What changed in this filing

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Item 1. Financial Statements

2025-05-01 compared with 2024-10-24 · 115 added, 169 removed, 277 unchanged (51% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

September 30,

March 31, 2025

December 31, 2024

Current assets:

9 unchanged sentences

Current liabilities:

Line of credit, net

Line of credit

Accounts payable

1 unchanged sentence

Accrued expenses

Accrued payroll and employee related

Accrued payroll and employee related expenses

Financing agreements - current

7 unchanged sentences

23,000,000 shares authorized;

14,746,172 and 14,420,105 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

15,920,047 and 14,746,172 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

Additional paid in capital

7 unchanged sentences

Consolidated Statements of Operations

the three and nine months ended September 30, 2024 and 2023

For the three months ended September 30,

For the nine months ended September 30,

the three months ended March 31, 2025 and 2024

Cost of revenue

5 unchanged sentences

Loss from operations

( 1,949,000 )

( 2,120,000 )

Interest expense

1 unchanged sentence

$ ( 449,000 )

$ ( 1,973,000 )

$ ( 2,123,000 )

Per share information - basic and fully diluted:

4 unchanged sentences

Statements of Cash Flows

the nine months ended September 30, 2024 and 2023

the three months ended March 31, 2025 and 2024

$ ( 761,000 )

3 unchanged sentences

Depreciation and amortization

Amortization of debt discounts

Stock and options issued for services

Gain on asset disposal

Amortization of line of credit discount

Changes in assets and liabilities

Accounts receivable

( 1,033,000 )

Other receivables

3 unchanged sentences

Net cash used in operating activities

( 1,544,000 )

( 1,990,000 )

Investing activities

4 unchanged sentences

Repayment of line of credit

( 1,402,000 )

Issuance of convertible debt

Financing agreement payments

Repurchases from stock compensation program

Net cash provided by (used in) financing activities

Net decrease in cash

( 1,490,000 )

( 2,008,000 )

Issuance of common stock, net of $ 26,000 issuance cost

Shares repurchased for income tax withholding under stock compensation program

Net cash provided by financing activities

Net increase (decrease) in cash

Cash, beginning of period

Cash, end of period

Cash paid during the period for:

Amounts included in the measurement of lease liabilities

Non-cash financing and investing activities:

2 unchanged sentences

Financed acquisition of long-term assets

Value of shares relinquished in modification of stock-based compensations awards

Cash paid for interest

the accompanying notes to the condensed consolidated financial statements

7 unchanged sentences

of Presentation

accompanying condensed consolidated financial statements are unaudited.

These unaudited interim condensed consolidated financial statements

have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and

applicable rules and regulations of the U.S.

Securities and Exchange Commission (“SEC”) regarding interim financial reporting.

Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been

condensed or omitted pursuant to such rules and regulations.

Accordingly, these interim condensed consolidated financial statements should

be read in conjunction with the audited consolidated financial statements for the fiscal year ended December 31, 2023 included in the

Company’s Annual Report on Form 10-K, as filed with the SEC on March 22, 2024.

In management’s opinion, the unaudited interim

condensed consolidated financial statements reflect all adjustments, which are of a normal and recurring nature, that are necessary for

a fair presentation of financial results for the interim periods presented.

Operating results for any quarter are not necessarily indicative

of the results for the full fiscal year.

accompanying condensed consolidated financial statements are unaudited, except for the condensed balance sheet as of December 31, 2024.

These unaudited interim condensed consolidated financial statements have been prepared in conformity with accounting principles generally

accepted in the United States of America (“GAAP”) and applicable rules and regulations of the U.S.

Securities and Exchange

Commission (“SEC”) regarding interim financial reporting.

Certain information and footnote disclosures normally included

in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements

for the fiscal year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K, as filed with the SEC on March

In management’s opinion, the unaudited interim condensed consolidated financial statements reflect all adjustments, which

are of a normal and recurring nature, that are necessary for a fair presentation of financial results for the interim periods presented.

Operating results for any quarter are not necessarily indicative of the results for the full fiscal year.

of Consolidation

13 unchanged sentences

were as follows:

of Contract Manufacturers Percentage of Finished Goods

For the three months ended September 30,

For the nine months ended September 30,

Schedule of Contract Manufacturers Percentage of Finished Goods

For the three months ended March 31,

Manufacturer A

Manufacturer B

Manufacturer C

Concentration risk percentage

Other Manufacturers

of Significant Accounting Policies

3 unchanged sentences

Company’s financial instruments consist of cash, accounts receivable, accounts payable, the line of credit and financing agreements.

The carrying value of the Company’s

financial instruments approximates their fair value.

The carrying value of the Company’s financial instruments approximates their fair value.

Receivable and Allowances

6 unchanged sentences

losses are recorded as general and administrative expenses on our condensed consolidated statements of operations.

As of September 30,

As of March 31, 2025

and December 31, 2024, there was no allowance for credit losses.

There was no credit loss expense for the three and nine months

ended September 30, 2024 and 2023.

receivables consist of the Company’s 2021 Employee Retention Tax Credit “ERTC” claim, which the Company collected

in March 2024, amounts due from vendors for materials acquired on their behalf for use in manufacturing the Company’s

products, vendor rebates and freight claims.

claims can be made in a variety of circumstances with varying degrees of subjectivity and clear authoritative guidance.

Paid claims are

subject to IRS inspection which may occur prior to expiration of the statute of limitations.

The Company’s ERTC claim was based

on objectively calculated declines in revenue using methods that are clearly defined in the Coronavirus Aid, Relief, and Economic Security

Act and various regulations and interpretations thereof.

There was no credit loss expense for the three months ended March 31,

2025 and 2024.

accordance with ASC 606, Revenue from Contracts with Customers, revenue is recognized when a customer obtains ownership of promised goods.

32 unchanged sentences

and outbound freight costs are included in selling, marketing and distribution expense.

For the three months ending September 30, 2024

and 2023, storage and outbound freight totaled approximately $ 480,000 and $ 370,000 , respectively.

For the nine months ended September

30, 2024 and 2023, storage and outbound freight totaled approximately $ 1,061,000 and $ 932,000 , respectively.

For the three months ending March 31, 2025 and

2024, storage and outbound freight totaled approximately $ 391,000 and $ 364,000 , respectively.

and Development

1 unchanged sentence

The Company incurred approximately

$ 52,000 and $ 32,000 in research and development expense for the three months ended September 30, 2024 and 2023, respectively, and $ 99,000

and $ 88,000 for the nine months ended September 30, 2024 and 2023, respectively.

the three and nine months ended September 30, 2024 and 2023, common stock equivalents have not been included in the calculation of net

loss per share as their effect is anti-dilutive as a result of losses incurred.

Reclassifications

reclassifications have been made to the 2023 financial statements to conform to the 2024 presentation, namely stock-based compensation

paid to the Company’s directors has been reclassified from stock and options issued for services and shares repurchased for employee

tax withholding under the Company’s stock compensation program have been reclassified to financing activities in the consolidated

statement of cash flows, with corresponding changes reflected in the statement of stockholders’ equity for the nine months ended

September 30, 2023.

$ 18,000 and $ 30,000 in research and development expense for the three months ended March 31, 2025 and 2024, respectively.

the three months ended March 31, 2025 and 2024, common stock equivalents have not been included in the calculation of net loss per share

as their effect is anti-dilutive as a result of losses incurred.

Pronouncements

4 unchanged sentences

Schedule of Inventory

September 30,

March 31, 2025

December 31, 2024

Raw materials and packaging

4 unchanged sentences

Schedule of Property and Equipment, Net

September 30,

March 31, 2025

December 31, 2024

Manufacturing equipment

6 unchanged sentences

Property and equipment, net of depreciation

expense related to these assets was approximately $ 55,000 and $ 102,000 for the three months ended September 30, 2024 and 2023, respectively,

and $ 168,000 and $ 277,000 for the nine months ended September 30, 2024 and 2023, respectively.

Depreciation expense in cost of revenue

was $ 6,000 and $ 4,000 for the three months ended September 30, 2024 and 2023, respectively, and $ 19,000 and $ 13,000 for the nine months

ended September 30, 2024 and 2023, respectively.

expense related to these assets was approximately $ 53,000 and $ 59,000 for the three-months periods ending March 31, 2025 and 2024, respectively.

Depreciation expense in cost of revenue was $ 7,000 for each of the three-month periods ending March 31, 2025 and 2024.

Commitments and Contingencies

Company leases office space under a non-cancellable operating lease which expired on March 31, 2023 , and was extended in a series of

amendments through March 31, 2025 .

The Company’s periodic lease cost was approximately $ 20,000 for each of the three month periods

ended September 30, 2024 and 2023 and $ 60,000 for each of the nine month periods ended September 30, 2024 and 2023.

amendments through September 30, 2025.

The Company’s periodic lease cost was approximately $ 20,000 for each of the three-month

periods ending March 31, 2025 and 2024.

Company’s products are produced to its specifications through several contract manufacturers.

38 unchanged sentences

August 2024, the Company secured receivables financing of $ 1,500,000 (the “Facility”).

Under the Facility,

the Company may borrow up to 90% of eligible customer account balances.

Amounts outstanding bear interest at a rate prime plus 1.2% (9.20%

as of September 30, 2024) and collateral fees of 0.15% and are secured by accounts receivable and inventory.

The Facility terminates on September 5, 2025, and renews automatically,

unless notice is given or received.

As of September 30, 2024, borrowings under the Facility amounted to $ 86,000 , net of unamortized

deferred financing cost of $ 14,000 , and $ 1,400,000 was available to borrow.

Under the Facility, the Company may

borrow up to 90% of eligible customer account balances.

Amounts outstanding bear interest at a rate prime plus 1.2% and collateral fees

of 0.15% and are secured by accounts receivable and inventory .

The Facility expires on September 5, 2025 , and renews automatically, unless

notice is given or received.

As of March 31, 2025, there were no borrowings under the Facility.

Unamortized deferred financing cost amounted

to $ 7,000 and are included in prepaid expenses and other current assets on the accompanying March 31, 2025 consolidated balance sheet.

2024, the Company entered into financing agreements to purchase equipment and software as a service, with imputed or stated interest

of 15 - 19 %.

Amounts due under the agreements are as follows as of September 30, 2024:

of Financing Agreements

Amounts due under the agreements are as follows as of March 31, 2025:

Schedule of Financing Agreements

2025 (9 months)

3 unchanged sentences

Financing agreements

Financing agreements non current

July 2023 to March 2024, the Company executed subscription agreements for substantially all of a $ 2,000,000 privately placed convertible

16 unchanged sentences

Stockholders’ Equity

following are changes in stockholders’ equity for the nine months ended September 30, 2023 and 2024:

following are changes in stockholders’ equity for the three months ended March 31, 2024 and 2025:

Schedule of Changes in Stockholders’ Equity

3 unchanged sentences

Equity-based compensation expense

Cash settlement of equity-based compensation

Issuance of stock for services

( 2,123,000 )

Balance September 30, 2023

Conversion of debt and interest (Note 5)

Registered issuance of common stock

Registered issuance of common stock, shares

Balance March 31, 2024

$ ( 61,245,000 )

4 unchanged sentences

Equity-based compensation expense

Conversion of debt and interest (Note 5)

( 1,973,000 )

Balance September 30, 2024

Registered issuance of common stock

Balance March 31, 2025

$ ( 64,382,000 )

the nine months ended September 30, 2024, 122,739 warrants at a weighted average exercise price of $ 9.10 per share expired.

February 5, 2025, the Company entered into securities purchase agreements with several investors, pursuant to which the Company sold

an aggregate of 1,052,793 shares of common stock at a price of $ 2.85 per share in a registered direct offering.

the three months ended March 31, 2025, 121,076 warrants at a weighted average exercise price of $ 3.51 per share expired.

warrants outstanding as of March 31, 2025.

Incentive Plan

2022, the Company issued equity awards under the 2015 Equity Incentive Plan (the “2015 Plan”) and outside the Plan.

2023, the Company’s stockholders adopted the 2023 Equity Incentive Plan (the “2023 Plan”), reserving 650,000 shares

for future issuance.

The Board of Directors discontinued further grants under the 2015 Plan.

In March 2024, the Board of Directors amended

the 2023 Plan to reserve an additional 650,000 shares for future issuance, bringing the total for the plan to 1,300,000 , and to provide

an evergreen provision that reserves additional shares depending on future non-plan issuances of common stock.

of September 30, 2024, the Company has $ 545,000 of total unrecognized share-based compensation expense relative to unvested options,

stock awards and stock units, which is expected to be recognized over the remaining weighted average period of 2.8 years.

following is a summary of stock option activity for the nine months ended September 30, 2024:

Schedule of Stock Options Activity

Number of Options

Weighted average exercise price per share

Remaining term in years

of March 31, 2025, the Company has $ 409,000 of total unrecognized share-based compensation expense relative to unvested options, stock

awards and stock units, which is expected to be recognized over the remaining weighted average period of 3.0 years.

following is a summary of stock option activity for the three months ended March 31, 2025:

Summary of Stock Options Activity

average exercise

price per share

term in years

Outstanding on December 31, 2024

Outstanding on September 30, 2024

Exercisable, September 30, 2024

Outstanding on March 31, 2025

Exercisable, March 31, 2025

fair value of the options issued was calculated using the Black-Scholes option pricing model, based on the following:

of Fair Value of Options Using Black-Sholes Option Pricing Model

Summary of Fair Value of Options Using Black-Sholes Option Pricing Model

Expected term (in years)

3 unchanged sentences

Weighted average grant date fair value per share

following is a summary of restricted stock award and restricted stock unit activity for the nine months ended September 30, 2024:

following is a summary of restricted stock award and restricted stock unit activity for the three months ended March 31, 2025:

Schedule of Restricted Stock Award and Restricted Stock Unit Activity

Number of shares

Weighted average grant date fair value

Weighted average

grant date fair value

Unvested at January 1, 2025

Unvested at September 30, 2024

2023 and 2024, the Company issued performance share units (“PSUs”) that represented shares potentially issuable based upon

Company and individual performance in the years of issuance.

following table summarizes the activity for the Company’s unvested PSUs for the nine months ended September 30, 2024:

Unvested at March 31, 2025

Company issues performance share units (“PSUs”) that represent shares potentially issuable based upon Company and individual

performance in the years of issuance.

following table summarizes the activity for the Company’s unvested PSUs for the three months ended March 31, 2025:

Schedule of Performance Stock Unit Activity

Number of shares

Weighted average grant date fair value

Unvested at January 1, 2024

Unvested and expected to vest at September 30, 2024

February 2023, the unvested awards issued and outstanding for individual performance under the 2022 PSU program were modified to cash-settle

the original grant-date fair value of approximately $ 80,000 , resulting in incremental compensation of $ 56,000 after considering the $ 24,000

fair value of the vested shares at the date of the modification.

Additionally, the Company performance targets were modified to allow

approximately 71,000 PSUs to vest, with an additional time-based vesting requirement for approximately 26,000 of the PSUs.

awards did not vest based on the original terms, the modification was considered a new grant, resulting in $ 64,000 in compensation expense

in the nine months ended September 30, 2023.

Company adopted a 2024 PSU program in March 2024, granting approximately 430,000 PSUs at target performance against company-wide and

individual performance metrics.

The results for the three and nine months ended September 30, 2024 include $ 79,000 and $ 289,000 , respectively,

in expense for the 2024 PSU program.

Estimates of expense associated with 2024 performance will be reassessed each quarter through the

performance period.

Weighted average

grant date fair value

Unvested January 1, 2025

Unvested at March 31, 2025

740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of evidence, it is more than likely

2 unchanged sentences

valuation allowance on all tax assets.

As of September 30, 2024, the estimated effective tax rate for 2024 was zero .

As of March 31, 2025, the estimated effective tax rate for 2025 was zero .

are open statutes of limitations for taxing authorities in federal and state jurisdictions to audit our tax returns from 2019 through

1 unchanged sentence

Our policy is to account for income tax related interest and penalties in income tax expense in the statement of

the three and nine months ended September 30, 2024 and 2023, the Company did not incur any interest and penalties associated with tax

As of September 30, 2024, the Company did not have any significant unrecognized uncertain tax positions.

the nine months ended September 30, 2024, the Company used $ 1,544,000 in operations.

As of September 30, 2024, the Company had $ 1,371,000

of working capital, including $ 401,000 in cash and excluding $ 499,000 in disputed co-manufacturer accounts payable (Note 4).

Company has a history of negative cash flow and operating losses, which were expected to improve with growth.

the three months ending March 31, 2025 and 2024, the Company did not incur any interest and penalties associated with tax positions.

As of March 31, 2025, the Company did not have any significant unrecognized uncertain tax positions.

the three months ending March 31, 2025, the Company used cash in operations of $ 506,000 .

As of March 31, 2025, the Company had $ 1,872,000

Company has a history of operating losses and negative cash flow, which are expected to improve with growth.

As described more fully

1 unchanged sentence

to procure certain products necessary to achieve our growth projections and in elevated legal costs.

mitigate the impact of procurement constraints, the Company built and paid for inventory in anticipation of third quarter seasonal requirements,

contributing $ 320,000 to the cash used in operations in the first half of 2024.

The inventory build allowed the Company to generate a

40 % increase in revenue in the three months ended September 30, 2024 compared to the prior year quarter.

Accounts receivable increased

with revenue by $ 504,000 compared with September 30, 2023.

The Company secured a receivables-based line of credit in August 2024 of $ 1,500,000 ,

with $ 1,400,000 available to borrow as of September 30, 2024.

Management expects that the cash cycle will shorten as additional contracted

capacity commences production in the fourth quarter of 2024, offset by additional working capital necessary for further anticipated growth.

Additionally, in May 2024, the Company obtained non-recourse litigation financing to allow vigorous pursuit of the complaint against

the Manufacturer without further expense to the Company.

alleviated, the financial position at September 30, 2024 and historical results raise substantial doubt about the Company’s ability

to continue as a going concern.

As described, the Company has taken and partially completed steps to mitigate the dispute related issues.

Management believes that other potential actions are feasible, including raising additional financing and reducing growth-related expenditures.

While management cannot predict with certainty whether additional actions would achieve the predicted outcome, the availability of such

options, along with the actions already taken, resulted in the alleviation of the substantial doubt about the Company’s ability

to continue as a going concern.

mitigate the impact of procurement constraints, the Company builds inventory in anticipation of third quarter seasonal requirements,

and has invested in materials necessary to carry out trials and initial production runs at new co-manufacturers.

The Company secured

a receivables-based line of credit in August 2024 of $ 1,500,000 ,

outstanding borrowing as of March 31, 2025.

Management expects that the cash cycle will shorten as additional contracted capacity

improves production volume and efficiency in 2025.

Additionally, in May 2024, the Company obtained non-recourse litigation financing

to allow vigorous pursuit of the complaint against the Manufacturer without further expense to the Company.

Finally, as described in

Note 6, the Company raised $ 3,000,000

through the sale of the Company’s common stock in February 2025.

financial position at March 31, 2025 and historical results raise substantial doubt about the Company’s ability to continue as

a going concern.

As described, the Company has completed steps to mitigate dispute related issues and raise capital.

The actions taken

have resulted in the alleviation of the substantial doubt about the Company’s ability to continue as a going concern.

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 1. Financial Statements