Jones Soda Co

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 31st, 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 21st, 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.

Hey, thanks, John. And thank you, everyone, for joining us. 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 is a new buzz around the craft soda category with continued innovation and product news. Jones is 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 food service 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 a million dollars 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 one-time 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. All 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 food service 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 I'm 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.

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 lemon cocoa 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 startup costs associated with the development of the Mary Jones brand. Net loss in the fourth quarter improved to $1.5 million, or negative two cents per share, compared to a net loss of $1.6 million, or negative two cents 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 5 cents per share compared to a net loss of $6.4 million or negative 7 cents 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. Now moving on to 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.