What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-07-28 compared with 2022-04-28 · 109 added, 40 removed, 82 unchanged (65% of the section changed)

30 unchanged sentences

of Operations

of Operation for Three Months Ended March 31, 2022 as Compared to the Three Months Ended March 31, 2021

of Operation for Three Months Ended June 30, 2022 as Compared to the Three Months Ended June 30, 2021

and cost of revenue

1 unchanged sentence

The overall revenue

for the first quarter 2022 was higher due to growth in “Twist & Go”™

for the second quarter 2022 was higher due to growth in “Twist & Go”™

revenue and the gradual return of single serve demand.

2 unchanged sentences

(32%) and $562,000 (43%) for 2022 and 2021, respectively.

Gross margins decreased in the first quarter primarily due to product mix which

includes “Twist & Go”™ at slightly lower product margins.

Gross margins decreased in the second quarter primarily due to product mix

which includes “Twist & Go”™ at slightly lower product margins.

and marketing expenses

operations were primarily directed towards increasing sales and expanding our distribution network.

Three months ended

Sales and marketing

Storage and outbound freight

and marketing expenses increased approximately $133,000 (72%) from approximately $186,000 in 2021 to $319,000 in 2022.

The increase in

sales and marketing expenses was primarily the result of the retention of new employees and outside service providers to assist with

sales and initiatives, as well as participation in education nutrition trade shows in 2022.

and outbound freight expense increased approximately $114,000 (44%) from approximately $257,000 in 2021 to $371,000 in 2022.

was primarily a result of the 115% increase in revenue, tempered by logistics efficiencies from the increased volume in core markets

and administrative expenses

general and administrative expenses increased by 41%, or approximately $237,000, from approximately $575,000 in 2021 to approximately

$813,000 in 2022, primarily driven by personnel, including non-cash stock-based compensation, and other general and administrative expenses.

The following is a breakdown of our general and administrative expenses for the three months ended June 30, 2022, and 2021:

Three months ended

Personnel costs

Stock-based compensation

Legal, professional and consulting fees

Director fees

Research and development

Other general and administrative expenses

cost represents the cost of employees including salaries, bonuses, employee benefits and employment taxes and continues to be our largest

Personnel cost increased by approximately $148,000 (70%) from approximately $210,000 to $358,000.

The increase in personnel cost

was partially offset by the decrease in consulting fees as we choose to hire permanent staff as the critical stages of the COVID-19 pandemic

waned, rather than rely on consultants and temporary staff.

based compensation is used as an incentive to attract new employees and to compensate existing employees.

Stock based compensation includes

stock issued and restricted stock units and options granted to employees and non-employees.

Stock based compensation for the three months

ended June 30, 2022 was approximately $64,000 compared to $45,000 for the three months ended June 30, 2021 due to the aforementioned

increase in staffing.

and development expenses increased approximately $27,000 (39%) from approximately $70,000 in 2021 to $96,000 in 2022.

The increase is

primarily due to material consumption and expiration, partially offset by a reduction in labor hours for our development consulting team.

expenses increased approximately $93,000 (122%) from approximately $76,000 in 2021 to $169,000 in 2022.

In 2022, we incurred approximately

$65,000 in one-time costs related to the uplist of our common stock to the NASDAQ Stock Market.

Additionally, 2021 benefited from the

results of vendor payables reconciliation resulting in the reduction of vendor liabilities.

had operating losses of approximately $737,000 and $602,000 for the three-month periods ended June 30, 2022 and 2021, respectively.

increase of approximately $135,000 or 22%, was primarily due to the increase in operating expenses, partially offset by the increase

in gross profit.

income and expense

expense was approximately $69,000 and loss on debt extinguishment was approximately $194,000 for the three months ended June 30, 2021.

Interest related to convertible debt that was converted and repaid in 2021.

We did not incur any interest expense for the three months

ended June 30, 2022.

We also recognized gain of $568,000 from the forgiveness of our PPP loan in 2021

had net losses of approximately $737,000 and $297,000 in the three-month periods ended June 30, 2022 and 2021, respectively, with the

primary change due to the $568,000 gain on the forgiveness of the PPP loan in 2021.

of Operation for Six Months Ended June 30, 2022 as Compared to the Six Months Ended June 30, 2021

and cost of revenue

increased by approximately $3,009,000 (130%) from approximately $2,316,000 in 2021 to approximately $5,325,000 in 2022.

The overall revenue

for the six months ended June 30, 2022 was higher due to growth in “Twist & Go”™

revenue and the gradual return of single serve demand.

of revenue for 2022 was approximately $3,678,000 as compared to approximately $1,405,000 in 2021.

Our gross profit was approximately

$1,647,000 (31%) and $911,000 (39%) for 2022 and 2021, respectively.

Gross margins decreased in the six months ended June 30, 2022 primarily

due to product mix which includes “Twist & Go”™ at slightly lower

product margins.

and marketing expenses

Six months ended

Sales and marketing

Storage and outbound freight

and marketing expenses increased approximately $210,000 (59%) from approximately $355,000 in 2021 to $565,000 in 2022.

The increase in

sales and marketing expenses was primarily the result of the retention of new employees and outside service providers to assist with

sales initiatives, as well as participation in education nutrition trade shows in 2022.

and outbound freight expense increased approximately $356,000 (89%) from approximately $401,000 in 2021 to $757,000 in 2022.

was primarily a result of the 130% increase in revenue, tempered by logistics efficiencies from the increased volume in core markets

and administrative expenses

general and administrative expenses increased by 66%, or approximately $665,000, from approximately $1,013,000 in 2021 to approximately

$1,677,000 in 2022, primarily driven by personnel, including non-cash stock-based compensation, shipping and storage and other general

and administrative expenses.

The following is a breakdown of our general and administrative expenses for the three months ended March

The following is a breakdown of our general and administrative expenses for the six months ended June 30,

2022, and 2021:

Three months ended

Six months ended

Personnel costs

Stock-based compensation

Shipping and storage

Legal, professional and consulting fees

Marketing and selling

Director fees

3 unchanged sentences

Personnel cost increased by approximately $289,000 (73%) from approximately $395,000 to $684,000.

We had eleven full time

equivalent employees in the first quarter of 2021, compared with fifteen in the first quarter of 2022.

The increase in personnel cost

was partially offset by the decrease in consulting fees as we choose to hire permanent staff as the critical stages of the COVID-19 pandemic

waned, rather than rely on consultants and temporary staff.

based compensation is used as an incentive to attract new employees and to compensate existing employees.

1 unchanged sentence

stock issued and options granted to employees and non-employees.

Stock based compensation for the three months ended March 31, 2022 was

approximately $28,000 compared to ($35,000) for the three months ended March 31, 2021 due to the departure of two key employees and the

forfeiture of their unvested options in 2021.

and storage expense increased approximately $294,000 (204%) from approximately $144,000 in 2021 to $437,000 in 2022.

The increase was

primarily a result of the 149% increase in revenue, as well as increased supply chain costs resulting from the COVID-19 pandemic and

other geopolitical events.

Stock based compensation for the six months ended June 30, 2022 was

approximately $93,000 compared to $10,000 for the six months ended June 30, 2021 due to the aforementioned increase in staffing coupled

with the departure of two key employees and the forfeiture of their unvested options in 2021.

professional, and consulting fees increased approximately $66,000 (37%) from approximately $178,000 in 2021 to $244,000 in 2022.

increase was primarily due to corporate development activities.

and selling expenses increased approximately $33,000 (76%) from approximately $43,000 in 2021 to $76,000 in 2022.

The increase in marketing

and selling expenses was primarily the result of the retention of outside service providers to assist with sales initiatives.

fees decreased approximately $15,000 from approximately $76,000 in 2021 to $63,000 in 2022.

Annual director fees are anticipated at $50,000

per non-employee director.

and development expenses decreased approximately $11,000 (8%) from approximately $138,000 in 2021 to $127,000 in 2022.

The reduction is

primarily due to the non-recurrence of material consumption and expiration as well as a reduction in labor hours for our development

consulting team.

The reduction

is primarily due to a reduction in labor hours for our development consulting team.

expenses increased approximately $263,000 (185%) from approximately $142,000 in 2021 to $405,000 in 2022.

3 unchanged sentences

results of vendor payables reconciliation resulting in the reduction of vendor liabilities.

had operating losses of approximately $895,000 and $549,000 for the three-month periods ended March 31, 2022 and 2021, respectively.

The increase of approximately $346,000 or 63%, was primarily due to the increase in general and administrative expenses, partially offset

by the increase in gross profit.

had operating losses of approximately $1,631,000 and $1,151,000 for the six-month periods ended June 30, 2022 and 2021, respectively.

The increase of approximately $480,000 or 42%, was primarily due to the increase in operating expenses, partially offset by the increase

in gross profit.

income and expense

change in the value of the derivative liability is based upon the Black-Scholes model from one period to another.

The gain of approximately

$17,000 for the three months ended March 31, 2021 was a result of the change in components of the Black-Scholes model.

expense was approximately $59,000 for the three months ended March 31, 2021.

Interest related to convertible debt that was converted

and repaid in 2021.

We did not incur any interest expense for the three months ended March 31, 2022.

had net losses of approximately $895,000 and $592,000 in the three-month periods ended March 31, 2022 and 2021, respectively.

$16,000 for the six months ended June 30, 2021 was a result of the change in components of the Black-Scholes model.

The derivative liability

was settled upon conversion and repayment of the convertible notes in the second quarter of 2021.

expense was approximately $128,000 for the six months ended June 30, 2021.

Interest related to convertible debt that was converted and

repaid in 2021.

We did not incur any interest expense for the six months ended June 30, 2022.

had net losses of approximately $1,631,000 and $889,000 in the six-month periods ended June 30, 2022 and 2021, respectively, with the

primary change due to the $568,000 gain on forgiveness of the PPP loan in 2021.

and Capital Resources

of March 31, 2022, we had working capital of approximately $5,559,000 as compared with approximately $6,171,000 at December 31, 2021.

The decrease in working capital surplus is primarily due to operating loss for the three months ended March 31, 2022.

the three months ended March 31, 2022, we used cash of approximately $1,132,000 in operations, and $14,000 for the purchase of equipment,

of June 30, 2022, we had working capital of approximately $4,996,000 as compared with approximately $6,172,000 at December 31, 2021.

The decrease in working capital surplus is primarily due to operating loss for the six months ended June 30, 2022.

the six months ended June 30, 2022, we used cash of approximately $1,923,000 in operations, and $13,000 for the purchase of equipment,

partially offset by $5,000 from the issuance of stock pursuant to an outstanding warrant.

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The aggregate minimum lease payments

under the non-cancellable direct lease as of March 31, 2022 are approximately $81,000.

under the non-cancellable direct lease as of June 30, 2022 are approximately $60,000.

Sheet Arrangements

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis