Jones Soda Co

OTC:JSDA

Earnings Call Analysis

Jones Soda Expands and Innovates Amidst Decline

Jones Soda reported a slight revenue decrease, citing a dip in food service and grocery channel sales. However, their licensed cannabis business surged by 99%, indicating potential for growth. The overall net loss improved, and operating expenses diverged favorably due to lower startup costs linked to the Mary Jones brand. The company is focused on expansion, including a Canadian strategy that could double their revenue and margins, and the Spiked Jones launch in partnership with Locust Cider. Additionally, rising stars like Mary Jones THC soda, which has become a leading brand in California, are paving the way for further innovation across the beverage spectrum, promising to drive future revenue growth.

Performance Overview and Strategic Shifts

The company saw a slight dip in net revenue to $3.5 million in the fourth quarter from $3.7 million in the previous year, reflecting decreased sales in food service and grocery segments. However, a notable surge in their licensed cannabis business countered this trend with 99% growth, reaching $438,000 in the fourth quarter. Gross profit percentages experienced a decline to 19.5% from 24.8% due to one-time inventory write-offs, but adjusting for this, the margins would surpass last year's, aligning with the company's goal for mid-30s margins. The quarter witnessed a net loss improvement to $1.5 million, or negative $0.02 per share, a marginal enhancement over the previous year. Operating expenses decreased owing to cost-conscious strategies, particularly in marketing and general and administrative expenses. The full-year net loss also showed improvement, shrinking from $6.4 million to $4.9 million, underscoring a gradual yet steady move toward profitability.

Expanding Market Footprint and Product Releases

Expansion played a leading role this quarter, with the company marking its presence in notable restaurant chains nationwide and launching the 'Nuka Cola Victory' product in collaboration with renowned entertainment brands, reflecting the company's innovative marketing strategies. The product's swift sell-out demonstrated the company's strong brand appeal and market relevance. In addition to the licensing success, ambitious distribution strategies are underway, particularly for the newly announced Spiked Jones product line and the launch of their THC sodas in Ontario, Canada. The latter marks a significant strategic entrance into the fast-growing THC-infused beverage market, hinting at the strong potential for international brand growth.

Operational Developments

Internally, the company has seen key leadership changes aimed at bolstering growth and efficiency, signaling a company in transformation and ready to capitalize on new market opportunities. With veteran COO Eric Chastain stepping down, new operational lead Eric Bittner brings in experience from top-tier beverage companies, while Mary Money will spearhead product innovation and commercialization—a move aligning with the company's innovation-forward stance. The launch of the Mary Jones product line, an array of hemp-infused craft sodas, adds to the diversification of their portfolio, tapping into evolving consumer trends toward cannabis products, with plans for expansion both geographically and in product variety. The launch of their e-commerce platform for direct sales further showcases an agile response to market shifts and regulatory landscapes.

Mary Jones Brand Success and Growth Prospects

The company's Mary Jones brand has emerged as a frontrunner, claiming the top spot in the California cannabis-infused carbonated beverage market and showing promising indicators of future performance. The brand's 99% year-over-year growth in cannabis-related revenue, alongside strategic partnerships and product diversification, is expected to be a significant revenue driver for the company going forward. With a strong base established in less than two years, the leadership is geared towards maximizing the brand's contribution to the overall company growth.

Future Outlook and Financial Considerations

As for the future, the company is focused on evolving from its original bottled soda offerings to a multi-format beverage company. Innovations and strategic partnerships are set to play vital roles. Financing remains a topic of focus for the company's board, with various options including lines of credit and investments under consideration to ensure adequate cash runway and to fuel the ambitious growth strategies in place.

Earnings Call Transcript 2023-Q4

[Operator]

Good afternoon, everyone. Thank you for participating in today's conference call to discuss Jones Soda's financial results for the fourth quarter and full year ended December 31, 2023.Before we begin, let me remind everyone of the company's Safe Harbor disclaimer. Certain portions of our comments today will concern future expectations, plans, and prospects of the company that constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements containing verbs, such as aims, anticipates, estimates, expects, believes, intends, plans, predicts, will, may, continue, projects or targets, and negatives of these words and similar words or expressions. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements. Factors that could affect our actual results include, among others, those that are discussed under the heading Risk Factors in our most recently filed reports with the SEC, including our Annual Report on Form 10-K, our quarterly reports on Form 10-Q, and our current reports on Form 8-K. In addition, this call includes discussions of certain non-GAAP financial measures, including adjusted EBITDA. The most directly comparable GAAP measures and reconciliations for non-GAAP measures are available in the earnings release and other documents posted on the company's website under Investor Relations.This call will be available for telco replay through March 21 starting at 7:30 p.m. Eastern time tonight. A webcast replay will also be available via the link provided in today's press release as well as on the company's website.And now, I would like to turn the call over to the President and CEO of Jones Soda, Mr. David Knight.

[David Knight, executive]

Hey. Thanks, John. And thank you everyone for joining.As I continue to become further ingrained in the operations of Jones Soda and see the opportunities at hand, I've become more and more confident in our ability to take this company to new heights. My main focus areas from day one have been delivering great taste and growth through both innovation and marketing. I strongly believe that we are setting the stage to do that on a larger scale than Jones Soda has ever achieved before with unique and compelling product offerings across a multitude of channels and categories.As you have most likely read recently, there is a new buzz around the craft soda category with continued innovation and product news. Jones is well-primed to capture these opportunities and will be a leader in sodas and beyond. When looking at our fourth quarter results, we obviously didn't close out the year where we would have liked to. We were still dealing with headwinds in our grocery channel as a result of decreasing sales velocities in addition to our food service channel still struggling during the quarter.We did however see some bright spots as our Mary Jones business continued its expansion and delivered strong results. In fact, looking at the entire year, our Mary Jones business delivered over $1 million in revenue for 2023. And we are really only just getting started. We also maintained a strict cost discipline to make progress towards achieving bottom-line profitability. And despite a one-time impact on our gross margins in the fourth quarter, we remain on track to achieve our goal of consistently reporting gross margins in the mid-30s.All this to be said, 2023 is behind us and I remain highly focused on the future. It's been encouraging to see many new initiatives take hold in early 2024 including a new food service division, further Mary Jones geographic expansion, the introduction of product lines in completely new categories, and much, much more. I firmly believe that these initiatives will set us up for improved results throughout the year and beyond and I'm excited to share more details here today.But first, I'd like to pass the call over to Joe to discuss our fourth quarter and full-year financial results in greater detail. Then I'll return to talk about the exciting growth opportunities that we're working on for 2024 and beyond.So Joe, over to you.

[Joe Culp, executive]

Thank you, David, and good afternoon, everyone.Net revenue in the fourth quarter was $3.5 million compared to $3.7 million in the fourth quarter of 2022. The decrease was primarily due to a decline in sales across our food service and grocery channels compared to the fourth quarter of last year. Our licensed cannabis business generated approximately $438,000 in the fourth quarter of 2023, which represents a 99% increase over the same quarter in 2022. Gross profit as a percentage of revenue was 19.5% compared to 24.8% in the prior year period. This decrease was primarily due to a one-time inventory write-off associated with our Lemoncocco product line.If we remove the one-time write-off of $212,000, our margin would be approximately 25.5% and above last year. Despite this, we continued to strive to hit our goal of consistently reporting margins in the mid-30s. Operating expenses in the fourth quarter improved to $2.2 million compared to $2.6 million in the same year ago quarter. This decrease was due to lower marketing and G&A costs, mostly as a result of lower business start-up costs associated with the development of the Mary Jones brand. Net loss in the fourth quarter improved to $1.5 million or negative $0.02 per share compared to a net loss of $1.6 million or negative $0.02 per share for the same quarter of 2022.Adjusted EBITDA in the fourth quarter was negative $1.4 million compared to negative $1.3 million in the same year ago quarter. Quickly running through our full-year results. Our revenue in 2023 was $16.7 million compared to $19.1 million in 2022. Our gross profit as a percentage of revenue increased 220 basis points to 29.1% in 2023 compared to 26.9% in 2022. Total operating expenses declined to $9.7 million in 2023 compared to $11.2 million in 2022. Net loss for 2023 improved to $4.9 million or negative $0.05 per share compared to a net loss of $6.4 million or negative $0.07 per share in 2022.And lastly, adjusted EBITDA improved to negative $4.1 million in 2023 compared to a negative $4.6 million in 2022.Now moving on to the balance sheet. As of December 31, 2023, cash and cash equivalents were $3.9 million compared to $5.2 million at September 30, 2023, and $8 million at December 31, 2022. Working capital was $7.2 million at December 31, 2023, compared to $11.6 million in December 31, 2022.Now I'll turn the call back over to David, who will provide further insights into various growth initiatives we have planned and overall progress being made throughout the organization.David, back to you.

[David Knight, executive]

Hey. Thanks, Joe.So let's jump back into it. I have now been at Jones Soda for 8 months. And as we talked about on our last call, I am focusing on innovation that will drive both Jones Soda and Mary Jones and highlighting our significant taste advantage. The team has been hard at work developing new initiatives in marketing and product development. And if you have been tracking our press releases, we are bringing to market a significant amount of new news and revenue opportunities for 2024.As I'm sure many of you have seen, we have introduced a new food service division. I believe this channel within our core soda business hasn't had the proper resources allocated to capture the growth opportunities at hand. So we've changed that. We're expanding our sales efforts beyond being so highly focused on the traditional grocery channel to bars, restaurants, hotels, and other quick service eating and drinking organizations. We brought on an industry veteran in, Victor Petrone to lead this division as well as signing partnerships with Dot Foods, Green Nature Marketing, Ignite Brand Advisors, and more recently, adding Dot Foods Canada and North South Management to ensure we have the necessary resources and foundation to make inroads in this channel in both the U.S. and now in Canada.This initiative has already paid off as we announced in February that we are now on the menu nationwide at both STK Steakhouse and Kona Grill. The initial feedback from our partners has been excellent with the one owner of both restaurant brands stating that Jones Soda has been one of the top product integrations that they have launched. We're not stopping there and have plenty of more food service customers to announce in the coming months. We're attending the Pizza Expo next week and we'll put Jones food service on the map with all pizza operators nationally.Nothing pairs better with a fine pizza than Jones Soda, especially our Root Beer.Now let's move to our core soda marketing efforts. In the first quarter of 2024, we began to implement our 2024 innovation and channel development plan. During the quarter, we launched Nuka Cola Victory, a collaboration with Amazon Prime Video, Kilter Films, and Bethesda Game Studio. Nuka Cola Victory is from the universe of the video game Fallout, and the product supports the streaming series launching in early April on Prime Video. Bottlecaps are the currency in the post-apocalyptic wasteland and our unique bottlecaps on Nuka Cola Victory can be traded for gear in our Caps4Gear website.The product sold out at both Amazon and our company's e-comm platform within 15 minutes of its initial release and a restock also sold out immediately. As this is one of our rotational flavors in our special release program, we are focusing on distributing this product in our key retailers around the country. As we look for other growth categories where the Jones brand can compete, we're excited to announce our launch of Spiked Jones. We have partnered with Locust Cider and developed a great tasting product in our core flavors with a fermented Apple malt alcohol. There has been an exciting response to this new launch, and we have secured distribution with key retailers in Washington.The first production is expected to roll off the line next week in 12-ounce and 19.2-ounce cans with a variety pack as well. The product certainly delivers on the company's promise of great taste. Our launch will provide us with key data as we expand the footprint across the country. In Canada, we have restructured our go-to-market strategy that has the potential to both double our revenue and double our margins. Loic Tomei has been promoted to General Manager Canada and is leading our new growth strategy in that country.We have transitioned into a new broker system with North South and Dot Foods Canada as our product delivery pipeline. We're also focusing on food service and replicating the model we have kicked off in the U.S. More to come on that.Now moving to operations. In recent news, Eric Chastain, our veteran COO, with 22 years of service, has decided to step aside and take a well-deserved break. We would like to thank Eric for his commitment to the company and the legacy that he's built over this long tenure. That said, we welcome Eric Bittner to the team as our new COO. He is a seasoned beverage operator with time at PepsiCo, Keurig Dr Pepper, Niagara Bottling, and Fever Tree. I am excited to have him on board to help drive growth into new categories, gain scale, and improve margins.Mary Money has also joined the team as the Director of New Product Development and Commercialization. Both are seasoned executives with deep beverage and consumer packaged goods experience.With that, let's now turn to Mary Jones. I'm very proud to say that as of February, we've officially launched our 10-milligram THC sodas in Ontario, Canada, meeting our promise of launching into the Canadian market by Q1 this year. As previously discussed, we are using Tilray brands, one of the leading cannabis companies worldwide as our manufacturing and distribution partner for the Canadian market. We also partnered with Green Hedge, a leading cannabis sales and distribution company based in Canada to further support our sales and field marketing for Mary Jones.THC-infused beverages are growing at a rapid pace in Canada and around the world as more and more consumers are shifting over from alcohol. We believe this creates a highly lucrative opportunity for our Mary Jones, craft sodas and syrups, especially given Jones was originally founded in Canada and has significant brand power in this geography. We've received positive initial feedback and look forward to expanding our product offerings and provinces in this international market.To recap where Mary Jones sits today from a geographic perspective, we are currently the #1 ranked seller in the cannabis-infused carbonated beverage format in California, where our products are carried in more than 350 dispensaries with many more on slate for 2024. We launched this week our line of Mary Jones Fizzy Tabs that are hitting the shelves and dispensaries with 3 of our core flavors, a great brand representation with 40 Fizzy Tabs of 2.5-milligram THC in a childproof container.We also recently launched in the state of Washington and within 5 months, our Berry Lemonade and Root Beer beverage are ranked #1 and #2 in beverage sales. We continually assess the next horizons for the regulated market and we'll continue to expand as we find the right partners. In addition to our geographic expansion, we're also very excited about our expansion into hemp derived craft sodas with our new Hemp Delta-9 or as we call it, HD9. The new Mary Jones HD9-infused craft sodas are created with the exact same formulation of Jones Soda adapted for HD9 with high-quality lab-tested THC derived from hemp.The sodas are sold in 12-ounce cans with either 2.5, 5, or 10 milligrams of low-dose hemp THC. We're starting off in 4 classic Jones flavors, including Root Beer, Orange & Cream, Green Apple, and Mary Jones award-winning Berry Lemonade. We also plan on introducing new and special release flavors in '24 as well as other HD9-infused edibles and shots. Additionally, we launched a direct-to-consumer e-commerce store for Merry Jones HD9 products, shipping to all states with the exception of Alaska, Hawaii, Colorado, Idaho, and Oregon due to state regulations.HD9 for Mary Jones is also currently available in 6 retail markets, including Massachusetts, Florida, Ohio, Minnesota, Alabama, and Southern California with many more to come. We believe there's a great evolution happening among today's consumers and retailers as we're seeing more people adapt to legal cannabis and THC products. Whether low-dose hemp-derived Delta9 or traditionally higher-dose THC options via state-regulated markets, Mary Jones now sits squarely in this trajectory with low-dose HD9 and traditional cannabis products that meet the demand.Overall, I continue to be very excited about Mary Jones. In Q4, we grew our cannabis-related revenue 99% year-over-year and 100% sequentially, but we are still just getting started. To give a better perspective on the success our brand is having as we continue to scale our operations, our agreements are set up for us to get a bigger piece of the pie as our system-wide sales numbers continue to grow.Overall, Mary Jones remains our top priority within the growth opportunities we've identified. We are still in the early days, given it's only been less than 1.5 years since launching in California and we've already managed to become a leading brand in the industry. With this momentum and proper strategy in place to scale the business, we remain highly confident that Mary Jones will be a major contributor to the overall revenue growth of the company.So in summary, this is an exciting time at Jones and the team is delivering unprecedented innovation across Jones Soda and Mary Jones. I am personally excited at the opportunity ahead and the team I am building. We are evolving rapidly from a 12-ounce glass bottled soda lime to a multi-format beverage company. 2024 is off to a great start, and the fun is just beginning. Delivering shareholder value is our #1 corporate objective, and I look forward to engaging with our shareholders to get their feedback and answer any questions they may have.With that, I'll pass the call back over to John to see if there are any questions from our listeners today.John, over to you.

[Operator]

[Operator Instructions] The first question comes from the line of Daniel Thiel with -- a private investor.

[Daniel Thiel, analyst]

I have about 7 questions here. So I'll take a break and let some other folks take a turn. But to kick us off, can you update us on what happened in Michigan and Nevada with the Mary Jones launches that we thought were coming there?

[David Knight, executive]

Yes, I think we all recognize -- and Daniel, it's a great question, I think we all recognize that it's key that we have the right partners in place. Our plans for Michigan. We had to rethink those. So we're working on a new plan. That should get us in that marketplace in the second half. So disappointing, but we will be in a better place. And then Nevada, we're still assessing who the right partner is. So again, weighing up what the size of the prize and the cost of the entry is. So you'll hear more news on that, but Michigan is back to the second half, unfortunately.

[Daniel Thiel, analyst]

We appreciate the transparency there. And obviously, cheering for you guys to find something right there. Congrats on the Fallout launch. That seems like a huge hit. Does Jones plan to pursue similar special releases in the future so that this doesn't just be a one-hit wonder?

[David Knight, executive]

Absolutely. As you're probably aware, our special releases happen 3 times a year. We're balancing that between flavor news and really exciting partnerships. I can't give you the details yet, but there is a third partner special release coming out in the back half.We do think though that Nuka Cola in Jones right now is probably the hottest news in beverages to hit the market in the last couple of years.

[Daniel Thiel, analyst]

That's good to hear that we're targeting some additional partnerships. So it seems like a great opportunity for exposure.Switching to another topic here, David, and then I'll let some other folks take a turn. As far as financing in our runway as far as cash to burn here and what it's looking like we're spending? Are there any plans for financing needs to raise money or to find financing?

[David Knight, executive]

Yes. So it's something that we, as a team, finance team, and the Board focus on a lot in terms of what's our cash position and what is that runway. We're considering a number of options, and we should be exploring this pretty aggressively over the next couple of months. They include a line of credit. They include some options to go back to the market and secure more investment. I think as you see our strategy, we're doing a lot of things and once we identify which ones deserve the highest investment, we're going to need more capital.So we're planning for that. We're underway in terms of our consideration set and more news to come.

[Daniel Thiel, analyst]

And I guess just while we're on the topic, I saw in one interview, I know you've been transparent and have done a number of interviews, which we appreciate, you were anticipating or at least hopeful of profitability in Q3 or Q4 of 2024 here. Are you still anticipating that?

[David Knight, executive]

Yes. Look, I think we're all pushing for that number, and we're ready to pop some champagne corks when we achieve it. I am confident we will have 1 or 2 profitable quarters this year. Again, it comes down to how quickly we can expand Mary Jones HD9 and then how some of these other initiatives perform, including Spiked Jones. But certainly, on my radar and again, something we're really pushing hard to achieve this year.

[Daniel Thiel, analyst]

I'll step aside here for some other folks.

[Operator]

[Operator Instructions] And the next question is a follow-up from Daniel Thiel.

[Daniel Thiel, analyst]

Looks like it's me and --

[David Knight, executive]

You're back so quickly, Daniel.

[Daniel Thiel, analyst]

So 3 more questions for you. Along the line of product expansion, which I love your vision that you've laid out and your energy that you're bringing to moving Jones to be a beverage company as opposed to a 12-ounce glass bottled soda company. I know Jones' energy drink, Jones Plus and then the flavored water are 2 things that have been teased or mentioned in the past. Can you give us an update on where those stand in development and potential launch?

[David Knight, executive]

Sure. Jones Plus we produced the end of last year. We got it out into the marketplace. We learned a few things. We've pivoted slightly. It's ready for a prime time. In fact, I'll be sharing some news shortly on getting distribution in a large format convenience chain. But that is looking great. It's -- we call it Jones Soda -- sorry, Jones Plus, and it's 160 milligrams of caffeine plus our natural cane sugar.Tastes great, delivers the amount of caffeine that you need, and opens up both the convenience channel as well as that morning day part, where people are looking for a caffeinated beverage in the morning. So that's Jones Plus. Still, we learn a lot. We're ready to take that to a bigger deal this year and into '25.On the flavored soda water side, super excited at what we're developing here where it's on our innovation charter for test and learn this year. And so our expectations will be out in a market test, I would say, Q3, Q4. And I think that's going to be our biggest kind of news for 2025.

[Daniel Thiel, analyst]

As far as the Spiked Jones goes, I know we're launching in Washington, Rainmaker, who makes Locust Cider as a partner. One thing that struck me about Rainmaker is they seemed a little bit on the smaller side themselves. Do you think they're an appropriate partner to take this beyond Washington and nationwide? Is that what Jones is looking to do? And yes, if so, do you think Rainmaker is the right partner?

[David Knight, executive]

Look, I think they're the exact partner that we needed to start with, a great group, similar philosophies, Seattle-based, and committed to delivering great tasting beverages. They also have a go-to-market strategy that we can jump into immediately. So they're able to get us in front of some major retailers and get the order for May. So more news coming on who that will be. But we're excited about the opportunity here.We've had great conversations like what happens if this is a complete rocket ship. And the agreement that we have with them is that if we max out the capacity, then we're open to take the formulations to other commands. So we're geared up for success. It's a great partnership. Jason and the team at Locust, they're amazing. And we look forward to seeing how big this can be with the expectation and the plan B that if we need to scale, we can.It's a good problem to have.

[Daniel Thiel, analyst]

That's the answer I was looking for to make sure that we have options to accommodate more scale in this area. So kind of a follow-up question on that note. Is this something that can be shipped direct to consumer similar like to the HD9 product or will this only be available via retailers in Washington?

[David Knight, executive]

It won't be able to be shipped or made available through our e-commerce platform. As it is alcohol, it has to go through kind of licensed premises. Now we will stream it into some of the spirit and alcohol online distributions where they've got the licenses to do that, right? But our play right now is more retail-based through traditional liquor and beer formats.

[Daniel Thiel, analyst]

And then the last question I have for you. So excited about the team that you're bringing together. It seems like there's some new fresh energy with some new vision at Jones. With that, I'm sure comes some cost. And I know our operating expenses and looking at the release here, I'm not finding the exact number. I think it was around $8.1 million or so this year. Is that your expectation for approximate overhead costs moving forward? Do you expect that cost to increase or decrease moving forward?

[David Knight, executive]

I think it will remain static as a percentage of total revenue. And as we grow the company, that will go up and commensurate with, one, the quality of the players that we're bringing on as well as the number of people that we need to run the business. So we are laser-focused on SG&A, but we're planning for growth, right? And to grow the company, we need key players that are aligned with what we're doing. And [Technical Difficulty]

[Operator]

Ladies and gentlemen, please stay on the line. Apologies for the quick technical difficulty. Please stay on the line. Ladies and gentlemen, thank you for remaining on the line.

[David Knight, executive]

Hey, Daniel, sorry, I lost service. So I'm back.

[Daniel Thiel, analyst]

No worries. We hear you loud and clear.

[David Knight, executive]

Yes. Did you catch me at the end of that? So we're going to hold SG&A flat as a percentage of revenue, grow the company, but we are bringing on more talented folks. And as we scale, we will need to enhance the team not dramatically, but there's more work to be done. And if we're going to grow this thing, then we're going to need people that can handle that growth as well as get us into channels, get us into better cost of goods facilities, et cetera. So we're very conscious of it. We appreciate that question, and it's our focus.

[Daniel Thiel, analyst]

Sounds good. Well, David, I appreciate the time. I appreciate you taking our questions or my questions and looking forward to what's to come at Jones.

[David Knight, executive]

Perfect. Thanks, Daniel. Thanks for your support. We can't do this alone, and I appreciate everybody for their questions and support. And I'm excited about what we're doing this year.

[Operator]

And the next question comes from the line of Oleg Gahl, a private Investor.

[Unknown Analyst]

My question is more for the Canadian market. Of course, the partnership with Tilray is exciting. Just what's the break down of the business structure there? Is it kind of like a licensing model and the whole overall thought process in Canada, launching with Ontario, how many stores you think are possibly going to carry the Mary Jones product lines, and just kind of what's coming in the future for Canada?

[David Knight, executive]

Yes. So it is a licensing deal with Tilray. We're fortunately partnered with one of the best in class across the globe. So we're excited about that. The launch in Ontario has done well. In fact, we are accelerating production ahead of where we thought we needed. And Tilray have stepped up, and that's ready to go.In terms of next provinces, I think Alberta is next. We've got conversations with that -- with those bodies. And I'm pretty confident we'll be probably nationwide in Canada by the end of this year. We're also bringing in some other lines beyond just our 10-milligram THC beverage. In terms of specific numbers, I don't have those at hand, but we will get them and shine a light on Canada in the next earnings call in May. But I appreciate that question, Oleg. Anything further on Canada?

[Unknown Analyst]

No, that's great. Yes, Tilray is a very exciting name. So very excited for the potential of this.

[David Knight, executive]

Well, hopefully, if you're in Canada, you've gone to one of the dispensaries and picked up some products. So go try it out.

[Unknown Analyst]

That's what's happening after the call.

[Operator]

And the next question comes from the line of Steve Kanzer with private investor.

[Unknown Analyst]

David, thank you for taking calls from us. It's a welcome change from the past and being able to have direct dialogue with the company and the team. So thank you very much. I wanted to better understand the food services division and make sure I'm thinking about this correctly. In the alcohol industry, you have on-prem and off-prem, 2 different sales channels being retail stores and then the bars and restaurants. In the craft soda business, do you see the benefit or essentially, the hand selling of the product, a more personalized engagement with the consumer to where it assists with the pull-through going into grocery stores and what, which is a very competitive and a very difficult sales channel?

[David Knight, executive]

Yes. Look, we're super excited about food service, especially now that we're producing broader formats and variety, specifically for food service. The 12-ounce glass bottled offering has been somewhat a stumbling block for food service as their preference is really cans and food -- fountain, slush, et cetera. So we've now got a comprehensive range of products across all flavors that suit food service. What we've built with Dot Foods and Green Nature has really opened up and will open up Jones in numerous accounts that have never really considered Jones either because of the format or the lack of a delivery system.The Dot has 4,000 customers in the U.S. and they're distributors and retailers and food operators. So now they can order through Dot as little as just one case of Jones where previously they had to step up and buy a pallet load. So we're going to see a significant explosion in food service. Victor, who is our GM has got such a deep experience and great relationships. So he's the right guy and now that we've armed him with the right product range and the go-to-market strategy and infrastructure that supports that, we're expecting significant growth there.So we're excited about that. So as I said, we got to the Pizza Expo next week. I'm sure we'll secure increasing excitement and orders at the show that will be delivered through Dot. And just by way of example, Green Nature took Olipop and Liquid Death from 0 to over $20 million in revenue through food service. So we know that we have the right food service broker. They've got 18 sales folks that are around the country that all they do is speak to food service operators. So that's restaurants, colleges, hospitals, wherever cafeterias and canteens are.And so we're going to see a significant growth through that channel. And then again, Dot Foods is having their expo here in Denver in April. And so Jones will be there again to secure new business at that expo. So food service, you're going to see a lot of buzz and activity about. And yes, Jones Soda tastes amazing in a frozen slush or off the fountain as well as now being available through cans. So exciting stuff. So hopefully, Steve, that answers your question.

[Unknown Analyst]

It does. And I appreciate my kind of follow on related to food services and the sales process of it. And the fact that they've got their own salespeople is really helpful because it goes back to, I guess, Daniel's question around the additional SG&A relative to the sales. So partnering with the right folks that have their own sales team and that's super helpful.I've got 2 more questions if that's okay.

[David Knight, executive]

Yes, sure. Go ahead.

[Unknown Analyst]

In your 10-K and 10-Q, you referenced that there's, I think, $27 million warrants that are set to expire, I want to say, mid-March with a $0.65 conversion price. Will those be expiring and going away and removing that overhang or do you know if they'll be converting those at the time $0.65?

[David Knight, executive]

I'm going to hand it over to Joe. Joe, do you want to answer that?

[Joe Culp, executive]

Yes. Good question. At this point, no plans for any changes, but we'll certainly let you know if anything changes there. And we know that's just coming up in a couple of weeks, but no plans to do anything with those.

[Unknown Analyst]

So they -- but they expire. I was trying to count the days and figured out but it is in March of this year that they expire. This month.

[Joe Culp, executive]

Correct.

[Unknown Analyst]

And my last question, and I'm really happy to hear the #1 corporate objective is shareholder value. And as we think about how that shareholder value is created through the different verticals that you've now introduced, the broadening of the product base, growing top-line revenue, paying real close attention to both gross and net margin, watching that growth in EBITDA, even though it may be negative quarter-to-quarter, but seeing it all moving in the right direction as you guys build out invest back into the business. Share price is obviously another indicator of growing shareholder value. And one of the challenges -- or 2 of the challenges that we face as a company being on the current exchange that we're on presents a liquidity challenge for current shareholders and it also kind of inhibits the broader investor support as there's a lot of brokerage firms that are not permitted to buy for their clients any penny stocks or anything on an over-the-counter.As you think forward, growing shareholder value with all these other channels and very important pieces of it, how do you think about uplifting the stock or reversing the share price and maybe tying it with something like a rights offering to get capital in the company and allow current shareholders to maintain their percentage or increase ownership through that rights offering kind of going forward? Like your thoughts around that.

[David Knight, executive]

Yes. Look, it's something that is one of my -- we call it big rocks. What are the things that am I focused on every day? And the share structure, the Boards that we're on, opportunities ahead to uplift is certainly one of my top priorities. So I'm privileged to have some great Board members. So we've set up a small team of myself and several of our Board teams to really go through what are the opportunities. What's the best way to raise capital? What's the best way to make our shares more available?Certainly being a penny stock is not where we want to be. And yes, you'll hear more on that this year. But just to assure you, it's on my kind of top 3 objectives for the first half.

[Unknown Analyst]

Well, that's great to hear. I've been a shareholder for a very long time and I wasn't sure what I was going to do. And then saw the transition begin to happen and thought I'd just stick it and watch for a little while. And you guys have been quarter-over-quarter and year-over-year executing and doing what you've indicated publicly what you were going to be doing and executing on the plan. So thanks for that. And good luck for the rest of '24. We're watching closely.

[David Knight, executive]

Yes. Steve, look, I mean we have a large group of really loyal shareholders, right? And one of the things I noticed when I came into the company was, gosh, people are still hanging in and still supporting, and we need to get growth behind the company. We need to do what we say and say what we do, right? Trust and execution is key in any company, but beverages, it's paramount. And so I'm glad that we're now in this cycle of, hey, we're looking at opportunities. We're identifying growth verticals, and we're going hard at it, right? I think we've delivered more innovation at Jones Soda in the last 6 months than we probably ever had before.So we're hard at it, right? And I would encourage you guys to hang in. We're excited with the plans that we have, and that's going to reflect in shareholder value.So thank you for your patience and commitment, and I'm looking forward to delivering Q1 and giving you insight into what we're doing in Q2. And just as that momentum builds, I think we're going to have a very exciting year.

[Operator]

And at this time, this concludes our question-and-answer session. I would now like to turn the call back over to Mr. Knight for any closing remarks.

[David Knight, executive]

Yes. Thanks a lot, John. I'll be brief. I think I've said exactly what I needed to say. I appreciate the support that we're getting across the company from our Board, from our shareholders. Thank you, everyone, for taking the time to listen today. And we look forward to coming back with you and reporting on our first quarter results in May. And I'm enjoying some of the calls I'm getting from my shareholders, right? They're calling me up and asking questions and supporting what we're doing and noticing a difference.So that transition from a soda company to a total beverage play is really key to our success. And getting into new formats, new verticals, new sub-brands is going to be priority one for us as we drive both Jones Soda and Mary Jones. So thanks, everyone. Have a great day. I appreciate you all.

[Operator]

And ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.