Good morning and welcome to REIT's third quarter 2026 earnings conference call for the three months ended September 3rd, 2026. My name is Anas and I'll be your conference call operator for today. Today's call will include remarks from Neal Cohane, REIT's interim chief executive officer, and Doug McCurdy, REIT's chief financial advisor. Following their remarks, we will open the call for questions. Before we begin, please take note of the company's cautionary statement. Today's call will include forelooking statements, including statements about regional business strategy, growth initiatives, financial projections, operational improvements, the impact of corrective efforts, financing plans, and liquidity. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. Forward-looking statements inherently involve risks and uncertainties and only affect management's view as of today, November 11, 2026. READS assumes no obligation does not intend to update these forward-looking statements, except as required by law. For more information, please refer to the risk factors section of the company's annual report filed with the Securities and Exchange Commission on March 25th, 2026. And in other files, the company makes from time to time with the SEC. While discussing results, the presenters may refer to non-GAAP measures, which exclude certain items from reported results. Please refer to REIT's third quarter 2026 earnings release on REIT's investor website at investor.reitsinc.com. and the company's quarterly report on Form 10-Q for the quarter ended September 30th, 2026, expected to be published on the website soon for definitions and reconciliations of non-GAAP measures and additional information regarding results. Including discussion of factors that could cause actual results, the material would differ from forward-looking statements. While we believe the non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. I will now turn the call over to Mr. Cohane.

Thanks, Operator, and good morning, everyone. Third quarter marked another step forward in improving our operating performance with continued progress on gross margins and cost discipline. In short, the turnaround plan is taking hold. The actions we have taken throughout the year are beginning to translate into a more efficient operating structure. Gross margins increased to 25% compared to 24% in the second quarter and 17% a year ago, while operating expenses continue to decline. We recognize that restoring revenue growth remains a priority, and our focus is on building these improvements as we position the business for 2027. As we emphasized last quarter, we're making progress. There is still considerable work ahead of us. We have taken steps to address the challenges facing the business, but we are not yet where we want to be. Let me give you some context on key areas of progress during the third quarter. An important development since our last call is that we have strengthened our balance sheet. At the end of the third quarter, we refinanced our credit facility and extended its maturity to June 2027. After quarter end, we closed a $10 million private placement. Doug will walk you through the details, but the bottom line is that we now have the capital to execute our plan. With the completion of our $10 million private placement, we have strengthened our financial position and provided the company with additional flexibility to execute our business plan. Our capital allocation priorities are straightforward. First, to support working capital and ensure operational stability. Second, to continue improving our cost structure and operating efficiency. And third, we will make targeted investments in our brands and retail partners that will drive incremental revenue and long-term growth. Importantly, we intend to be disciplined and increasingly selective in how we deploy capital. While we will continue to manage expenses carefully, We will also recognize that returning REITs to growth requires investment behind our brands and our retail distribution footprint. As we move into 2027, we will expect to place greater emphasis on focused marketing, including digital, social media engagement, and influencer retailer marketing. This is designed to build awareness, drive consumer demand, which will translate into measurable sales, Our objective is to ensure that every marketing dollar we deploy is backed with a return on investment that will increase velocities while creating long-term shareholder value. On the retail channel side, our investment in a stronger national broker network is beginning to deliver results. Year over year, we have secured more than 3,000 new retail doors while also regaining distribution with several important national and regional accounts. This represents meaningful progress in rebuilding our retail footprint and expanding the availability of our brands. We expect these new placements to begin contributing more meaningfully in the fourth quarter throughout 2027 as products reach store shelves, gain consumer visibility, and build velocity. Our focus is now on supporting these placements with disciplined sales and targeted marketing to convert expanded distribution into sustainable revenue growth. Product innovation will be another important driver of our growth strategy as we move into 2027. We're continuing to build on Reed's strong heritage in ginger with the development of our new mixer line, which we believe creates an exciting opportunity to expand our presence and relevance in the beverage category mixer space. In addition, we're working towards what we believe could be a game-changing product innovation targeted for launch in early 2027. While we are very excited about the potential of this innovation, we intend to take a measured and disciplined approach to its launch. Our initial strategy will be to introduce the product through a controlled market test with our local customers and with very specific retail partners. This will allow us to evaluate consumer response, product velocity, and operational execution in a short period of time before considering a broader rollout. While we're not prepared to share additional details at this time, we are excited about this initiative and what it could mean for the future of Reed's brands. Our objective is to bring meaningful, new innovation to the market that differentiates our portfolio, attracts new consumers, and creates incremental growth opportunities with our retail partners. Reed's will return to growth by not only growing our existing portfolio, but by constantly innovating and partnering with key retail partners around the country. Our decades of distribution and retail partnerships are what we do best. We are now leveraging those relationships. It's time to pay attention. On costs, we will continue to balance our selling, general and administrative expenses with the size of the business and those expenses decline meaningful both year over year and sequentially. Our operations team has also done a strong job managing logistics, vendor relationships, and in a challenging fuel and freight environment with delivering and handling costs down 10% year over year. In Asia, we have narrowed our focus and significantly reduced our investment in the second half of the year. We can continue to closely monitor our investment there and we'll update investors as appropriate. Stepping back, the third quarter demonstrated continued sequential progress in gross margin, operating expenses, and net loss, but we recognize the substantial work remains, particularly on top line. As we close out the year and move into 2027, we are focused on disciplined commercial execution, putting our new capital work, continued margin improvement, and positioning REITs for profitable, sustainable growth. In the fourth quarter, We are not simply focused on stabilizing REITs. We are focused on rebuilding forward into an exciting growth company. That means we're rebuilding our commercial foundation, investing in meaningful product innovation, reconnecting with consumers, and creating new opportunities with our retail partners. We believe Reed's has tremendous brand heritage and untapped potential and our focus is on translating those strengths into sustainable growth, improved profitability and long-term shareholder value. I'd like to thank everybody for your time today and I'll turn the call over to Doug now.

Thank you, Neal. Turning to our results for the third quarter of 2026, All variance commentary is on a year-over-year basis unless otherwise noted. Net sales for the third quarter of 2026 were $6.5 million compared to $7.0 million in the prior year period. The decrease was primarily driven by lower volumes with recurring national customers, partially offset by lower promotional and other allowances. Gross profit for the third quarter increased 34%, to 1.6 million compared to 1.2 million in the prior year period. Gross margin expanded to 25% compared to 17% in the prior year period. The increase was primarily driven by lower promotional and other allowances and lower cost of goods per case, which decreased to $13.26 from $13.73 in the prior year period. Delivery and handling expenses decreased by 10% to $1.0 million during the third quarter of 2026, compared to $1.1 million in the third quarter of 2025, primarily driven by the net sales decrease and continuing improvements in logistics efficiency and freight optimization. Delivery and handling costs were 15% of net sales, or $2.69 per case, compared to 16% of net sales, or $2.60 per case, during the same period last year. Selling general and administrative expenses decreased 15% to $3.6 million, compared to $4.2 million in the prior year period. The decrease was primarily driven by continuing efforts to optimize selling general and administrative expenses, partially offset by investment in personnel and related services to support our Asia growth initiative. Net loss during the third quarter of 2026 improved to 3.2 million, or negative 27 cents per share, compared to a net loss of 4.0 million or negative 48 cents per share in the prior year period. EBITDA loss improved to 2.9 million in the third quarter of 2026 compared to an EBITDA loss of 3.6 million in the year-ago period. Turning to liquidity, cash used in operations improved to 0.3 million in the third quarter of 2026 Thank you. Thank you. Thank you. We have taken important steps to strengthen our financial position and balance the company with additional flexibility to execute our growth strategy. On September 30, 2026, we refinanced our $9.25 million senior secured loan, extending its maturity to June 30, 2027, with an option to extend for an additional three months subject to certain conditions. In addition, subsequent to quarter end, on November 9, 2026, we closed a private placement pursuant to which we issued and sold an aggregate of 17,421,602 shares of common stock for aggregate gross proceeds of $10.0 million. The closing of the transaction satisfied the equity contribution requirement under our amended credit agreement. We intend to use the net proceeds for working capital and other general corporate purposes. This concludes our prepared remarks. Operator, you may open the line for questions.

Thank you, Mr. McCurdy. Ladies and gentlemen, we now begin the question and answer session. If you'd like to ask a question, please press star, followed by the number one on your telephone keypad. If your question has been answered, you would like to withdraw from the queue, please press star, followed by the number two. And if you're using a speakerphone, please lift your hands before pressing any keys. One moment, please while we compile the roster. Your first question comes from Aaron Gray with AGP. Please go ahead.

Hi, good morning, and thank you very much for the questions. So first question for me, just in terms of the distribution, you know, regaining and adding some new ones. Maybe just help talk about where we are today. I think you're at 32,000 doors in 25. You've been as high as 46,000 in the past couple years before that. So where are we today in terms of doors, and where do you think we could be in the next 12 months or so? Thank you.

Yeah, thanks, Aaron. Doors today, you know, it's a moving target, but between the syndicated data and our natural food channel data, we're probably in about 30, we'll say 32 to 35,000 doors. The good news is we're picking back up some accounts that kind of left us behind in 2025. and we're re-engaging and they're committed to bringing us back on the shelves and that that's going to happen uh you know primarily in the first and second quarters coming up in in 2027 so hope that answers your question yeah that's helpful um game-changing innovation I know you said you're limited in terms of what you can touch on today but maybe just kind of broad strokes is it

more so in line with the functional beverage. I know you had kind of pulled and said would be coming back in 2027. Is it tangential to the ginger core of REACH? Any type of color you could provide in terms of what we could expect in terms of innovation for next year?

Yeah. Without giving too much away because we feel it's going to be different than everybody else out there. So we're not looking to talk too much about it at this moment. but it is different from our current lineup. It's not going to, more than likely, not live in the same space that we have on the shelf right now but it's going to be super exciting and it plays in a much bigger category than we play in at this, you know, currently right now in the, call it the craft soda ginger beer space, right?

Okay, great. We'll keep an eye out for that. Next question for me, just on the gross margin profile and evolution. So I know you talked about sequential improvement expected there. Longer term, how much of a step up can we expect in the gross margin as we get some fixed cost leverage or otherwise as we look to 2027?

Yeah, good morning, Aaron. So, you know, our expectation is that we'll see modest sequential improvement in fourth quarter, so better than 2025, but I don't think we step function up in fourth quarter. And then I think as we make our way into first quarter and first half, we're very focused on getting to the mid-30s honor about the course of second quarter.

Okay, great, thanks. Last question for me. Just in terms of the sales and marketing team, the external one that you guys have brought on, you talk about how that's helped in terms of getting these new doors and maybe how that's made you feel that it's possible to compete in a larger category with the innovation you've alluded to? I'm sorry, the question is Do you think they helped us compete? Yeah, so number one, have they been helpful in terms of getting the new doors? Number two, do you think they helped make it possible to launch a new innovation that's different from the core ginger or craft soda category?

Absolutely. I mean, the broker, you know, brokers are not, you know, I call them our partners, number one. It's probably a bad term to use for certain guys. They tend to get... Their names tend to get used in different ways. But our broker partner puts more feet on the street for us. They open up doors and have relationships, years of relationships that we might not ordinarily have with some customers. Some customers we have relationships, and then they help administratively. But we have all the complexities We have all the complexities, and I want to say it, of a large national beverage brand. We are in almost every chain store in the country, and managing a chain store creates a lot of administrative responsibility. They're there to help us with relationships, administrative responsibility, but then also this broker is going to help us as we launch this new innovation because we are going to be extremely targeted, number one. but they can also help us from a merchandising standpoint. So we'll have some flexibility that a lot of smaller beverage companies don't have. We'll have that flexibility to bring products to market quick, fast, and efficient.

OK, great. Thanks for the call. I'll go and jump back in the queue.

Thank you, Aaron. There are no further questions at this time. I will turn it back to Mr. Cohane for some closing remarks.

Thanks, Operator. Appreciate everybody's time today. We believe the actions we've taken this year together with the capital raised positions REITs for profitable growth in 2027. We appreciate your continued interest and look forward to updating you on progress during the next call. Thank you.

Ladies and gentlemen, this concludes your conference call for today. We thank PC Painting and ask that you please disconnect your lines. Have a great day.