Thank you for the first presentation of the Gateway Conference. We have Jones Soda. They're a beverage company based out of Seattle, Washington. They really operate in three main categories, which are core, modern, and adult. And here to tell you a little more about it is CEO Scott Harvey and CFO Brian Meadows. Good morning. Thanks for joining us at the first presentation of Gateway, and thanks, Clay, for having us. We're Jones Soda. Like Clay was saying, we're based out of Seattle. Our creation started back in 1987, so we're just approaching our 30-year anniversary. And part of our presentation today, we just want to walk you through some of our strategic pillars as we go. Brian and I have joined the business. I've been on since February. Brian joined us in January. And we're literally reshaping and reforming the business from the ground up, from cost controls to purchasing to manufacturing, and really trying to narrow our focus as we continue to build our business across the key categories that we want to be able to focus on. This morning, I would say just take a few seconds just to, because we are public, to take a look at the Safe Harbor Statement, and then we'll just give it a few seconds, and then we can move on from there. Why now for Jones Soda? So a couple of things about Jones. We're evolving a craft soda business into a multi-category portfolio beverage company. Prior to this, we were focused singularly on our core soda, which was the craft segment of our population. As we've seen throughout the years, with the shifting of craft in regards to sugar, non-sugar, there's alternate drinks that people are looking for, and there's a need and a desire. Thus, our diversification into other channels that we want to be able to focus our business on, on a going forward, on a growth strategy. We want to be able to expand into high-growth segments, like reduced sugar, the better for you, the hemp, THC-infused, and ready-to-drinks, such as what we'll talk about a little bit later is our Spiked Jones product. Leveraging our strong brand equity. Again, we've got almost 30 years of experience within the field, and it happens every time I'm out in airports, people, and if I'm wearing a Jones shirt, we'll go, "Hey, I remember," which is great to be able to build upon as we go. Experienced CPG leadership, both Brian and I come back out of there in various different companies, which can add value to this as we continue to grow the business. What is Jones' mission and strategic vision? We've always been known as the people's soda, for its bold flavors, its vibrant colors, and its unmatched taste. Our mission is really just to redefine craft beverages by offering a multi-category portfolio spanning nostalgic sodas, prebiotics, and adult beverages, all rooted in the quality ingredients and the bold flavors. The Jones advantage, there's four of them, very clear. The strong brand equity, as I said, coming up on 30 years of being in the business. Our taste superiority, award-winning, bold, differentiated flavors. The fact that we still use real cane sugar, and we've never used the artificials in our core products at all. Fewer preservatives within those, and that drive really trial and repeat purchases. Expanding into the multi-portfolio business, as we said, versus just staying singular within our core, and really, it's just driving that trial and the repeat advantage through that strong brand recognition, while, again, providing that superior taste in our products as we develop. When I talked about what those categories are, here's a little bit more of a clear definition of them. Our core soda, which again is how our business was founded, on that core craft soda business, which remains relevant in the low and the sugar-free options, appealing to those health-conscious consumers. Modern soda, we know, based upon some of what we've seen in the media today, that it's a growing $2 billion category by 2029, and modern soda is set to drive the future growth and innovations for us, like Pop Jones and Fiesta Jones, which we'll share in a bit. The adult beverage, emerging as a growth pillar for us in the adult beverages, which is expected to leverage the hemp, THC products, and alcohol-infused beverage markets to tap into the new consumer demand. We're also seeing out there that there's a shift from going from alcohol, looking for alternatives. Beer, wine sales are predominantly sagging, and consumers are looking for an alternative. So the options that we're able to do through our Spiked Jones products and our THC products give those folks that alternative that they're looking for. Core soda, our overview, really is to engage our consumer with proven formats, meaning the zero sugar options. Strategic partnerships is what you've seen, and you may have seen recently online with Nuka-Cola, where we partnered with Bethesda in the Fallout series to be able to launch some of those products for them as well, which drives excitement around our brand, and it allows us to be able to, again, introduce trial and impressions of our brand as we go forward. Club packs, the bottom left box down there, matter of fact, just launched last week in a division of Costco in the Southeast. It's our first rotation in there, and it was exciting for us to be able to launch and to be able to drive trial and experience through the launch within those clubs, as well as we're doing demos, and we've executed a social media plan to drive awareness of our brand as we've launched them into Costco. The innovation piece, which I just spoke about on the ongoing strategic partners with Bethesda, we just launched a Nuka-Cola Victory, and later this year, in conjunction with the rollout of the next series of Fallout, we'll be launching a sarsaparilla product as well. We plan to expand our distribution into growth channels, including convenience stores, which we just launched into last year and has been very successful through wide distribution within the Circle K food service, and also, again, looking more into the club channels as we proceed throughout the balance of the year. Modern soda, really, there's two categories in here. There's one is our Pop Jones, and our other segment is Fiesta. Fiesta is a Latin-inspired, on-trend flavors and aluminum resealable items that play well within the convenience space. They're Latin-based, they're a larger bottle, bold flavors, and it's great for grab-and-go inside when you're dealing within the convenience channel. Our Pop Jones, one, it's a functional soda, offering that best taste, innovative slimline cans positioned really for grocery mass and club, and they're prebiotics, 30 calories, three grams of dietary fiber, 2.2 g of zinc, as well as only three grams of carbs. So it's in that same market for that good-for-you type of products that we're looking to launch and, again, be able to drive trial with the recognizable name of Jones. Modern soda, again, there's that shift of health. When you walk down the soda aisle today, you notice the left side of the aisle, which is Coke and Pepsi, and then you look across the aisle of all the different emerging brands that are coming out there, and that's where we want to place our stake, is on the other opposite aisle through our better-for-you movement. Really, consumers are shifting away from the Coke and Pepsi side and looking for those alternatives. Rapid growth, again, the market has surged from zero to almost 700 million in 2024, and again, it's expected to grow to 2 billion by 2029, and again, it gives us an opportunity to get into that retail and that club expansion through major outlets that we've already been able to secure across the country. Alternate adult beverages, there's two segments again in here. As I mentioned before, it's the Spiked Jones, which is a hard craft soda. The alternate adult beverages are reshaping alcohol, blurring the traditional categories of beer and wine, great acceptance that we've seen so far, and by 2027, we expect, and as data would prove, $1 out of every $5 spent on alcohol will go to the adult alternate beverages. Younger consumers are driving that demand as they're not choosing the beer and the wine. They're looking for alternative flavor-driven profiles to experience those types of products as they're deployed, and again, Jones is positioned to lead with those bold flavors, the innovation in the category, and specifically the agility that we have. When you think about the categories that we have, we plan on staying within those categories, operating in through the adult, the modern, and the core, but going deep, staying within there, working innovation within those channels, trying not to get spread too far out, but really driving the ones that we believe that will add the benefit to the brand as we continue to grow. More of the adult beverage strategy. One, it's two strong portfolios that we talked about. The hemp is a THC non-alcohol and premium RTD alcoholic portfolio under the unifying theme of Jones. The ideal partner is distributors and retailers. Distributors and retailers are impacted by declining beer and wine sales, and again, when you look at there, there's alternates. There's the Spike, there's the THC. We also offer gummies, and there's also shooters in there. Some of our omnichannel distribution partners that we have, as you can see, through grocery mass and club, Costco, Publix, Albertsons, Hy-Vee, Circle K, Kroger, wide variety, as well as our foothold in Canada in Loblaws and Sobeys. Distributors such as UNFI, KeHE, McLane, Core-Mark, and again, direct-to-consumer via Amazon, Gopuff. We also do our own D2C on JonesSoda.com, again, where you can go and purchase those products and have it delivered directly to your home. Jones is really widely accessible across the grocery mass and club and online channels that we have. And again, those optimized route to market via the consolidators, the grocery C- stores. And again, we've seen great acceptance in the C- store channels that we've had. I'm going to turn it over just for a second to Brian, our CFO. Brian. Thank you, Scott. Yeah. So not the greatest chart to share with you this morning, but you can see in 2022, around $19 million, that declined to less than $17 million. 2023. Last year, we rebounded our sales to over $19 million, but if you go into the numbers, it was a very large EBITDA loss. So there was a lot of spending on the innovation. So basically, Scott and I, when we came in early this year, this was a turnaround business, which we're both familiar with doing numerous times in our careers. So some of the things we focused on, you'll notice gross margin was quite low, 21% last year. So we're looking at getting that into the 30s% again. We're looking at growing the top line, and of course, SG&A is a big focus for us. So looking at the first half versus last year. So decline in revenue, 19%. When you look at the details, though, there was a large load-in with a big distributor we had last year. So it was front-end heavy last year and a very light back half. So what we're focusing on is just continued sequential quarter growth on revenue on the core products that Scott had emphasized, our core modern soda, and of course, the adult beverages, alternative adult beverages. Looking at gross profit, we are in the 30s again, which we're pleased with the progress, but we'd like to get that into mid-30s. This is a water-based product, right? So there's a lot of logistics and warehousing involved in trying to manage that gross margin. But look at our EBITDA loss, though, that we have improved to 47% for the first six months. That was largely on examining pretty much every cost we have in the business, cutting out the excess, and focusing on what really matters. Let's see. The next one is our board. Did you want to pick it up from here? Yeah, that's fine. So I think a couple of things. Another addition of what Brian was talking about was really about how are we laying the foundation of our company going forward. Again, when Brian and I came in, it is very clearly a turnaround piece, but what we've been able to do through establishing processes, bringing cost under control, being able to replicate that on a daily and monthly basis, looking for ways to be able to drive unneeded cost out of our business has been of our core focus as we begin to lay the foundation. It's been about narrowing those gaps. Prior to us getting here, we had great innovation ideas, but way too many and way too many to chase. So that's the reason why we want to be able to stay narrow and go deep within those three channels, continue the innovation within those channels, but not really going after a wide variety of different items to be able to chase down the track. We have a great board of directors, all CPG experienced individuals out of Kellogg's, Kimberly-Clark, Solo, Campbell's. So we have a great support network for Brian and I to be able to bounce things off, to be able to help guide us, ask questions, and even more importantly, the context that they all have as well for us if we're looking for a manufacturer or looking for some kind of marketing assistance. So our board has been super supportive of us, as well as they're great partners to be able to bounce ideas off and allow Brian and I to really focus on managing the business. From a management team perspective, my background comes out of CPG and restaurants. I've been with Black Rifle Coffee at the inception of the business, Nathan's Famous, and Einstein Noah Restaurant Group as well, in various different roles across many different segments within the businesses that I worked in. We have Jerry Goldner, our Chief Growth Officer out of Kellogg's, Strive, and such, is really driving those partnerships that we're looking for and assisting our sales team as they continue to grow. Our supply chain is headed by Ryan Harmon. He, again, worked for me at Black Rifle Coffee and was instrumental in our success over there. Brought him in to help us reset our supply chain going forward, making sure that we're dealing with top-tier manufacturers, evaluating our cost structure, looking at our logistics program. And of course, Brian is an experienced CFO in public companies as well as to be able to help yield the growth that we're looking for and putting the processes in place in order for us to continue to grow. So the board and the management team were very happy with this moment. And again, we've laid that foundation over the last seven months in order for us to be able to spur our growth trajectories going forward. Again, in summary, it's like Jones is an evolving craft soda brand into a multi-category portfolio beverage company. Again, looking at the channels that we want to be able to grow in, the better-for-you, the hemp, the ready-to-drink products, really leveraging our legacy of history that the brand has and expanding that across the country and really building the impressions of the brand and making, more importantly, getting people to taste the product. Again, we have an experienced CPG leadership team in place now to be able to continue to drive our business forward. And again, with the innovations and investments completed, we're really starting to prioritize growth now. Where do we want to go? What segments do we want to focus on? And where do we want to be able to drive? Is it a specific region within the country or across the country? Are we looking at large box, small box, DSD? So great conversations that we have on a daily basis. So for me, coming onto the business seven months ago, it's certainly a great opportunity for Jones to be able to leverage our legacy, great products, great tasting products, and a consumer that wants more. And that gives us the opportunity to be able to continue growth as we move forward. I guess we'll open it up now for Q&A. Yes, sir. You mentioned Costco earlier, and I apologize if you already covered it, but this pilot program or the initial launch that you have in there, how large could that be relative to where it is today? And then too far, sorry. Sure. As you think about your ability to go play offense now, all the different markets you can go after, different strategies you want to pursue, you've got optionality here. Do you have a sense specifically where you would want to target first and foremost now that you guys are on the offensive? Yeah. So first question around Costco. Costco, we're in an LTO rotation in the Southeast. So expansion will depend upon performance, right? So again, one, it's securing it. And I can tell you that the team that we have went all out in regards to the marketing plan, demos inside stores. To the extent, I was actually in clubs last week talking with consumers as they were sampling and handing out drinks. So I actually got out, and a lot of the folks that live in the Southeast, we went out to the clubs where we were demoing just to add and make sure that the people doing the samples had the needed information to be able to communicate to the consumers. And it gave me an opportunity to listen as to what consumers were telling us. So the opportunity could be expansive, but it's all based upon Costco's performance. We're excited that we got the opportunity to be able to do that. I'll just add to that. I mean, we've both been in companies previously that had big Costco programs nationally. The one I came from was doing $50 million a year. It was a protein bar. Scott, I think you were with Einstein and probably larger, right? Yeah. Yeah. So again, have that experience, but again, it's all you've got to perform. I mean, assuming you perform and everything goes exactly as you'd like, is that a number realistic though, I mean, what you guys are talking about? Potentially, yes, depending on what regions that you get. So right now, we're in it. It's Phase I. We need to get another couple of rotations in there before you even have the opportunity to go national with it. Yeah. Yeah. Yeah. Yeah. That would be contingent on a couple of MVMs, relatively frequent rotations through the other regions. Yeah. I think, were you in Canada as well? We were also in Canada. Yeah. I was not. I mean, I had products, Einstein's, I had the bagel business for them and all national and internationally for them. So again, once you're in, great, but you've got to perform, and that's where we're at today. Second part of your question is, where do we see it going? I think over time, we will see core, our percentage of core drop, and I think the other two segments will grow. And I think the opportunity for us that Brian and I keep talking about with the teams is really with the HD9 products and the Spiked Jones products. When you look at the market for modern, I think we have to shift some resources to be able to compete, which is with all the Olipops and the Culture Pops that are on the shelf, and it's a very crowded space. And we have to have those funds needed to be able to market four blocks four miles outside of the stores versus just putting it on the shelf and think that you're going to sell. So HD9 through distributors and where we're starting to see them through liquor stores and such is a great opportunity for us. And I think as consumers start shifts, their trends start to shift from beer and wine looking for something as an alternative, I think those two give us a great opportunity for us to be able to expand. Just going to add one other thing. So Costco is not an easy customer to have. You've got to really execute well. When you get those purchase orders, you've got to hit the delivery dates. We know how to manage teams to do that. We've got financing support for anything Costco. I had that with the previous company. I brought those guys along. That's Two Shores Capital. But we executed, I think, flawlessly on this one. Everything got delivered on time, which was critical, right? But a lot of companies maybe get the opportunity. They don't know how to deliver, but we do. Thank you. You're welcome. Thanks. Great questions. The Black Rifle Coffee background is interesting. Just curious if you guys are running any of that marketing playbook at Jones, just knowing how successful they've been with brand ambassadors and being across new digital mediums, podcasts, YouTube. Are you guys running any of those plays at Jones? So, ideas that we're looking at right now based upon where we are from the turnaround, it's what funds we need to put where to be able to drive that. But yeah, I mean, I always look at it even when at Black Rifle, it was really about engaging the consumers, entertaining them, and educating them, right? So those three factors really drove our success at Black Rifle. And I think as we start to evolve and as we form and shape our team and we start to drive revenue and allocate funds, definitely someplace where we want to be because we have to be a disruptor. We can't just expect to go in and put it on the shelf and sell. So, there's got to be. We've got to stand out. That experience that I had with Black Rifle, which was something I will remember forever, was certainly an exciting thing on the way that they actually did their marketing plan. But yes, it is something that we're considering. Yes, sir. Give us a little color on the macro picture of the soda world. Obviously, we're all seeing a lot of ads with Olipop and Poppi and soda felt so dead for a long time. We've seen a lot of marketing dollars going into that, kind of shifting from a bigger picture. What's happening in the industry there? Yeah. And again, when you start to see acquisitions of Pepsi going out and buying one of the major competitors, they even understand that consumer trends are shifting. And again, I think that when you look at the movement of Coke and Pepsi, they're still selling a ton, right, because it's who they are. But I think it's the need for different and new, and I think it's the age of the population is looking for that differentiation other than the Coke and Pepsi that you go because that aisle started here. Now it's a full aisle. It's 40 ft long where all these different brands are out there. And I think staying within that category and starting to see some of those shifts, we'll probably see some more acquisitions through Coke, Pepsi, Keurig Dr Pepper, or some of the other emerging brands because it is a category that's there. There's a want, a need, and a desire. Now it's just a matter of, and the good-for-you thing. I mean, again, some of the things you hear a lot is, "I can't drink. I can't have I can't have sugar," right? Those looking for that better-for-you-type products, and if you can get it with the same flavor, the same style, through nostalgic, I think is where we'll start to see it continue to grow. Can you speak to the different distribution channels you have and how you're planning on getting new partners to, whether it's C-channel or wholesale, how you're viewing that? Yeah. So again, there's always the big box, which either you go through direct or you go through some of the ones like the McLane and such. I just onboarded a new broker that came out of Black Rifle, and he actually helped me launch my DSD ready-to-drink, of which he focuses in on convenience and DSD. And I think that is one a great opportunity for us to be able to do that where we're actually expanding our sales force through our broker network and our DSD distributors where they're going door to door. And I think whether it's the small box players, the medium box players, that gets us in the door where we may not be able to gain in some of the larger chains out there just because we don't have enough distribution and brand awareness at that time. So looking at the DSD segments that they're partnering with great brokers that can get us in the door and to the table. And then once we be able to show folks our products, then people go, "Oh my God, this stuff is great." But we've got to be able to get into the door. And I think that through those networks of brokers and DSD will help us achieve that. You also talked about optionality earlier. I think we haven't heard talk much about our HD9 portfolio, but the alternative adult beverage market, there was one stat there that showed for every it was like $1 for every five is shifting. And it's a massive market, right? It's probably bigger than the soda pop market. And we're pretty excited about the HD9 market. We have a cooler program we're launching in September. It's about 1,000 coolers, which we're going to go through our, I guess, AmBev and mostly Coors distributors to get to beer and wine stores. We're pretty excited about that market and how quickly that could grow as well. As you think about it, as end caps would be, as you walk into a grocery store, what's always on the end. These coolers are brand advertising to us because we give them the cooler in exchange for filling the cooler with our product. The bet is on the refills, right? Again, it's fully branded. It has our HD9 products in it too. I think that that just draws awareness and visuals when you walk in the store, again, instead of trying to find it on a shelf or right out in front. We talked about supply chain earlier. That's been a big focus of us to expand our HD9. This presentation has now finished. Please check back shortly for the.