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spk00: Good afternoon, and welcome to Reed's first quarter 2022 earnings conference call for the period ending March 31st, 2022. My name is Gary, and I will be your conference call operator for today. We will have prepared remarks from Norman Snyder, Reed's Chief Executive Officer, and Tom Spisak, Reed's Chief Financial Officer. Following their remarks, they will take your questions. I would like to remind listeners that this conference call will include forward-looking statements. Forward-looking statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause actual results, levels, or activity, performance, or achievements to be materially different from those anticipated by such statements. Those factors include, but are not limited to, Reeve's ability to manage growth, manage debt, and meet development goals, Reed's ability to protect its supply chain in light of disruption caused by elevated freight costs and other impediments, the availability and cost of capital to finance our working capital needs and growth plans, reduction in demand for products, dependence on third-party manufacturers and distributors, changes in the competitive environment, future business outlook, including the potential impact of COVID-19 on Reed's business and results of operation, and other information detailed from time to time in REIT's filings with the United States Securities and Exchange Commission. These statements, including financial guidance, involve risks and uncertainties that may cause actual results or trends to differ materially from the company's forecast. The achievement or success of the matters covered by such forward-looking statements, including future financial guidance, involves risks, uncertainties, and assumptions, many of which involve factors or circumstances that are beyond Reed's control. Fiscal 2022 guidance reflects year-to-date business trends, including the ongoing operating environment related to COVID-19. The COVID-19 pandemic and its related impacts could continue to create many incremental potential business risks, including potential impacts to Reed's ability to access raw materials, production, transportation, and or other logistics needs, as well as potential inflation related to all aspects of supply chain and logistics, which cannot be reasonably estimated and may not be completely factored into current fiscal 2022 guidance. Growth margin guidance assumes our known pricing for ingredients, packaging, and production costs, each of which has been and could continue to be impacted by factors related to COVID-19. Financial guidance should not be viewed as a substitute for full financial statements prepared in accordance with GAAP. For more information, please refer to the risk factors discussed in Reed's most recently filed annual report on Form 10-K and the Form 10-Q to be filed with the SEC today. Although management believes that the expectations reflected in forward-looking statements are reasonable, management cannot guarantee future results, levels of activity, performance, or achievements. In addition, any projections as to the company's future performance represents management's estimates as of today, May 16, 2022. Reeds assumes no obligation to update any forward-looking statements or information which speaks of their respective dates. Additionally, please note non-GAAP financial measures referenced during this call are reconciled to the comparable GAAP financial measures in the press release and supplemental materials filed with the SEC and is posted on Reeds Investor website at investor.reedsinc.com. Modified EBITDA is presented because management believes it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of core operating performance. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for or superior to the financial information prepared and presented in accordance with GAAP. and Reed's non-GAAP measures may be different from non-GAAP measures used by other companies. Reconciliations of non-GAAP measures to GAAP measures, as well as the definition of each measure, their limitations and our rationale for using them, can be found in this afternoon's press release and in Reed's SEC filings. Please note, this event is being recorded. I will now turn the call over to Mr. Snyder. Please go ahead.
spk07: Thank you, and good afternoon, everyone. We appreciate you joining us today to discuss our first quarter 2022 results. Since our last corporate update was about six weeks ago, we will keep our comments relatively brief and focused on recent updates. As we discussed on our March 31st conference call, our Q1 results were impacted by residual supply chain headwinds at the start of the year. Order volumes were up approximately 20% in Q1, but we simply couldn't satisfy the demand in a cost-efficient manner. Those supply chain challenges have since been resolved, and our sales in April were up approximately 45% year over year, with order volume up 23% over the prior year. As mentioned on our last earnings call, we have two primary goals to drive our growth, which we will continue to focus on throughout the balance of the year. Distribution expansion and brand launches as a result of innovation, with an emphasis on new, larger, and faster-growing categories. Regarding our distribution, we increased our retail coverage footprint by 5% over the prior year with Reed's products sold in approximately 45,000 locations nationwide. At quarter end, MULO measured retail sales were up approximately 14% year-to-date and up 16% over the last four weeks, with corresponding volume up 14% year-to-date and 20% the last four weeks. while the natural and enhanced category measured retail sales grew by 52% year-to-date, 53% over the last four weeks, with volume up 38% year-to-date and 36% the last four weeks. More low retail growth was noted for REIT's Ginger Beer, Ginger Ale, Virgil's Full Sugar, and Flying Cauldron. Virgil's Zero Sugar experienced a decline as a result of resets in converting from standard to sleek cans. For the natural and enhanced category, retail growth was visible in all product lines. Moving on to our DSD network. We have added approximately 12 new DSD distributors as we continue to build out our network. All of these additional distributors will sell products from both our non-alcohol and alcohol portfolios. We are also in discussions with several more distributors and expect to have executed contracts completed in the second quarter. Moving on to our various brand and product initiatives, starting with ginger ale. We continue to see strong momentum for our ginger ale line. At quarter end, Moolo measured retail sales for full sugar ginger ale were up 66%, with velocity up 14%. Moolo sales for zero sugar ginger ale were up 57%, with velocity up 21%. And in the natural and enhanced channel, full sugar was up 88%, with velocity up 6%, Zero sugar was up 97%, with a velocity up 23%. All of this to say, our ginger ale is clearly taking market share. Up next are RTD alcohol beverages. For classic ginger mule, we added seven distributors on the East Coast and seven on the West Coast, with eight additional distributors pending. Shortly, we will be launching our stormy mule, our RTD version of the classic dark and stormy. We continue to anticipate increasing doors that carry our RTD alcohol lines to approximately 5,000 outlets by the end of 2022. For hard ginger ale, we have recently completed our initial production run and are extremely pleased with the results. Additional production is scheduled for next week and we start shipping product June 1st. To date, we have authorizations from 20 retailers, totaling over 2,000 stores, and anticipate rolling out products to our first retailer during Q2. New Virgil 0 sugar sleek 12 ounce cans. We rolled out this new package and branding in sprouts in April, followed by HEB, and initial reports indicate consumer acceptance with increasing velocity that exceeds prior trends with the old packaging. We expect to have our new sleep cans available in all stores that sell Virgil's by year end. Moving on to our supply chain initiatives. The benefits for our various supply chain initiatives are taking hold. Q1 transportation and warehouse costs were down 14% year over year as a result of eliminating out-of-network shipments and focused on direct shipments to eliminate multiple touchpoints. In addition, we focused on increasing payloads and organically increasing the sale of cans over bottles. As we mentioned last quarter, we have our entire can supply secured for 2022. Freight costs have also begun to improve from peak levels experienced last year. We have locked in rates with heavily traveled lanes and are more disciplined in how we are handling our freight. For example, we could have driven more volume in Q1, but it would have been at very high freight rate. to push these orders into Q2. Managing our cash burn is just as important to us as revenue and volume growth. In addition, we have begun to see the benefits of our purchasing efficiencies, ingredient and label optimization initiatives, reduced towing fees, and inbound freight as a result of taking advantage of economies of scale. Our recent price increase, which has been communicated and accepted by our retail partners, will result in an anticipated 8% lift in gross revenue but will not be reflected in our financial results until late Q2 or early Q3. We are expecting a 4% to 5% margin benefit in 2022 as a result. Despite our price increase, most of our products are still priced in the middle of pack relative to competition on a cost per ounce basis. So we feel good about where we stand with the consumer and our competitiveness for wallet share especially at a time when inflation is impacting the consumer wallet more than it has in a very long time. While we continue to face supply chain issues in the first quarter that it lingered from last year, our business is in a much better place today. The sustained demand for our products is robust, and with our supply chain constraints easing, we expect our results to materially improve each quarter from here on out. Before passing it to Tom, I'd like to touch on the financing we announced last week where we closed on an 11.25 million private placement with White Box Advisors. Tom will provide more details on the terms of the financing, but the most important takeaway from my perspective is what this financing represents. For the first time, I now believe we have the capital we need to execute on our growth objectives and turn cash flow positive in the second half of 2023. As most of you are aware, The capital markets have been under severe pressure this year, so our ability to take down the largest financing to date since I was appointed CEO at a time when the markets have been closed to most operators, and all while doing so in the least dilutive way we could to our shareholders, makes me incredibly pleased with the outcome. With that, I'll pass the call to Tom to walk through our financial results before returning for Q&A and closing remarks.
spk05: Thanks, Norm. Turning to our results, all variances referenced are on a year-on-year basis unless otherwise noted. Net revenue for Q1 increased to $12.2 million compared to $12.1 million in the year-ago quarter. As Norm mentioned, our growth would have been stronger as reflected by the 20% increase in order volume for the quarter. However, we did not fulfill the order demand due to supply chain challenges at the start of the quarter. In addition, we adopted a more disciplined approach to manage our order of fulfillment to eliminate incremental freight costs that would adversely impact cash burn. Gross profit during the first quarter of 2022 was $2.9 million compared to $3.9 million. Gross margin was 24.1% compared to 31.7% in the first quarter of 2021, reflecting the increased supply chain input and inflationary costs. Sequentially, we grew 370 basis points from 20.4 in Q4 of 2021. Delivery and handling fees in Q1 decreased 14% to 2.8 million from 3.3 million, driven by the implementation of lower contracted freight lanes and a more disciplined approach to shipment scheduling by reducing out-of-network shipments. Delivery and handling expenses were approximately 23% of net sales, or $3.90 per case, compared to 27% of net sales, or $4.43 per case in the year-ago quarter. Selling and marketing costs were $2.2 million, which remain in line with the first quarter of 2021. As a percentage of revenue, selling and marketing costs remain flat at 18%. Our general administrative expenses reduced 19% year-over-year to $2.1 million from $2.6 million, driven by lower stock compensation and legal settlements recorded in the prior year. Total operating costs were reduced by approximately $1 million or 12% from the prior year. As Norm stated earlier, we believe this trend will continue for the balance of the year. Operating loss during the quarter was $4.2 million or $0.04 per share, compared to operating loss of $4.3 million or $0.05 per share. Modified EBITDA in Q1 was $3.8 million compared to $3.4 million in the year-ago quarter. Turning to our balance sheet and liquidity, cash used in operating activities was approximately $2.2 million for the first quarter of 2022 compared to $5.1 million for the same period in 2021. As of March 31st, we had approximately $122,000 of cash and $5.1 million available on our revolving line of credit. The total facility has a borrowing capacity of $13 million with $7.9 million outstanding. As Nora mentioned, we recently closed the private placement of convertible notes for aggregate proceeds of $11.25 million. The principal amount of the notes carries a 10% coupon, of which 5% is payable in cash, and 5% is payable in kind. The notes are convertible into shares of common stock at a price of approximately $0.24 per share, reflecting a 10% premium from the closing price. And the notes will mature in May of 2025. The purchasers have the exclusive option to buy up to an additional $12 million of notes on the same terms that expire at 180 days, 270 days, and 300 days. 60 day intervals. Looking to our guidance for 2022, we continue to expect net sales to range between approximately 59 and 62 million, reflecting growth of approximately 20 to 25% from 2021. We also continue to expect gross margins for 2022 to be approximately 30% compared to 27.4 in 2021. And finally, we expect modified EBITDA to improve in 2022 as a result of our revenue growth, margin expansion, and cost savings initiatives. I will now turn the call back to Norm for closing remarks. Thanks, Tom.
spk07: I would like to take this time to again acknowledge all the hard work and dedication from the REITs team throughout this challenging period. We are guardedly optimistic that we are through the turbulent period of supply chain impediments and have elevated input pricing. Our various cost mitigation initiatives are flowing through to our results. And for the first time, we believe that we have the capital we need to fully execute our plan to turn cash flow positive in 2023. We look forward to carrying this momentum through 2022 and into next year. Operator, we will now open up the call for Q&A. Before we start, I would like to apologize for abruptly ending the Q&A session during our last earnings call. I will be happy to answer all questions this afternoon.
spk00: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster.
spk09: Our first question comes from Sean McGowan with Roth Capital Partners.
spk00: Please go ahead.
spk02: Thanks for taking the questions. I'm juggling a couple of conference calls, so I apologize if I ask something that's already been touched on. Can you talk a little bit about what we would expect to see on a quarterly basis in terms of total interest? The convert is pretty easy to calculate. But in terms of the credit line, will the cash raised from the convert reduce the amount that you have to borrow, at least for a while? Or should we just kind of take what you had in the first quarter and use that as a kind of going rate plus the convert?
spk05: So the first quarter, Sean, thanks for your question. The first quarter is overstated because that first quarter has a financing charge in there related to the prior – related to our – Note that we had outstanding with Rosenthal. So I wouldn't include that because the number you'll see is a little over 800,000. So the ABL will be paid down based on the money that we have raised. So yes, you should expect that to be lower. So I think it's roughly 400 for the year. 400 should be the number you should expect on a quarterly basis.
spk02: Okay. And then second, you know, on the guidance, sounds like there's really no change and just wondering, you know, how to look into the confidence level given that, you know, a couple of things that maybe were worse than expected in the first quarter. Maybe they weren't. Maybe you expected them. But, you know, do you still have the same level of confidence of getting to those same numbers?
spk07: Yeah. Sean, this is Norm. Absolutely. I think there's a lot of factors. going on. One, the demand is still very strong and robust. So we believe that will continue and only grow. The second half of the year, we'll experience the impact of pricing that I touched on. We'll really start to feel the impact of our entry into the RTD alcohol sector. And then obviously, as we get into Q3 and Q4, those are really our big seasons. So I think all three of those plus there's some new incremental business that we're working on that I'm fairly confident will come to fruition. So I think with all four of those factors, we will recover what we missed in Q1 and still have that overall number.
spk02: Okay. All right. Thank you very much.
spk00: The next question is from Anthony Vendetti with Maxim Group. Please go ahead.
spk08: Thanks. Good evening. I want to just touch on two things. One is the DSD network. I know you're expanding that. Can you give us an estimate of how far along that expansion is into your network of stores and what kind of increased velocity of sales or what's the increase that you're seeing when you switch to DSD in a particular channel?
spk07: Anthony, hi, it's Norm. Thanks for joining us. I'm looking at like, and I wish I could put this up, looking at a map of white space. So I look at it, not what we've covered, but what's left. And there's probably two or three major metropolitan areas that we really need to tackle. The rest of it's really areas with low population and applicable volume. So we're probably, I want to say, 70% through where we'd like to be and our goal. And we do like, I think, Illinois and the greater Chicagoland area, Virginia are the two big areas that kind of jumped to mind. I mean, we're right now in the process of closing out Texas, which is a big area. So those are really what's left, and obviously the other stuff will be, I think, although nice to have, will be lower in terms of volume and velocity. Now, in terms of your question, how does it impact, it's really difficult to measure, although I'll point out a great example of something that exceeded our expectations, and I believe it has a lot to do with not just the brand, but with our DSD partners, is our first promo that we did at Publix, where we had like a seven to eight times lift over our normal volume, which we were very excited about, and obviously Publix kind of shared that excitement with us. So we haven't really analyzed area by area, although I think that's a great thing to focus on. I'm kind of looking at some of these big events like the Publix promo that we did, which was our first one, and obviously we believe very successful. So I think I'd have to go back and look, but what it does is it allows us coverage from both an alcohol and non-alcohol portfolio, which obviously that will more than double our chances in terms of volume. But we're real pleased with, you know, what we're seeing so far. And the big items, like I just touched on, you know, we saw a bigger than expected impact on velocity.
spk08: Okay. No, that's quite the lift. And I'm just curious, was that in all Publix that you're in, or was that in one particular store? How many Publix are you in right now? And then I had one just quick follow-up.
spk07: We're in the majority of the Publix network, so it's not, I mean, that was a big authorization lift that we had last year as we went from about, we were in 300 to 400 Publix to now we're in the majority of them. Great.
spk08: And then just the last question is on the decision not to ship orders that were out of network. How much revenue do you think, or ballpark of how much revenue do you think was sacrificed at this quarter based on that decision?
spk09: I estimate about $2 million.
spk07: Oh, wow, okay. That's helpful. Yeah. I want to go back to the DSC network. You know, the other thing is really the quality. I mean, we're setting up, the majority are both AB and Miller Coors houses. So we're generally getting, you know, the top distributor in that area. or some of the strongest, and it tends to be networked. Like Florida, we have the entire AB group, and in other areas, we're talking to big groups, so I think we get more synergy there. So it's not just about signing up DSP guys to sign them up. It's really about quality and the ability to impact the marketplace. So I think that's real important. You know, the other thing to talk about, and this goes back to Sean's question that I didn't mention, our revenue multiple for our alcohol portfolio is like three times the non-alcohol portfolio. So if we sell a truck of our ginger beer and then we sell a truck of our hard ginger ale, the revenue is like three times greater. So that's the other thing we're excited about. Obviously... you know, with very strong margin contribution, that adds up pretty quickly.
spk08: Okay, so then just the last follow-up on the DSD, because I do think that's an important point. How much more green space or white space do you think you have in terms of switching to, you know, more of your customers over to the DSD? Is there, you know, still a 50% opportunity, a 30% opportunity? Where does that stand approximately?
spk07: I'd say more like 30%. 30% more. Okay.
spk08: All right. Thanks so much. I'll hop back in the queue. Thank you.
spk00: The next question is from Will Bandujo, a private investor. Please go ahead.
spk03: Hey, Norm. Thanks for taking my question. Two just quick questions. One, on the inventory on the balance sheet, is that finished goods or raw materials?
spk07: It's both. And actually, you're one of the people we cut off last time, so I'm glad that you got a chance to go through. So, Will, that's a great question. We grew finished goods this quarter, which we need to be able to service our customers. One of the things that I did talk about that's really important and something I'm really proud of because it translates into higher sales is we are finally some of our top tier retailers. We're shipping 100% in full and approximately 95% on time, which is numbers we've never hit previously. So that goes hand in hand with trying to ship efficiently, but it's something that we're real proud of, and to be able to accomplish that, you have to have inventory now. So that's gone up, and then ingredients and packaging materials stayed static, but what you'll see over the next three quarters is we will gradually work those down and turn that into cash. So we built up, we got ahead of ourselves with primarily packaging materials, but our focus is really to bring that number down. So overall, our inventory numbers will come down. You might see finished goods go up a little bit, but you're going to see ingredients and packaging materials come down significantly.
spk03: Okay, thanks. And then kind of switching gears to what you were just talking about with Anthony, the three times revenue with the alcohol, how much of that do you guys have baked in to the revenue this year?
spk07: Very little. That goes back to my question with Sean's question about confidence. We have very little revenue baked in, and we see a big opportunity with both those product lines.
spk03: Okay. And then last quick question. So, you know, with another delisting notice kind of looming here in August before we have another conference call, can you provide some color on how many extensions you, you know, think you guys can get? And then sitting here with the share price at, you know, what did we close at today? 22 cents, you know, using your words that this is the first time, you know, the management team really feels like they've got the opportunity to achieve their goals. Can we anticipate the management team buying stock in the open market?
spk07: Well, I can tell you our chairman and myself and other members have bought a lot of stock, both in our offerings and in the open market. We will continue to be opportunistic, obviously, and support the company. And I can only speak for myself. And I will continue to buy stock. You know, look, right now it's almost like a luxury. that for the first time in a long time, this team is focusing on driving the business. And it's fun. And we're incredibly optimistic. We believe the results will speak for themselves and drive the stock price up. We will work as hard as we can to try to get additional extensions to do the right thing. The preferred solution is have the stock price reach over $1 You know, unfortunately, the microcaps in the beverage space are being hammered, so we're not the only ones. But we need to focus on what we're doing, and we'll continue to put up better results, drive the stock price up, and work as hard as we can to do that. And, you know, when it comes to be if we have to make a decision, later on we'll make that decision, but right now it's, you know, full focus on driving REIT.
spk03: Right. I understand. All right. Well, I appreciate all the hard work and look forward to the future. Thanks, guys. Thank you.
spk01: The next question is from Wally Jamal, a private investor. Please go ahead.
spk10: Hi, Norm. How are you doing? Good, Wally. How are you? I'm doing well. Just to go back to one or two things, actually. One thing specifically, you have a little bit of the alcohol... I said revenue baked into the guidance. If those 2,000 stores, if you had a mildly successful sell-through, what would you extrapolate that as far as dollar amount?
spk09: Ooh.
spk10: Give me a second on that. I guess to maybe even make it more specific, say let's consider, say like a 70% sell-through. What would those 2,000 doors, based on the products you're shipping, what would that equate to dollar amount?
spk07: Well, what I'll do is I'll take, I'll say 2,000 stores and there's 26 weeks left in the year, right? I'll take, I'll say 18 weeks, 18 or 19. I'll say 19 weeks, right? So if there's 2,000 stores times 19 weeks and I'm going to say, be conservative, say three units a store, right?
spk09: Sure. That's about 32,000 cases.
spk07: At 30, say around 30 bucks a case, you know, that could be a million bucks. All right.
spk10: And a million dollars. And to kind of lightly circle back to the last call about, do you know if the reads Has any more extension options available to it under the current compliance guidelines?
spk07: Our legal counsel is talking to NASDAQ right now to find out what additional extensions are available to us, but we don't have an answer.
spk10: I see. Do we have an idea of when READS will have the answer to this question?
spk07: We will have an answer by the next call.
spk10: By the next call. Okay, I see. And I guess that was a pretty good question. Okay, guys, listen, I really appreciate the hard work, and keep it up, guys. We're all rooting for you, and we know you guys can do it. Thank you, Wally. Thank you.
spk00: Again, if you have a question, please press star then 1. The next question is from Matthew Takolsky, a private investor. Please go ahead.
spk04: Hi, everybody. I've been a long-time investor in REITs since 2009. I believe in the brand the current management team has been executing. You mentioned that you're expecting to reach cash flow break-even in 2023, and the current capital available will be sufficient to get REITs to profitability. Could you elaborate on that plan? Are there any risks, and what are the keys to it, and how confident is the team of getting there? And it's also curious, what do you think the annual sales will be at that point? And if at that point, if somebody wanted to make an offer for the company, would they go at 2, 3, 4x? Thanks.
spk07: I'll go backwards. I hope they go for 10x. You know, it's hard to say. it's really driven by market conditions. But let's get back to the path to cash flow break even. It's been, we haven't hit our strategy for the beginning. It's continued top line growth and for the items that I mentioned with Sean's question about what's going on in the second half of the year that will continue over for a full year in 2023. and the robust demand for our products. You know, that million dollars that I threw out for Wally's question was just hard ginger ale. Obviously, you know, we're talking about 5,000 doors for mule, so that could be, if you just kind of extrapolate, you know, another two and a half to three million dollars. So we think, you know, it's not inconceivable for our alcohol portfolio to get up to five million dollars. So, again, you know, top-line growth for the reasons of which I outlined. Margin enhancement, which we're working extremely hard on, and we believe we can continue to grow that. Now, the added benefit with the alcohol products is the margins are very strong. So, you know, every time that margin creeps up higher, it throws off more cash to offset operating costs. So obviously, as the top line gets bigger and the margin gets bigger, you have a doubling effect of gross margin dollars. And then we are watching, and I'm watching, every penny that we spend. The big opportunity is on transportation. And one of the things that we didn't talk about that we'll see in the second half of the year is moving into co-packer slash distribution centers do we really reduce the amount of times we touch our product? There's a big opportunity there. We spend north of $3.5 to $4 million on interplant transfers from Copacker to warehouse, and we're working hard to eliminate that. So you'll start to see, for phase one, which will include two locations, in the second half of the year, you'll see continued downward movement on our transportation costs, both in the aggregate and on a cost-per-case basis. So we believe with all three of those measures, you know, the lines will converge and we'll get to cash flow break even. And in terms of top line, you know, it depends on the margin, but it's probably in a range of $75 to $85 million. And that's gross revenue, not net revenue. You know, my goal is, you know, my near-term goals are really drive the top line north of $100 million. And, you know, now that I'm not, you know, we're not raising money, we can focus on that and really drive and expedite what, you know, our success is. So, again, that's what gives me the confidence and, quite frankly, what I want to be doing. And having the time to do it now is like a luxury. So that's really the plan, and it's just watching Everything we do and you know one of the other things we haven't talked about is the availability of information that we have at Available to the senior team on a daily basis. So we're able to make smarter decisions and that's a big factor in Evaluating deals evaluating do we do this or do we not do it and we're looking at both, you know fat with a balance a balancing of top-line growth and obviously, and then what we spent. And the fact that we're all aligned and everyone in the company understands the objectives very clearly gives me confidence that we can merge all those different factors together and produce the results that we all desire.
spk09: Great. Thanks.
spk01: You're welcome. Excuse me. The next question is from Jack Hire, a private investor. Please go ahead.
spk06: Hey, guys. Appreciate you taking the time. So just a question for you about the two new influxes of cash from both the private placement and the notes purchase agreement. Is it, you know, suffice it to say that we've, you know, for the time being, um, satisfied sort of, you know, all of our cash problems, um, in terms of like the going concern statement that was in the most recent filing.
spk07: Yes, most definitely on the going concern.
spk06: Okay. And based on, you know, the amount that we've brought in, is it enough to like, what's the runway on it? Is it, you know, enough for the rest of this year? Can it extend into next year? Is it just going to, like, you know, get us to that next threshold? Where do you guys see, like, you know, the roughly, what, $16 million, like, you know, pushing us through?
spk07: Well, I believe it's going to get us through next year at least. You know, I haven't really looked at points past that, but, you know, when we put the plan together to determine what really makes sense, we really targeted – how to get the cash flow break even, and 2023 is what got us there, and that amount of cash was sufficient to take us to 2023. Now, you know, once we get to that point, the company starts throwing off cash. Now the question is, you know, what do we do with that? So I think that's something we evaluate, but this isn't, you know, the recent fundraising activity wasn't, just to get us through 2022, it's really to get us to cash flow breakeven. Right now the markets are tough. So for us to get this accomplished I think was pretty incredible. And two, it's not fun to do this. So obviously we really wanted to consider what it would take to get to cash breakeven. And that's how we put this plan together.
spk06: Okay, that's great insight. Yeah, I think to your point, all of us as investors are pretty excited to see you take a step back from being an investment banker and do what we're really here to get done. So I appreciate it, and good luck, and we're excited for the future.
spk09: Thank you, Jack.
spk01: This concludes our question and answer session.
spk00: I would like to turn the conference back over to Norm Snyder for any closing remarks.
spk07: Again, I'd like to thank everybody for participating in today's call. We remain excited and confident of our opportunities, and we'd like to thank all of our business partners that have worked through this trying period while we were raising funds, but really strengthened who we are as a company. and all of our employees that I think are working extremely hard and are committed to get the cash flow breakeven. We look forward to the future. We look forward to next quarter's call. And, again, thank everyone for taking the time to participate today.
spk00: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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