What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-14 compared with 2023-04-27 · 78 added, 38 removed, 83 unchanged (58% of the section changed)

27 unchanged sentences

of Operations

of Operation for Three Months Ended March 31, 2023 as Compared to the Three Months Ended March 31, 2022

of Operation for the Three Months Ended June 30, 2023 as Compared to the Three Months Ended June 30, 2022

and cost of revenue

decreased $1,288,000, or 46%, from $2,799,000 in 2022 to $1,511,000 in 2023.

The decline in revenue was due to limited supply due to our

product withdrawal resulting from the quality complaints with product purchased from the Manufacturer.

The decline in revenue was due to limited supply caused

by our product withdrawal resulting from the quality complaints with product purchased from the Manufacturer.

We anticipate that our

revenues will be adversely impacted as a result of the dispute unless and until new sources of reliable supply at sufficient volume can

be identified and developed, the timing of which is uncertain.

of revenue for 2023 was $1,037,000 as compared to $1,916,000 in 2022.

Our gross profit was $474,000 (31%) and $883,000 (32%) for 2023

and 2022, respectively.

Cost of revenue declined as a result of the 46% decrease in revenue as well as a shift in product mix resulting

from the limited supply of smoothie bottles, partially offset by additional inventory reserves, resulting from the quality complaints.

marketing and distribution expense

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

Sales and marketing

Storage and outbound freight

marketing and distribution expense decreased approximately $76,000 (11%) from approximately $701,000 in 2022 to $625,000 in 2023.

and marketing expense decreased approximately $8,000 (2%) from approximately $382,000 in 2022 to $374,000 in 2023.

and outbound freight expense decreased approximately $68,000 (21%) from approximately $319,000 in 2022 to $251,000 in 2023.

was the result of the 46% decrease in revenue, offset by higher costs resulting from product mix and inefficiencies due to production

and administrative expense

Three months ended June 30,

Personnel costs

Stock based compensation

Legal, professional and consulting fees

Director fees paid in cash

Research and development

Other general and administrative expenses

and administrative expense decreased approximately $309,000 (39%) from approximately $802,000 in 2022 to $493,000 in 2023.

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

Personnel cost decreased by approximately $118,000 (33%) from approximately $362,000 to $244,000 and stock-based compensation decreased

by approximately $129,000 (113%) from $114,000 to ($15,000).

The decrease in personnel cost and stock-based compensation resulted primarily

from the confirmation and recognition of our 2021 COVID-related tax credit, reduction in headcount, and reversal of previously recognized

compensation under our 2023 performance stock unit program, as management does not currently expect that performance criteria will be

and development expense decreased approximately $61,000 (64%) from approximately $96,000 in 2022 to $35,000 in 2023 as activities were

minimized to conserve working capital.

had net losses of approximately $742,000 and $716,000 for the three-month periods ended June 30, 2023 and 2022, respectively.

of approximately $26,000, was the result of the aforementioned changes in revenue, partially offset by reductions in cost and expenses.

of Operation for the Six Months Ended June 30, 2023 as Compared to the six Months Ended June 30, 2022

and cost of revenue

decreased $1,723,000, or 32%, from $5,325,000 in 2022 to $3,602,000 in 2023.

The decline in revenue was due to limited supply caused

by our product withdrawal resulting from quality complaints with product purchased from the Manufacturer.

We anticipate that our revenues

4 unchanged sentences

2023 and 2022, respectively.

Cost of revenue declined as a result of the 17% decrease in revenue, partially offset by lower costs relative

to revenue on the smoothie carton product, resulting in the 1,100-basis point gross margin improvement.

Cost of revenue declined as a result of the 32% decrease in revenue as well as a shift in product mix resulting

from the limited supply of smoothie bottles, partially offset by additional inventory reserves resulting from the quality complaints.

marketing and distribution expense

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

Three months ended

Sales and marketing

1 unchanged sentence

marketing and distribution expense decreased approximately $83,000 (6%) from approximately $1,376,000 in 2022 to $1,293,000 in 2023.

and marketing expense increased approximately $67,000 (23%) from approximately $289,000 in 2022 to $356,000 in 2023.

The increase in

sales and marketing expense was primarily the result of the retention of outside service providers to assist with sales and initiatives,

including, beginning in the third quarter of 2022, brokers specializing in the school market.

Additionally, the Company increased its

product sampling and advertising in conjunction with the launch of its smoothie carton product.

and marketing expense increased approximately $123,000 (20%) from approximately $608,000 in 2022 to $731,000 in 2023, primarily due to

product sampling of smoothie carton products and equipment maintenance incurred to relaunch bulk product sales in locations that had

been non-operational as a result of COVID shutdowns and subsequent labor shortages.

and outbound freight expense decreased approximately $206,000 (27%) from approximately $768,000 in 2022 to $562,000 in 2023.

was the result of the 17% decrease in revenue and distribution efficiencies.

was the result of the 32% decrease in revenue, offset by higher costs resulting from product mix and inefficiencies due to production

and administrative expense

Three months ended March 31,

ended June 30,

Personnel costs

4 unchanged sentences

Other general and administrative expenses

and administrative expense increased approximately $171,000 (21%) from approximately $823,000 in 2022 to $994,000 in 2023.

and administrative expense decreased approximately $137,000 (8%) from approximately $1,624,000 in 2022 to $1,487,000 in 2023.

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 $180,000 (58%) from approximately $309,000 to $489,000 and stock-based compensation increased

by approximately $124,000 (146%) from $85,000 to $209,000.

The increase in personnel cost and stock-based compensation resulted primarily

from modification of our 2022 performance stock unit program, with partial cash settlement.

professional, and consulting fees decreased approximately $46,000 (29%) from approximately $161,000 in 2022 to $115,000 in 2023.

decrease was primarily due to a reduction in temporary labor, partially offsetting the increase in personnel costs.

and development expense decreased approximately $10,000 (32%) from approximately $31,000 in 2022 to $21,000 in 2023 as a result of vendor

credits related to development activities.

expense decreased approximately $77,000 (36%) from approximately $212,000 in 2022 to $135,000 in 2023.

In 2022, we incurred approximately

$102,000 in one-time costs related to the uplist of our common stock to the NASDAQ Stock Market.

In 2023, we incurred approximately $25,000

in inventory disposal costs related to our dispute with the Manufacturer.

had net losses of approximately $910,000 and $895,000 for the three-month periods ended March 31, 2023 and 2022, respectively.

of approximately $15,000, was the result of the aforementioned changes in revenue, cost and expenses.

Personnel cost increased by approximately $63,000 (9%) from approximately $670,000 to $733,000.

The increase in personnel cost

resulted primarily from an increase in headcount during the first quarter of 2023, partially offset by the confirmation and recognition

of our 2021 COVID-related tax credit, and a reduction in headcount in the second quarter of 2023.

and development expense decreased approximately $70,000 (56%) from approximately $126,000 in 2022 to $56,000 in 2023 as activities were

minimized to conserve working capital.

Other general and administrative expenses decreased approximately $82,000

(22%) from approximately $366,000 in 2022 to $284,000 in 2023 primarily as a result of non-recurring costs related to our uplisting to

the NASDAQ stock exchange in 2022, partially offset by costs related by our dispute with the Manufacturer.

had net losses of approximately $1,647,000 and $1,589,000 for the six-month periods ended June 30, 2023 and 2022, respectively.

of approximately $58,000, was the result of the aforementioned changes in revenue, partially offset by reductions in cost and expenses.

and Capital Resources

of March 31, 2023, we had working capital of $1,250,000 compared with $1,801,000 at December 31, 2022.

The decrease in working capital

is primarily due to the operating loss for the three months ended March 31, 2023.

the three months ended March 31, 2023, we used $1,242,000 in operations.

of June 30, 2023, we had working capital of $554,000 compared with $1,801,000 at December 31, 2022.

The decrease in working capital is

primarily due to the operating loss for the six months ended June 30, 2023.

the six months ended June 30, 2023, we used $2,067,000 in operations.

impact of COVID-19 on the Company is constantly evolving.

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manufacturing our products due to COVID-19.

The developments surrounding COVID-19 remain fluid and dynamic, and consequently, will require

the Company to continue to monitor news headlines from government and health officials, as well as the business community.

While further developments surrounding COVID-19 may arise, the business climate appears to

have stabilized in 2023.

June 1, 2021, the Company completed a private placement of 1,282,051 shares of its common stock at $4.68 per share, resulting in gross

2 unchanged sentences

shares of common stock and debt in the amount of $840,000 was retired, leaving the Company with no debt.

August 2023, the Company received subscriptions of approximately $1,130,000 of a $2,000,000 privately placed convertible debt offering.

The debt may be drawn in 25% increments, matures on the anniversary of the draw, bears interest at 10% per annum for the term, regardless

of earlier payment or conversion, and is mandatorily convertible as to principal and interest into shares of the Company’s common

stock at any time prior to maturity at the greater of $1.20 or 85% of the volume-weighted average price of the common stock for the ten

trading days immediately preceding the written notice of the conversion (the “Conversion Price”).

If the Company has not

exercised the mandatory conversion, the holder of the debt has the option after six months and on up to four occasions to convert all

or any portion of the principal and interest into shares of the Company’s common stock at the Conversion Price.

liquidity needs will depend on how quickly we are able to profitably ramp up sales, as well as our ability to control and reduce variable

16 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