I’m speaking with Phil Thomas, CEO of Long Island Iced Tea Corp. (LIIT) (Nasdaq: LTEA), today about the company and where it is headed. LIIT makes an assorted selection of iced tea drinks which can be found in numerous supermarkets, mostly in the eastern part of the country. These iced teas are also available online at Amazon.

Ilene: What makes your product, Long Island Iced Tea, special?
Philip Thomas: We use premium, non-GMO ingredients including cane sugar (not high fructose corn syrup) in our proprietary recipes. Our diet teas do not contain Aspartame. We sell these high-quality, great tasting drinks at very affordable prices.

Ilene: Your sales are up triple digits from last year, but expenses are up around that much too. How and when do you see sales surpassing expenses?
Philip Thomas: Expenses were high due to our building a platform for growth ahead of the revenue growth we are hoping for. Also, a large amount of the financial expenses are one time and non-cash, stock-based expenses. We expect expenses to normalize as a percent of sales as we grow.

Ilene: At what rate do you anticipate growing revenue during the next couple of years?
Philip Thomas: We would hope to maintain our current growth rate for as long as possible during the near future.

Ilene: Your net loss for the past two years has been a little over $3 million per year. Will losses decrease next year? When do you expect your company to become profitable?
Philip Thomas: Profitability will depend on how much operating cash flow we decide to reinvest into the business, which will depend on how fast we grow. At this point it’s hard to tell when profitability will occur, as we plan to reinvest operating cash flow into our brand for the foreseeable future.

Ilene: Will you need to sell shares of stock or take out loans before LIIT reaches profitability?
Philip Thomas: This will depend on how fast we will grow and how much we reinvest into our brand.

Ilene: You have a group of very experienced individuals on your management team. Can you tell me more about you and your team members’ roles at other beverage companies and at LIIT?
Philip Thomas: I have over 20+ years of beverage experience. I served as our Chief Executive Officer since the consummation of the Business Combination on May 27, 2015. I also served as our Chairman of the Board from May 2015 until June 2016. I previously served as the Chief Executive Officer of Long Island Brand Beverages, LLC (predecessor to LIIT) since its formation in February 2011 and as the Managing Member and a member of the board of managers of LIBB from February 2011 until May 2015. Prior to this, I revitalized a 45-year old family owned food and beverage distribution business, Magnum Enterprises, in 2003 by creating strategic partnerships with Coca‐Cola and Vitamin Water. I founded Capital Link in 2005, which was involved in a nationally recognized ATM processing network that funds over 13,000 ATMs.

Julian Davidson, CA (Executive Chairman) has 25 years in the beverage industry, primarily in Australia and New Zealand. He was CEO of Independent Liquor NZ (7 years) which was sold to Asahi in 2011 for $1.5bn. He transitioned Independent Liquor NZ from single focus RTD business to multi-beverage business (RTD's/Beer/Cider/Spirits). Previously, Julian spent 15 years at Lion Nathan, an Australasian brewery subsidiary of Kirin Holdings.

Richard Allen, CPA (CFO) has over 10 years in senior roles at Snapple and Cadbury Schweppes including CFO of Snapple Beverage Group, General Manager of Pacific Snapple Distributors and SVP of Business Development and M&A for Cadbury Schweppes Americas Beverages. Previously, Richard spent over 15 years at RJR Nabisco in various audit, accounting and analytic positions culminating in Vice President and Corporate Assistant Controller.

Peter Dydensborg (COO) has over 30 years of experience in the distribution and building of brands within large corporations, including Kellogg's, The Keebler Company, Coca Cola and Thomas’ English Muffins. He was previously the Director of Sales for Phoenix Beverages - 2004 until joining LIIT in 2014. He was senior Zone Manager at Keebler (which was later acquired by Kellogg’s) - 1994 to 2004.

Joseph Caramele (VP, National Sales & Marketing) has nearly 10 years of iced tea experience with Arizona Beverages USA, most recently as Executive National Sales Director. He managed a team of 85 individuals and portfolio of over 100 accounts totaling $750mn in sales.

Ilene: The beverage market is highly competitive. Why do you believe your business will grow into profitability and presumably gain favor over your competition?
Philip Thomas: Because our value proposition of healthier drinks at an affordable price is better than our competitors.

Ilene: LIIT is closing the acquisition of Alo Juice this month. How much is LIIT paying for the company?
Philip Thomas: 5,000 shares of stock and a stock earn-out based on ALO Juice net sales of $2.5-$5.5mn and LIIT net sales of $2.0-$4.0mn.

Ilene: Can you explain a “stock earn out”?
Philip Thomas: The Seller of the Alo Juice company has also become part of our team as an employee. He will receive additional shares of stock only if he meets certain 2017 sales goals.

Ilene: How much cash/debt does Alo Juice have, which LIIT will presumably acquire?
Philip Thomas: We are buying the assets/trademark, so there is no debt/cash.

Ilene: Will you combine Alo Juice with your Iced Teas? E.g., have an TeAlo drink?
Philip Thomas: We are not planning to do that at this time.

Ilene: How long do you think it will take the acquisition to become accretive?
Philip Thomas: We are not releasing this info at the present time.

Ilene: What are the most significant challenges your company is facing right now?
Philip Thomas: The single most difficult challenge in any young start up is capturing shelf space from major suppliers such as Pepsi, Coke, Arizona.

Ilene: What are your company’s greatest successes?
Philip Thomas: Reverting back to the previous statement, we are steadily and sustainably opening new distribution points, as well as expanding existing facings / sets, throughout the country to increase our shelf space, which we think is fantastic for a young company like ours.It has also been a thrill to be listed on the Nasdaq. The bell ringing ceremony in Time Square is something we will never forget.

Ilene: Thank you for taking the time to talk with me and I’m looking forward to seeing LIIT on the shelves of stores on the west coast!