What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-14 compared with 2023-05-15 · 156 added, 73 removed, 198 unchanged (54% of the section changed)

73 unchanged sentences

of Operations

following sections discuss and analyze the changes in the significant line items in our statements of operations for the comparison periods

of the Three Months ended March 31, 2023 and 2022

the three months ended March 31, 2023 revenues were $620 thousand and increased by $224 thousand, or 56.6%, when compared to $396 thousand

for the three months ended March 31, 2022.

following sections discuss and analyze the changes in the significant line items in our condensed consolidated statements of

operations for the comparison periods identified.

of the Three Months ended June 30, 2023, and 2022

the three months ended June 30, 2023, revenues were $1.17 million and increased by $606 thousand, or 108.0%, when compared to $561 thousand

for the three months ended June 30, 2022.

The increase in our overall revenues was primarily due to sales growth in both our contract

manufacturing and branded products, including the revenue from CG Labs from March 1, 2023 through March 31,

2023 of $189 thousand.

manufacturing and branded products, including the revenue from CG Labs from April 1, 2023 through June 30, 2023 of $602 thousand.

Company has four distinct lines of business;

Contract Manufacturing, Custom & White Label, Consumer Branded Products, and Medical

Devices as further described below.

Manufacturing

23 unchanged sentences

also be offered to a distributor to reach the full scale of the market.

profit (loss) .

Our gross loss was $57 thousand for the three months ended March 31, 2023 compared to a gross loss of $22 thousand

for the three months ended March 31, 2022.

The increase of $35 thousand in gross loss quarter over quarter was primarily due to the higher

volume of contract manufacturing sales against fixed costs partially offset by higher manufacturing labor costs.

Gross loss was approximately

(9.2%) for the three months ended March 31, 2023 compared to a gross loss of (5.6%) for the three months ended March 31, 2022.

components of cost of revenues are as follows for the three months ended March 31, 2023 and 2022 ($ in thousands):

and finished products

and amortization

production and other expenses

Our gross profit was $175 thousand for the three months ended June 30, 2023, compared to a gross profit of $101 thousand

for the three months ended June 30, 2022.

The increase of $74 thousand in gross profit quarter over quarter was primarily due to the

higher volume of contract manufacturing sales against fixed costs partially offset by higher manufacturing labor costs and increased manufacturing of promotional materials, customer product samples and other marketing materials to support

our new product launches.

profit was approximately 15% for the three months ended June 30, 2023, compared to a gross profit of 18% for the three months ended

June 30, 2022.

components of cost of revenues are as follows for the three months ended June 30, 2023 and 2022 ($ in thousands):

Three Months Ended

Cost of revenues

of revenues increased by $259 thousand, or 62.0%, to $677 thousand for the three months ended March 31, 2023, as compared to $418 thousand

for the three months ended March 31, 2022.

The increase in cost of revenues is primarily aligned with the new product line growth and

an increase in compensation and benefits in the current year.

Materials and finished products

Compensation and benefits

Depreciation and amortization

Equipment, production and other expenses

Total cost of revenues

of revenues increased by $532 thousand, or 115.7%, to $992 thousand for the three months ended June 30, 2023, as compared to $460 thousand

for the three months ended June 30, 2022.

The increase in cost of revenues is pertains to and increase in materials and finished products and equipment,

production and other expenses.

These increases primarily align with the new product line growth and increased amounts of promotional materials, customer product samples and other marketing materials to support

our new product launches.

general, and administrative expenses .

The following table highlights selling, general, and administrative expenses by type for the

three months ended March 31, 2023 and 2022 ($ in thousands):

three months ended June 30, 2023 and 2022 ($ in thousands):

Three Months Ended

Selling, general and administrative expenses

Compensation and benefits

Share-based compensation

Depreciation and amortization

Advertising, marketing, & Amazon fees

Investor & shareholder services

Franchise tax & corporate insurance

Professional & consulting fees

Other expenses and professional fees

Total selling, general and administrative expenses

general and administrative expenses increased by $174 thousand, or 24.6%, to $882 thousand for the three months ended June 30, 2023,

as compared to $708 thousand for the three months ended June 30, 2022.

The increase in Selling, general and administrative expenses is

primarily attributable to the factors described below.

and benefits increased by $55 thousand, or 45.5%, to $176 thousand for the three months ended June 30, 2023, as compared to $121 thousand

for the three months ended June 30, 2022.

The number of employees increased compared to the prior period and officer compensation increased

in conjunction with contract renewals.

compensation decreased by $20 thousand, or 46.5%, to $23 thousand for the three months ended June 30, 2023, as compared to $43 thousand

for the three months ended June 30, 2022.

The decrease in share-based compensation related to the issuance of stock options and restricted

awards to our officers, employees, and advisors in the prior year period that were not issued in the current period.

marketing, Amazon fees increased by $86 thousand, or 107.5% to $166 thousand for the three months ended June 30, 2023, as compared to

$80 thousand for the three months ended June 30, 2022.

The increase is due to the increased Amazon selling fees and Amazon Advertising,

which correlates with our increase in Branded Sales, as well as an increase in advertising and marketing in channels outside of Amazon.

and shareholder services increased by $11 thousand, or 8.5% to $140 thousand for the three months ended June 30, 2023, as compared to

$129 thousand for the three months ended June 30, 2022.

The increase is due to an increase in investor outreach.

taxes and corporate insurance increased by $15 thousand, or 31.3% to $63 thousand for the three months ended June 30, 2023, as compared

to $48 thousand for the three months ended June 30, 2022.

and consulting fees increased by $29 thousand, or 13.4% to $246 thousand for the three months ended June 30, 2023, as compared to $217

thousand for the three months ended June 30, 2022.

We continued to incur accounting and consulting fees associated with public company

governance requirements.

expenses decreased by $11 thousand, or 17.5%, to $52 thousand for the three months ended June 30, 2023 from $63 thousand for the three

months ended June 30, 2022.

Other selling, general and administrative expenses generally consist of costs associated with our selling

efforts and general management, including information technology, travel, training and recruiting.

and development expenses .

Research and development expenses were $55 thousand and $111 thousand for the three months ended June 30,

2023 and June 30, 2022, respectively.

of the Six Months ended June 30, 2023 and 2022

the six months ended June 30, 2023, revenues were $1.79 million and increased by $830 thousand, or 86.8%, when compared to $956 thousand

for the six months ended June 30, 2022.

The increase in our overall revenues was primarily due to sales growth in both our contract manufacturing

and branded products, including the revenue from CG Labs from April 1, 2023 through June 30, 2023 of $792 thousand.

Our gross profit was $117 thousand for the six months ended June 30, 2023, compared to a gross profit of $72 thousand

for the six months ended June 30, 2022.

The increase in profit recorded for the six months ended June 30, 2023, as compared to the

six months ended June 30, 2022, was primarily due to the higher volume of contract manufacturing sales against fixed costs, partially offset by increased manufacturing of promotional materials,

customer product samples and other marketing materials to support our new product launches.

profit was approximately 7% for the six months ended June 30, 2023, compared to a gross profit of 8% for the six months ended June

The components of cost of revenues are as follows for the six months ended June 30, 2023 and 2022 ($ in

Six Months Ended

Cost of revenues

Materials and finished products

Compensation and benefits

Depreciation and amortization

Equipment, production, and other expenses

Total cost of revenues

of revenues increased by $785 thousand, or 88.8%, to $1.67 million for the six months ended June 30, 2023, as compared to $884 thousand

for the six months ended June 30, 2022.

The increase in cost of revenues pertains to and increase in materials and finished products

and equipment, production and other expenses.

These increases primarily align with the new product line growth and increased amounts

of promotional materials, customer product samples and other marketing materials to support our new product launches.

general, and administrative expenses .

and amortization

marketing, & Amazon fees

& shareholder services

tax & corporate insurance

& consulting fees

expenses and professional fees

The following table highlights selling, general, and administrative expenses by type for the

six months ended June 30, 2023 and 2022 ($ in thousands):

Six Months Ended

Selling, general, and administrative expenses

Selling, general and administrative expenses increased

by $31 thousand, or 4.0%, to $797 thousand for the three months ended March 31, 2023, as compared to $766 thousand for the three months

ended March 31, 2022.

The increase in Selling, general and administrative expenses is primarily attributable to the factors described

Compensation and benefits increased by $49 thousand, or 43.8%, to $161

thousand for the three months ended March 31, 2023, as compared to $112 thousand for the three months ended March 31, 2022.

of employees decreased compared to the prior period and officer compensation increased in conjunction with contract renewals.

compensation increased by $1 thousand, or 5.6%, to $19 thousand for the three months ended March 31, 2023, as compared to $18 thousand

for the three months ended March 31, 2022.

The share-based compensation related to the issuance of stock options and restricted awards

to our officers, employees, and advisors in the prior year period.

marketing, Amazon fees increased by $55 thousand, or 141%, to $94 thousand for the three months ended March 31, 2023, as compared to

$39 thousand for the three months ended March 31, 2022.

Compensation and benefits

Share-based compensation

Depreciation and amortization

Advertising, marketing, & Amazon fees

Investor & shareholder services

Franchise tax & corporate insurance

Professional & consulting fees

Other expenses

Total selling, general and administrative expenses

general, and administrative expenses increased by $212 thousand, or 14.5%, to $1.68 million for the six months ended June 30, 2023, as

compared to $1.47 million for the six months ended June 30, 2022.

The increase in selling, general, and administrative expenses is primarily

attributable to our costs for professional fees and other administrative expenses in the current period associated with public company

governance requirements.

and benefits increased by $88 thousand, or 37.8%, to $321 thousand for the six months ended June 30, 2023, as compared to $233 thousand

for the six months ended June 30, 2022.

The number of employees increased compared to the prior period and officer compensation increased

in conjunction with contract renewals.

compensation decreased by $19 thousand, or 31.1%, to $42 thousand for the six months ended June 30, 2023, as compared to $61 thousand

for the six months ended June 30, 2022.

The share-based compensation related to the issuance of stock restricted stock awards and options

to our CEO and options to board members, employees, and advisors.

marketing, Amazon fees increased by $141 thousand or 118.5%, to $260 thousand for the six months ended June 30, 2023, as compared to

$119 thousand for the six months ended June 30, 2022.

The increase is due to the increased Amazon selling fees as well as an increase

in advertising and marketing.

and shareholder services decreased by $53 thousand, or 35.6%, to $96 thousand for the three months ended March 31, 2023, as compared

to $149 thousand for the three months ended March 31, 2022.

The decrease is due to initial fees related to the Nasdaq listing in 2022

upon the IPO occurring on December 27, 2021.

taxes and corporate insurance decreased by $5 thousand, or 10.2%, to $44 thousand for the three months ended March 31, 2023, as compared

to $49 thousand for the three months ended March 31, 2022.

and consulting fees increased by $37 thousand, or 16.4%, to $263 thousand for the three months ended March 31, 2023, as compared to $226

thousand for the three months ended March 31, 2022.

and shareholder services decreased by $41 thousand or 14.7%, to $237 thousand for the six months ended June 30, 2023, as compared to

$278 thousand for the six months ended June 30, 2022.

The decrease is due to initial fees related to the Nasdaq listing in 2022 upon

the IPO occurring on December 27, 2021.

taxes and corporate insurance increased by $25 thousand or 25.8%, to $122 thousand for the six months ended June 30, 2023, as compared

to $97 thousand for the six months ended June 30, 2022.

and consulting fees increased by $109 thousand or 24.6% to $552 thousand for the six months ended June 30, 2023, as compared to $443

thousand for the six months ended June 30, 2022.

We continued to incur accounting and consulting fees associated with public company

governance requirements.

Expenses decreased by $56 thousand, or 33.7%, to $110 thousand for the three months ended March 31, 2023 from $166 thousand for the three

months ended March 31, 2022.

expenses decreased by $103 thousand, or 46.4%, to $119 thousand for the six months ended June 30, 2023 from $222 thousand for the six

months ended June 30, 2022.

Other selling, general and administrative expenses generally consist of costs associated with our selling

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and development expenses .

Research and development expenses were $29 thousand and $24 thousand for the three months ended March 31,

2023 and March 31, 2022, respectively.

Research and development expenses decreased by $51 thousand to $84 thousand for the six months ended June

30, 2023 from $135 thousand for the six months ended June 30, 2022.

The decrease is due to the completion of development efforts of two

proof of concept studies for drug delivery candidates utilizing our hydrogel technology.

and Capital Resources

cash used in operating activities

cash provided by investing activities

cash used in financing activities

increase (decrease) in cash and cash equivalents

and cash equivalents at beginning of year

and cash equivalent at end of quarter

of March 31, 2023, we had $787 thousand of cash and $5.0 million of marketable securities ,

Net cash used in operating activities

Net cash provided by investing activities

Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalent at end of quarter

of June 30, 2023, we had $3.7 million of cash and $612 thousand of marketable securities ,

compared to $1.1 million of cash and $5.5 million of marketable securities at December 31,

Net cash used in operating activities was $709 thousand and $797 thousand for the three months ended March 31, 2023 and 2022, respectively.

cash provided by investing activities was $397 thousand and $0 thousand for the three months ended March 31, 2023 and 2022, respectively,

consisting of the sales of marketable securities of $485 thousand and purchases of capital equipment

of $88 thousand for three months ended March 31, 2023.

There were no investing activities for the three months ended March 31,

cash used in financing activities for the three months ended March 31, 2023 and 2022 was $2 thousand and $2.0 million is

attributable to the principal payments of notes payable and convertible notes, respectively.

March 31, 2023, current assets totaled $7.3 million and current liabilities totaled $1.5 million, as compared to current assets totaling

Net cash used in operating activities was $1.9 million and $1.5 million for the six months ended June 30, 2023 and 2022, respectively.

cash provided by investing activities was $4.5 million and net cash used in investing activities was $5.4 million for the six months

ended June 30, 2023 and 2022, respectively, consisting of the sales of marketable securities of

$4.8 million and purchases of capital equipment of $253 thousand for six months ended June 30, 2023.

cash used in financing activities for the six months ended June 30, 2023 and 2022 was $3 thousand and $2 million and is attributable

to the principal payments of notes payable and convertible notes, respectively.

June 30, 2023, current assets totaled $6.7 million and current liabilities totaled $1.7 million, as compared to current assets totaling

$7.5 million and current liabilities totaling $859 thousand at December 31, 2022.

As a result, we had working capital of $5.0 million

at March 31, 2023, compared to a working capital of $6.6 million at December 31, 2022.

The decrease in the working capital as

of March 31, 2023 is primarily attributable to the loss from operations of $883 thousand.

at June 30, 2023, compared to a working capital of $6.6 million at December 31, 2022.

The decrease in the working capital as of

June 30, 2023 is primarily attributable to the loss from operations of $1.6 million.

have never declared or paid any cash dividends on our common stock.

For the foreseeable future, we anticipate that all available fund

For the foreseeable future, we anticipate that all available funds

and any earnings generated in our business will be used to finance the growth of our business and will not be paid out as dividends to

33 unchanged sentences

Balance Sheet Arrangements

of March 31, 2023, we had no off-balance sheet arrangements in the nature of guarantee contracts, retained or contingent interests in

of June 30, 2023, we had no off-balance sheet arrangements in the nature of guarantee contracts, retained or contingent interests in

assets transferred to entities (or similar arrangements serving as credit, liquidity or market risk support to entities for any such

43 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