Jones Soda Co

Good afternoon, everyone. Thank you for participating in today's conference call to discuss Jones Soda's financial results for the second quarter ended June 30, 2022. 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 8K. In addition, this call includes discussion 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. I would like to remind everyone that this call will be available for a replay through August 18, 2022, 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. Now, I would like to turn the call over to the President and CEO of Jones Soda, Mark Murray.

Thank you, Tom, and thank you, everyone, for joining us today. We recorded another strong quarter here at Jones, marking our eighth consecutive quarter of year-over-year revenue growth in the first time since 2009 that our revenue in the first half of the year exceeded $10 million. Considering the volatile macro environment and uncertainty surrounding consumer spending, I am very proud of the revenue growth we continue to report. To give context, when we first entered our three-year strategic turnaround plan back in 2020, We developed internal revenue projections for each year to keep us on track. It's noteworthy to report that within the first six months of 2022, we exceeded the initial revenue target we set for the entire year of 2020. This is a testament to not only how far we've come in a relatively short period of time, but also our team's ability to execute and our growth strategy. even during unprecedented market conditions. While we did see some margin compression when compared to Q2 of last year, it is important to note that 2021 had a benefit of market tailwinds and an outside portion of high-margin fountain sales to the overall product mix. Despite the slight year-over-year compression, we were in line with our internal margin expectations. Overall, we are incredibly proud of our team's ability to execute upon our transformation strategy throughout the quarter, which I believe will further position Jones for continued success. On the call today, I'm going to do a dive deeper into our sales performance, new and upcoming marketing initiatives, our core operations, an update on our successful cannabis launch, and then wrap up the call by responding to questions submitted by shareholders over the last few weeks. Before I dive into those topics, I'd like to hand the call over to Joe to discuss our strong financial results for the quarter in more detail. Joe?

Thank you, Mark, and good afternoon, everyone. Net revenue in the second quarter increased 35% to $6 million, compared to $4.5 million in the second quarter of 2021. This increase was primarily due to our continued growth in our retail and alternative channels within the core soda business. It's important to note, while we experienced a successful launch of certain cannabis products during the second quarter, all cannabis-related sales were recorded subsequent to the end of the quarter. and we expect to see those results begin to flow through our financials starting next quarter. Gross profit as a percentage of revenue was 28% compared to 31.3% in the prior year period. As Mark mentioned earlier, the year-over-year margin compression was the result of a combination of sales mix and inflationary pressures related to increased material and freight costs. However, our price increases and overall management of our supply chain costs offset a portion of these factors. It's also important to note, as evidenced by our strong revenue growth, our increased prices have not discouraged our customers from purchasing our products. Operating expenses in the second quarter were $2.8 million compared to $1.4 million in the same year-ago quarter. The increase was primarily due to an additional $1.2 million of costs to support our strategic entry into the cannabis sector. Net loss in the second quarter was $1.4 million, or negative two cents per share, compared to a net income of $300,000, or zero cents per share, for the same quarter in 2021. The increase in net loss was primarily driven by the aforementioned startup expenses related to the launch of certain cannabis products during the past quarter, as well as continued investments in our sales and marketing initiatives. Additionally, our results from the second quarter of 2021 included the full forgiveness of our $335,000 loan under the Paycheck Protection Plan recorded as other income. Adjusted EBITDA in the second quarter was negative $1.1 million compared to $0.4 million in the year-ago quarters. Moving to the balance sheet. As of June 30th, 2022, cash and cash equivalents were $9.3 million compared to $4.7 million on December 31st, 2021. Working capital was $13.9 million at June 30th, 2022 compared to $6.0 million on December 31st, 2021. Additionally, As of June 30, 2022, all convertible debentures have been converted and we do not have any substantial debt. I'll now hand the call back over to Mark for his remarks.