What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-14 compared with 2024-05-15 · 107 added, 60 removed, 82 unchanged (67% of the section changed)

27 unchanged sentences

of Operations

of Operation for the Three Months Ended March 31, 2024 as Compared to the Three Months Ended March 31, 2023

of Operation for the Three Months Ended June 30, 2024 as Compared to the Three Months Ended June 30, 2023

and cost of revenue

decreased $47,000, or 3%, to $1,464,000 in 2024 as compared to $1,511,000 in 2023.

Our revenue in 2024 benefited from continued acceptance

of our carton packaging format and improvements in bulk sales due to the reintroduction of our WHIRLZ 100% juice product in the fourth

quarter of 2023.

Our revenues in 2023 were positively impacted by adjustments to estimated credits related to the dispute with the Manufacturer.

Excluding such adjustments, revenue increased by 6%.

the introduction of our carton packaging format has mitigated the loss of supply, the product offering has not been accepted by some

customers or as a substitute for the bottle product in all use cases.

We have been able to expand our capacity on a limited basis at

our existing smoothie bottle manufacturer and in July 2024 contracted with an additional manufacturer.

We expect expanded capacity to

become available in the third quarter of 2024, subject to the risks and uncertainties associated with pre-production activities.

of revenue decreased $82,000, or 8%, to $955,000 in 2024 as compared to $1,037,000 in 2023.

Cost of revenue decreased at a higher rate

compared to revenue due to product mix and slight improvements in raw material and other input costs.

gross profit was $509,000 (34.8%) and $474,000 (31.4%) for 2024 and 2023, respectively.

The improvement in gross margin is a result of

favorable product mix, pricing actions, and a slight improvement in the cost of supply chain components.

marketing and distribution expense

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

Three months ended

Sales and marketing

Storage and outbound freight

marketing and distribution expense decreased approximately $42,000 (7%) from approximately $625,000 in 2023 to $583,000 in 2024.

and marketing expense decreased approximately $7,000 (5%) from approximately $373,000 in 2023 to $366,000 in 2024.

The increase is a

result of a reduction in compensation expense, partially offset by higher broker commissions due to expansion of the broker network.

and outbound freight expense decreased approximately $35,000 (14%) from approximately $252,000 in 2023 to $217,000 in 2024, primarily

because of freight efficiencies, and lower storage and inventory management cost in 2024.

and administrative expense

Three months ended

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 expenses increased approximately $378,000 (77%) from approximately $493,000 in 2023 to $871,000 in 2024.

cost represents the cost of employees including salaries, bonuses, employee benefits and employment taxes.

Personnel cost increased by

approximately $97,000 (40%) from approximately $244,000 in 2023 to $341,000 in 2024.

The increase in personnel cost resulted from the

non-recurrence of the recognition of a COVID-19 related Employee Retention Tax Credit in 2023.

compensation increased by approximately $229,000 from ($15,000) in 2023 to $214,000 in 2024 as a result of the Company adopting an equity-only

structure for management incentives Board of Directors compensation, implemented to conserve cash and to achieve compliance with NASDAQ

listing regulations.

general and administrative expenses increased by approximately $95,000 (66%) due to recruiting fees incurred to broaden the capabilities

of our management team.

had net losses of approximately $1,011,000 and $742,000 for the three-month periods ended June 30, 2024 and 2023, respectively.

in net loss of approximately $269,000, was primarily the result of a shift to stock-based compensation and the non-recurrence of recognizing

ERTC benefits in 2023.

of Operation for the Six Months Ended June 30, 2024 as Compared to the Six Months Ended June 30, 2023

and cost of revenue

increased $691,000, or 19%, to $4,293,000 in 2024 as compared to $3,602,000 in 2023.

Our revenue in 2024 benefited from continued acceptance

of our carton packaging format and improvements in bulk sales, including our WHIRLZ 100% juice product that was reintroduced in the fourth

quarter of 2023, as the impact of venue closures and labor shortages resulting from the pandemic had substantially resolved.

in 2023 were adversely impacted because of lost customers and supply constraints resulting from the product issues and related dispute

with the Manufacturer.

While the introduction of our carton packaging format has mitigated the loss of supply, the product offering has

not been accepted by some customers or as a substitute for the bottle product in all use cases.

We have been able to expand our capacity

on a limited basis at our existing smoothie bottle manufacturer and are actively working to develop additional manufacturing capacity.

We expect expanded capacity to become available in 2024, subject to the risks and uncertainties associated with contracting and pre-production

of our carton packaging format and improvements in bulk sales due to the reintroduction of our WHIRLZ 100% juice product in the fourth

quarter of 2023.

of revenue increased $341,000, or 15%, to $2,614,000 in 2024 as compared to $2,273,000 in 2023.

5 unchanged sentences

marketing and distribution expense

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

Six months ended

Sales and marketing

Storage and outbound freight

Sales, marketing and distribution expense

marketing and distribution expense increased approximately $27,000 (4%) from approximately $667,000 in 2023 to $694,000 in 2024.

marketing and distribution expense decreased approximately $16,000 (1%) from approximately $1,293,000 in 2023 to $1,277,000 in 2024.

and marketing expense decreased approximately $35,000 (5%) from approximately $731,000 in 2023 to $696,000 in 2024.

The decrease is

a result of headcount reductions and lower advertising expense, partially offset by higher broker commissions due to expansion of the

broker network and the increase in revenue.

The decrease is a

result of a reduction in compensation expense.

Advertising and sample expense were lower as a result of non-recurring costs in 2023 associated

with the launch of our smoothie carton format offering.

These cost reductions were partially offset by higher broker commissions due

to expansion of the broker network.

and outbound freight expense increased approximately $19,000 (3%) from approximately $562,000 in 2023 to $581,000 in 2024, primarily

because of the 35% increase in revenue, freight efficiencies, and lower storage and inventory management cost in 2024 because of inventory

disposals following the dispute with the Manufacturer.

because of the 19% increase in revenue over the same period, partially offset by freight efficiencies, and lower storage and inventory

management cost in 2024.

and administrative expense

Three months ended March 31,

Six months ended

Personnel costs

4 unchanged sentences

Other general and administrative expenses

and administrative expense decreased approximately $136,000 (-14%) from approximately $994,000 in 2023 to $858,000 in 2024.

cost represents the cost of employees including salaries, bonuses, employee benefits and employment taxes.

Personnel cost decreased by

approximately $227,000 (-46%) from approximately $489,000 to $262,000 and stock-based compensation increased by approximately $94,000

(45%) from $209,000 to $303,000.

The decrease in personnel cost resulted from a reduction in headcount and the decision to issue stock-based

compensation in lieu of cash bonuses.

Additionally, approximately $54,000 in officer salaries and vacation pay were settled in our stock

and classified as stock-based compensation in the three months ended March 31, 2024.

Further, directors’ fees previously paid in

cash were instead paid in our stock.

The actions surrounding cash bonuses, conversion of other cash compensation and directors’

fees as well as the first quarter performance in 2024 against annual operating plan targets resulted in a $94,000 increase in stock-based

compensation in 2024 compared to 2023.

professional, and consulting fees increased by $42,000 (37%) as a result of legal spend in pursuit of our claim against the Manufacturer.

general and administrative expenses decreased by approximately $29,000 (-21%) due to a reduction in operating costs associated

with the product withdrawal.

had net losses of approximately $449,000 and $889,000 for the three-month periods ended March 31, 2024 and 2023, respectively.

in net loss of approximately $440,000, was the result of improved revenue and margins, and a reduction of approximately $125,000 in operating

expenses due to cost-saving measures.

and administrative expenses increased approximately $242,000 (16%) from approximately $1,487,000 in 2023 to $1,729,000 in 2024.

cost decreased by approximately $130,000 (18%) from approximately $733,000 in 2023 to $603,000 in 2024.

The decrease in personnel cost

resulted from a reduction in headcount and cash bonus expense as a result of adopting an equity-only incentive structure in mid-2023,

partially offset by the non-recurrence of the recognition of a COVID-19 related Employee Retention Tax Credit in 2023.

compensation increased by approximately $326,000 from $191,000 in 2023 to $517,000 in 2024 as a result of the Company adopting an equity-only

structure for management incentives Board of Directors compensation, implemented to conserve cash and to achieve compliance with NASDAQ

listing regulations.

general and administrative expenses increased by approximately $63,000 (22%) due to recruiting fees incurred to broaden the capabilities

of our management team, partially offset by a decrease in patent fees due to targeted renewals in 2024.

had net losses of approximately $1,460,000 and $1,647,000 for the six-month periods ended June 30, 2024 and 2023, respectively.

in net loss of approximately $187,000, was primarily the result an increase in gross profit of approximately $350,000, partially offset

by increased operating expense of $163,000 due to the shift to stock-based compensation and the non-recurrence of recognizing ERTC benefits

and Capital Resources

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

June 1, 2021, we completed a private placement of 1,282,051 shares of our common stock at $4.68 per share, resulting in gross proceeds

of $6,000,000.

8 unchanged sentences

exercised the mandatory conversion, the holder of the debt had 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 our common stock at the Conversion Price.

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

On October 23, 2023, we issued

5 unchanged sentences

29, 2024, we drew down $136,000 in convertible debt and converted the total drawn into 124,208 shares, settling all debt.

the three months ended March 31, 2024, we used $769,000 in operations.

Our net loss adjusted for non-cash operating expenses was essentially

breakeven, while changes in non-cash current assets and liabilities consumed $760,000 primarily as a result of increased accounts receivable

due to the $907,000 increase in revenue compared to the fourth quarter of 2023 and to a lesser extent due to timing of inventory purchases

and resulting payments to vendors.

of March 31, 2024, we had working capital of $1,981,000 compared with $1,846,000 at December 31, 2023.

The increase in working capital

is primarily due to capital raised in the three months ended March 31, 2024 through the sale convertible notes and the conversion of

those notes and other current liabilities to equity.

the six months ended June 30, 2024, we used $1,549,000 in operations.

Our net loss adjusted for non-cash operating expenses was a loss

of $799,000, while changes in non-cash current assets and liabilities consumed $750,000 primarily as a result of increased inventory

built at our Twist & Go bottle manufacturer in advance of orders for the 2024/25 academic year to alleviate capacity constraints

while we bring up additional locations contracted in the third quarter of 2024.

Additionally, our accounts payable decreased with other

manufacturing locations as we slowed purchases in anticipation of the summer recess in the education channel.

of June 30, 2024, we had working capital of $1,185,000 compared with $1,846,000 at December 31, 2023.

The decrease in working capital

is primarily due to losses incurred in the six months ended June 30, 2024, partially offset by capital raised in the six months ended

June 30, 2024 through the sale convertible notes and the conversion of those notes and other current liabilities to equity.

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

operating expenses, and to continue to control and reduce fixed overhead expense.

Our current dispute with the Manufacturer and the resulting

loss of product supply and legal expense continue to negatively impact our financial position, results of operations and cash flow.

operating expenses, and to continue to control fixed overhead expense.

Our current dispute with the Manufacturer and the resulting loss

of product supply and legal expense continue to negatively impact our financial position, results of operations and cash flow.

the introduction of our carton packaging format has mitigated the loss of supply, the product offering has not been accepted by some

customers or as a substitute for the bottle product in all use cases.

We have identified and are actively working to develop additional

smoothie bottle manufacturing capacity.

We expect expanded capacity to become available in 2024, subject to the risks and uncertainties

associated with contracting and pre-production activities.

Additionally, we have taken other measures to reduce our liquidity requirements,

including compensating our directors and employees with equity to reduce cash compensation requirements.

We have contracted with a co-manufacturer for additional smoothie

bottle manufacturing capacity.

We expect expanded capacity to become available in 2024, subject to the risks and uncertainties associated

with pre-production activities.

Additionally, we have taken other measures to reduce our liquidity requirements, including compensating

our directors and employees with equity to reduce cash compensation requirements, obtaining non-recourse litigation financing, and securing

receivables financing in the third quarter of 2024.

operations to date have been financed by the sale of securities, the issuance of convertible debt and the issuance of short-term debt,

11 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