What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-09-26 compared with 2022-08-26 · 108 added, 42 removed, 176 unchanged (46% of the section changed)

52 unchanged sentences

Recent Developments

Pandemic Impact

COVID-19 Pandemic Impact

We have seen increased customer and consumer demand

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Results of Operations

Three Months Ended March 31, 2022 Compared to Three Months Ended

March 31, 2021

The following table presents certain information concerning our financial

results, including information presented as a percentage of consolidated net sales:

Three Months Ended March 31,

Three Months Ended June 30, 2022 Compared to Three Months Ended

June 30, 2021

The following table presents certain information

concerning our financial results, including information presented as a percentage of consolidated net sales:

Three Months Ended June 30,

Cost of goods sold

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Total operating expenses

(Loss) income from operations

Income from operations

Other (expense) income:

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Total other (expense) income

(Loss) income before provision for income taxes

(Benefit) provision for income taxes

Net (loss) income

Income before provision for income taxes

Provision for income taxes

Net sales finished at $33,491 for the three-month

period ended March 31, 2022, an increase of $4,723 or 16.1% versus prior year.

period ended June 30, 2022, an increase of $4,329 or 14.8% versus prior year.

The net sales increase was primarily driven by higher volumes

of our branded drinkable kefir and the impact of price increases implemented during the quarter, and to a lesser extent the favorable

impact of our acquisition of GlenOaks Farms during the third quarter of 2021.

of our branded drinkable kefir and the impact of price increases implemented during the first quarter of 2022, and to a lesser extent

the favorable impact of our acquisition of GlenOaks Farms during the third quarter of 2021.

Gross profit as a percentage of net sales was

16.4% during the three-month period ended March 31, 2022.

17.0% during the three-month period ended June 30, 2022.

Gross profit percentage was 26.3% in the prior year.

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Selling expenses decreased by $84 to $2,482 during

the three-month period ended March 31, 2022 from $3,222 during the same period in 2021.

the three-month period ended June 30, 2022 from $2,566 during the same period in 2021.

General and Administrative Expenses

General and administrative expenses increased

$401 to $3,292 during the three-month period ended March 31, 2022 from $2,891 during the same period in 2021.

$222 to $2,839 during the three-month period ended June 30, 2022 from $2,617 during the same period in 2021.

The increase is primarily

a result of increased legal and professional fees, which includes expense related to the fiscal year 2020 Form 10-K restatement.

a result of increased legal and professional fees, which includes expense related to the fiscal year 2020 Form 10-K restatement, partially

offset by lower consulting expense to our Chairperson of the Board of Directors.

Provision for Income Taxes

The provision for income taxes was $65 and $731

during the three months ended March 31, 2022 and 2021, respectively.

during the three months ended June 30, 2022 and 2021, respectively.

The effective income tax rate for the three months

ended March 31, 2022 was 18.1% compared to 31.2% in the same period last year.

ended June 30, 2022 was 35.3% compared to 31.1% in the same period last year.

The statutory Federal and state tax rates remained consistent

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to the Consolidated Financial Statements.

Six Months Ended June 30, 2022 Compared to Six Months Ended June

The following table presents certain information

concerning our financial results, including information presented as a percentage of consolidated net sales:

Six Months Ended June 30,

Cost of goods sold

Depreciation expense

Total cost of goods sold

Selling expenses

General & administrative expenses

Amortization expense

Total operating expenses

(Loss) income from operations

Other (expense) income:

Interest expense

Gain on investment

Loss on sales or property and equipment

Other (expense) income, net

Total other (expense) income

(Loss) income before provision for income taxes

(Benefit) provision for income taxes

Net (loss) income

Net sales finished at $67,590 for the six-month

period ended June 30, 2022, an increase of $9,052 or 15.5% versus prior year.

The net sales increase was primarily driven by higher volumes

of our branded drinkable kefir and the impact of price increases implemented during the quarter, and to a lesser extent the favorable

impact of our acquisition of GlenOaks Farms during the third quarter of 2021.

Gross profit as a percentage of net sales was

16.7% during the six-month period ended June 30, 2022.

Gross profit percentage was 26.9% in the prior year.

The decrease versus the prior

year was primarily due to the unfavorable impact of milk pricing, and to a lesser extent the increased pricing of freight and other inputs,

partially offset by the decrease in depreciation expense.

We expect to see continued pressure in milk pricing and other input costs during

the fiscal year 2022.

Selling Expenses

Selling expenses decreased by $104 to $5,684

during the six-month period ended June 30, 2022 from $5,788 during the same period in 2021.

General and Administrative Expenses

General and administrative expenses increased

$623 to $6,131 during the six-month period ended June 30, 2022 from $5,508 during the same period in 2021.

The increase is primarily a

result of increased legal and professional fees, which includes expense related to the fiscal year 2020 Form 10-K restatement, partially

offset by lower consulting expense to our Chairperson of the Board of Directors.

Provision for Income Taxes

The provision for income taxes was $(132) and

$1,324 during the six months ended June 30, 2022 and 2021, respectively.

The effective income tax rate for the six months

ended June 30, 2022 was 14.5% compared to 31.2% in the same period last year.

The statutory Federal and state tax rates remained consistent

from 2021 to 2022.

The Company has items that are nondeductible or are discrete adjustments to tax expense.

The company consistently reflects

non-deductible officer compensation expense, non-deductible compensation expense related to equity incentive awards and separate state

tax rates from period to period.

Although similar items were reflected in 2022, the percentage effect is different due to the difference

in pre-tax (loss) income in 2022 compared to 2021.

The Company’s effective tax rate may change

from period to period based on recurring and non-recurring factors including the relative mix of pre-tax earnings (or losses), the jurisdictional

mix of earnings, enacted tax legislation, state income taxes, the impact of non-deductible items, changes in valuation allowances, settlement

of tax audits, and the expiration of the statute of limitations in relation to unrecognized tax benefits.

The Company records discrete

income tax items such as enacted tax rate changes and completed tax audits in the period in which they occur.

Income taxes are discussed in Note 10 in the Notes

to the Consolidated Financial Statements.

Liquidity and Capital Resources

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and growth initiatives and to ensure the continuation of the Company as a going concern.

additional borrowings are needed, $2,223 was available under the Revolving Credit Facility as of March 31, 2022 (see Note 7, Debt).

We are in compliance with the terms of the Credit Agreement and expect to meet foreseeable financial requirements.

The success of

our business and financing strategies will continue to provide us with the financial flexibility to take advantage of various

opportunities as they arise.

To date, we have been successful in generating cash and obtaining financing as needed.

connection with the COVID-19 pandemic or other circumstances, if a serious economic or credit market crisis ensues, it could have a

negative effect on our liquidity, results of operations and financial condition.

If additional

borrowings are needed, $2,223 was available under the Revolving Credit Facility as of June 30, 2022 (see Note 7, Debt).

We are in compliance

with the terms of the Credit Agreement and expect to meet foreseeable financial requirements.

The success of our business and financing

strategies will continue to provide us with the financial flexibility to take advantage of various opportunities as they arise.

we have been successful in generating cash and obtaining financing as needed.

However, in connection with the COVID-19 pandemic or other

circumstances, if a serious economic or credit market crisis ensues, it could have a negative effect on our liquidity, results of operations

and financial condition.

most significant ongoing short-term cash requirements relate primarily to funding operations (including expenditures for raw materials,

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Statement of Cash Flows:

Three Months Ended

Six Months Ended

Net cash (used in) provided by operating activities

Net cash (used in) provided by investing activities

Net cash (used in) provided by financing activities

Net cash used in investing activities

Net cash used in financing activities

Operating Activities

Net cash used in operating activities was $529

during the three-month period ended March 31, 2022 compared to net cash provided by operating activities of $1,210 in the same period

The decrease was primarily due to lower cash earnings, which reflect the impact of input and freight cost inflation in 2022,

partially offset by the change in working capital.

during the six-month period ended June 30, 2022 compared to net cash provided by operating activities of $3,647 in the same period in

The decrease was primarily due to lower cash earnings, which reflect the impact of input and freight cost inflation in 2022, and

the change in working capital.

Investing Activities

Net cash used in investing activities was $1,710

during the three-month period ended March 31, 2022 compared to $518 in the same period in 2021.

The decrease in cash used reflects lower

during the six-month period ended June 30, 2022 compared to $1,161 in the same period in 2021.

The increase in cash used reflects higher

capital spending.

7 unchanged sentences

Net cash used in financing activities was $500

during the three-month period ended March 31, 2022 compared to net cash provided by financing activities of $0 in the same period in 2021.

during the six-month period ended June 30, 2022 compared to net cash provided by financing activities of $0 in the same period in 2021.

The increase in cash used relates to quarterly principal payments under the term loan entered into during August 2021 in connection with

1 unchanged sentence

Debt Obligations

As of March 31, 2022, the Company had $2,777 outstanding

As of June 30, 2022, the Company had $2,777 outstanding

and $2,223 available for future borrowings under the revolving line of credit.

1 unchanged sentence

matures on June 30, 2025.

The were no letters of credit issued or outstanding as of March 31, 2022.

The were no letters of credit issued or outstanding as of June 30, 2022.

The Company had $3,973 outstanding under the note

payable, net of $28 of unamortized deferred financing fees, as of March 31, 2022,

payable, net of $27 of unamortized deferred financing fees, as of June 30, 2022,

The Company’s interest rate on debt outstanding

under the revolving line of credit and note payable as of March 31, 2022 was 2.15%.

under the revolving line of credit and note payable as of June 30, 2022 was 3.07% and 3.55%, respectively.

The Company is in compliance with all applicable

financial debt covenants as of March 31, 2022.

financial debt covenants as of June 30, 2022.

See Note 7 to our Consolidated Financial Statements for additional information regarding

7 unchanged sentences

There were no material changes

to the Company’s critical accounting policies and estimates in the three months ended March 31, 2022, except for the change in estimated

to the Company’s critical accounting policies and estimates in the six months ended June 30, 2022, except for the change in estimated

useful life of one brand name intangible asset which is disclosed in Note 5 – Goodwill and Intangible assets.

2 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