What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-11-14 compared with 2022-09-26 · 90 added, 91 removed, 193 unchanged (48% of the section changed)

78 unchanged sentences

Results of Operations

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

June 30, 2021

Three Months Ended September 30, 2022 Compared to Three Months

Ended September 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,

Three Months Ended September 30,

Cost of goods sold

14 unchanged sentences

Net sales finished at $38,140 for the three-month

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 first quarter of 2022, and to a lesser extent

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

period ended September 30, 2022, an increase of $8,587 or 29.1% 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 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

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

19.9% during the three-month period ended September 30, 2022.

Gross profit percentage was 23.7% 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.

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 fourth quarter of 2022.

Selling Expenses

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

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

Selling expenses increased by $121 to $2,843 during

the three-month period ended September 30, 2022 from $2,722 during the same period in 2021.

General and Administrative Expenses

General and administrative expenses increased

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

$221 to $3,415 during the three-month period ended September 30, 2022 from $3,194 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.

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

compensation, partially offset by lower consulting expense to our former Chairperson of the Board of Directors.

Provision for Income Taxes

The provision for income taxes was $130 and $527

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

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

The effective income tax rate for the three months

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

from 2021 to 2022.

ended September 30, 2022 was 11.7% compared to 52.3% 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.

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

8 unchanged sentences

to the Consolidated Financial Statements.

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

Nine months Ended September 30, 2022 Compared to Nine months

Ended September 30, 2021

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,

Nine months Ended September 30,

Cost of goods sold

5 unchanged sentences

Total operating expenses

(Loss) income from operations

Income from operations

Other (expense) income:

4 unchanged sentences

Total other (expense) income

(Loss) income before provision for income taxes

Income before (benefit) 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

Net sales finished at $105,730 for the nine-month

period ended September 30, 2022, an increase of $17,639 or 20.0% 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.

17.8% during the nine-month period ended September 30, 2022.

Gross profit percentage was 25.8% 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.

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.

Selling expenses increased $17 to $8,527 during

the nine-month period ended September 30, 2022 from $8,510 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.

$844 to $9,546 during the nine-month period ended September 30, 2022 from $8,702 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, and incentive

compensation, partially offset by lower consulting expense to our former Chairperson of the Board of Directors.

Provision for Income Taxes

The provision for income taxes was $(2) and $1,851

$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.

during the nine months ended September 30, 2022 and 2021, respectively.

The effective income tax rate for the nine months

ended September 30, 2022 was (0.8)% compared to 35.2% 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.

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

15 unchanged sentences

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.

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

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.

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,

10 unchanged sentences

Statement of Cash Flows:

Six Months Ended

Net cash (used in) provided by operating activities

Nine months Ended

September 30,

Net cash provided by operating activities

Net cash used in investing activities

Net cash used in financing activities

Net cash (used in) provided by financing activities

Operating Activities

Net cash used in operating activities was $529

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.

Net cash provided by operating activities was

$3,639 during the nine-month period ended September 30, 2022 compared to $5,855 in the same period in 2021.

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 $3,189

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.

Our capital spending is focused in three core areas:

during the nine-month period ended September 30, 2022 compared to $6,905 in the same period in 2021.

The decrease in cash used reflects

the August 2021 acquisition of GlenOaks Farms, Inc., partially offset by increased capital spending.

Our capital spending is focused in

three core areas:

growth, cost reduction, and facility improvements.

Growth capital

spending supports new product innovation and enhancements.

Cost reduction and facility improvements support manufacturing efficiency,

safety, and productivity.

Growth capital spending supports new product innovation and enhancements.

Cost reduction and facility improvements support manufacturing efficiency, safety, and productivity.

Financing Activities

Net cash used in financing activities was $750

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

the acquisition of GlenOaks Farms, Inc.

during the nine-month period ended September 30, 2022 compared to net cash provided by financing activities of $3,142 in the same period

The decrease in cash used relates to the term loan entered into during August 2021 in connection with the acquisition of GlenOaks

Farms, Inc., partially offset by the quarterly principal payments under the term loan.

Debt Obligations

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

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

Under the credit agreement, the Revolving Credit facility

matures on June 30, 2025.

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

As of September 30, 2022, the Company had $2,777

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

Under the credit agreement, the Revolving Credit

facility matures on June 30, 2025.

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

The Company had $3,725 outstanding under the note

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

payable, net of $25 of unamortized deferred financing fees, as of September 30, 2022.

The Company’s interest rate on debt outstanding

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

under the revolving line of credit and note payable as of September 30, 2022 was 4.61% and 4.94%, respectively.

The Company is in compliance with all applicable

financial debt covenants as of June 30, 2022.

financial debt covenants as of September 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 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.

to the Company’s critical accounting policies and estimates in the nine months ended September 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.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

1 unchanged sentence

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