Jones Soda Co. (PNK:JSDA) Q4 2023 Earnings Call Transcript

Jones Soda Co. (PNK:JSDA) Q4 2023 Earnings Call Transcript March 14, 2024

Jones Soda Co. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good afternoon, everyone. Thank you for participating in today’s conference call to discuss Jones Soda’s Financial Results for the Fourth Quarter and Full Year ended December 31, 2023. Before we begin, let me remind everyone of the Company’s Safe Harbor disclaimer. Certain portions of our comments today will concern future expectations, plans and prospects of the Company that constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements containing verbs, such as aims, anticipates, estimates, expects, believes, intends, plans, predicts, will, may, continue, projects or targets and negatives of these words and similar words or expressions.

Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements. Factors that could affect our actual results include among others, those that are discussed under the heading Risk Factors in our most recently filed reports with the SEC, including our annual report on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K. In addition, this call includes discussions of certain non-GAAP financial measures, including adjusted EBITDA. The most directly comparable GAAP measures and reconciliations for non-GAAP measures are available in the earnings release and other documents posted on the Company’s website under Investor Relations.

This call will be available for telco replay through March, starting at 7.30 p.m. Eastern Time tonight. A webcast replay will also be available via the link provided in today’s press release, as well as on the company’s website. And now, I would like to turn the call over to the President and CEO of Jones Soda, Mr. David Knight.

A shelf filled with a variety of bottles of energy drinks, juices, and sodas in a convenience store.

David Knight: Hey thanks, John and thank you, everyone for joining. As I continue to become further ingrained in the operations of Jones Soda and see the opportunities at hand, I have become more and more confident in our ability to take this company to new heights. My main focus areas from day one have been delivering great taste and growth through both innovation and marketing. I strongly believe that we are setting the stage to do that on a larger scale than Jones Soda has ever achieved before with unique and compelling product offerings across a multitude of channels and categories. As you have most likely read recently, there was a new buzz around the craft soda category with continued innovation and product news. Jones was well primed to capture these opportunities and will be a leader in sodas and beyond.

When looking at our fourth quarter results, we obviously didn’t close out the year where we would have liked to. We were still dealing with headwinds in our grocery channel, as a result of decreasing sales velocities, in addition to our foodservice channel, still struggling during the quarter. We did however see some bright spots as our Mary Jones business continued its expansion and delivered strong results. In fact, looking at the entire year, our Mary Jones business delivered over $1 million in revenue for 2023. And we are really only just getting started. We also maintained a strict cost discipline to make progress towards achieving bottom line profitability. And despite a onetime impact on our gross margins in the fourth quarter, we remain on track to achieve our goal of consistently reporting, gross margins in the mid 30s.

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Q&A Session

For this to be said, 2023 is behind us and I remain highly focused on the future. It’s been encouraging to see many new initiatives take hold in early 2024, including a new foot foodservice division, further Mary Jones geographic expansion, the introduction of product lines in completely new categories and much, much more. I firmly believe that these initiatives will set us up for improved results throughout the year and beyond and are excited to share more details here today. But first, I’d like to pass the call over to Joe to discuss our fourth quarter and full year financial results in greater detail. Then, I’ll return to talk about the exciting growth opportunities that we’re working on for 2024 and beyond. So, Joe, over to you.

Joe Culp: Thank you, David, and good afternoon everyone. Net revenue in the fourth quarter was $3.5 million compared to $3.7 million in the fourth quarter of 2022. The decrease was primarily due to a decline in sales across our food service and grocery channels compared to the fourth quarter of last year. Our licensed cannabis business generated approximately $438,000 in the fourth quarter of 2023, which represents a 99% increase over the same quarter in 2022. Gross profit as a percentage of revenue was 19.5% compared to 24.8% in the prior year period. This decrease was primarily due to a one-time inventory write-off associated with our Lemoncocco product line. If we remove the one-time write off of $212,000, our margin would be approximately 25.5% and above last year.

Despite this we continue to strive to hit our goal of consistently reporting margins in the mid-30s. Operating expenses in the fourth quarter improved to $2.2 million compared to $2.6 million in the same year ago quarter. This decrease was due to lower marketing and G&A costs, mostly as a result of lower business start-up costs associated with the development of the Mary Jones brand. Net loss in the fourth quarter improved to $1.5 million or negative $0.02 per share compared to a net loss of $1.6 million or negative $0.02 per share for the same quarter of 2022. Adjusted EBITDA in the fourth quarter was negative $1.4 million compared to negative $1.3 million in the same year ago quarter. Quickly running through our full year results, our revenue in 2023 was $16.7 million compared to $19.1 million in 2022.

Our gross profit as a percentage of revenue increased 220 basis points to 29.1% in 2023 compared to 26.9% in 2022. Total operating expenses declined to $9.7 million in 2023 compared to $11.2 million in 2022. Net loss for 2023 improved to $4.9 million or negative $0.05 per share compared to a net loss of $6.4 million or negative $0.07 per share in 2022. And lastly, adjusted EBITDA improved to negative $4.1 million in 2023 compared to a negative $4.6 million in 2022. And moving onto the balance sheet. As of December 31st, 2023, cash and cash equivalents were $3.9 million compared to $5.2 million at September 30th, 2023 and $8 million at December 31st, 2022. Working capital was $7.2 million at December 31st, 2023 compared to $11.6 million in December 31st, 2022.

Now, I’ll turn the call back over to David who will provide further insights into various growth initiatives we have planned and overall progress being made throughout the organization. David back to you.

David Knight: Hey thanks Joe. Let’s jump back into it. I have now been at Jones Soda for eight months and as we talked about on our last call, I am focusing on innovation that will drive both Jones Soda and Mary Jones and highlighting our significant cost advantage. The team has been hard at work developing new initiatives in marketing and product development and if you’ve been tracking our press releases, we are bringing to market a significant amount of new news and revenue opportunities for 2024. As I’m sure many of you have seen, we have introduced a new Foodservice division. I believe this channel within our core soda business hasn’t had the proper resources allocated capture the growth opportunities at hand. So, we’ve changed that.

We’re expanding our sales efforts beyond being so highly focused on the traditional grocery channel to bars, restaurants hotels, and other quick-service eating and drinking organizations. We brought on an industry veteran Victor Petrone and to lead this division as well as signing partnerships with Dot Foods, Green Nature Marketing, Ignite Brand Advisors, and more recently and in Dot Foods, Canada and North South Management to ensure we have the necessary resources and foundation to make inroads in this channel in both the U.S. and now in Canada. This initiative has already paid off as we announced in February that we are now on the menu nationwide at both STK Steakhouse and Kona Grill. The initial feedback from our partners has been excellent with one owner of both restaurant brands stating Jones Soda has been one of the top product integrations that they have launched.

We’re not stopping there and have plenty of more foodservice customers to announce in the coming months. We were attending the Pizza Expo next week and we’ll put Jones Foodservice on the map with all pizza operators nationally, mapping data with a fine pizza than Jones Soda, especially our Root Beer. Now let’s move to our core soda marketing efforts. In the first quarter of 2024, we began to implement our 2024 innovation and channel development plan. During the quarter, we launched Nuka-Cola Victory, a collaboration with Amazon Prime Video Kilter Films, and Bethesda Game Studio. Nuka Cola Victory is from the universe of the video game Fallout, and the product supports the streaming series launching in early April on Prime Video. Bottle caps are the currency in the post-apocalyptic wasteland, and our unique bottle caps on Nuka Cola Victory can be traded for gear in our Caps for Gear website.

The product sold out at both Amazon and our company’s e-com platform within 15 minutes of its initial release, and a restock also sold out immediately. As this is one of our rotational flavors in our special release program, we are focusing on distributing this product in our key retailers around the country. As we look for other growth categories with the Jones brand can compete, we’re excited to announce our launch of Spiked Jones. We have partnered with local side up and developed a great tasting product in our core flavors with a fermented apples mold alcohol has been an exciting response to this new launch and we have secured distribution with key retailers in Washington. The first production is expected to roll off the line next week in 12 ounce and 19 to point out scans with the variety pack as well.

The product certainly delivers on the company’s promise of great taste. Our launch will provide us with key data, as we expand the footprint across the country. In Canada, we have restructured our go-to-market strategy that has the potential to both double our rent revenue and double our margins. Lower PMI has been promoted to General Manager Canada and is leading our new growth strategy in that country. We have transitioned into a new broker system with north south and dog foods Canada as our product delivery pipeline. We are also focusing on foodservice and replicating the model we have kicked off in the US. More to come on that. Now moving to operations. In recent news Eric Chastain, our veteran COO with 22 years of service has decided to step aside and take a well-deserved break.

We would like to thank Eric for his commitment to the company and the legacy that he’s built over this long tenure. That said, we welcome Eric Bittner to the team as our new COO. He is a seasoned beverage operator with time at PepsiCo, Keurig Dr Pepper, Niagara Bottling and Fever-Tree. I’m excited to have him onboard to help drive growth into new categories, gain scale and improve margins. Mary Money has also joined the team as the Director of New Product Development and Commercialization. Both a seasoned executives with deep beverage and consumer packaged goods experience. With that let’s now turn to Mary Jones. I’m very proud to say that as of February, we’ve officially launched our 10 milligram THC service in Ontario Canada, meeting our promise of launching it into Canadian market by Q1 this year.

As previously discussed, we are using Tilray brands, one of the leading cannabis companies worldwide, as a manufacturing and distribution partner for the Canadian market. We also partnered with Grain Hedge a leading cannabis sales and distribution company based in Canada to further support our sales and field marketing for Mary Jones. THC infused beverages are growing at a rapid pace in Canada and around the world, as more and more consumers are shifting over from alcohol. We believe this creates a highly lucrative opportunity for our Marie Johns craft sodas and syrups, especially given Jones was originally founded in Canada and has significant brand power in this geography. We’ve received positive initial feedback and look forward to expanding our product offerings and provinces in this international market.

To recap where Mary Jones sits today from a geographic perspective, we are currently the number one ranked seller in the cannabis-infused carbonated beverage format in California, where our products are carried in more have more than 350 dispensaries with many more on slate for 2024. We launched this week our line of Mary Jones fizzy tabs that are hitting the shelves in dispensaries with three of our core flavors. A great brand representation with 40 fizzy tabs of 2.5 milligram THC in a child proof container. We also recently launched in the state of Washington. And within five months our Berry Lemonade and rupia beverage are ranked number one and number two in beverage sales. We continually assess the next horizons for the regulated market and will continue to expand as we find the right partners.

In addition to our geographic expansion, we’re also very excited about our expansion into hemp-derived craft sodas with our new Hemp Delta 9, or as we call it HD9. The new Mary Jones HD9 infused craft sodas are created with the exact same formulation of Jones Soda adapted for HD9 with high quality lab tested THC derived from hemp. The sodas are sold in 12 ounce cans with either 2.55 or 10 milligrams of low dose and THC. We’re starting off in four classic Jones flavors, including rupia, Orange and Cream, Green Apple, and Mary Jones award-winning Berry Lemonade. We also plan on introducing new and special release flavors in 2024, as well as other HD9 infused edibles and shots. Additionally we launched a direct-to-consumer e-commerce store for Mary Jones HD9.

products, shipping to all states with the exception of Alaska, Hawaii, Colorado, Idaho and Oregon due to state regulations. HD9 for Mary Jones is also currently available in fixed retail markets, including Massachusetts, Florida, Ohio, Minnesota, Alabama and Southern California with many more to come. We believe there’s a great evolution happening among today’s consumers and retailers. As you’re seeing more people adapt to legal cannabis and THC products with a low-dose hemp-derived Delta 9, or traditional higher dose, THC options via state regulated markets. Mary Jones now sits squarely in this trajectory with low dose HD9 and traditional cannabis products that meet the demand. Overall, I continue to be very excited about Mary Jones. In Q4, we grew our cannabis related revenue 99% year-over-year and 100% sequentially.

But we are still just getting started. To give a better perspective on the success our brand is having as we continue to scale our operations, our agreements are set up for us to get a bigger piece of the pie as our system-wide sales numbers continue to grow. Overall, Mary Jones remains our top priority within the growth opportunities we’ve identified. We are still in the early days given it’s only been less than a year and a half since launching in California and have already managed to become a leading brand in the industry. With this momentum and profit strategy in place to scale the business, we remain highly confident that Mary Jones will be a major contributor to the overall revenue growth of the company. So in summary this is an exciting time at Jones and the team is delivering unprecedented innovation across Jones Soda and Mary Jones.

I am personally excited at the opportunity ahead and the team I am building. We are evolving rapidly from a 12 ounce glass bottles soda line to a multi-format beverage company. 2024 is off to a great start. And the fun is just beginning; delivering shareholder value is our number one corporate objective. And I look forward to engaging with our shareholders to get their feedback and answer any questions they may have. With that, I’ll pass the call back over to John to see if there are any questions from our listeners today. John, over to you.

Operator: Thank you sir. We will now be conducting a question-and-answer session. [Operator Instructions] Daniel Thiel [ph], a private investor. Please proceed with your question.

Unidentified Analyst: Hey, David as always thank you for taking our call. I have about seven questions here. So I’ll take a break and let some other folks take a turn. So kick us off, can you update us on what happened in Michigan in Nevada with the Mary Jones launches that we thought were coming there?

David Knight: Yeah, I think we all recognize. And Daniel, it’s a great question. I think we all recognize that, it’s key that we have the right partners in place. Our plants in Michigan we had to rethink those. So we’re working on a new plan that should get us in that marketplace in the second half. So disappointing, but we will be in a better place. And on Nevada, we’re still assessing we know who the right partner is, and so again, weighing up what the size of the prize, and the cost of inventories. So you’ll hear more news on that, but Michigan is back to the second half unfortunately.

Unidentified Analyst: Okay. Understood. We appreciate the transparency there and obviously, cheering for you guys to find something right there. And congrats on the fallout launch. That seems like a huge hit just Joan’s plan to pursue similar special releases in the future. So, that this doesn’t just be a one-hit wonder?

David Knight: Absolutely. And as you’re probably aware, our special releases happen three times a year. We’re balancing that between flavor news, and really exciting partnerships. I can’t give you the details yet, but there is a third partners special release coming out in the back half. We do think though that Nuka-Cola and Jones right now is probably the hottest meals and beverages to hit the market in the last couple of years.

Unidentified Analyst: Okay. Great. That’s good to hear that we’re targeting some additional partnerships that seems like a great opportunity for exposure. Switching to another topic here David, and then I’ll let some other folks take a turn, as far as financing in our runway, as far as your cash burn here and what it’s looking like we’re spending are there any plans for financing needs to raise money or to find financing?

David Knight: Yeah. So, it’s something that we as a team, our finance team and the Board focuses on a lot in terms of what’s out cash position and what is our runway. We’re considering a number of options, and we should be exploring those pretty aggressively over the next couple of months, as they include a line of credit, they includes some options to go back to the market and secure more investment. I think as you see our strategy, we’re doing a lot of things on once we identify, which ones that deserve the highest investment we’re going to need more capital. So we’re planning for that. We’re underway in terms of consideration set and more news to come.

Unidentified Analyst: Okay. Thanks, David. And then I guess just more on the topic, I saw in one interview, I know, you’ve been transparent have done a number of interviews which we appreciate. Are you are anticipating or at least hopeful of profitability in Q3 or Q4 of 2024 here? Are you still anticipating that?

David Knight: Yeah. Look, I think we’re all pushing for that number and we’re ready to pop some champagne cokes when we achieve it. I am confident, we will have one or two profitable quarter this year. Again, it comes down to how quickly, we can expand Mary Jones HD9, and then how some of these other initiatives are performing, including Spiked Jones, but certainly, on my radar, and again, something where we’re really pushing hard to achieve this year.

Unidentified Analyst: Great. Thanks, David. I’ll step aside here for some other folks.

David Knight: Great. Thanks, Daniel. Appreciate you as always.

Operator: [Operator Instructions] And the next question is a follow-up from Daniel Thiel. Please proceed with your question.

Unidentified Analyst: It looks like it’s me I say…

David Knight: That’s so quickly, Daniel. Its okay.

Unidentified Analyst: So three more questions for you, along the line of product expansion, which love your vision that you’ve laid out in your energy that you’re bringing to moving Jones to be a beverage company as opposed to a 12 ounce glass bottle Soda Company? I know, Jones Energy Drink, Jones Plus and then the flavored water or two things that have been teased or mentioned in the past. Can you give us an update on where those stand in development and potential launch?

David Knight: Sure. Jones Plus we produce the end of last year. We got it out into the marketplace. We’ve learned a few things. We’ve pivoted slightly. It’s ready for a prime time. In fact, I’ll be sharing some news shortly on getting distribution in a large format convenience chain. But that is looking great. It’s — we call it Jones Soda, sorry Jones Plus and it’s 160 milligrams of caffeine plus our natural cane sugar, taste great, delivers the amount of caffeine that you need and opens up both the convenience channel as well as the morning daypart where people are looking for a caffeine — caffeinated beverage in the morning. So that’s John’s Plus. Still we went a lot. We’re ready to take that to a bigger deal this year and into 2025.

On the flavored soda water side, super excited at what we’re developing here, where it’s on our innovation charter for test and learn this year. And our expectations will be out in a market test, I would say Q2, Q4. And I think that’s going to be our biggest kind of news for 2025.

Unidentified Analyst: Okay. Good to hear. Thank you. As far as the Spiked Jones goes and we’re launching in Washington, Rainmaker who makes Locust Cider as the partner. One thing that struck me about Rainmaker is that they seemed a little bit on the smaller side themselves. Do you think they’re an appropriate partner to take this beyond Washington and nationwide? Is that what Jones is looking to do and if so, do you think Rainmaker’s the right partner?

David Knight: Look, I think they are the exact partner that we needed to start with, a great group of similar philosophies, Seattle-based and committed to delivering great taste in beverages. They also have a go-to-market strategy that we can jump into immediately. So, they’re able to get us in front of some major retailers and get the order for May. So, more news coming on, who that will be. But we’re excited about the opportunities here. We’ve had great conversations like what happens if this is a complete rocket ship. And the agreement that we have with them is that we — if we max out the capacity then we’re open to take the formulations to other commands. And so, we geared up for success. It’s a great partnership Jason and the team at Locust, they are amazing. And we look forward to seeing how big this can be with the expectation and the Plan B that if we need to scale we can. It’s a good problem to have.

Unidentified Analyst: Yes, perfect. That’s the answer I was looking forward to make sure that we have options to accommodate more scale in this area. Kind of follow-up question on that note, is this something that can be shipped direct to consumer somewhere like to the HD9 product or will this only be available via retailers in Washington?

David Knight: It won’t be able to be shipped or made available through our e-commerce platform as it is alcohol and has to go through kind of licensed premises now. We will stream it into some of the spirit and alcohol online distributions where they’ve got the licenses to do that, right? But our play right now is more retail based through traditional liquor and beer formats.

Unidentified Analyst: Makes sense. And then, last question I have for you, so excited about the team that you’re bringing together. It seems like there’s some new fresh energy with some new vision at Jones. With that I’m sure comes some costs. I know our operating expenses. I’m looking at the release here. Not finding the exact number. I think it was around $8.1 million or so this year. Is that your expectation for approximate overhead costs moving forward? Do you expect that the cost increase or decrease moving forward?

David Knight: I think it’ll remain static as a percentage of total revenue. And as we grow the company, that will go up and commensurate with one the quality of the players that we’re bringing on as well as the number of people that we need to run the business. And so, we are laser focus on SG&A, but we’re planning for growth rate and to grow the Company. We need some key players that are aligned with what we’re doing. And [Technical Difficulty]

Operator: Ladies and gentlemen, please stay on the line. Apologies for the, quick technical difficulty. Please stay on the line. Ladies and gentlemen, thank you for remaining on the line.

David Knight: Hey, Daniel, sorry, I lost service. So I’m on back.

Unidentified Analyst: No worries. We hear you loud and clear.

David Knight: Yeah. Did I — did you catch me at the end of that. So we’re going to hold SG&A flat as a percentage of revenue grow the Company. But we are bringing on more talented folks. And as we scale, we will need to enhance the team, not dramatically but there’s more work to be done. And we’re going to grow this thing. And we’re going to need people that can handle that growth as well as get us into channels, get us into better cost of goods — good — cost of goods facilities et cetera. So we’re very conscious of it. We appreciate that question. And it’s our focus.

Unidentified Analyst: Good. Well, David, I appreciate the time. Appreciate you taking our questions or my questions, and looking forward to looking forward to what’s come at Jones.

David Knight: Perfect. Thanks Daniel. Thanks for your support. And we can’t do this alone. And I appreciate everybody for their questions and support. And I’m excited about, what we’re doing this year.

Unidentified Analyst: Thanks David.

Operator: And the next question comes from the line of Oleg Gredel [ph], a Private Investor. Please proceed with your question.

Unidentified Analyst: Thank you. My question is more for the Canadian market. Of course, the partnership with Tilray is exciting. Just what’s the breakdown of the business structure there, as a kind of like a licensing model? And the whole overall thought process in Canada launch in Ontario? How many stores you think are possibly going to carry the Mary Jones product lines? And then just kind of what’s coming in the future for Canada?

David Knight: Yeah. So it is a licensing deal with Tilray. We’ve fortunately partnered with one of the best-in-class across the globe. So we’re excited about that. And the launch in Ontario has done well. In fact we are accelerating production ahead of where we thought we needed and Tilray have stepped up. And that’s ready to go. In terms of next provinces, I think Alberta, is next. We’ve got conversations and with that — with those parties. And I’m pretty confident we’ll be probably nationwide in Canada by the end of this year. We will also bring in some other lines, beyond just our 10 milligram THC beverage. In terms of specific numbers, I don’t have those at hand, but we will get them and shine a light on Canada in the next earnings call in May. And I appreciate that question, Oleg, anything further on Canada?

Unidentified Analyst: No. That’s great. Yeah Tilray is very exciting name, so, very excited for the potential of this.

David Knight: Well, hopefully, if you’re in Canada, you have gone to one of the dispensaries and picked up some products. So go try it out.

Unidentified Analyst: That’s what’s happening after the call.

David Knight: Great. Thanks, Oleg.

Operator: And the next question comes from the line of Steve Cantor [ph], a Private Investor. Please proceed with your question.

Unidentified Analyst: David, thank you for taking calls from us. It’s a welcome change from the past and may have the elaborate dialogue with the company and her team. So thank you very much.

David Knight: Thanks Steve.

Unidentified Analyst: I wanted to better understand the — the Food Services division and make sure, I’m thinking about this correctly. In the Alcohol industry have on-prem and off-prem, two different sales channels being moving our retail stores and then the bars and restaurants. In the craft soda business, do you see the benefit for the essentially the hand selling of the product, may put more personalized engagement with the consumer to where it assist with the pull-through going into grocery stores and what which is very competitive and very difficult sales channel?

David Knight : Yes. Look we’re super excited about foodservice, especially now that we’re producing broader formats and variety, specifically for foodservice. The-12 ounce glass bottle offering and it’s been somewhat a stumbling block for foodservice as their preferences really cans and food — fountain, slush, et cetera. So we’ve now got a comprehensive range of products across all flavors that suit foodservice. And what we’ve built with Dot Foods and Green Nature has really opened up and will open up Jones in numerous accounts that I’ve never really considered Jones either because of a format of a lack of a delivery system. So Dot has 4,000 customers in the U.S. and they’re distributors and retailers and food operators. So now they can order through Dot as little as just one case of Jones, where previously they had to step up and buy a pallet load.

So we’re going to see a significant explosion in foodservice. Victor, who is our GM, has got such deep experience and great relationships. So he’s the right guy. And now that we’ve armed him with the right product range and the best go to market strategy and infrastructure that supports that, we’re expecting significant growth there. So we’re excited about that. So as I said, we go to the Pizza Expo next week, I’m sure we’ll secure increasing excitement and orders at the show that will be delivered through Dot. And just by way of example, Green Nature took OLIPOP and Liquid Death from 0 to over $20 million in revenue through foodservice. So we know that we have the right foodservice broker. They’ve got 18 sales folks that are around the country that all they do is speak to foodservice operators.

So that’s restaurants, colleges hospitals wherever cafeterias and canteens. And so we’re going to see significant growth through that channel. And then again Dot Foods is having their exposure here in Denver in April. And so Jones will be there again to secure new business at that Expo. So foodservice, you’re going to see a lot of buzz and activity about Jones Soda taste amazing and a frozen slush or off the fountain as well as now being available through cans. So exciting stuff. So, hopefully, Steve that answered your question.

Unidentified Analyst: It does. Thanks. And I appreciate my kind of follow on related to foodservices and the sales process of it. The fact that they’ve got their own salespeople is really helpful, because it goes back to, I guess, Daniel’s question around the additional SG&A relative to the sales. So partner with the right folks that have their won sales team, and that’s super helpful. I’ve got a few more questions if that’s okay.

David Knight : Yes. Sure. Go ahead.

Unidentified Analyst: In your 10-K and 10-Q, you referenced that there’s I think 27 million warrants that are set to expire. I want to say mid-March with a $0.65 conversion price. Will those be expiring and going away and removing that overhang? Or do you know if they’ll be converting those at the $0.65?

David Knight : I’m going to hand it over to Joe. Joe, do you want to answer that?

Joe Culp: Yes, yes, good question. At this point, no plans for any changes, but we’ll certainly let you know if anything changes there. And we know that’s just coming up in a couple of weeks, but no plans to do anything with those.

Unidentified Analyst: Okay. So they — but they expire. I was trying to count the days and figure it out, but it is in March of this year that they expire this month?

Joe Culp: Correct.

Unidentified Analyst: Okay, great. Thank you. And then my last question and I’m really happy to hear the number one corporate objective is shareholder value. As we think about how that shareholder value is created through the different verticals that you’ve now introduced, the broadening of the product base, growing top line revenue, paying real close attention to both gross and net margin, watching that growth in EBITDA, even though it may be negative quarter to quarter, but selling it all moving in the right direction as you guys build out and invest back into the business. Share price is obviously another indicator of growing shareholder value and not one of the challenges or two of the challenges that we face as a company, being on the current exchange that we’re on presents a liquidity challenge for current shareholders.

And it also kind of inhibits the broader investor support as there’s a lot of brokerage firms that are not permitted to buy for their clients. Any penny stocks or anything on an over the counter as you think forward growing shareholder value with all these other channels are very important. But how do you think about uplifting the stock or reversing the share price and maybe tying it with something like rights offering to get capital in the Company and allow current shareholders to maintain their percentage or increase ownership through that rights offering kind of going forward, like your thoughts around that.

David Knight: Yeah. Look, it’s something that is I’m wondering, we call it big rocks. One of the things that I’m I focused on every day and the share structure, the boards that were on opportunities add to uplift is certainly one of my top priorities. So, I’m privileged to have some great Board members, so we’ve set up a small team of myself and several of our Board teams to really go through what are the opportunities, what’s the best way to raise capital? What’s the best way to make our shares more available, certainly being a penny stock is not where we want to be. And yes, you’ll hear more on that this year, but I assure you, it’s on my kind of top three objectives for the first half.

Unidentified Analyst: Well, that’s great to hear the shareholder for a very long time. And I wasn’t sure what I was going to do and then saw the transition begin to happen and thought I’d just stick it and watch for a little while and you guys have quarter over quarter and year over year executing and doing what you’ve indicated publicly, what you are going to be doing and executing on the plan, so thanks for that and good luck for the rest of ’24. We’re watching closely.

David Knight: Yes, Steve. Look, I mean we have a large group of really loyal shareholders, right. And one of the things I noticed when I came into the Company was gosh, people are still hanging in and still supporting and we need to get growth behind the company. We need to prove to you and do what we say and say what we do, right? Trust and execution is key in any company. But beverages, it’s paramount. And so I’m glad that we’re now in this cycle of hey we’re looking at opportunities where we’re identifying great verticals and we’re going hard at it, right? I think we’ve delivered more innovation at Jones Soda in the last six months than we probably ever had before. So we’re hard at it, right and I would encourage you guys to hang in.

We are excited of the plans that we have and that’s going to reflect in shareholder value. So, thank you for your patience and commitment and I’m looking forward to delivering Q1 and giving you insight into lower during Q2. And just as that that momentum builds, I think we’re going to have a very exciting year.

Unidentified Analyst: Great. Thank you, very much.

David Knight: Thanks, Steve.

Operator: And at this time, this concludes our question and answer session. I would now like to turn the call back over to Mr. Knight for any closing remarks.

David Knight: Yes. Thanks. Thanks a lot John. I’ll be brief. I think I’ve said exactly what I needed to say. I appreciate the support that we’re getting across the company from our Board, from our shareholders. Thank you everyone for taking the time to listen today and we look forward to coming back with you and reporting on our first quarter results in May. And I’m enjoying some of the calls I’m getting from our shareholders, right? They’re calling me up and asking questions and supporting what we’re doing and noticing a difference. So, that transition from a soda company to a total beverage plays is really key to our success and getting into new formats, new verticals, new sub-brands is going to be priority one for us as we drive both Jones Soda and Mary Jones. So, thanks everyone. Have a great day. I appreciate you all.

Operator: Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.