Lftd Partners Inc

Welcome to Lifted Partners' first quarter 2024 earnings conference call. This call is being recorded. At this time, all participants are in a listen-only mode. If you have joined via the webcast and would like to ask a question during this presentation, please click on the Ask Question box on the left side of your screen, type in your question, and hit Submit. Teleconference participants, please hit star 1 on your telephone keypad to ask a question. I will now hand the call over to Jerry Jacobs, the Chairman and CEO of Lifted Partners, Inc. Please go ahead.

Good morning, and welcome to Lifted Partners' first quarter 2024 earnings conference call. Our earnings press release and financial statements for the first quarter 2024 have been filed with the SEC, and links to both can be found in our website, www.lftdpartners.com. On today's call, we'll share some comments on our quarterly performance, and we'll answer some questions at the end of the call. A replay of this call will be available for an extended period of time, accessible through the investors section of our website. Here's the safe harbor notice. Some of the statements that we will make today regarding our business operations and financial performance, including words such as may, might, would, should, could, potentially, hope, believe, expect, project, and similar verbiage are forward-looking statements that involve a number of risks and uncertainties that could cause actual results to differ materially, so listeners should not place undue reliance upon such statements. For more information, please refer to the risk factors discussed in our most recent Form 10-K filed with the SEC. We undertake no obligation to update these forward-looking statements. I'd like to highlight some of the factors that have been impacting our business, some for the better and some for the worse, over the past few months. First, regarding product collaborations. During the second half of 2023, our lifted subsidiary launched a hemp-derived products collaboration with privately held marijuana company Jeter, which absorbed a significant portion of our management time and efforts. However, for various reasons, neither party was satisfied with the collaboration. Consequently, Lifted and Jeter signed a mutually acceptable termination agreement that unwound the collaboration's positions, including in regard to cash, accounts receivable, raw materials, and finished inventory associated with Jeter-branded hemp-derived products. While this unwinding actually had a positive impact on Lifted's cash on hand, Bob White- Which is currently in excess of $5 million under gap accounting rules, the transfer from lifted to Jeter of raw materials and finished inventory resulted in lifted recognizing a loss from the termination of the Jeter collaboration of $1.3 million. Bob White- One of the reasons why lifted agreed to terminate its collaboration with Jeter is that nearly back to back with the termination of the Jeter collaboration. lifted entered into a new collaboration with a much larger publicly traded multi-state marijuana company on terms and conditions that we consider to be more attractive than the jeter deal and meanwhile lifted is continuing to manufacture and sell hemp drive products under its collaboration with diamond supply company second regarding stock buybacks As previously reported, Lifted Partners received approvals from our lender, Surety Bank, and our board of directors to use up to $300,000 of our working capital to conduct a private off-the-market stock buyback of up to 178,571 shares of our common stock at $1.68 per share or less from certain of Lifted Mate's earliest employees who are obligated to pay income taxes on the deferred contingent stock that they acquired pursuant to an employee retention agreement that was negotiated by Nick Warrender that reduced his merger consideration by the same number of shares. Pursuant to these approvals, Lifted Partners to date has purchased a total of 143,000 shares of our common stock at $1.68 per share for an aggregate of $240,240. Paul Cecala, Third, regarding regulatory risks hemp derived cannabinoid infused products continue to be under regulatory attack at both the federal and state levels. Paul Cecala, A reauthorization of the so called farm bill is currently being discussed in Washington DC and it is uncertain what language will be included in the final legislation. In addition, Bill Meyer- prohibition of or tighter regulation of hemp derived cannabinoid infused products has been adopted or proposed in several states that are significant markets for lifted, including Florida. Bill Meyer- These federal and state regulatory challenges are material risks to lifted business and are continuing to require us to expend substantial management time effort money in regard to lobbying efforts. At this point, I'll turn over the presentation to Nick Warnder, our vice chairman and chief operations officer and the founder and CEO of our wholly owned subsidiary, Lifted Made.

Thank you, Jerry, and good morning, everyone. I'd like to provide some information regarding some exciting developments and updates regarding for Lifted and operations, the first being Milos. We plan to launch our new brand of non-hemp health and wellness products called Milos this May. The Milos brand will focus around fitness, focus, sleep, and relaxation. Milos will be the first nutraceutical gummy brand leveraging the power of botanical terpenes with well-known natural ingredients. The second is a brand called Rebel. We plan to launch a new brand of non-hemp energy gummies called Rebel in June. These gummies are formulated to compete with similar Red Bull caffeine-infused beverages. Third, we're working on our rebrand of Herb. Our team, along with one of the top creative firms in the world, have spent the last seven months working on the newest iteration of our best-selling brand, Herb. This relaunch will showcase a brand-new suite of products, formulation, technologies and branding that we believe will set a new benchmark in the cannabis industry. Come by and see the new phase of ERB this July at Champs Vegas. Fourth, our expansions of our Kenosha operations. At the end of March, Lifted came to an agreement with its landlord in Kenosha to cancel, without penalty, two of its existing leases in the Kenosha Business Park and to expand the area of another existing lease in the Kenosha Business Park by an additional 23,000 square feet. This started April 1st. We expect this arrangement to improve Lifted's operational efficiency meaningfully. Fifth, the relocation of our hemp flower division to Colorado. Lifted has terminated its lease in Aztec, New Mexico, and has moved its hemp flower division to a facility in Durango, Colorado. One of the reasons we made this move was to allow Lifted to be able to manufacture its own THCA products, which are currently illegal in New Mexico, but legal in Colorado and have big consumer demand. At the Durango facility, we're using a large machine that we acquired in the Oculus acquisition to manufacture hemp drive products. Finally, a major new online sales initiative. Our company's greatest strength continues to be our well-known, high-quality, and extremely popular brand, Herb. However, for technical reasons, it's been challenging for Lifted to use its current website to simultaneously and efficiently sell Herb products to individual consumers, to our retail stores, and to our distributors. We have spent months analyzing the situation, and we've developed a solution that is currently being implemented, which we expect will be capable of efficiently handling larger product and sales volumes to all three of our channels. At this point, I will turn the presentation over to Jake Jacobs, our President and Chief Financial Officer.

Thank you, Nick. My comments will be based on quarter-over-quarter comparisons of Q1 2024 to Q1 2023, unless they state otherwise. Our consolidated net sales were $10.6 million, down 14% due to a number of headwinds. Prohibition of or tighter regulation of intoxicating hemp-derived products has been adopted or proposed in many states that are significant markets for lifted, including Florida. There is also greater competition in the marketplace for branded hemp-derived and psychoactive products. More distributors are creating their own brands and selling their own branded products at low prices. There's increased competition for products containing more milligrams of cannabinoids per unit at lower price points. And other competing brands are paying distributors and wholesalers for valuable shelf space, which is something that Lifted has never done. Our total cost of goods sold was $7.3 million, up 7%. Written off inventory increased to $399,000 compared to $132,000. Operating expenses were $3.5 million, down 39%, or $2.2 million. The decrease in operating expenses was primarily driven by the fact that $2.1 million of deferred contingent stock was recognized in Q1 2023, but none was recognized in Q1 2024. We expect to see a significant reduction in payroll and consulting fees. Prior to May 1st, Lifted's single largest payroll expense was the salary and bonuses owed to Lifted's chief strategy officer, the quarterback, the ramp-up of Lifted's sales team to its current size of 30 individuals. During 2023, Lifted's chief strategy officer earned cumulative salary and bonuses that were in excess of $1.4 million. Lifted's chief strategy officer retired as of April 30, 2024, which is substantially reduced lifted payroll. In addition, in April 2024, Lifted terminated a consulting contract with a third-party firm that was costing Lifted $180,000 per year. These two reductions in Lifted's payroll and consulting fee obligations will obviously have a material positive effect on Lifted's profitability. Operating loss was $122,000 compared to an operating loss of $105,000. Other expenses were $1.4 million compared to $10,000. Other expenses primarily consisted of lifted $1.3 million loss triggered by the termination of the Jeter collaboration. Offsetting the Jeter loss was the benefit of $397,000 from the provision for income taxes bringing lifted partners net loss to $1.1 million, or $0.08 per share, compared to a loss of $141,000, or $0.01 per share. Basic and diluted weighted average shares outstanding for the quarter were 14.8 million shares. At March 31, 2024, we had total outstanding vested and exercisable options and warrants of $3.6 million, with a weighted average exercise price of $3.85, which, if all were exercised, would generate proceeds of $13.8 million, ignoring any cashless exercise features. In regards to our March 31, 2024 balance sheet compared to our December 31, 2023 balance sheet, cash on hand remained level at $4.3 million. Inventory decreased 25%. to $7.6 million, down from $10 million. Current assets decreased 15% to $18.4 million, down from $21.6 million. Current ratio increased to 2.62 from 2.49. Working capital decreased 12% to $11.4 million, down from $12.9 million. And there are outstanding notes payable to Surety Bank of $3.7 million, down from $3.9 million. We'll now answer questions that have been submitted to us. If you would like to ask a question and are connected via teleconference, please press star 1 on your telephone keypad. Confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing start keys. Webcast participants, please click on the ask question box on the left side of your screen. Type in your question and hit submit. Okay, we received a question. I'd like a question regarding the plan to reward the initial Investor class money has been made by many outside of the people that invested their hard-earned money years ago. Jerry, do you want to handle that one?

Yeah, sure. Yeah, this has been a situation where all of us who are shareholders of the company are concerned, obviously, in terms of the stock price, which Since the initial investments were made in our company by our convertible preferred shareholders at a dollar a share, our stock has bounced around quite much higher than it is today and for a brief period lower than a dollar a share. But I'd say that from an overall perspective, the challenge in terms of our stock price is primarily based on conversations that we've had with potential investors and funds, the biggest issue relates to the regulatory environment that we're operating in, which is both, as I mentioned earlier, is both at the federal level in terms of the reauthorization of the farm bill, but it's also at the state level, especially in terms of a few states that are very significant to our sales, including state-by-state discussions in Florida, Illinois, Texas, and so forth. We're doing everything we can along with other players in the hemp industry. There's a massive lobbying effort by players in the hemp industry, including Lifted Partners, to attempt to minimize any negative effects of potential regulatory or legislative or regulatory changes. But this is an ongoing fight and our stock is clearly being weighed upon by those regulatory risks.

We have another question. Do you have a sense of what the new farm bill might include in relation to hemp derivatives and can you discuss how that could impact your business under various scenarios? Some states like Virginia, Texas, and Florida have talked about a crackdown on hemp derivatives. Can you discuss what has changed in both states and whether it has impacted your business? Gary, do you want to take that one?

Well, you know, we're privy, and especially Nick is privy to, you know, the strategies being used, lobbying strategies being used by the hemp industry. And, you know, we're very well aware of a lot of nuances in terms of Patrick Corbett- Potential regulatory features we are like the other companies attempting to. Patrick Corbett- You know, educate. Patrick Corbett- legislators, both in terms of how huge this industry is and how many jobs it's creating not just for farmers, but processors labs manufacturers distributors and so forth, but. Having said that, you know, there's also many, many millions of dollars being spent by lobbyists, many of whom relate to large marijuana companies who are, you know, jealous of or resentful of the position that the hemp companies are in. You know, I guess I'd ask Nick whether there are any comments from the internal discussions of the hemp group that we're free to share in this call?

We've been actively engaged in D.C. for two years. It's something that we're working on every day to ensure that we have a friendly farm bill at the federal level. Likewise at the state level. So, you know, we're currently battling in some key states. We've been super successful in a lot, and we have lost some like Virginia. But we've also seen massive economic impact in the state of Virginia. Sixty-eight percent of businesses went out of business after that ban bill was put into place. So, you know, we're really hoping that the other states see that this is not only a big business, but there's a massive consumer benefit to it. And that they put in, you know, proper regulations, not prohibition. So, we're pushing for proper regulations. We believe that good regulations are not only good for the industry and the consumer, but we believe it's good for our business. And it gets some of the bad players out and the bad products out. So, we're all for regulations. We just want to see logical, realistic regulations that allow small businesses to still participate. And those are the things that we're fighting for and we have been fighting for.

All right. The next question we received is, have you been able to expand to derivatives of psychedelics in any ways? And can you discuss how that is going? Nick, is that something you need to comment on?

Sure. Yeah. So we were super early in... the research and development of Amanita muscaria and Musclamol being the primary compound. We had some great success in the early stages of that product. The markets kind of continued to shift and we've continued to do a lot of R&D on legal compounds to service that market. as well as legal due diligence. So, you know, we have multiple things in our pipeline right now that is in R&D and is in legal. And, you know, we're hoping to get more products to market that are in that category, along with the health and wellness category. And we continue to explore products that we can plug into our current distribution channels. So we've spent the last seven or eight months not only rebranding, you know, our best-selling brand herb and also looking at, you know, non-intoxicating cannabinoids for states that have banned Delta-8 and some of these other intoxicating cannabinoids. And, you know, a lot of our work over the last six and seven months is starting to get to market this quarter and then the third quarter and finishing off the year. So, you know, we've We've battled in all of these states, we've battled at the federal level, but you know, simultaneously we spent a lot of time and money in getting other things to market that can penetrate our retailers and our current distributors. Um, and add a couple more legs on our chair. So, you know, we've, we, we grew at extremely fast rate as a company. Um, we've still stayed extremely nimble and we've, we've tried to continue to be able to pivot as fast as we can, but. In order for us to do things right, it takes time. I think that we've been conservative in our efforts, but we've also pushed forward at a rapid rate to expand our offerings and to de-risk the hemp side of our business as much as we can while also following the law. again, we want our industry to be regulated. We think it's a positive thing for companies like ourselves. And we think that that'll put us in a better position. So, you know, we're active, we are activating on all levels as an operating company. And, you know, we have a lot of excitement for the things that we're working on. And we'll continue to fight. And, you know, we hope that All of these efforts will start to reflect on our financial statements and give more insight as to the work that has been done behind the scenes.

Thank you, Nick. All right. Another individual emailed two questions. Is the company currently cash flow positive? Is there a need to replace the strategy officer who retired? Q1 2024, yes, the company was cash flow positive. Nick, can you comment on that second part of that question, please?

Sure. So, as the CEO, I'm doing everything in my power to increase our business. to increase our cash flow, to increase our profitability, even if that means taking on more work personally. So I dove headfirst into that role myself. We are bringing on some more support for that role. We have great management at the sales team level. We went from $70,000 a month in wholesale business prior to bringing that individual on to about a million dollars a month in wholesale business, and that's at great margin. So, you know, we brought on that strategic person to help us build a sales force that will continue to grow and continue in moving forward. So there is management that was put into place prior to him leaving the company, and this wasn't something that You know, we randomly let this guy go or he randomly retired. We had a strategy on, you know, really burn the midnight oil for years. His contract was two years. He stayed on for over two years and really helped kind of build out that sales infrastructure. So we're bringing on some marketing support. We've never had a huge marketing team. I'm becoming more involved in sales as well to see how we can expand with our current distributors. but also how we can expand our direct-to-consumer business as well as our direct-to-store business. These are two pathways that we've seen grow, but we know that if we increase the technical support, if we increase our website to be more mobile-friendly, if we do a lot of twisting of the dials, I think we can see big growth in the business that has the most margin. So that's a huge focus for us to get launched literally over the next month as we go into this rebrand relaunch. Um, it's something that I've never been so proud of the work that's been done, uh, to take herb to the next level and how we're going to showcase ourselves to the world. So there's a lot of great things going on, but you know, we are cashflow positive. Um, we did have a strategy, um, with our CSO bill who came in, he did a phenomenal job and he really left us with, uh, a well-organized sales machine that is going to take us forward and do great things for us for a lot of years to come. So, yeah.

All right. The next question we received is marijuana stocks are some of the highest performing stocks year-to-date 2024. Is it time to try to spend more time on this market as opposed to the market that you are facing now? all these headwinds in the health-oriented market for sleep and relaxation is already very crowded. I think this market will be difficult. Nick, do you have any comments or Jerry on that? Sure.

Yeah, I mean, let me initially say the topic of us getting involved in marijuana is something that and we have been evaluating on a quarter by quarter basis. You have to keep in mind, our shareholders need to keep in mind that since the marijuana gold rush, as they called it, or green rush started, I mean, there have been in the marijuana industry, according to one report that we've seen, that was reported by Benzinga, there's been like over $13 billion of investors' money that's been lost in the marijuana industry. When you look at the marijuana industry, even today, there are literally, at least among the publicly traded marijuana companies, you know, you will see at most like one publicly traded marijuana company that is profitable. They're all still losing money. So, We have to be very, we are very wary of getting in the swimming pool with the marijuana companies because the pathway to profitability is extremely difficult in that industry. There's tremendous price compression, tremendous number of companies that are running out of cash. And, you know, the recent run-up in marijuana stocks is largely due to the reflection that it's been reported that the DEA has internally concluded that, although they haven't formally recommended yet, that, you know, marijuana be reclassified to Schedule III. But, you know, that leak of DEA intention to reclassify sparked the run-up in marijuana stocks. But the reality is that, first of all, in our opinion, it is not clear yet what impact the rescheduling will have on Section 280D. And number two, even if you can be convinced that the rescheduling to Schedule III would result in the impact of IRS Code Section 280E no longer applying to marijuana companies, that process of getting that released under Section 280E potentially could be years away. The process of DEA announcing an approval of the rescheduling followed by public notice of that, public comment periods, even if the White House, you know, even if the Office of Management and Budget approved it, there will undoubtedly be litigation relating to that. And, you know, that process could conclude as early as, you know, say a year and a half from now, but it could go on for about five to seven years. So we're very wary of stepping into the marijuana industry when, again, we feel Like it is a, uh, it is just a very, very easy way to lose a great deal of money and there's no clear path to profitability. We are certainly willing to re revisit that and we look at it each quarter, but that's our assessment at this point. Uh, you know, we're, we're not, we, uh, you know, we've received comments, you know, over the last couple of years from. potentially, you know, funds that are potentially interested in it. And like one of them within the last month, you know, called me and said, you guys are like the last of the Mohicans standing a public company that's actually profitable in the cannabis space. So we're very, very judicious in terms of our evaluation of it. But even putting aside the question, which is obviously very difficult to put aside the question of you know, is there a path to profitability in marijuana? There's an other issue that is very important to us, which is that, you know, Jake and Nick and I have spoken to many funds over the last couple of years that, and many of them potentially would be interested in getting involved in our stock. But 95% of those funds, their position wound up with guys uh you'd need to uh migrate from the otc uh to the nasdaq because our fund either by our charter or what we promised to our investors whatever we have to invest only in stocks that are on the nasdaq or the new york stock exchange or some other recognized exchange and uh you know the volume of our stock we believe would go up significantly if we're on nasdaq And of course, many, many funds, as I mentioned, I think the pool of funds and family offices that would be potentially interested in investing in our stock will increase dramatically if we were, for example, able to get onto NASDAQ. But the problem is that as of today, you know, as it has been for several years and it's still today, if our company were to touch, quote unquote, touch the marijuana plant in the United States, it's not possible to list on NASDAQ. So, you know, we don't want to lose the opportunity to, whenever we meet the NASDAQ listing requirements, to immediately apply to NASDAQ. And we are 100% sure that our opportunity to meet their listing requirements will evaporate if we were to touch the marijuana plant in the United States. So it's the combination of getting involved in marijuana would likely cause us to lose money in that division, plus our getting involved in touching the marijuana plant in the U.S. would cause us to lose any opportunity to potentially at a future time get onto NASDAQ. Those have led us and our board of directors to choose to stay out of marijuana at this time. But if the laws change, if the pricing dynamics in marijuana change where we actually thought we had a possibility of being profitable in marijuana and could get onto NASDAQ if we were involved in marijuana, well, that would be a very different world and we would actually we would shift from kind of sitting on the sidelines observing marijuana to potentially having quite a bit of interest in getting involved in marijuana. But there are a lot more layers to the onion that may immediately be apparent to people. And like I said, this run-up in marijuana stocks is based on a reaction to this leak from the DEA that we are not sure whether it's going to have the positive impact that some investors, clearly retail investors, are suggesting it will. And even if it does, like I said, that may not come down the road for a year and a half to seven years. Nick, I don't know whether there's any other comments you'd like to make on this topic.

Well, we found a great way to license our brand, and we're testing that in New Mexico right now, and it's going very well. So we dipped our toes into the license side without plant touching. We're seeing people resonate with the URB brand, with our packaging, with the quality of product, and it's been a total grassroots effort, and it's expanded very well over the last few months. you know, those type of deals is something that we're certainly going to continue to explore. We think that at least those markets are solidified. But we weren't, one, going to put us in a position to not be able to uplift the NASDAQ, but also go burn a ton of cash to try to figure out, you know, what would participation in licensed states look like? So, you know, we were conservative. We tested a model, and it's, in my opinion, been successful. So, You know, it's certainly something that I think we'll continue to look at expanding, but doing it in a way that, you know, doesn't put us at huge risk to ourselves or our numbers, our cash flow, or our investors. But we are participating at this time.

Yeah, and I'll just add to that the collaboration that we're doing in New Mexico. We are, under that agreement, we do have the ability to pull out of it at any time if we wanted to, if there were any issue that we foresaw with applying to NASDAQ. So we're getting as close to that industry and participating as we can without, you know, making it not possible for us to apply to NASDAQ. All right, the next question is, Historically, it appears that most of our customers like to have the semi-high feeling of the cannabinoid products that are under such intense regulatory risk. Have you given any thought to offering white-labeled alcoholic beverages on your website, which I am pretty sure are legal to meet the desires of your current customer group to have the party-like feeling? Jerry, can you take the lead on this one, please?

Yeah, I mean, we, that's an actually a very interesting, important question. You know, we have dipped our toes into the alcoholic business by our purchase a few years ago of 4.9% of Bend Distillery in Bend, Oregon. Bend Distillery manufactures Crater Lake Spirit, whiskey, gin, and vodka under the Crater Lake Spirits brand. And although some folks in, you know, Chicago or the East Coast, Southeast may never have heard of Crater Lake Spirits. It's really a wonderful brand and it does have a significant presence in Oregon, Washington, Northern California. And, you know, I sit on the board of directors of Bend Distillery and we've gotten to know the folks that own and manage that brand very well. We have had, and you know, without breaching nondisclosure agreements, we have had and we are continuing to have a very extensive dialogue with Bend Distillery about how we could assist them, participate with them, Uh, in one fashion or another, which could be anywhere from, uh, a financial relationship or anywhere up the line to a flat out merger of that company with us. But, uh, you know, the education, we do a lot of due diligence and every deal we look at, I'm not going to spend the time in this call to try to walk through everything we've learned, but. The alcoholic beverage industry is a highly regulated industry. Distilled spirits as well as beer have been experiencing a significant downturn nationally as just consumer preferences have been moving in less drinking, less alcohol, being healthier. you know, drinking mocktails and whatever you want to call these non-alcoholic drinks, which are, you know, booming and taking market share. And frankly, in my opinion, it's a combination of the movement towards health and wellness and non-alcoholic drinks, which is side by side with a very significant increase in the use of marijuana as well as other types of non marijuana intoxicating products which is a combination of many things including hemp derived products including psychedelics and so forth this is an area that from from not only the alcoholic beverage regulatory industry, which has all sorts of restrictions in terms of how you can transfer alcohol from one jurisdiction to another, but also, you know, there are other nuances to the, there are nuances in terms of how we would be in a position to participate in that industry that you know again i'm under a non-disclosure agreement as to certain topics here but uh the the topic of you know there is a public company called tilray a canadian which i'm sure many of the people on this call are are aware of you know tilray is a mammoth uh marijuana company that out of canada that raised you know, an insane amount of money and lost a gigantic amount of money spending that in the marijuana industry. And it got to a point where they brought in at extraordinary expense, a new CEO who basically raised, in my opinion, basically raised the white flag, uh, on, uh, seeing any dramatic up taken the profitability opportunities for till rate in marijuana. And consequently, this new CEO decided to bet a lot of Tilray's remaining cash and future prospects on alcohol. And they have purchased a number of beer companies and other alcohol-related businesses. We're not saying that we have concluded one way or another what is the best way to expand our relationship with Bend Distillery and in the alcohol business but it's it's a topic that we're very heavily in real time in discussions and analysis on and that's about all I can say at this point all right the next question is are there any future opportunities to partner with marijuana companies

Well, we did enter into a manufacturing and sales and marketing agreement with a subsidiary of a large publicly traded U.S. marijuana company in the beginning of the year in January. The 18-month agreement, we're manufacturing their gummies, hemp-derived gummies and vapes. Once the other party is paid, they're putting up the money for all of the inventory uh once they are repaid that money uh the uh revenues split 60 to the other party and 40 to lift it as royalty payments so we have partnered with uh another marijuana company that's publicly traded in the us jake i'll i'll add to that that uh look we

We have been approached and are in discussions with a number of companies, both inside hemp and outside hemp, that are potentially interested in merger opportunities with us. But it's, you know, look, some of our shareholders may be, you know, a little restless, wishing that that process would go forward. uh faster uh but uh we are a company that are committed to uh only engaging and participating and merging with companies that meet uh you know a pretty rigorous set of criterias uh you know we do not want to get larger just for the sake of getting larger so we are really looking just for merger opportunities uh you know that we feel have a high likelihood of contributing to uh growth and earnings per share yeah we're only interested in emerging with companies that we feel have people that have very high integrity standards to complying with the law and i can tell you that there are many companies in the cannabis space that do not have that mentality and so we cannot do business with them uh and of course from our standpoint uh you know, valuation is also, you know, an extremely important topic. And it's very difficult, because, you know, the run up in the, the great euphoria of the green rush, in which gigantic billions of dollars were raised for marijuana companies led many of many potential merger candidates to have know valuation expects expectations about their business that you know we're just uh not uh you know we're not buying into uh but having said all that there are a few companies again or under non-disclosure agreements i'm not going to get into the names of any of them but we are in discussions with about some transactions uh like i said our criteria are very rigorous Uh, but we are in discussions with some. For some transactions that do have at this point in time, or we wouldn't be continuing the discussions at this point from what we know we're optimistic about, but it's a real time situation where these discussions and due diligence are ongoing. We're heavy into it. They're spending a lot of time on it. Uh, but we're not going to pull the trigger unless we really feel that you know, it's a very good deal for us and has a high likelihood of creating shareholder value.

Thank you, Jerry. Next question. Can you talk about what you are doing to improve liquidity in the stock for investors? Average volume of around 2,000 shares is a big deterrent to investors seeking maybe to invest in the company. In addition, with a market cap of less than $20 million, is an uplifting to a major exchange even realistic? Jerry, can you take this?

Yeah, well, I mean, that question, you know, puts its finger on a topic that in terms of our time, as Nick and Jake knows, has taken up a vast amount of our time. You know, we clearly, the holy grail, you know, the grail for us is to get onto NASDAQ But, you know, the biggest issue relative to NASDAQ is that you have to have, you know, their listing requirements include that the bid price on our stock has to be consistently higher than $4 a share, and we're not near that at this point. Everything we do has to have in mind, and it does have in mind, what is the likelihood that this is going to get us closer to that listing requirement or further away um there is putting aside nasdaq and our strong desire to meet their listing requirements there are obviously other stock exchanges in the world but uh we have not and trust me there have been extensive dialogue and extensive due diligence done over the last six months in terms of a particular listing option. But without getting into the details of that, we have not found an alternative path for us yet that meets our requirements and that we think would be a good deal for our shareholders. The gist of the question or the thesis of the question, I completely agree with. Our volume is distressingly low. No one is happy about it. And frankly, we must move onto an exchange based on the conversations I mentioned earlier with many, many funds that we've talked to. That's the key to getting our volume higher. It's not the profile of our growth. which has been dramatic over the last few years. It's not the product of our balance sheet, which is in my opinion, excellent. It's not the product of our profitability. We've had out of the last 15 quarters, you know, 13 quarters that have been profitable. And then two quarters, one was unprofitable because of a, right off of some clogged vapes last year which hit the entire industry not just lifted i mean it forced the entire industry to move to a new paradigm in terms of designing of vapes which lifted also moved and we haven't had any uh significant uh issues about that since then and then in this most uh well we were still profitable after that but we had one quarter where we uh know as everyone who's a shareholder knows i assume you know we had one quarter first quarter last year where we had this mammoth uh charge for employee stock compensation which really didn't cost us anything it was just a uh an accounting entry that was stock that we were prepared to give to nick and he just generously gave it to some of his key employees and then of course in this quarter we are taking the the brunt of a decision which was extremely thought out that we just had to exit Jeter and our collaboration with Jeter and move into a much better, in our view, much better terms with a much larger marijuana company where we feel we have a much better chance of having significant success. you know we we do want to get on to the nasdaq we are going to do everything we can to move in that direction but at this point the biggest hurdle by far is the question of uh the bid price on our stock um at this point in time uh you know our company has not uh our our management our board of directors has not Robert Hechtman, FSC BioLinks, Viewed a reverse stock split as being in our best interest that idea has been floated as the fastest way to get to. Robert Hechtman, FSC BioLinks, For us to get the NASDAQ and it potentially at some point could be used, but at this point in time, our opinion is that there are more negatives to that process and there are positives, but like I said that's being. you know, considered on an ongoing basis.

But this is a very important issue.

I think this, I don't think we have any other questions. So this will conclude today's conference and you may disconnect at this time. Thank you for your participation.