (NKF) Spring Clinical Meeting. Importantly, it was demonstrated that OLC is bioequivalent to lanthanum carbonate from the Phase 1, single-center, randomized 1:1, open-label, controlled, 2-way crossover study. In addition, a poster presentation on the findings of a survey of 100 renal dieticians concluded that strategies that reduce pill burden and increase ease of use for patients are needed. This poster was among the top-rated submissions to the Meeting.

Financial Results for the Quarter Ended June 30, 2024

Research and Development (R&D) expenses were $4.9 million for the three months ended June 30, 2024, compared to $2.3 million for the three months ended June 30, 2023. The increase in research and development expenses was primarily due to increased drug development costs.

General and Administrative (G&A) expenses were $2.5 million for the three months ended June 30, 2024, compared to $2.1 million for the three months ended June 30, 2023. The increase was primarily due to increased non-cash stock compensation costs.

Other Income (Expense) was $17.3 million for the three months ended June 30, 2024 compared to $0.5 million in the three months ended June 30, 2023, due primarily to a decrease in the fair value of our warrant liability.

Net income attributable to common stockholders for the three months ended June 30, 2024 was $3.0 million, and basic earnings per share was $0.08. On a diluted basis, we reported a loss per share for the same period of $0.15. The net income for the three-month period ended June 30, 2024 was attributable to a decrease in the fair value of our warrant liability. For the three months ended June 30, 2023, we reported a net loss of $4.4 million, and basic loss per share of $0.29. On a diluted basis, we reported a loss per share for the same period of $0.29.

As of June 30, 2024, cash and cash equivalents totaled $41.8 million. The Company believes that it has sufficient resources to fund planned operations into 2026.

About Unicycive Therapeutics

Unicycive Therapeutics is a biotechnology company developing novel treatments for kidney diseases. Unicycive’s lead drug candidate, oxylanthanum carbonate (OLC), is a novel investigational phosphate binding agent being developed for the treatment of hyperphosphatemia in chronic kidney disease patients on dialysis. UNI-494 is a patent-protected new chemical entity in clinical development for the treatment of conditions related to acute kidney injury. For more information, please visit Unicycive.com and follow us on LinkedIn and YouTube.

Forward-looking statements

Certain statements in this press release are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified using words such as “anticipate,” “believe,” “forecast,” “estimated” and “intend” or other similar terms or expressions that concern Unicycive’s expectations, strategy, plans or intentions. These forward-looking statements are based on Unicycive’s current expectations and actual results could differ materially. There are several factors that could cause actual events to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, clinical trials involve a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results; our clinical trials may be suspended or discontinued due to unexpected side effects or other safety risks that could preclude approval of our product candidates; risks related to business interruptions which could seriously harm our financial condition and increase our costs and expenses; dependence on key personnel; substantial competition; uncertainties of patent protection and litigation; dependence upon third parties; and risks related to failure to obtain FDA clearances or approvals and noncompliance with FDA regulations. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: the uncertainties related to market conditions and other factors described more fully in the section entitled ‘Risk Factors’ in Unicycive’s Annual Report on Form 10-K for the year ended December 31, 2023, and other periodic reports filed with the Securities and Exchange Commission. Any forward-looking statements contained in this press release speak only as of the date hereof, and Unicycive specifically disclaims any obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

Fosrenol® is a registered trademark of Shire International Licensing BV.

Investor Contact:

ir@unicycive.com
(650) 900-5470

SOURCE: Unicycive Therapeutics, Inc.

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Release – The ODP Corporation Announces Departure of Chief Financial Officer

Posted on by dburczyk@noblecapitalmarkets.com

Research News and Market Data on ODP

D. Anthony Scaglione to pursue another career opportunity

BOCA RATON, Fla.–(BUSINESS WIRE)–Aug. 14, 2024– The ODP Corporation (“ODP,” or the “Company”) (NASDAQ:ODP), a leading provider of products, services, and technology solutions to businesses and consumers, today announced that D. Anthony Scaglione, executive vice president and chief financial officer, is stepping down from his role to pursue another career opportunity and that his last day will be September 13, 2024.

“On behalf of ODP, I want to thank Anthony for his significant contributions to ODP over the past four years,” said Gerry Smith, chief executive officer of the Company. “Under his financial leadership, ODP has made great strides in its transformation and has strengthened its foundation to be able to deliver profitable growth in the future. Anthony is supported by a talented finance team that will continue to serve the company and its shareholders. We thank Anthony for all his efforts and wish him well in his new role.”

Anthony Scaglione said, “It has been a privilege to work as part of the ODP team and I’m proud of the progress we have made toward achieving our strategic goals. ODP is well positioned with a strong balance sheet and dedicated team to continue driving forward its strategic transformation to create shareholder value.”

As the Company formulates its plans to fill the chief financial officer role and to ensure a smooth transition, Mr. Scaglione will continue to work closely with Mr. Smith until his departure date, supported by the Company’s experienced financial reporting and accounting team.

About The ODP Corporation

The ODP Corporation is a leading provider of products, services, and technology solutions through an integrated business-to-business (B2B) distribution platform and omni-channel presence, which includes supply chain and distribution operations, dedicated sales professionals, a B2B digital procurement solution, online presence, and a network of Office Depot and OfficeMax retail stores. Through its operating companies ODP Business Solutions, LLC; Office Depot, LLC; and Veyer, LLC, The ODP Corporation empowers every business, professional, and consumer to achieve more every day. For more information, visit theodpcorp.com.

ODP and ODP Business Solutions are trademarks of ODP Business Solutions, LLC. Office Depot is a trademark of The Office Club, LLC. OfficeMax is a trademark of OMX, Inc. Veyer is a trademark of Veyer, LLC. ©2023 Office Depot, LLC. All rights reserved. Any other product or company names mentioned herein are the trademarks of their respective owners.

FORWARD LOOKING STATEMENTS – THE ODP CORPORATION

This communication may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements or disclosures may discuss goals, intentions and expectations as to future trends, plans, events, results of operations, cash flow or financial condition, or state other information relating to, among other things, The ODP Corporation, based on current beliefs and assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “plan,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “expectations”, “outlook,” “intend,” “may,” “possible,” “potential,” “predict,” “project,” “propose” “aim” or other similar words, phrases or expressions, or other variations of such words. These forward-looking statements are subject to various risks and uncertainties, many of which are outside of the Company’s control. There can be no assurances that the Company will realize these expectations or that these beliefs will prove correct, and therefore investors and stakeholders should not place undue reliance on such statements.

Investors and shareholders should carefully consider the foregoing factors and the other risks and uncertainties described in the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the U.S. Securities and Exchange Commission. The Company does not assume any obligation to update or revise any forward-looking statements.

Tim Perrott
Investor Relations
561-438-4629
Tim.Perrott@theodpcorp.com

Source: The ODP Corporation

Release – Schwazze Announces Second Quarter 2024 Financial Results

Posted on by dburczyk@noblecapitalmarkets.com

Research News and Market Data on SHWZ

Growth and Restructuring Initiatives Lead to Quarter-over-Quarter Growth Across all Key Financial Metrics in Q2

Schwazze Management to Host Conference Call Today at 5:00 p.m. Eastern Time

DENVER, Aug. 13, 2024 (GLOBE NEWSWIRE) — Medicine Man Technologies, Inc., operating as Schwazze, (OTC: SHWZ) (Cboe CA: SHWZ) (“Schwazze” or the “Company”), today announced financial and operational results for the second quarter ended June 30, 2024.

“We made solid progress on our growth and optimization initiatives in Q2 and generated sequential quarterly growth across all key financial metrics while advancing our retail strategy,” said Forrest Hoffmaster, Interim CEO of Schwazze. “During the quarter, we continued to deepen our customer understanding, sharpen our pricing and promotional strategy, enhance the in-store experience, and improve our assortment and in-stock positions. These efforts drove increased store traffic and market share expansion in both Colorado and New Mexico. In our wholesale business, we generated our second consecutive period of quarter-over-quarter growth in both states with penetration growth and catalog expansion while improving wholesale margins.”

“To drive growth in the competitive Colorado environment, we continued to elevate the retail experience and loyalty offerings to improve customer acquisition and retention. As a result, we outpaced the market on a year-over-year basis and generated 6% growth in a market that declined 11% during the same period. As part of our restructuring initiative, we shuttered our non-plant touching wholesale operation in Denver and eliminated three underperforming stores that no longer met our high-margin expectations. We continue to evaluate our asset base to ensure we’re running as efficiently as possible while maximizing output.”

“In New Mexico, state cannabis sales were up 7% across a store base that was 20% higher year-over-year in Q2. The state’s regulatory body continued to increase its enforcement, helping lead to a reduction in net new store openings, which we anticipate will flip from positive to negative in the back half of the year. Our consistent efforts to optimize our pricing and promotional strategy, expand assortment with high-quality flower, and deliver an enhanced customer experience is generating momentum. In the second quarter, we grew revenue 9% sequentially compared to the state’s 2%, demonstrating the effectiveness of our operating playbook to compete in challenging environments.”

“Looking ahead, we will continue to refine our retail strategy while further driving operating efficiencies across our retail, cultivation, and manufacturing assets. Our recent debt restructuring provides us with the financial flexibility to execute our strategic growth initiatives in Colorado and New Mexico. Over the past year, our consistent efforts to optimize operations have established a solid foundation, positioning us for continued growth and stronger levels of profitability in the second half of 2024.”

Recent Highlights

  • In July 2024, Schwazze extended the maturities of its original $15.0 million Altmore, LLC Loan Agreement and its $17.0 million Reynold Greenleaf & Associates LLC Promissory Note to November 2025 (both previously due in February 2025) in a step toward addressing future debt obligations.
  • Announced the grand opening of a medical and recreational dispensary in June under the R. Greenleaf banner in Bernalillo, New Mexico, increasing the Company’s retail footprint to 35 stores across the state.
  • Closed the Company’s Colorado distribution center and shuttered its non-plant touching wholesale operations, The Big Tomato, in Colorado to concentrate on core business operations.
  • Closed three underperforming Colorado dispensaries and streamlined the Company’s corporate office support structure to strengthen its retail forward strategy.
  • Increased wholesale penetration during the quarter to approximately 34% and 35% of total doors in Colorado and New Mexico, respectively.
  • Expanded wholesale catalog in New Mexico with the launch of Lowell Farms pre-rolls.
  • Generated 28% sequential wholesale unit growth in New Mexico with Wana gummies.

1 Adjusted EBITDA is a non-GAAP measure as defined by the SEC, and represents earnings before interest, taxes, depreciation, and amortization, adjusted for other income, non-cash share-based compensation, one-time transaction related expenses, or other non-operating costs. The Company uses Adjusted EBITDA as it believes it better explains the results of its core business. See “ADJUSTED EBITDA RECONCILIATION (NON-GAAP)” section herein for an explanation and reconciliations of non-GAAP measure used throughout this release.

Second Quarter 2024 Financial Results

Total revenue in the second quarter of 2024 increased 2% to $43.2 million compared to $42.4 million for the same quarter last year. The increase was primarily due to growth from new stores compared to the prior year period, partially offset by lower wholesale revenue and continued pricing pressure from the proliferation of new licenses in New Mexico.

Gross profit for the second quarter of 2024 was $19.0 million or 44.0% of total revenue, compared to $23.0 million or 54.4% of total revenue for the same quarter last year. The decrease in gross margin was primarily driven by the aforementioned pricing pressure and greater mix of third-party purchasing in New Mexico to broaden assortment in the state, as well as higher medical sales mix in Colorado.

Operating expenses for the second quarter of 2024 were $21.8 million compared to $18.1 million for the same quarter last year. The increase was primarily driven by four-wall SG&A costs associated with five additional stores in Colorado and New Mexico, as well as non-recurring professional service fees related to prior period workpaper review stemming from work required to comply with SEC based on their Order against BF Borgers.

Loss from operations for the second quarter of 2024 was $2.7 million compared to income from operations of $5.0 million in the same quarter last year. Net loss was $13.9 million for the second quarter of 2024 compared to $6.6 million for the same quarter last year.

Adjusted EBITDA for the second quarter of 2024 was $9.0 million compared to $13.8 million for the same quarter last year. The decrease in Adjusted EBITDA was primarily driven by lower gross margin and higher operating expenses.

As of June 30, 2024, cash and cash equivalents were $12.3 million compared to $19.2 million on December 31, 2023. Total debt as of June 30, 2024, was $163.4 million compared to $156.8 million on December 31, 2023.

Conference Call

The Company will conduct a conference call today, August 13, 2024, at 5:00 p.m. Eastern time to discuss its results for the second quarter ended June 30, 2024.

Schwazze management will host the conference call, followed by a question-and-answer period. Interested parties may submit questions to the Company prior to the call by emailing ir@schwazze.com.

Date: Tuesday, August 13, 2024
Time: 5:00 p.m. Eastern time
Toll-free dial-in: (844) 825-9789
International dial-in: (412) 317-5180
Conference ID: 10191294
Webcast: SHWZ Q2 2024 Earnings Call

The conference call will also be broadcast live and available for replay on the investor relations section of the Company’s website at https://ir.schwazze.com.

Toll-free replay number: (844) 512-2921
International replay number: (412) 317-6671
Replay ID: 10191294

If you have any difficulty registering or connecting with the conference call, please contact Elevate IR at (720) 330-2829.

About Schwazze

Schwazze (OTC: SHWZ) (Cboe CA: SHWZ) is building a premier vertically integrated regional cannabis company with assets in Colorado and New Mexico and will continue to explore taking its operating system to other states where it can develop a differentiated regional leadership position. Schwazze is the parent company of a portfolio of leading cannabis businesses and brands spanning seed to sale.

Schwazze is anchored by a high-performance culture that combines customer-centric thinking and data science to test, measure, and drive decisions and outcomes. The Company’s leadership team has deep expertise in retailing, wholesaling, and building consumer brands at Fortune 500 companies as well as in the cannabis sector.

Medicine Man Technologies, Inc. was Schwazze’s former operating trade name. The corporate entity continues to be named Medicine Man Technologies, Inc. Schwazze derives its name from the pruning technique of a cannabis plant to enhance plant structure and promote healthy growth. To learn more about Schwazze, visit https://schwazze.com/.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include financial outlooks; any projections of net sales, earnings, or other financial items; any statements of the strategies, plans and objectives of our management team for future operations; expectations in connection with the Company’s previously announced business plans; any statements regarding future economic conditions or performance; and statements regarding the intent, belief or current expectations of our management team. Such statements may be preceded by the words “may,” “will,” “could,” “would,” “should,” “expect,” “intends,” “plans,” “strategy,” “prospects,” “anticipate,” “believe,” “approximately,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” or the negative of these terms or other words of similar meaning in connection with a discussion of future events or future operating or financial performance, although the absence of these words does not necessarily mean that a statement is not forward-looking. We have based our forward-looking statements on management’s current expectations and assumptions about future events and trends affecting our business and industry. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Therefore, forward-looking statements are not guarantees of future events or performance, are based on certain assumptions, and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company’s control and cannot be predicted or quantified. Consequently, actual events and results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, risks and uncertainties associated with (i) regulatory limitations on our products and services and the uncertainty in the application of federal, state, and local laws to our business, and any changes in such laws; (ii) our ability to manufacture our products and product candidates on a commercial scale on our own or in collaboration with third parties; (iii) our ability to identify, consummate, and integrate anticipated acquisitions; (iv) general industry and economic conditions; (v) our ability to access adequate capital upon terms and conditions that are acceptable to us; (vi) our ability to pay interest and principal on outstanding debt when due; (vii) volatility in credit and market conditions; (viii) the loss of one or more key executives or other key employees; and (ix) other risks and uncertainties related to the cannabis market and our business strategy. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company’s filings with the Securities and Exchange Commission (SEC), including the Company’s Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. Investors and security holders are urged to read these documents free of charge on the SEC’s website at http://www.sec.gov. The Company assumes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise except as required by law.

Investor Relations Contact
Sean Mansouri, CFA or Aaron D’Souza
Elevate IR
(720) 330-2829
ir@schwazze.com

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Release – Snail, Inc. Reports Second Quarter 2024 Financial Results

Posted on by dburczyk@noblecapitalmarkets.com

Research News and Market Data on SNAL

CULVER CITY, Calif., Aug. 13, 2024 (GLOBE NEWSWIRE) — Snail, Inc. (NASDAQ: SNAL) (“Snail” or “the Company”), a leading, global independent developer and publisher of interactive digital entertainment, today announced financial results for its second quarter ended June 30, 2024.

Tony Tian, Co-Chief Executive Officer commented, “I’m honored to lead Snail alongside an amazing team as we continue to build upon the company’s incredible legacy of innovation and creativity. Our unwavering passion for delivering exceptional gaming experiences, as showcased by the phenomenal launch of ARK: Survival Ascended, will continue to propel Snail to future successes and victories. Looking ahead, we are excited to expand the reach of our premium mods and introduce new content that will delight our growing community of players worldwide.”

Second Quarter 2024 Highlights:

  • ARK: Survival Ascended and ARK: Survival Evolved
    • On October 25, 2023, the Company launched its flagship remake of the ARK franchise leveraging Unreal Engine 5’s stunning graphics and introduced a game-altering cross-platform modding system, ushering in a new era of creativity.
    • In the three and six months ended June 30, 2024, ARK: Survival Evolved and ARK: Survival Ascended combined for an average total of 218,241 and 213,690 daily active users (“DAUs”) on the Steam and Epic platforms, respectively, as compared to 240,522 and 258,235 in the three and six months ended June 30, 2023, respectively.
    • Through June 30, 2024, our ARK franchise game has been played for 3.7 billion hours with an average playing time per user of 161 hours and with the top 21.1% of all players spending over 100 hours in the game, according to data from the Steam platform.
    • Since its launch, ARK: Survival Ascended sold approximately 2.5 million units and has an average of 108,515 daily active users (“DAUs”) with a peak of 307,875 DAUs.
    • ARK: Survival Evolved averaged a total of approximately 131,927 DAUs and sold approximately 0.5 million units in the second quarter of 2024.
    • In the second quarter of 2024, the Company successfully launched Bellwright, a medieval survival game, Bob’s Tall Tales DLC for ARK: Survival Ascended and the Power Rangers premium mod for ARK: Survival Ascended . Furthermore, a full-size DLC expansion, Scorched Earth, was made available to all ARK: Survival Ascended owners.

Net revenue for the three months ended June 30, 2024 was $21.6 million compared to $9.9 million in the three months ended June 30, 2023. The increase in net revenue was due to an increase in total Ark sales of $10.0 million, an increase in sales of the Company’s other games of $3.9 million driven by the release of Bellwright, partially offset by a decrease in Ark Mobile sales of $0.3 million and an increase in deferred revenue of $1.9 million related to the Ark franchise.

Net income for the three months ended June 30, 2024 was $2.3 million compared to a net loss of $4.1 million for the three months ended June 30, 2023. The improvement in net income is due to an increase in net revenue of $11.7 million, decreased general and administrative expenses of $1.2 million, and an increase in total other income (expense) of $0.5 million, partially offset by increased research and development expenses of $0.7 million, increased advertising and marketing expenses of $0.5 million, increased costs of revenue of $4.2 million and a decrease in benefit from income taxes of $1.7 million.

Bookings for the three months ended June 30, 2024 was $22.9 million as compared to $9.3 million for the three months ended June 30, 2023, the increase was primarily due to the release of ARK: Survival Ascended in the fourth quarter of 2023, and the release of Bobs Tall Tales and Bellwright along with the ARK: Survival Ascended DLC, Scorched Earth in April 2024. In addition to increased net sales of the aforementioned titles, the Company deferred approximately $7.1 million in revenue during the three months ended June 30, 2024 for the ARK: Survival Ascended DLC’s and parts of Bobs Tall Tales which have not yet released; partially offset by the recognition of $5.6 million for the release of Scorched Earth.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the three months ended June 30, 2024 was $3.1 million compared to a loss of $4.8 million in the prior year period. The increase was due to the improvement in net income of $6.4 million and a decrease in the benefit from income taxes of $1.7 million.

As of June 30, 2024, unrestricted cash was $15.5 million.

Use of Non-GAAP Financial Measures

In addition to the financial results determined in accordance with U.S. generally accepted accounting principles, or GAAP, Snail believes Bookings and EBITDA, as non-GAAP measures, are useful in evaluating its operating performance. Bookings and EBITDA are non-GAAP financial measures that are presented as supplemental disclosures and should not be construed as alternatives to net income (loss) or revenue as indicators of operating performance, nor as alternatives to cash flow provided by operating activities as measures of liquidity, both as determined in accordance with GAAP. Snail supplementally presents Bookings and EBITDA because they are key operating measures used by management to assess financial performance. Bookings adjusts for the impact of deferrals and, Snail believes, provides a useful indicator of sales in a given period. EBITDA adjusts for items that Snail believes do not reflect the ongoing operating performance of its business, such as certain non-cash items, unusual or infrequent items or items that change from period to period without any material relevance to its operating performance. Management believes Bookings and EBITDA are useful to investors and analysts in highlighting trends in Snail’s operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which Snail operates and capital investments.

Bookings is defined as the net amount of products and services sold digitally or physically in the period. Bookings is equal to revenue, excluding the impact from deferrals. Below is a reconciliation of total net revenue to Bookings, the closest GAAP financial measure.

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Snail (SNAL) – First Look At Q2 Results

Posted on by cpereira@noblefcm.com


Wednesday, August 14, 2024

Snail is a leading, global independent developer and publisher of interactive digital entertainment for consumers around the world, with a premier portfolio of premium games designed for use on a variety of platforms, including consoles, PCs and mobile devices.

Michael Kupinski, Director of Research, Equity Research Analyst, Digital, Media & Technology , Noble Capital Markets, Inc.

Patrick McCann, CFA, Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Q2 results. The company reported Q2 revenue of $21.6 million, and adj. EBITDA of $3.1 million, both of which were lower than our forecasts of $27.8 million and $7.4 million, respectively, as illustrated in Figure #1 Q2 Results. In our view, there were multiple factors contributing to the shortfall, such as deferred revenue in the quarter, as well as lower than expected revenue from ARK: Survival Ascended (ASA) on Microsoft Game Pass.

Closing the gap. Notably, there is a technology gap between many potential ASA users’ PC hardware and the advanced processing power needed for the game, which uses Unreal Engine 5. This technology disparity has inhibited some users from migrating from the original game, ARK: Survival Evolved (ASE), to ASA, dampening ASA sales. However, an update to Unreal Engine 5 that is expected to take place in Q3. Should the update help bridge the technology gap, it could catalyze accelerated adaption of ASA. 


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Bitcoin Depot (BTM) – Rolling Out the Kiosks

Posted on by cpereira@noblefcm.com


Wednesday, August 14, 2024

Michael Kupinski, Director of Research, Equity Research Analyst, Digital, Media & Technology , Noble Capital Markets, Inc.

Patrick McCann, CFA, Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Q2 beats expectations. The Company reported Q2 revenue of $163.1 million, beating our estimate of $147.6 million by 10.5%, and adj. EBITDA of $12.7 million, 37.1% above our estimate of $9.2 million. While revenue and adj. EBITDA were down 17.4% and 36.1% from the prior year period, respectively, we view 2024 as a transitional year and the Q2 results favorably. 

Kiosk deployment ahead of schedule.  Importantly, the company had 8,068 kiosks deployed at the end of Q2, surpassing its goal of having 8,000 kiosks deployed by year end. With more than 10,000 total owned kiosks (deployed and warehoused) and a strong pipeline of potential new partners, we are estimating the number of kiosk deployed at year end to be 9,000.


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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

Harte Hanks (HHS) – A Deeper Dive Into The Latest Quarter; Stock Over Reacts

Posted on by cpereira@noblefcm.com


Wednesday, August 14, 2024

Harte Hanks (NASDAQ: HHS) is a leading global customer experience company whose mission is to partner with clients to provide them with CX strategy, data-driven analytics and actionable insights combined with seamless program execution to better understand, attract, and engage their customers. Using its unparalleled resources and award-winning talent in the areas of Customer Care, Fulfillment and Logistics, and Marketing Services, Harte Hanks has a proven track record of driving results for some of the world’s premier brands including Bank of America, GlaxoSmithKline, Unilever, Pfizer, HBOMax, Volvo, Ford, FedEx, Midea, Sony, and IBM among others. Headquartered in Chelmsford, Massachusetts , Harte Hanks has over 2,500 employees in offices across the Americas, Europe and Asia Pacific .

Michael Kupinski, Director of Research, Equity Research Analyst, Digital, Media & Technology , Noble Capital Markets, Inc.

Jacob Mutchler, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Installing a sales organization. We believe that the management team is focused on positioning the company for a swing toward revenue and cash flow growth. To that end, the company has hired high profile senior management that is transforming it into a sales and customer centric company.

A healthy revenue indicator. Management indicated that its pipeline of business is building and ahead of last year. We believe that the company’s investment into building its sales infrastructure, which began late last year, is likely to show improving revenue trends in the second half 2024.


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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

FreightCar America (RAIL) – Strong 2Q Operational and Financial Results; Increasing Estimates

Posted on by cpereira@noblefcm.com


Wednesday, August 14, 2024

Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Second quarter financial results. FreightCar America generated second quarter adjusted net income to common stockholders of $1.772 million or $0.05 per share compared to $0.424 million or $0.02 per share during the prior year period. We had forecast $1.582 million and $0.05 per share. Revenue and rail car deliveries increased to $147.4 million and 1,159 compared to $88.6 million and 760 during the second quarter of 2023. On a year-over-year basis, adjusted EBITDA increased 50.6% to $12.1 million. While EPS was in line with our estimates, railcar deliveries, revenues and adjusted EBITDA were above our estimates.

Full Year 2024 corporate guidance. Management raised its full year 2024 guidance ranges. Railcar deliveries are expected to be in the range of 4,300 to 4,700, revenue is expected to be in the range of $560 million to $600 million, and adjusted EBITDA is expected to be in the range of $35 to $39 million. Previously, railcar deliveries were expected to be in the range of 4,000 to 4,400, revenue was expected to be in the range of $520 million to $572 million, and adjusted EBITDA was expected to be in the range of $32 million to $38 million.


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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

Schwazze (SHWZ) – A First Look into 2Q24 Results

Posted on by cpereira@noblefcm.com


Wednesday, August 14, 2024

Schwazze (OTCQX:SHWZ, NEO:SHWZ) is building a premier vertically integrated regional cannabis company with assets in Colorado and New Mexico and will continue to take its operating system to other states where it can develop a differentiated regional leadership position. Schwazze is the parent company of a portfolio of leading cannabis businesses and brands spanning seed to sale. The Company is committed to unlocking the full potential of the cannabis plant to improve the human condition. Schwazze is anchored by a high-performance culture that combines customer-centric thinking and data science to test, measure, and drive decisions and outcomes. The Company’s leadership team has deep expertise in retailing, wholesaling, and building consumer brands at Fortune 500 companies as well as in the cannabis sector. Schwazze is passionate about making a difference in our communities, promoting diversity and inclusion, and doing our part to incorporate climate-conscious best practices.

Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Results. Revenue of $43.2 million increased 2% y-o-y and was in-line with our $43 million estimate. Gross profit margin fell to 44% from 54.4% a year ago, but was in-line with our 43.6% projection. The GM decline reflects ongoing pricing pressure in both Colorado and New Mexico, as well as a greater mix of 3rd-party products in New Mexico and higher medical sales in Colorado. Schwazze reported a net operating loss of $2.7 million and a net loss of $13.9 million, or $0.20/sh. We were at a net loss of $0.19/sh.

Quarter Highlights. Schwazze generated sequential quarterly growth across all key financial metrics during the quarter. The Company continued to focus on sharper pricing and promotional strategies to drive store traffic and market share in both Colorado and New Mexico. Wholesale margins continued to show improvement.


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Lifeway Foods (LWAY) – Setting Another Record

Posted on by cpereira@noblefcm.com


Wednesday, August 14, 2024

Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Another Record Quarter. Net sales for the second quarter were $49.2 million, a new record for the Company, and marks the 19th consecutive quarter of year-over-year growth. Net sales also were above our estimate of $46.5 million. Gross margin was 27.0%, down from 28.8% last year but above the first quarter’s 25.8%. Net income was $3.8 million, or $0.25/sh, above last year’s $3.2 million or $0.21/sh and our estimate of $2.6 million or $0.17/sh.

Kefir the Driver. Once again, sales of drinkable kefir drove quarterly results. In 2Q24, drinkable kefir sales rose 30.8% to $41.0 million from $31.3 million in 2Q23. Drinkable kefir sales accounted for 83% of total revenue, up from 80% in the year ago period.


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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

PDS Biotechnology (PDSB) – PDS 2Q24 Financial Results Recap A Productive Quarter

Posted on by cpereira@noblefcm.com


Wednesday, August 14, 2024

PDS Biotech is a clinical-stage immunotherapy company developing a growing pipeline of molecularly targeted cancer and infectious disease immunotherapies based on the Company’s proprietary Versamune® and Infectimune™ T-cell activating technology platforms. Our Versamune®-based products have demonstrated the potential to overcome the limitations of current immunotherapy by inducing in vivo, large quantities of high-quality, highly potent polyfunctional tumor specific CD4+ helper and CD8+ killer T-cells. PDS Biotech has developed multiple therapies, based on combinations of Versamune® and disease-specific antigens, designed to train the immune system to better recognize diseased cells and effectively attack and destroy them. The Company’s pipeline products address various cancers including HPV16-associated cancers (anal, cervical, head and neck, penile, vaginal, vulvar) and breast, colon, lung, prostate and ovarian cancers.

Robert LeBoyer, Senior Vice President, Equity Research Analyst, Biotechnology, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

FDA Alignment Allows Phase 3 To Move Forward. PDS Biotech announced a loss of $8.3 million or $(0.23) per share for 2Q24. Cash at June 30, 2024, was $57.7 million, which we estimate to be sufficient to fund operations into 2H25. The company announced FDA alignment on the design of the Phase 3 VERSATILE-003 Plus trial, with preparations underway to begin the trial by year-end.

Meeting Results Confirmed Three-Arm Design Of Phase 3. PDS held a Pre-Phase 3 meeting with the FDA to get alignment on the design and analysis of the Phase 3 VERSATILE-003 Plus trial with the additional treatment arm testing the Triplet Combination of Versamune HPV, PDS01ADC, and Keytruda. The company’s immediate focus will be to start the VERSAMUNE-003 doublet arm by YE2024 while conducting the dose optimization stage separately. The design of the trial was discussed in our Research Note on July 9.


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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

New High-Pressure Drilling Technology Opens Opportunities in Gulf of Mexico Oil Exploration

Posted on by slightbourne@noblecapitalmarkets.com

The oil industry is abuzz with excitement as groundbreaking high-pressure drilling technology promises to unlock billions of barrels of previously inaccessible crude in the Gulf of Mexico. This development could spell significant opportunities for investors, particularly those interested in small cap companies involved in offshore drilling and related technologies.

Chevron recently announced the successful first oil production from its Anchor project, a deepwater development utilizing innovative high-pressure technology. This $5.7 billion project represents a major technological milestone, as it’s capable of safely operating at pressures up to 20,000 pounds per square inch (psi) – a third higher than any previous well. The implications of this breakthrough are substantial. Analysts estimate that this technology could put up to 5 billion barrels of previously unreachable oil into production globally, with about 2 billion barrels in the U.S. Gulf of Mexico alone. This volume equates to approximately 50 days of current global oil production, highlighting the significance of the advancement.

For small cap investors, this development opens up several potential avenues. Equipment manufacturers like NOV and Dril-Quip, which provided specially designed equipment for the Anchor project, could see increased demand for their high-pressure capable products. Offshore drilling contractors operating advanced drillships, such as Transocean, may benefit from increased activity in ultra-high pressure fields. Smaller exploration and production companies with Gulf of Mexico assets could potentially reassess their portfolios for high-pressure opportunities previously considered uneconomical. Additionally, companies offering specialized services for high-pressure, high-temperature (HPHT) environments may see growing demand.

The new technology is expected to be a significant driver of production growth in the Gulf of Mexico. Wood Mackenzie, a research firm, projects a nearly 30% increase in deepwater output from 2023-2026, potentially reaching 2.7 million barrels of oil equivalent per day. This growth could help return the region to its peak output levels, last seen in 2019. Moreover, the applications of this technology extend beyond the Gulf of Mexico. Similar high-pressure, high-temperature oil fields that could benefit from this technology are found off the coasts of Brazil, Angola, and Nigeria. Brazil, in particular, with its complex offshore environments, is seen as a prime candidate for future application of this technology.

However, investors should be aware of potential risks and challenges. The regulatory environment, including the pace of offshore lease auctions and environmental regulations, can significantly impact future development. Operating in such high-pressure environments carries inherent risks and technical difficulties that companies must navigate. The economic viability of these projects remains dependent on global oil prices, adding an element of market risk. Furthermore, increased offshore drilling activity may face opposition from environmental groups, particularly in light of past disasters like the Deepwater Horizon spill.

Despite these challenges, the advent of this new high-pressure drilling technology represents a significant opportunity for the oil industry and investors alike. While major oil companies will likely lead the charge, savvy small cap investors may find promising opportunities in the ecosystem of companies supporting this technological revolution in offshore drilling. These could include specialized equipment manufacturers, innovative service providers, and smaller E&P companies with strategic Gulf of Mexico assets.

In conclusion, the high-pressure drilling breakthrough in the Gulf of Mexico marks a new chapter in offshore oil exploration. It offers the potential to tap into vast previously unreachable reserves, driving production growth and technological innovation. For small cap investors willing to navigate the complexities and risks of the offshore oil sector, this development could uncover valuable investment opportunities. As always, thorough due diligence is essential when considering investments in this dynamic and complex sector, but for those who choose wisely, the rewards could be substantial.