Jones Soda Co

Good afternoon, everyone. Thank you for participating in today's conference call to discuss Jones Soda's financial results for the third quarter ended September 30th, 2022. This call is being recorded. 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. I would like to remind everyone that this call will be available for replay through November 10th, 2022, starting at 730 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.

Okay, thank you, Jenny, and thank you, everyone, for joining us today. We wrapped up another solid quarter here at Jones Soda Company and reported our ninth consecutive quarter of year-over-year revenue growth. Looking at our results year to date, our top line has grown 26% when compared to the same period last year. To provide additional context on what that means to the organization, year to date, at the end of the third quarter, we posted 5% more revenue than we did for the entire year of 2021. That said, all our sales for the upcoming quarter will reflect incremental year-over-year volume increases for the company, which we are proud to be able to share with you today. While we have faced inflationary headwinds, our focus on expanding our points of distribution managing costs, and strategically spending our trade and marketing dollars has allowed the company to capture growth in today's volatile market. Although we have experienced year-over-year margin compression as a result of higher raw material costs, we are not only in line with, but we are performing slightly better than our internal expectations. I am very proud of our team's achievements in the third quarter and their dedication to helping Jones Soda become a leader in the craft soda and cannabis channels. The entire team has put in an exceptional effort to manage costs, execute on our marketing strategies, and continue delivering superior customer service, all in the face of a very difficult macro environment. I firmly believe we are set up nicely to continue delivering great results for the rest of the year and into 2023. On the call today, I'll provide further details on our sales performance, new and upcoming marketing initiatives, core supply chain and operation updates, and a commentary on our cannabis segment, Mary Jones. We'll 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 third quarter increased 5% to $4.8 million, compared to $4.6 million in the third quarter of 2021. This increase was primarily due to the sustained growth of our core bottled soda business in our retail and alternative channels, along with generating approximately $114,000 in revenue from the company's cannabis products that launched in the current year. I'll let Mark explain the revenue-generating dynamics of this segment later during the call. Gross profit as a percentage of revenue was 26.9% compared to 32% in the prior year period. The decrease was due to a combination of sales mix and inflationary pressures, slightly offset by decreased freight costs and previously implemented price increases. While we did experience margin compression compared to Q3 of last year, as Mark mentioned, we slightly beat our internal expectations due to the overall management of our supply chain costs. Operating expenses in the third quarter were $3 million compared to $1.4 million in the same year-ago quarter. The increase was primarily due to $800,000 of planned spending to support our strategic entry into the cannabis sector, along with an increase in marketing dollars being spent to drive special promotions for our core bottled soda business. Net loss in the third quarter was $1.7 million, or negative two cents per share, compared to a net loss of $59,000 or zero cents per share for the same quarter of 2021. The increase in net loss was primarily driven by the expenses related to our cannabis launch and decrease in gross profit. Adjusted EBITDA in the third quarter was negative $1 million compared to positive $72,000 in the year-ago quarter. Now moving to the balance sheet. As of September 30th, 2022, cash and cash equivalents increased 76% to $8.2 million compared to $4.7 million on December 31st, 2021. Working capital was $12.9 million at September 30th, 2022 compared to $6 million on December 31st, 2021. I'll now hand the call back over to Mark for his remarks.