What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-01 compared with 2024-10-24 · 47 added, 122 removed, 79 unchanged (68% of the section changed)

27 unchanged sentences

of Operations

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

of Operation for the Three Months Ended March 31, 2025 as Compared to the Three Months Ended March 31, 2024

and cost of revenue

1 unchanged sentence

Our revenue in 2025 benefited from increased sales

of our bottled Twist & Go smoothies due to improved availability resulting from inventory built over the months prior to the commencement

of the school year, continued acceptance of Twist & Go smoothies provided in cartons, and improvements in bulk sales due to the reintroduction

of our WHIRLZ 100% juice product in the fourth quarter of 2023.

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 fourth quarter of 2024, subject to the risks and uncertainties

of our bottled Twist & Go smoothies.

have been able to expand our capacity on a limited basis at our existing smoothie bottle manufacturer and have been developing an additional

manufacturer relationship since the fourth quarter of 2024, after the candidate we contracted with in July 2024 was unable to successfully

produce product at scale.

We expect expanded capacity to become available in the second half of 2025, subject to the risks and uncertainties

associated with pre-production activities.

of revenue increased $371,000, or 22%, to $2,030,000 in 2025 as compared to $1,659,000 in 2024.

Cost of revenue increased at a slightly

higher rate compared to revenue due to $126,000 in cost incurred to relocate our single-serve smoothie pouch production line.

Cost of revenue increased at a higher

rate compared to revenue due to trial costs at our new manufacturer and elevated costs to supply product in a sub-optimal manner while

the production process at our new manufacturer is under development.

The increase was partially offset by the non-recurrence of costs

to relocate our single-serve manufacturing line, which amounted to $45,000 in 2024.

gross profit was $900,000 (31%) and $1,170,000 (41%) for 2025 and 2024, respectively.

1 unchanged sentence

profit was $1,215,000 in 2024 (43%).

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.

The reduction in gross margin is a result of product mix and new manufacturer trial and developments

marketing and distribution expense

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

Three months ended

September 30,

Three months ended

September 30,

March 31, 2025

March 31, 2024

Sales and marketing

Storage and outbound freight

operations in 2025 were primarily directed towards increasing sales and expanding our distribution network.

marketing and distribution expense increased approximately $130,000 (19%) from approximately $694,000 in 2024 to $824,000 in 2025.

1 unchanged sentence

The increase is

a result of higher personnel cost, travel and broker commissions due to expansion of the broker network.

and outbound freight expense increased approximately $110,000 (30%) from approximately $370,000 in 2023 to $480,000 in 2024, lower than

the 40% rate of increase in revenue primarily because of freight efficiencies, and lower storage and inventory management cost in 2024.

a result of higher personnel costs and broker commissions due to expansion of the broker network, as well as an increase in sample expense

due to the introduction of our Pop & Go freeze pops.

and outbound freight expense increased approximately $27,000 (7%) from approximately $364,000 in 2024 to $391,000 in 2024, slightly higher

than the 4% rate of increase in revenue primarily because of freight inefficiencies resulting from supply constraints.

and administrative expense

Three months ended

September 30,

Three months ended

September 30,

March 31, 2025

March 31, 2024

Personnel costs

1 unchanged sentence

Legal, professional and consulting fees

Director fees paid in cash

Research and development

Other general and administrative expenses

and administrative expenses increased approximately $128,000 (22%) from approximately $577,000 in 2023 to $705,000 in 2024.

and administrative expenses decreased approximately $108,000 (13%) from approximately $855,000 in 2024 to $747,000 in 2025.

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

Personnel cost increased

by approximately $116,000 (59%) from approximately $196,000 in 2023 to $312,000 in 2024.

The increase in personnel cost resulted

from the non-recurrence of the 2023 reversal of cash bonuses in favor of increased performance-based stock compensation in the third

quarter, increased head count and higher staff utilization, and resulting deferral of paid time off.

Similarly, director fees paid

in cash decreased as a result of a shift to stock-based compensation in the third quarter of 2023.

compensation decreased by approximately $61,000 (25%) from $240,000 in 2023 to $179,000 in 2024 as a result of the aforementioned 2023

third quarter shift to performance-based stock-based compensation, partially offset by stock-based compensation associated with increased

general and administrative expenses increased by approximately $28,000 (29%) due to increased information technology costs and the non-recurrence

of certain 2023 adjustments to estimates.

had net losses of approximately $513,000 and $476,000 for the three-month periods ended September 30, 2024 and 2023, respectively.

increase in net loss of approximately $37,000, was primarily the result of operating expense increases of $384,000 due to headcount,

and variable freight and broker commission costs, partially offset by increased gross profit of $347,000 from our 40% increase in revenue.

of Operation for the Nine Months Ended September 30, 2024 as Compared to the Nine Months Ended September 30, 2023

and cost of revenue

increased $1,724,000, or 28%, to $7,929,000 in 2024 as compared to $6,205,000 in 2023.

Our revenue in 2024 benefited from continued acceptance

of our carton packaging format, increased sales of our bottled Twist & Go smoothies due to improved availability in the third quarter

of 2024, and improvements in bulk sales due to the reintroduction of our WHIRLZ 100% juice product in the fourth quarter of 2023.

of revenue increased $1,028,000, or 26%, to $4,991,000 in 2024 as compared to $3,963,000 in 2023.

Cost of revenue increased at a lower

rate compared to revenue due to product mix and slight improvements in raw material and other input costs, partially offset by $176,000

in cost incurred to relocate our single-serve smoothie pouch production line.

gross profit was $2,938,000 (37%) and $2,242,000 (36%) for 2024 and 2023, respectively.

Excluding production relocation costs, our gross

profit was $3,114,000 in 2024 (39%).

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

Nine months ended

September 30,

Nine months ended

September 30,

Sales and marketing

Storage and outbound freight

marketing and distribution expense increased approximately $277,000 (14%) from approximately $1,990,000 in 2023 to $2,267,000 in 2024.

and marketing expense increased approximately $148,000 (14%) from approximately $1,058,000 in 2023 to $1,206,000 in 2024.

is a result of higher personnel costs, travel and broker commission due to expansion of the broker network.

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.

and outbound freight expense increased approximately $129,000 (14%) from approximately $932,000 in 2023 to $1,061,000 in 2024, primarily

because of the 28% increase in revenue over the same period, partially offset by freight efficiencies, and lower storage and inventory

management cost in 2024.

and administrative expense

Nine months ended

September 30,

Nine months ended

September 30,

Personnel costs

Stock based compensation

Legal, professional and consulting fees

Research and development

Other general and administrative expenses

and administrative expenses increased approximately $361,000 (18%) from approximately $2,062,000 in 2023 to $2,423,000 in 2024.

cost decreased by approximately $13,000 (1%) from approximately $929,000 in 2023 to $916,000 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 $265,000 (61%) from $431,000 in 2023 to $696,000 in 2024 as a result of the Company adopting

an equity-only structure for management incentives and Board of Directors compensation, implemented to conserve cash and to achieve compliance

with NASDAQ listing regulations.

Increases in management headcount and the issuance of long-term incentive awards also contributed to

the increase.

general and administrative expenses increased by approximately $84,000 (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 $1,973,000 and $2,123,000 for the nine-month periods ended September 30, 2024 and 2023, respectively.

The decrease in net loss of approximately $150,000, was primarily the result an increase in gross profit of approximately $696,000, partially

offset by increased operating expense of $546,000 due to variable freight and broker commission costs, increased headcount, and the non-recurrence

of recognizing ERTC benefits in 2023.

Personnel cost increased by

approximately $110,000 (42%) from approximately $262,000 in 2024 to $372,000 in 2025.

The increase in personnel cost resulted from increased

head count, and acceleration of employer payroll taxes due to vesting of stock-based compensation.

compensation decreased by approximately $145,000 (48%) from $303,000 in 2024 to $158,000 in 2025 as a result of lower expected attainment

under our performance stock unit program.

professional and consulting fees decreased by approximately $76,000 (48%) from $157,000 in 2024 to $81,000 in 2025 due to a reduction

in dispute related legal costs that are paid through non-recourse litigation financing that was arranged in May 2024.

general and administrative expenses increased by approximately $14,000 (14%) due to increased information technology costs.

had net losses of approximately $761,000 and $449,000 for the three-month periods ending March 31, 2025 and 2024, respectively.

in net loss of approximately $312,000 was primarily due to the 10.7 percentage point reduction in gross margin, from 41.4% to 30.7%,

resulting in a reduction in gross profit of $270,000.

We expect our gross margin to normalize in the second half of 2025 as new co-manufacturers

are operating at full capacity and capability, improving our supply and cost structure.

and Capital Resources

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.

In addition, holders of debt converted a total of $399,000 in principal and $234,000 in interest into 133,991 shares of

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

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

13 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 nine months ended September 30, 2024, we used $1,544,000 in operations.

Our net loss adjusted for non-cash operating expenses was

a loss of $982,000, while changes in non-cash current assets and liabilities consumed $562,000 primarily because of increased accounts

receivable resulting from our 40% increase in revenue compared to the nine months ended September 30, 2024.

Additionally, our accounts

payable decreased as we improved adherence with vendor terms.

These changes were partially offset by a $444,000 reduction in inventory.

of September 30, 2024, we had working capital of $1,371,000 compared with $2,345,000 at December 31, 2023, both excluding disputed accounts

February 5, 2025, we entered into securities purchase agreements with several investors, pursuant to which we 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, we used $506,000 in operations.

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

of $525,000, while changes in current assets and liabilities generated $19,000 primarily because of a reduction of $372,000 in inventory

and increases in accounts payable and accrued expense of $222,000 and $218,000, respectively, partially offset by an increase in accounts

receivable of $670,000.

of March 31, 2025, we had working capital of $2,848,000 compared with $606,000 at December 31, 2024, both excluding disputed accounts

payable of $499,000 resulting from our dispute with the Manufacturer.

The decrease in working capital is primarily due to losses incurred

in the nine months ended September 30, 2024, partially offset by capital raised in the nine months ended September 30, 2024 through the

sale of convertible notes and the conversion of those notes and other current liabilities to equity.

The increase in working capital is primarily due to capital raised

in the three months ended March 31, 2025 through the sale of common stock, partially offset by losses incurred in the three months ended

March 31, 2025.

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 fixed overhead expense.

Our current dispute with the Manufacturer and the resulting loss

of product supply and legal expense have negatively impacted our financial position, results of operations and cash flow.

While the introduction

of our carton packaging format in 2023 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 contracted with a co-manufacturer for additional smoothie bottle

manufacturing capacity.

We expect expanded capacity to become available in the fourth quarter of 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.

10 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