What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-13 compared with 2024-05-20 · 299 added, 116 removed, 152 unchanged (73% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our discussion and analysis is intended to help the reader understand our

results of operations and financial condition and is provided as an addition to, and should be read in connection with, our condensed

financial statements and the accompanying notes.

Cautionary statements on page [ii] of this report

and in “Part I, Item 1A.

Risk Factors” of our 2023 Form 10-K as updated by “Part II, Item 1A” of this report,

should be considered when evaluating our trends and future results.

discussion and analysis is intended to help the reader understand our results of operations and financial condition and is provided as

an addition to, and should be read in connection with, our condensed financial statements and the accompanying notes.

Cautionary statements

on page [ii] of this report and in “Part I, Item 1A.

Risk Factors” of our 2023 Form 10-K as updated by “Part II, Item

1A” of this report, should be considered when evaluating our trends and future results.

addition to our GAAP results, the following discussion includes Modified EBITDA as a supplemental measure of our performance.

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of Operations

the three months ended March 31, 2024, the Company continued to strengthen its supply chain, implement gross margin enhancement initiatives,

the six months ended June 30, 2024, the Company continued to strengthen its supply chain, implement gross margin enhancement initiatives,

drive efficiencies in transportation and warehouse costs and reduce operating expenses.

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Trends – Market Conditions

economy continued to grow throughout 2023 and into Q1 2024, the higher inflation, the actions by the Federal Reserve to

address inflation, and rising energy prices create uncertainty about the future economic environment which will continue to evolve

and may impact our business in future periods.

We have experienced supply chain challenges, including increased lead times, as well

as inflation of raw materials, logistics and labor costs due to availability constraints and high demand.

Although we regularly

monitor companies in our supply chain, and use alternative suppliers when necessary and available, supply chain constraints could

cause a disruption in our ability to obtain raw materials required to manufacture our products and adversely affect our

the three months ended March 31, 2024, the Company experienced moderation from the elevated freight costs experienced in 2023.

average cost of shipping and handling for period March 31, 2024, was $3.01 per case, as compared to $3.46 per case for the period

ended March 31, 2023.

Although the Company has experienced decreases in freight costs over the last four quarters, in the

Company’s opinion there remains a volatile environment and the Company will continue to monitor pricing and availability in

transportation.

Mitigation plans have been implemented to manage this risk.

The Company has been negatively impacted by supply chain

challenges affecting our ability to benefit from strong demand for, and increased sales of our product.

The disruption caused by

labor shortages, significant raw material cost inflation, logistics issues and increased freight costs, and ongoing port congestion,

resulted in suppressed margins.

The Company has experienced moderation in inflation and anticipates this to continue throughout

the three months ended March 31, 2024, we continued to generate cash flows to meet our short-term liquidity needs, and we expected to

maintain access to the capital markets.

of Operations – Three Months Ended March 31, 2024, as compared to March 31, 2023

following table sets forth key statistics for the three months ended March 31, 2024 and 2023, respectively, in thousands.

economy continued to grow throughout 2023 and into Q2 2024, the higher inflation, the actions by the Federal Reserve to address

inflation, and rising energy prices create uncertainty about the future economic environment which will continue to evolve and may impact

our business in future periods.

We have experienced supply chain challenges, including increased lead times, as well as inflation of

raw materials, logistics and labor costs due to availability constraints and high demand.

Although we regularly monitor companies in

our supply chain, and use alternative suppliers when necessary and available, supply chain constraints could cause a disruption in our

ability to obtain raw materials required to manufacture our products and adversely affect our operations.

During the three months ending June 30, 2024, the Company continued to

experience moderation from the elevated freight costs experienced in 2023.

The average cost of shipping and handling for the three months

ended June 30, 2024, was $2.18 as compared to $3.05 in the three months ended June 30, 2023.

During the six months ended June 30, 2024,

the average cost of shipping and handling was $2.54 per case, as compared to $3.27 per case for the six months ended June 30, 2023.

the Company has experienced decreases in freight costs over the last four quarters, in the Company’s opinion there remains a volatile

environment and the Company will continue to monitor pricing and availability in transportation.

Mitigation plans have been implemented

to manage this risk.

The Company has been negatively impacted by supply chain challenges affecting our ability to benefit from strong

demand for, and increased sales of our product.

The disruption caused by labor shortages, significant raw material cost inflation, logistics

issues and increased freight costs, and ongoing port congestion, resulted in suppressed margins.

The Company has experienced moderation

in inflation and anticipates this to continue throughout 2024.

the six months ended June 30, 2024, we continued to generate cash flows to meet our short-term liquidity needs, and we expected to maintain

access to the capital markets.

of Operations – Three Months Ended June 30, 2024, as compared to Three Months Ended June 30, 2023

following table sets forth key statistics for the three months ended June 30, 2023 and 2022, respectively, in thousands.

Three Months Ended

Gross billing (A)

Promotional and other allowances (B)

of goods sold

Cost of goods sold

% of Gross billing

and marketing

and administrative

operating expenses

from operations

expense and other expense

per share – basic and diluted

average shares outstanding - basic & diluted

% of Net sales

Delivery and handling

% of Net sales

Dollar per case ($)

Selling and marketing

% of Net sales

General and administrative

% of Net sales

Total operating expenses

Loss from operations

Interest expense and other income (expense)

Loss per share – basic and diluted

Weighted average shares outstanding - basic & diluted

We define gross billing as the total sales for the Company unadjusted for costs related to generating those sales.

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Cost of Sales, and Gross Margins

following chart sets forth key statistics for the transition of the Company’s top line activity from the first quarter of 2023

through the first quarter of 2024.

following chart sets forth key statistics for the transition of the Company’s top line activity from the second quarter of 2023

through the second quarter of 2024.

Cost of Sales, and Gross Margins

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Non-core products consist

primarily of candy and slower selling discontinued Reed’s and Virgil’s SKUs.

2023, the Company licensed its candy business to Rootstock Trading, a company founded and owned by our former Chief Sales Officer, Neal

As part of this agreement, Rootstock agrees to pay a royalty on a percentage of its net sales of licensed products.

fees are 0% for 2023, 2% for 2024, 4% for 2025, and 5% thereafter.

beverage volume for the three months ended March 31, 2024, represents 100% of all beverage volume.

brand gross billing decreased by 16% to $10,377 compared to $12,333 during the same period last year, driven by a Reed’s volume

decline of 6% and Virgil’s volume decline of 37%.

The result is a decrease in total gross billing of 17%, to $10,379 during the

three months ended March 31, 2024, from $12,453 in the same period last year.

primarily of Wellness Shots, candy and slower selling discontinued Reed’s and Virgil’s SKUs.

beverage volume for the three months ended June 30, 2024, represents 99% of all beverage volume.

brand gross billing increased by 22% to $13,584 compared to $11,095 during the same period last year, driven by a Reed’s volume

increase of 16% and Virgil’s volume increase of 21%.

The result is an increase in total gross billing of 22%, to $13,584 during the

three months ended June 30, 2023, from $11,164 in the same period last year.

Price on our core brands increased 4% to $20.84 per case.

The increase was a result of price increases across the channels of our product lines.

as a percentage of gross sales decreased to 8% from 10% in the same period last year.

This decline in discounts partially offset the

revenue decline.

Net sales revenue decreased 14% in the three months ended March 31, 2024, to $9,595, compared to $11,157 in the same

period last year.

as a percentage of gross sales was 13% compared to 10% in the same period last year.

As a result, net sales revenue increased 19% in

the three months ended June 30, 2024, to $11,874, compared to $10,005 in the same period last year.

of Goods Sold

of goods sold decreased $2,277 during the three months ended March 31, 2024, as compared to the same period last year.

As a percentage

of net sales, cost of goods sold for the three months ended March 31, 2023, was 64% as compared to 76% for the same period last year.

total cost of goods per case increased to $12.39 per case in the three months ended March 31, 2024, from $13.80 per case for the same

of goods sold increased $547 during the three months ended June 30, 2024, as compared to the same period last year.

As a percentage of

net sales, cost of goods sold for the three months ended June 30, 2024, was 68% as compared to 75% for the same period last year.

total cost of goods per case decreased to $12.34 per case in the three months ended June 30, 2024, from $13.58 per case for the same

period last year.

The cost of goods sold per case on core brands was $12.39 during the three months ended March 31, 2024, compared to

$13.78 for the same period last year.

margin was 36% for the three months ended March 31, 2024, compared to 24% for the same period last year.

margin was 32% for the three months ended June 30, 2024, compared to 25% for the same period last year.

and Handling Expenses

and handling expenses consist of delivery costs to customers and warehousing costs incurred for handling our finished goods after production.

Delivery and handling expenses decreased by $618 in the three months ended March 31, 2024, to $1,502 from $2,120 in the same period last

Delivery and handling expenses decreased by $263 in the three months ended June 30, 2024, to $1,423 from $1,686 in the same period last

year, driven by our efforts to mitigate inflationary costs.

Delivery costs in the three months ended March 31, 2024, were 16% of net

sales and $3.01 per case, compared to 19% of net sales and $3.46 per case during the same period last year.

Delivery costs in the three months ended June 30, 2024, were 12% of net sales

and $2.18 per case, compared to 17% of net sales and $3.05 per case during the same period last year.

and Marketing Expenses

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expenses including personnel and contractor support.

Total selling and marketing expenses were $1,093 during the three months ended March

Total selling and marketing expenses were $1,097 during the three months ended June

30, 2024, compared to $1,259 during the same period last year.

As a percentage of net sales, selling and marketing costs was 9% during

the three months ended March 31, 2024, as compared to 13% during the same period last year.

the three months ended June 30, 2024, as compared to 13% during the same period last year.

The decrease was primarily driven by lower

employee related costs, marketing expenditures, and travel and entertainment expense, partially offset by slightly higher professional

marketing costs, service fees and product sampling costs partially offset

by higher broker commissions.

and Administrative Expenses

and administrative expenses consist primarily of the cost of executive, administrative, and finance personnel, as well as professional

General and administrative expenses decreased in the three months ended March 31, 2024, to $1,468 from $1,709, a decrease of $241

General and administrative expenses increased in the three months ended June 30, 2024, to $1,980 from $1,311, an increase of $669

over the same period last year.

As a percentage of net sales, general and administrative expenses were 17% during the three months ended

March 31, 2024, as compared to 15% during the same period last year.

The decrease was driven by lower employee related costs, professional

fees, and stock compensation.

June 30, 2024, as compared to 13% during the same period last year.

The increase was driven by higher professional fees, legal settlements and higher stock compensation.

from Operations

loss from operations was $650 for the three months ended March 31, 2024, as compared to a loss of $2,578 in the same period last year

loss from operations was $669 for the three months ended June 30, 2024, as compared to a loss of $1,747 in the same period last year

driven by decreased gross profit offset by decreases in operating expenses discussed above.

and Other Expense

and other expense for the three months ended March 31, 2024, consisted of $1,023 of interest expense.

During the same period last year,

interest and other expense consisted of $1,779 of interest expense.

addition to our GAAP results, we present Modified EBITDA as a supplemental measure of our performance.

However, Modified EBITDA is not

a recognized measurement under GAAP and should not be considered as an alternative to net income, income from operations or any other

performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of liquidity.

We define Modified EBITDA as net income (loss), plus interest expense, depreciation and amortization, stock-based compensation, changes

in fair value of warrant expense, legal settlements, and one-time restructuring-related costs including employee severance and asset

and other expense for the three months ended June 30, 2024, consisted of $1,150 of interest expense and $1,393 of the change in fair value of our SAFE investments.

During the same period last

year, interest and other expense consisted solely of $1,387 of interest expense.

In addition to our GAAP results, we present Modified

EBITDA as a supplemental measure of our performance.

However, Modified EBITDA is not a recognized measurement under GAAP and should not

be considered as an alternative to net income, income from operations or any other performance measure derived in accordance with GAAP,

or as an alternative to cash flow from operating activities as a measure of liquidity.

We define Modified EBITDA as net income (loss),

plus interest expense, tax expense, depreciation and amortization, stock-based compensation, changes in fair value of warrant expense,

change in fair value of SAFE agreements, legal and insurance settlements, non-recurring professional fees inventory write-offs associated

with exited categories and major packaging and formula changes, one-time changes in policy, impact of changes to accounting methodology

and one-time restructuring-related costs including employee severance and asset impairment.

considers our core operating performance to be that which our managers can affect in any particular period through their management of

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as an inference that our future results will be unaffected by unusual or non-recurring items.

forth below is a reconciliation of net loss to Modified EBITDA for the three months ended March 31, 2024 and 2023 (unaudited;

forth below is a reconciliation of net loss to Modified EBITDA for the three months ended June 30, 2024 and 2023 (unaudited;

in thousands):

EBITDA adjustments:

and amortization

quality hold write-down

option and other noncash compensation

EBITDA adjustments

Three Months Ended

Modified EBITDA adjustments:

Depreciation and amortization

Interest expense

Change in fair value of SAFE investments

Stock option and other noncash compensation

Professional fees

Legal settlements

Total EBITDA adjustments

Modified EBITDA

present Modified EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on

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the future, and Modified EBITDA does not reflect any cash requirements for such replacements.

and Capital Resources

the three months ended March 31, 2024, the Company recorded a net loss of $1,673 and used cash in operations of $2,395.

accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern , the Company’s management

has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the

Company’s ability to continue as a going concern within one year after the date the accompanying financial statements were

As of the issuance date of these financial statements, management expects that the Company’s existing cash of $314,

which includes $4,100 of additional cash received during the three months ended March 31, 2024, from investments with significant

stockholders and expected cash flow from operations, will be sufficient to fund the Company’s current operating plan for at

least twelve months from the date of issuance of these financial statements.

The financial statements do not include any adjustments

that might be necessary if the Company is unable to continue as a going concern.

assessment whether there is sufficient cash on hand, together with expected capital raises, to assure operations for a period of at least

twelve months from the date these financial statements are issued, is based on conditions that are known and reasonably knowable to management,

considering various scenarios, projections, and estimates and certain key assumptions.

These assumptions include, among other factors,

management’s ability to raise additional capital, and the expected timing and nature of the Company’s forecasted cash expenditures.

of Operations – Six months ended June 30, 2024, as compared to Six Months Ended June 30, 2023

following table sets forth key statistics for the six months ended June 30, 2024 and 2023, respectively, in thousands.

Six Months Ended June 30,

Gross billing (A)

Promotional and other allowances (B)

Cost of goods sold

% of Gross billing

% of Net sales

Delivery and handling

% of Net sales

Dollar per case ($)

Selling and marketing

% of Net sales

General and administrative

% of Net sales

Total operating expenses

Loss from operations

Interest expense and other income (expense)

Loss per share – basic and diluted

Weighted average shares outstanding - basic & diluted

define gross billing as the total sales for the Company unadjusted for costs related to generating those sales.

Management utilizes

gross billing as an indicator of and to monitor operating performance of products and salespersons before the effect of any promotional

or other allowances, which are determined in accordance with GAAP, and can mask certain performance issues.

We believe that the presentation

of gross billing provides a useful measure of our operating performance.

Additionally, gross billing may not be comparable to similarly

titled measures used by other companies, as gross billing have been defined by our internal reporting practices .

define promotional and other allowances as costs deducted from gross billing which are associated with generating those sales.

utilizes promotional and other allowances as an indicator of and to monitor operating performance of products, salespersons, and

customer agreements.

We believe that the presentation of promotional and other allowances provides a useful measure of our operating

The presentation of promotional and other allowances facilitates an evaluation of their impact on the determination

of net sales and the spending levels incurred or correlated with such sales.

The expenditures described in this line item are determined

in accordance with GAAP and meet GAAP requirements, the disclosure thereof does not conform to GAAP presentation requirements.

Additionally,

our definition of promotional and other allowances may not be comparable to similar items presented by other companies.

and other allowances primarily include consideration given to the Company’s distributors or retail customers including, but

not limited to the following:

(i) reimbursements given to the Company’s distributors for agreed portions of their promotional

spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products;

(ii) the Company’s

agreed share of fees given to distributors and/or directly to retailers for in-store marketing and promotional activities;

the Company’s agreed share of slotting, shelf space allowances and other fees given directly to retailers;

(iv) incentives

given to the Company’s distributors and/or retailers for achieving or exceeding certain predetermined sales goals;

discounted or free products.

Promotional and other allowances constitute a material portion of our marketing activities.

The Company’s

promotional allowance programs with its numerous distributors and/or retailers are executed through separate agreements in the ordinary

course of business.

These agreements generally provide for one or more of the arrangements described above and are of varying durations,

ranging from one week to one year.

Cost of Sales, and Gross Margins

part of the Company’s ongoing initiative to simplify and streamline operations the Company has identified core products on which

to place its strategic focus.

These core products consist of Reed’s and Virgil’s branded beverages.

Non-core products consist

primarily of Wellness Shots, candy and slower selling discontinued Reed’s and Virgil’s SKUs.

beverage volume for the six months ended June 30, 2023, represents 99% of all beverage volume.

brand gross billing increased by 2% to $23,962 compared to $23,429 during the same period last year, driven by Reed’s volume decline

of 5% and Virgil’s volume decline of 11%.

The result is an increase in total gross billing of 1%, to $23,963 during the six months

ended June 30, 2024, from $23,618 in the same period last year.

Price on our core brands increased 3% to $20.82 per case.

was a result of volume declines that have impacted the CSD segment as a result of price increases coupled with the Company’s inability

to produce sufficient levels of inventory to meet current demand as a result of tighter credit terms from suppliers.

as a percentage of gross sales was 10% compared to 10% in the same period last year.

As a result, net sales revenue increased 1% in the

six months ended June 30, 2024, to $21,469, compared to $21,162 in the same period last year.

of Goods Sold

of goods sold decreased $1,730 during the six months ended June 30, 2024, as compared to the same period last year.

As a percentage of

net sales, cost of goods sold for the six months ended June 30, 2024, was 66% as compared to 75% for the same period last year.

total cost of goods per case decreased to $12.36 per case in the six months ended June 30, 2024, from $13.70 per case for the same period

The cost of goods sold per case on core brands was $12.36 during the six months ended June 30, 2024, compared to $13.59 for

the same period last year.

margin increased to 34% for the six months ended June 30, 2023, compared to 25% for the same period last year.

and Handling Expenses

and handling expenses consist of delivery costs to customers and warehousing costs incurred for handling our finished goods after production.

Delivery and handling expenses decreased by $881 in the six months ended June 30, 2024, to $2,925 from $3,806 in the same period last

year, driven by our efforts to mitigate inflationary costs.

Delivery costs in the six months ended June 30, 2024, were 14% of net sales

and $2.54 per case, compared to 18% of net sales and $3.27 per case during the same period last year.

and Marketing Expenses

expenses consist of direct marketing, marketing labor, and marketing support costs.

Selling expenses consist of all other selling-related

expenses including personnel and contractor support.

Total selling and marketing expenses were $2,190 during the six months ended June

30, 2024, compared to $2,706 during the same period last year.

As a percentage of net sales, selling and marketing were 10% of net sales

during the six months ended June 30, 2024, as compared to 13% of net sales during the same period last year.

The decrease was driven

by lower service fees, and reduced sampling, trade show and marketing spend partially offset by higher broker fees.

and Administrative Expenses

and administrative expenses consist primarily of the cost of executive, administrative, and finance personnel, as well as professional

General and administrative expenses increased in the six months ended June 30, 2024, to $3,448 from $3,020, an increase of $428

over the same period last year.

The increase was driven by higher legal settlements costs and professional fees spending

partially offset by lower public company costs.

from Operations

loss from operations was $1,319 for the six months ended June 30, 2024, as compared to a loss of $4,325 in the same period last year

driven by increased gross profit and decreased operating expenses discussed above.

and Other Expense

and other expense for the six months ended June 30, 2024, consisted of $2,173 of interest expense and $1,393 of the change in fair value of our SAFE investments.

During the same period last

year, interest and other expense consisted solely of $3,166 of interest expense.

In addition to our GAAP results, we present Modified

EBITDA as a supplemental measure of our performance.

However, Modified EBITDA is not a recognized measurement under GAAP and should not

be considered as an alternative to net income, income from operations or any other performance measure derived in accordance with GAAP,

or as an alternative to cash flow from operating activities as a measure of liquidity.

We define Modified EBITDA as net income (loss),

plus interest expense, tax expense, depreciation and amortization, stock-based compensation, changes in fair value of warrant expense,

change in fair value of SAFE agreements, legal and insurance settlements, non-recurring professional fees inventory write-offs associated

with exited categories and major packaging and formula changes, one-time changes in policy, impact of changes to accounting methodology

and one-time restructuring-related costs including employee severance and asset impairment.

considers our core operating performance to be that which our managers can affect in any particular period through their management of

the resources that affect our underlying revenue and profit generating operations during that period.

Non-GAAP adjustments to our results

prepared in accordance with GAAP are itemized below.

You are encouraged to evaluate these adjustments and the reasons we consider them

appropriate for supplemental analysis.

In evaluating Modified EBITDA, you should be aware that in the future we may incur expenses that

are the same as or similar to some of the adjustments in this presentation.

Our presentation of Modified EBITDA should not be construed

as an inference that our future results will be unaffected by unusual or non-recurring items.

forth below is a reconciliation of net loss to Modified EBITDA for the six months ended June 30, 2022 and 2021 (unaudited;

in thousands):

Six Months Ended June 30,

Modified EBITDA adjustments:

Depreciation and amortization

Interest expense

Change in fair value of SAFE investments

Product quality hold write-down

Stock option and other noncash compensation

Professional fees

Severance expense

Legal settlements

Total EBITDA adjustments

Modified EBITDA

present Modified EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on

a consistent basis by excluding items that we do not believe are indicative of our core operating performance.

In addition, we use Modified

EBITDA in developing our internal budgets, forecasts and strategic plan;

in analyzing the effectiveness of our business strategies in

evaluating potential acquisitions;

making compensation decisions;

and in communications with our board of directors concerning our financial

Modified EBITDA has limitations as an analytical tool, which includes, among others, the following:

EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

EBITDA does not reflect future interest expense, or the cash requirements necessary to service interest or principal payments, on

depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in

the future, and Modified EBITDA does not reflect any cash requirements for such replacements.

The accompanying financial statements have been prepared

on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal

course of business.

As reflected in the accompanying financial statements, for the six months ended June 30, 2024, the Company recorded

a net loss of $4,885, and utilized $3,307 of cash in operations and at June 30, 2024, had a working capital deficiency of $19,378 and

a stockholders’ deficit of $23,849.

As of June 30, 2024, the Company borrowed $9,124 on its line of credit and owed $18,821on its

Notes (See Note 5 and Note 6 for further detail).

These factors raise substantial doubt about the Company’s ability to

continue as a going concern within one year of the date that the financial statements are issued.

The financial statements do not include

any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities

that might be necessary should the Company be unable to continue as a going concern.

of June 30, 2024, we had a cash balance of $326, no availability under our line of credit and $3,876 of additional borrowing capacity

from the credit facility assuming there is availability under the terms.

On July 26, 2024, Norman E.

Snyder Jr, CEO of the

Company, provided a personal guaranty for a $500 over advance on our existing line of credit with ACS.

On August 1, 2024, the Company

funded $1,400 pursuant to an option exercise by Whitebox under the Option Notes.

Historically,

the Company has financed its operations through public and private sales of common stock, convertible debt instruments, credit lines

from financial institutions, and cash generated from operations.

As we seek additional sources of financing, there can be no assurance

that such financing would be available to us on favorable terms or at all.

Our ability to obtain additional financing in the debt and

equity capital markets is subject to several factors, including market and economic conditions, our performance and investor sentiment

with respect to us and our industry.

we have financed our operations through public and private sales of common stock, issuance of preferred and common stock,

convertible debt instruments, term loans and credit lines from financial institutions, and cash generated from operations.

alleviate these conditions, management is currently evaluating various funding alternatives and may seek to raise additional funds

through the issuance of equity, mezzanine or debt securities, through arrangements with strategic partners or through obtaining

credit from financial institutions.

The Company is continuing to discuss restructuring of debt with existing lenders and is

exploring new financing opportunities to address the line of credit which comes due in March 2025 (see Note 5) and the portion of

debt under the Notes that is due under on December 15, 2024 (see Note 6).

As we seek additional sources of financing, there can be

no assurance that such financing would be available to us on favorable terms or at all.

Our ability to obtain additional financing

in the debt and equity capital markets is subject to several factors, including market and economic conditions, our performance and

investor sentiment with respect to us and our industry.

have also taken decisive action to improve our margins, including fully outsourcing our manufacturing process, streamlining our product

portfolio, negotiating improved vendor contracts and restructuring our selling prices.

Payable and Existing Financing

refer to Notes 5 and 6 in the accompanying condensed financial statements for a description of our existing line of credit agreement

and outstanding notes payable.

Accounting Policies and Estimates

17 unchanged sentences

There were no changes to our critical accounting policies described in the condensed financial

statements included in our 2023 10-K that impacted our condensed financial

statements and related notes included herein.

statements included in our 2023 10-K that impacted our condensed financial statements and related notes included herein.

Accounting Pronouncements

3 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