Beeline Holdings, Inc. (BLNE) Q3 2020 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the Eastside Distilling Reports Second (sic) [Third] Quarter Fiscal Year 2020 Financial Results Conference Call [Operator Instructions]. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Ms. Amy Brassard, Corporate Affairs Director. Ma'am, please go ahead.

All right. Thank you so much. Good afternoon, everyone, and thank you for joining us today to discuss Eastside Distilling Financial Results for the Third Quarter 2020 ended September 30, 2020. I'm Amy Brassard with Eastside Distilling, and I'll be your moderator for today's call. Earlier, Eastside issued third quarter 2020 financial results in our press release. Joining us on today's call to discuss these results are Mr. Paul Block, the company's Chairman and Chief Executive Officer and Mr. Geoffrey Gwin, Eastside's Chief Financial Officer. Following their remarks, we will open the call to your questions. Before we begin with prepared remarks, we submit for the record, the following statements. Certain matters discussed on this conference call by the management of Eastside Distilling may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended, Section 21E of the Securities Exchange Act of 1934 as amended, and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements describe future expectations, plans, results or strategies and are generally preceded by words such as may, future, plan or planned, will or should, expected, anticipates, draft, eventually or projected. Listeners are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events or results to differ materially from those projected in the forward-looking statements. Such matters involve risks and uncertainties that may cause actual results to differ materially include, but are not limited to, the company's acceptance and the company's products in the market, success in obtaining new customers, success in product development, ability to execute the business model and strategic plans, success in integrating acquired entities and assets, ability to obtain capital, ability to continue its growing concern and all the risks and related information described from time to time in the company's filings with the Securities and Exchange Commission, including the financial statements and related information pertaining to the company's annual report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission. Now with that said, I would like to turn the call over to Geoffrey Gwin. Geoffrey, please proceed.

Thank you, Amy. I'm pleased to report we have made meaningful progress over the last quarter on multiple fronts. First, on October 27, we signed a nonbinding term sheet to end our relationship with Redneck Riviera. We will be entering into a termination agreement of a license as well as the sale of barrel stock, raw materials and finished goods. The LOI contemplates total consideration to Eastside of approximately $8 million. That number will be subjected to certain adjustments upon closing, which we expect to take place in the current quarter. The company will use the proceeds to pay down debt and fund its growth plan, which Paul will discuss shortly. Now let's turn to the results for the quarter. Gross sales for the third quarter increased to $4.8 million compared to $4.5 million for the same period in 2019. These numbers reflect an adjustment for discontinued operations as we closed our Oregon tasting rooms earlier in the year. Craft Canning had a strong quarter with revenues up offsetting a single-digit decline in spirits. Craft Canning had a strong quarter with revenues up offsetting a single-digit decline in spirits. Craft results were positively impacted by strong volumes, which extended well into October. While we saw an initial improvement in spirit volumes earlier in the quarter, by September, we had begun to lap last year's push of Redneck Riviera's value-added packs for the holiday season. And we have dramatically de-emphasized money-losing VAPs for 2020. Gross profit for the quarter declined to $1.6 million, down from the $1.7 million last year. The decline was due to mix in spirits, marketing investments and reinvestment in Craft to support growth. Below the gross profit line, we delivered a 27% year-over-year improvement in general and administrative expenses. EBITDA improved again this quarter to a loss of $719,000. As we stated on our last call, we expected continual sequential improvement in EBITDA. And this quarter, we delivered that. Net income per share was a loss of $0.17 versus a loss of $0.38 last year. However, we're not done with our restructuring of the income statement. We are making meaningful progress change in our business mix eliminating nonproductive costs and concentrated investment to drive gross margins and growth. As we begin to pick up our pace of growth here, you will see the operating leverage in gross margins as our business shifts to higher-margin products. This transformation will be accelerated by the Redneck Riviera exit. Now let's turn to the balance sheet. We ended the quarter with just under $1 million in cash, we had $6.4 million of debt outstanding under our Live Oak credit facility and approximately $5.4 million in notes payable. We are currently in discussions with Interstate about the potential to adjust the deferred consideration for Azuñia. We do have the ability to convert a large portion of this liability to three year note early next year. These discussions are active, and we have limited information to share at this point. But suffice it to say, we are confident we can chart a course that is a win-win for all parties. Now that I've been in this role for about five months, I'd like to take a moment and share some of my broader observations of the business, where it is and what you should expect. It usually goes without saying that when you complete an acquisition of any meaningful size, you expect some integration opportunities. And these opportunities allow you to capture synergies and value. Eastside made two significant acquisitions last year and never integrated them. The focus at the time was simply revenue synergies, and more recently, those have been almost wholly interrupted by the pandemic. We are integrating these companies now. All three of them. You saw a big portion of that work announced last quarter, but we are continuing to make improvements and are making progress. This work is being done across the income statement, impacting nearly every category of expense. Let me read off some examples of this. We have reduced our physical footprint by consolidating locations and exiting leases. We are also in the process of reducing our footprint in manufacturing as well as looking to lower overall production costs and sales expenses. We have reduced our reliance on consultants and outside professionals and instead are redefining workflows to integrate finance, HR, compliance and other key corporate functions into consolidated shared services across the entire company. Once you concentrate responsibility, you see results. And thus, we continue to identify more savings and assign responsibility. We have more to do in this area, and we have more to do specifically in procurement and logistics. Our investments in corporate areas like S&OP and FP&A are already providing critical managerial tools to continue to make meaningful improvements in operating performance as we build our 2020 plan. We will continue to report to you on the progress we're making in all these areas. But before I hand it over to Paul, I would like to touch on one last topic that you will be hearing us speak about over the coming months, and that is capital efficiency. It's not lost on us, but our current equity valuation discounts the value of the company's assets. In my experience, when a company's management team is questioned on then they pare back, they often use phrase that goes something like be patient, the stock price will catch up with the results. While I believe that, yes, the income statement will drive results, I also believe we have another tool to unlock value for investors. That tool is targeting and releasing unproductive capital invested in assets. Eastside's barrel inventory position is a great example of this capital inefficiency. While it may have made sense to overinvest in barrel stock in the past and benefit from the ever-increasing value of aged whiskey, at this point, a dollar invested in Spirits, Craft Canning could yield a much greater return than one sitting in a barrel in a warehouse. We methodically turn over every opportunity to to redeploy capital. The Redneck disposal is one of the most obvious examples of this to date. So with that, I'll turn it over to Paul.

Thank you, Geoff. We certainly appreciate you joining us today for the Q3 earnings report. As Geoff previously mentioned, Redneck Riviera Whiskey license termination will offer Eastside $8.1 million in value and will significantly change the balance sheet dynamics. The company will have the opportunity to reduce absolute barrel inventory by 45%, reduce the -- the value of that barrel inventory by 38% and retain approximately 50% of the $8.1 million in cash. This event and the impact it will have on the balance sheet will better position the company for further capital structure improvement and will better support our goal of accelerated and sustainable growth. Now despite the substantial effort we're allocating for the Redneck Riviera closing, management continues to focus on five key objectives that we believe will change the underlying fundamentals of the company. Our overall goal is growth acceleration for the company and rapid value creation for our shareholders. And to this end, the 5 key objectives are neutral cash burn, improved balance sheet, as Geoff mentioned, adequate liquidity and growth capital, accelerated spirits volume with profit and Craft Canning expansion with the highest return. So for the first objective, neutral cash burn rate, the company has set a proxy for this scorecard measure as adjusted EBITDA plus interest expense. Now based on this measure, the 2019 fiscal year cash burn rate was $9.04 million. And the 2020 forecasted burn rate is 45% less at $5.011 million. As Geoff mentioned, we will deliver sequential EBIT improvement by quarter, and this improvement is reflected in a consistent reduction in the 2020 quarterly cash burn rate. So for example, Q1, the company recorded a cash burn rate of $2.169 million; Q2, $1.274 million; Q3, $930,000, and Q4 is forecasted to be less than $536,000, an average of 30% improvement for each quarter of 2020. In addition to the cash burn rate reduction, management is very focused on improving the income statement ratios in a manner that will drive the highest return for each case sold. For example, we're improving gross to net productivity by focusing on price, volume and mix. We are improving costs by reducing material complexity. We are optimizing brand promotional spend by focusing on purchase intent. And finally, we're holding G&A at current levels as gross profit increased. All of these actions and anticipated improvements will be detailed in the forthcoming 2021 company budget. Now turning to our second objective, focusing on the balance sheet improvement, I believe Geoff covered most of the salient points. However, I can say management is very enthusiastic about the possibility to align an optimal balance sheet with an accelerated growth plan. I did want to take a moment to comment further on the working capital and specifically inventory. Once the Redneck Riviera event is complete, our barrel inventory will be reduced from 8,800 barrels to 3,900. The plan is to use approximately a third of the remaining barrels for the Burnside grant, third for our new Eastside Limited Edition brand and a third for sale or depleted-through contract manufacturing. By converting most of the remaining 3,900 barrel inventory into finished products, the opportunity becomes very lucrative for Eastside. For example, 100 barrels can produce 4,000 cases of finished goods that translate to $1 million in revenue and $500,000 in gross profit. So rather than sell a barrel at wholesale, we can achieve 10x the return by selling finished goods. This strategy is new to Eastside and can add significant top line and bottom line profit. We are working diligently on branding, labeling, compliance, product development and pricing, and we anticipate introducing additional premium products for both Burnside and our new Eastside Limited Edition line late Q1, 2021. Turning our attention to the third objective, adequate liquidity, management believes achieving this objective is critical to Eastside's comprehensive success. Once we limit our cash burn rate, we can better manage our cash and improve our liquidity. At some point, we can even imagine, taking advantage of the increasing opportunities in the marketplace with bolt-on acquisitions. And while management continues to focus on organic growth, specifically on Azuñia Tequila and our other spirits brand, the opportunity for accretive external expansion is available and possible, whether internal organic growth or external bolt-on acquisition. Our overall objective continues to be accelerated growth, minimal dilution and appropriate debt level. Recently, we've secured short-term liquidity from Pat Kilkenny and management would like to take this opportunity to thank Pat for making these funds available to the company. Turning to our fourth objective, Spirits portfolio volume with profit. We continue to concentrate on those tenants we've mentioned before. Craft inspired, premium, unique, high-growth and strong pull oriented. We are currently finalizing our 2021 plan for a key spirits brand. For Azuñia Tequila, our biggest opportunity in the Eastside portfolio, we're looking to capitalize on the ever-growing tequila market. We'll expand a Azuñia distribution from west to east and focused on Azuñia Black, the brand's premium flagship product. In addition, as the on-premise business returns, we will focus on making Azuñia the tequila drink of choice. For Burnside Bourbon, we're focused on the relaunch of our premium 10-year Buckman Reserve. We're introducing new Buckman barrel strength reserve. We're developing a new ultra-premium Buckman black double barrel reserve. Our goal for Burnside is expansion outside of Portland, Oregon, and targeting bourbon aficionados in key markets throughout the country. For Portland Potato Vodka, one of our fastest growing brands, we are highlighting the premium nature of the product with a new more premium 750 mL bottle and a new 1 liter version for on-premise. Pristine water from Mount Hood, 4x distilled and the personality of Portland, will reinforce this unique vodka experience for all our consumers. For the Eastside Limited Edition line of premium spirits, we utilize the current barrel inventory and offer products like single malt sherry cask, small batch rye, 10-year rum, and aged gin, all at consumer price points ranging from $80 to $400 per bottle. Turning to our fifth objective, Craft Canning and Bottling expansion with high return, we'll continue to capitalize on the opportunity to extend the canning business in the areas of the highest return. While Craft Canning is not our strategic priority, it is a growing high margin, high return opportunity. Todd Garrett recently resigned as the CEO of the Craft Canning division, and we've been fortunate to replace him with a seasoned manufacturing industry executive, Michael [Carstedt]. Michael has extensive experience in change leadership, scaling manufacturing, rapid growth management and implementing ERP. Eastside team is very enthusiastic about the change and excited about the new leadership. Our immediate plan of action for Craft is to announce a price increase for 2021 that will offset the rising cost of cans and further maintain margins. So as a summary of my comments today, I wanted to share management's objectives for the upcoming Q4. First, we want to achieve the cash burn rate below $532,000, which we define as EBITDA plus interest expense. We want to have sequential gross profit improvement over the Q3 results that we've reported today. We want to close the Redneck Riviera deal and secure the $8.1 million, on a complete, a detailed 2021 budget based by month, by brand, by SKU. We want to recommend the capital structure that will drive company growth and achieve the value that we anticipate. We want to complete the new packaging and new products for launch in Q1, as I previously mentioned. So despite the COVID pandemic, we believe the tide continues to rise for spirits consumption and Craft Canning. As we continue to bring leadership, strategy and strong tactical execution to the Eastside company, we believe we can capture a disproportionate share of market and continue to accelerate top line growth. I think you will agree this is a new Eastside and a new opportunity to create value for all our shareholders and stakeholders. As always, we appreciate your continued support and your continued interest in Eastside. Thank you all for joining. And at this time, we will open it up to questions for all of our participants.

[Operator Instructions] Our first question today comes from David Bain from ROTH Capital.

I guess, first, I didn't see the typical detail as it relates to some of the product line volume growth. Is that something that could be in the queue? Or could we briefly go through Burnside, Azuñia and Redneck, maybe 3Q, and the trends so far in 4Q?

David, it's Geoffrey here. I can talk to that. Yes, we didn't give out the numbers this quarter for the volumes. We're going to -- I can talk generally about the direction of the Spirits business and then we can take it off-line later, if this is something you need more numbers on. So Redneck and Azuñia, both, as we said in the second quarter, were impacted by the the pandemic. And coming into the third quarter, each month sequentially got better, and we had a strong finish to the quarter with both Azuñia and Redneck. Having said that, there were some marketing-related expenses on Redneck that didn't let us benefit as much as we had hoped in September on a gross contribution basis. But those two brands are doing well. Now we have to keep our eyes on the fourth quarter here as we head towards this continued increase in the pandemic, but we remain optimistic on those two brands. And as we finish our stewardship of of Redneck, Burnside and the Portland Potato Vodka brands are doing extremely well. Portland Potato Vodka is doing very well and it's been now launched in California and has had a lot of initial success. So we're having year-over-year gains in that brand as well as we're seeing slight gains in Burnside. So we're pleased with the spirits, but clearly, in this quarter, the Craft Canning business looks phenomenal. They're up another 20% or so and really driving our growth and cash flow for the company.

And congratulations on kind of being unshackled as it relates to the balance sheet soon and margins as well. After you divest Redneck, which gives you, I guess, the instant sales margin pickup, I assume there's other margin augmentation opportunities that come in as well. If we extract the Redneck costs and look at the new revenue mix, do we need a significant amount of growth from here to be EBITDA positive? I'm speaking to EBITDA, not necessarily the cash burn that you were speaking to.

I'll start with that, and Paul, maybe you can jump in. Those numbers that Paul is referring to in his section of the script adds back interest expense. So just to make you aware of that when I speak to EBITDA, I'm not obviously including interest expense. But I have to tell you, I think from what I've seen, two things -- let me sit back for a second, just say, generally speaking, one of the challenges that East has had is they have premium Craft products and they take the price down. Right, then we moved down at retail. Again, Paul is much better at explaining this than I am. In the case of Redneck, that whole market, that whole business went down market for us. So I think our goal here with Azuñia and Burnside and also with Portland Potato Vodka -- and I'll again refer you back to some of Paul's comments on some of the changes made there. You're going to see us be able to capture more margin in those products. And that's going to go a long way to improving the cash flow operating performance of the company in the income statement. Having said that, there's also a mix shift going on. We've never really been able to capture the Black opportunity in Azuñia. We're selling a lot of Blanco, the lowest margin product we have. And the reason why we haven't captured it is because the minute we got our act together at the beginning of the year, all the on-premise locations went dark. It was very hard to get people focused on Black. That's changing for the holiday period, and we're getting that out finally. And that will have a margin change. But Paul also alluded to something else in his script that I'd point people to, is some new products that are going to be really high-margin products. The company sits on some aged whiskey that is incredible and has an opportunity to take some products out to market that I think are going to be -- have a big impact in the company and it's going to be reflected in growth and profitability. Paul, did you want to add to that?

Yes. What I'd like to do is just give a specific example. I'll take Portland Potato Vodka. We're looking at simultaneously creating less complexity in production and bringing products to market that are more Craft, more premium and more quality. You've heard us continually talk about that. The other thing we've talked about is not just pushing it in, but ensuring that we pull it through. So we have just taken the Portland Potato Vodka and assimilated in -- created a mockup in the Burnside bottle, which is a called the fourth-day [ph] bottle, presented it to consumers. And our top-box purchase intent, we went out and did a quantitative study, which is, I don't think Eastside has done at all for any of its products, and we've measured purchase intent. And like I said, we're going to look more at how consumers pull it through than just jam it in and hoping it moves through. And the top-box purchase intent on the new PPV bottle went from 15% to 25%. So those would be people, 15% said I'm extremely likely to buy it and when we showed them the new bottle, it went up to 25%. And on the top 3 box, which is extremely very and somewhat likely to purchase, it went from 79% to 86%. Now we'll also have a corresponding price increase and try and bring the price back up again, because we've been pushing that price down. So we'll take some of the iconography from the bottle and the label and what's very attractive to consumers in driving purchase intent. And we'll put it into point-of-sale and into merchandising. So that's one specific example. Also, I don't want to bore you to death, but we're looking at attributes and derived attributes. And I promised our shareholders, it would be more quantitative. We focus on more pull. We give you examples of how we're going to grow these brands. And the Potato Vodka scored higher on premium, quality, Craft and new and different, and those are all attribute ratings. Combined together, it's called derived attribute ratings and those specifically drive the purchase intent. So we know when we put this bottle in the market, we can go out to distributors, and we could show them the research, we can show retailers the research. We can explain why we should take our price up and we get a higher margin, and we can tell them how we're going to drive more velocity at the point of purchase. And just one more thing, not to take too much time. But the Eastside brand, the Eastside brand is scored through the roof. We've just tested just one mockup and the top three box score on talking purchase intent was 96%. So 96% of the target that we interviewed said they were extremely likely or very or somewhat likely to purchase. So we're out there measuring the impact of the packaging, and we're also measuring the underlying attribute fundamentals that move us to more premium, more Craft and higher quality, which allows us to charge more in the marketplace. So we're really excited about all this. We're ready to get out and start to see it in action in some of the markets and to support it with some promotion and some online support.

And I promise last one. I know it's my third. But just on Craft, a lot of beverage companies even one today have noted that the can supply tightening. They've been speaking, though, also to supply relief kind of at the end of next year after some factory build-outs and I'm just wondering how that impacts sort of the longer-term for Craft or just Craft like the mobile, does that fill a different type of niche or void that general supply factories can't? And also, would that be flexible enough to sort of ramp down as a business over time as spirits become much more pronounced and maybe supply does creep back into the market? Or how should we look at this as a longer-term opportunity for Eastside?

I can speak to that strategically. I think to answer your one question, is it different than fixed operations as a mobile canning operation? And the answer is yes. It's very different because we're actually putting three or four components on a truck along with the bright cans and going right to the point of production. And so different production facilities may have certain changeovers. They have some downtime. They may have optimized their capacity utilization. So they need something that is fast, is incremental and is on site. And that's very different. Because when you produce in a fixed operation, then you're either producing the liquid on-site or you're trucking it in. So you should think of it as a very unique opportunity offered to the marketplace, and one that I think is sustainable. In terms of the cans and the overall interest in the can market as a consumer demand, yes, you could envision there being a little bit less intensity after COVID as on-premise comes back, as draft beer comes back, but I don't think cans are going away as a preferred package or as a consumer consumption set. I think I've seen a lot of beverage trends, fads over the years. And this one looks fairly consistent. I'm not saying it won't back off. And then on the last point on the actual can supply, there is a lot of pressure on can supply. But I've been very impressed with the capability of our purchasing team and their innovative ways to get out into the market and find can availability and to even find some at pretty good cost. So it is a challenge. It's something that's on our mind. But from what I've seen, the team has been managing it well, and we haven't really run out of stock to date.

[Operator Instructions] Our next question comes from Peter Merkel from Magis.

A couple of quick questions, hopefully. The inventory aspect on the whiskey, when you're talking about new products, is that just the burn through that inventory, are these potentially permanent new products?

I think the primary impetus of developing the Eastside brand, there's other reasons, but primarily is to really burn through these barrels. Now if we find something that's on fire and that people love, we can even turn into a permanent product offering, it's possible. Or it could be a repetitive limited offering during different times of the year. So primarily, we're looking to work through the barrels. Secondarily, we're always open to opportunities as it emerges in the market.

And could you give an update on how the Hue-Hue Rum rollout is going? And then my final question is, are you seeing any good traction on the Azuñia on-premise when it comes to your trying -- I think last time we talked, we were talking about creating partnerships with signature drinks at the restaurants and on-premise, and if that's occurring?

So in terms of Hue-Hue. Hue-Hue is I mean it's doing maybe 100,000 cases this year. And it's a very limited usage occasion. I mean, I used to work on Kahlúa, coffee liqueur. And Hue-Hue is a coffee rum. And it's a very finite and a very small usage occasion. So we're really going after where we see the fastest growth and the best return. Given that we're a small company. We're a bit cash constrained. We want to use our resources judiciously. I would have to say the biggest opportunity the team sees on Hue-Hue is in a ready-to-drink. And we're now developing different prototypes for Hue-Hue RTD. And we're also thinking about the fact that Hue-Hue could be more than just a coffee rum. Maybe it's a coffee vodka. So Hue-Hue could just be this great coffee infused spirit that you have in a ready-to-drink offering. So we're not backing off of Hue-Hue. We are going to optimize the packaging. It's cost a fortune right now. So we're going to improve that. And we'll move forward opportunistically. But I would say, in 2021, it's not going to be our biggest push. It will be Azuñia, Burnside, Portland Potato Vodka, and then we'll offer the Limited Edition Eastside. And of course, we'll make Hue-Hue available, but we only have so much dollars to go around.

And just to clarify, it's under 1,000 cases this year of Hue-Hue.

How about Azuñia? Are you seeing traction in…

We've had some success with placing Azuñia in on-premise. In fact, I think there's a well-known chain. I don't think we've made it public yet, Paul. I'm not sure about that, but…

No, no, we're in. We're on the menu at cafe, lots.

And they think they're going to have other opportunities there. And yes, Azuñia lends itself well for this kind of placement. Remember, though, a bottle of Black is at retail over $100, right? So on-premise, then you're in a much higher dollar price point. But this is a situation where you start to go through the expressions of this tequila. You kind of end up wanting to go after the Black and have an opportunity to try it, extraordinary tequila. And so we are making progress there, and the sales team had some success in the past quarter. We should see more of that in the next quarter and into next year.

[Operator Instructions] And we do have a question from Matt Campbell from [Lorde Capital].

Nice to see some progress at the company. Geoff, you made a comment about the debts with Live Oak and your notes available. Wondering if you could expand upon that because you said you felt confident being able to push that out?

So yes, we're in process with -- we have two banks actually. Live Oak is the bank that we have used to finance the barrel inventory and then we have First Interstate, who's been extremely supportive with Craft and growing Craft. And we just have learned that we've renewed the First Interstate line for end of the year. In fact, it could be going up in size and shortly about that to help finance the growth. And Live Oak has also told us that they are excited to continue the relationship. And so we're in the process of having that rollover for another year. And we're in discussions with them about how much cash we'll capture, obviously, as we close the Redneck deal and how much we'll have left on the balance sheet. The rest of the debt is our notes payable. It's around $2 million and change, and those are old friends and family notes, some of them are convertible, busted like converts in the sense that they're low coupons and they mature over the next -- into the spring, late spring. And we've talked to people about helping us take care of that if we decide not to use our cash. And so we've got some interest there. And then the last item that I'll call out just because it's there, is the earn-out, as I mentioned, it's moved into a current liability because we have it coming up here in the first quarter. But a portion of that has already been crystallized in what we'll pay out in the stock. And we can issue more stock, issue cash, we can issue the rest of the note -- the notes, a three year note with a 6% coupon. But suffice it to say, right now, we want to look at all our opportunities. And as Paul said, the Kilkennys have been extremely supportive of this company over the last year. And they want to see the company be successful, not just the Azuñia product that they brought to the family, but the entire platform. And so we're in discussions with them about how we can create a win-win for them, extend the earn-out and give the company a clean balance sheet for next year, plenty liquidity growth.

And I'm traveling, so forgive me, I haven't been able to see the press release. But the PPP money, was that forgiven? Or what's the status of that?

We are applying for full forgiveness. The application is in process, and we will know in 60 days or so, that's about $1.4 million.

Ladies and gentlemen, I'm showing no additional questions. I'd like to pass the floor back to management for any closing remarks.

Yes. Well, we'd just like to thank everybody for their participation and continued support. Really appreciate it, and we look forward to any one-on-one conversations, you'd like to have with Geoff and I, if you'd like some more detail. Other than that, thank you very much, and have a nice evening.

And ladies and gentlemen, with that, we'll conclude today's conference call. We do thank you for attending. You may now disconnect your lines.