Laird Superfood Inc
For the period ended Sep 30, 2024. Filed Nov 6, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 6, 2024
LSF$2.22-2.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0001437749-24-025205
Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-06.
0001437749-24-033630
Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 82 previous paragraphs and 78 current paragraphs.
44 unchanged; 29 reworded; 5 added; 8 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 22 previous and 20 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (5)
Current report
Financial Highlights
Current report
The increase in cost of goods sold is driven by growth in sales volume, offset by lower product costs due to a shift to the direct procurement of key raw materials, as well as recoveries on costs previously incurred in connection with the quality event we experienced in 2023 as part of the settlement we reached with a supplier.
Current report
The increase in general and administrative expenses was primarily driven by personnel costs as well as by professional and accounting fees.
Current report
Cost of goods sold were nearly flat despite a period of 27% sales growth, which was offset by the full benefits realization of the transition to a variable cost third-party co-manufacturing business model, lower ingredient costs due to a shift to the direct procurement of key raw materials, and recoveries of costs previously incurred in connection with the quality event experienced in 2023 as part of a settlement with a supplier.
Current report
Additionally, on September 15, 2023, we entered into a settlement agreement (the "2023 Settlement Agreement") with a supplier (the "Supplier") to recover losses incurred in connection with the product quality issue with coconut milk powder that we experienced in 2023, pursuant to which the Supplier was obligated to, among other things, pay the Company $50,000 and provide a discount to the Company on the sale of future products of up to $950,000. On February 27, 2024, we filed a complaint against the Supplier in the District Court of Boulder, Colorado alleging that the Supplier breached the 2023 Settlement Agreement by failing to deliver acceptable coconut milk powder (the "Litigation"). Both parties dispute liability. As a result of the Litigation, on July 30, 2024, the Company entered into an additional settlement agreement with the Supplier, pursuant to which, among other things, the Supplier agreed to remit cash payment to us of approximately $500,000. As of September 30, 2024, $285,000 was receivable from the Supplier and was included in prepaid and other current assets on the balance sheets.
Removed paragraphs (8)
Previous report
Redomestication
Previous report
On December 31, 2023 (the “Effective Date”), we changed our state of incorporation from the state of Delaware to the state of Nevada (the “Redomestication”) by means of a plan of conversion, as described in our definitive proxy statement on Schedule 14A filed with the Securities and Exchange Commission (the “SEC”) on October 10, 2023.
Previous report
As of the Effective Date:
Previous report
The Redomestication was previously submitted to a vote of, and was approved by, our stockholders at our Annual Meeting of Stockholders held on November 28, 2023. The Redomestication did not result in any change in the business, physical location, management, assets, liabilities, or net worth of the Company, nor did it result in any change in location of our current employees, including management. The Redomestication did not affect any of our material contracts with any third parties, and our rights and obligations under those material contractual arrangements continue to be the rights and obligations of the Company after the Redomestication. The daily business operations of the Company will continue as they have been conducted prior to the Redomestication. The consolidated financial condition and results of operations of the Company immediately after consummation of the Redomestication remains the same as immediately before the Redomestication.
Previous report
Cost of goods sold was flat at approximately $5.8 million in Q2 2024 and Q2 2023, in a period of sales growth reflecting the full benefit realization of the transition to a variable cost third-party co-manufacturing business model.
Previous report
Cost of goods sold decreased to $11.8 million in YTD 2024 from $12.1 million in YTD 2023, which reflects the full benefits realization of the transition to a variable cost third-party co-manufacturing business model, which was partially offset by higher sales volume.
Previous report
Recent Accounting Pronouncements
Previous report
SeeRecently Issued Accounting Pronouncementsin Note 1 to our financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
Reworded paragraphs (29)
Previous wording
The following discussion and analysis of our financial condition and results of operations is a supplement to and should be read in conjunction with the unaudited consolidated condensed financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2023(the "2023 Form 10-K"). This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled“Cautionary Note Regarding Forward-Looking Statements”* included elsewhere in this Quarterly Report on Form 10-Q and the section titled*“Risk Factors”* included herein and in the 2023 Form 10-K.*
Current wording
The following discussion and analysis of the financial condition and results of operations of Laird Superfood, Inc. (together with its wholly owned subsidiary on a consolidated basis, the "Company," "Laird Superfood," "our," "us," or "we") is a supplement to and should be read in conjunction with the unaudited consolidated condensed financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Form 10-K"). This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled“Cautionary Note Regarding Forward-Looking Statements”* included elsewhere in this Quarterly Report on Form 10-Q and the section titled*“Risk Factors”* included herein and in the 2023 Form 10-K.*
Previous wording
Laird Superfood creates highly differentiated, plant-based, and functional foods, many of which incorporate adaptogens which may support a variety of brain functions. The core pillars of the Laird Superfood platform are currently Superfood Creamer coffee creamers, Hydrate hydration products and beverage enhancing supplements, Harvest snacks and other food items, and functional roasted and instant coffees, teas, and hot chocolate. Consumer preferences within the evolving food and beverage industry are shifting away from processed and sugar-laden food and beverage products, as well as those containing significant amounts of highly processed and artificial ingredients. Our long-term goal is to build the first scale-level and widely recognized brand that authentically focuses on natural ingredients, nutritional density, and functionality, allowing us to maximize penetration of a multi-billion-dollar opportunity in the grocery market.
Current wording
Laird Superfood creates highly differentiated, plant-based, and functional foods, many of which incorporate adaptogens which may support a variety of brain functions. The core pillars of the Laird Superfood platform are currently (i) Superfood Creamer coffee creamers, (ii) Hydrate hydration products and beverage enhancing supplements, (iii) Harvest snacks and other food items, and (iv) functional roasted and instant coffees, teas, and hot chocolate. Consumer preferences within the evolving food and beverage industry are shifting away from processed and sugar-laden food and beverage products, as well as those containing significant amounts of highly processed and artificial ingredients. Our long-term goal is to build the first scale-level and widely recognized brand that authentically focuses on natural ingredients, nutritional density, and functionality, which we believe will allow us to maximize penetration of a multi-billion-dollar opportunity in the grocery market. We generate revenue through two channels: e-commerce and wholesale.
Previous wording
Net sales were $10.0 million and $7.7 million, respectively, for the three months ended June 30, 2024 and 2023, representing 30% growth. For the six months ended June 30, 2024 and 2023, net sales were $19.9 million and $15.8 million, respectively, representing 26% growth. E-commerce channel sales increased by 47% in the second quarter of 2024 and 40% in year-to-date ("YTD") 2024 compared to the same periods in 2023 despite significant, planned reductions in media spend in the e-commerce channel. Sales through Amazon.com increased by 80% in Q2 2024 compared to Q2 2023, and by 63% comparing the 2024 and 2023 year-to-date periods, driven by growth in subscription revenue as well as new customer sales. Direct-to-Consumer ("DTC") sales, on lairdsuperfood.com and pickybars.com, increased by 32% comparing Q2 2024 to Q2 2023 and by 29% comparing YTD periods, driven by strong performance in both subscription and repeat customers, increasing average order value, and improved discount rates due to strategic shifts in promotional strategies. Wholesale channel net sales increased by 9% in both Q2 2024 and YTD 2024 as compared to the corresponding prior year periods, driven by sales growth in club stores, as well as velocity improvement and distribution expansion in grocery, and more efficient promotional spend across the wholesale channel.
Current wording
Net sales were $11.8 million and $9.2 million, respectively, for the three months ended September 30, 2024 and 2023, representing 28% growth from the prior year period. For the nine months ended September 30, 2024 and 2023, net sales were $31.7 million and $25.0 million, respectively, representing 27% growth from the prior year period. E-commerce channel sales increased by 42% in the third quarter of 2024 and 41% in year-to-date ("YTD") 2024 compared to the same periods in 2023 despite significant, planned reductions in media spend. Sales through Amazon.com increased by 133% in the third quarter of 2024 ("Q3 2024") compared to the third quarter of 2023 ("Q3 2023"), and by 85% when comparing the 2024 and 2023 YTD periods, driven primarily by product availability and successful sales execution. Direct-to-Consumer ("DTC") sales, on lairdsuperfood.com and pickybars.com, increased by 10% in Q3 2024 compared to the prior year period, and increased by 22% comparing YTD periods, driven by strong performance in both subscription and repeat customers, increasing average order value, and improved discount rates due to strategic shifts in promotional spend. Wholesale channel net sales increased by 13% in Q3 2024 compared to Q3 2023, and increased 11% comparing YTD periods, driven by distribution expansion in grocery as well as velocity growth and more efficient promotional spend across.
Previous wording
Our e-commerce channel is comprised of DTC (lairdsuperfood.com and pickybars.com) and Amazon.com. For the three and six months ended June 30, 2024, the e-commerce channel made up 61% and 60% of our net sales, respectively, compared to 54% for the three and six months ended June 30, 2023. Amazon.com accounted for 39% and 38%, respectively, of e-commerce channel sales, as compared to 32% for the corresponding 2023 periods. Lairdsuperfood.com and pickybars.com are platforms that provide an authentic brand experience for our consumers that drive engagement through educational content and provide feedback for future product development. We view our proprietary database of customers ordering directly from our website as a strategic asset, as it enhances our ability to develop a long-term relationship with these customers. We believe the content on our websites allows Laird Superfood to educate consumers on the benefits of our products and ingredients while providing a positive customer experience. We believe this experience leads to higher retention rates among repeat users and subscribers, as evidenced by repeat users and subscribers accounting for over three quarters of DTC sales for the three and six months ended June 30, 2024 and 2023.
Current wording
Our e-commerce channel is comprised of sales through DTC (lairdsuperfood.com andpickybars.com) andAmazon.com. For the three and nine months ended September 30, 2024, the e-commerce channel made up 58% and 59% of our net sales, respectively, compared to 53% and 54% for the three and nine months ended September 30, 2023, respectively. Amazon.com accounted for 43% and 40% of our e-commerce channel sales for the three and nine months ended September 30, 2024, respectively, as compared to 26% and 30% for the corresponding prior year periods.Lairdsuperfood.com andpickybars.com are platforms that provide an authentic brand experience for our consumers that drive engagement through educational content and provide feedback for future product development. We view our proprietary database of customers ordering directly from our website as a strategic asset, as it enhances our ability to develop a long-term relationship with these customers. We believe the content on our websites allows Laird Superfood to educate consumers on the benefits of our products and ingredients while providing a positive customer experience. We believe this experience leads to higher retention rates among repeat users and subscribers, as evidenced by repeat users and subscribers accounting for over three quarters of DTC sales for the three and nine months ended September 30, 2024 and 2023.
Previous wording
For the three and six months ended June 30, 2024, the wholesale channel made up 39% and 40% of our net sales, respectively, compared to 46% for the three and six months ended June 30, 2023. Laird Superfood products are sold through a diverse set of retail channels, including conventional, natural, and specialty grocery stores, and club stores. The diversity of our retail channel represents a strong competitive advantage for Laird Superfood and provides us with a larger total addressable market than would be considered normal for a food brand that is singularly focused on the grocery market.
Current wording
For the three and nine months ended September 30, 2024, the wholesale channel made up 42% and 41% of our net sales, respectively, compared to 47% and 46% for the three and nine months ended September 30, 2023, respectively. Laird Superfood products are sold through a diverse set of retail channels, including conventional, natural, and specialty grocery stores, and club stores.
Previous wording
On May 7, 2024, the Company entered into an accounts receivable factoring agreement (the “Factoring Agreement”) with Alterna Capital Solutions LLC (the “Purchaser”). The Factoring Agreement allows the Company to access up to $2 million on a revolving basis. The upfront purchase price for factored accounts is up to 70% of their face value, with the remainder payable to the Company upon collection by the Purchaser. The proceeds will be used to fund general working capital needs. The Company will pay fees, including a funds usage fee (prime rate + 1.5%, minimum 10% per annum) and a collateral monitoring fee (0.05% per month). The Purchaser can require repurchase of uncollectable or ineligible accounts.
Current wording
On May 7, 2024, we entered into an accounts receivable factoring agreement (the “Factoring Agreement”) with Alterna Capital Solutions LLC (the “Purchaser”). The Factoring Agreement allows us to access up to $2 million on a revolving basis. The upfront purchase price for factored accounts is up to 70% of their face value, with the remainder payable to us upon collection by the Purchaser. The proceeds, if any, will be used to fund general working capital needs. Pursuant to the Factoring Agreement, we will pay fees, including a funds usage fee (prime rate + 1.5%, minimum 10% per annum) and a collateral monitoring fee (0.05% per month). The Factoring Agreement provides that the Purchaser can require repurchase of uncollectable or ineligible accounts.
Previous wording
The Factoring Agreement has an initial term of 12 months and will renew annually, unless terminated in accordance with the Factoring Agreement. The Company may terminate the Factoring Agreement at any time upon 30 days prior written notice and payment to Purchaser of an early termination fee equal to 2.0% of the Maximum Amount if terminated during the first 12 months and 1.0% of the Maximum Amount during the subsequent terms.
Current wording
The Factoring Agreement has an initial term of 12 months and will automatically renew annually, unless terminated in accordance with the Factoring Agreement. We may terminate the Factoring Agreement at any time upon 30 days prior written notice and payment to Purchaser of an early termination fee equal to 2.0% of the Maximum Amount (as defined in the Factoring Agreement) if terminated during the first 12 months and 1.0% of the Maximum Amount during the subsequent terms.
Previous wording
The Company has granted a security interest it's personal property to secure the payment and performance of all obligations under the Factoring Agreement. The Factoring Agreement includes customary provisions, including representations, warranties and covenants, indemnification, waiver of jury trial, and the exercise of remedies upon a breach or default. Such description is qualified in its entirety by reference to the full text of the Factoring Agreement, a copy of which is attached as Exhibit 10.1 to this Quarterly Report on Form 10-Q.
Current wording
Pursuant to the Factoring Agreement, we granted a security interest to the Purchaser in our personal property to secure the payment and performance of all obligations under the Factoring Agreement.
Previous wording
We are currently seeking to grow our customer base through both paid and organic online channels, as well as by expanding our presence in a variety of physical wholesale distribution channels. E-commerce customer acquisitions typically occur at our websites,lairdsuperfood.comandpickybars.com, andAmazon.com. Our e-commerce customer acquisition program includes paid and unpaid social media, search, display, and traditional media. Our products are also sold through a growing number of wholesale channels. Wholesale customers include grocery chains, natural food outlets, club stores, drug stores, and food service customers including coffee shops, gyms, restaurants, hospitality venues and corporate dining services, among others. Customer acquisition in physical wholesale channels depends on, among other things, paid promotions through retailers, display, and traditional media.
Current wording
We are currently seeking to grow our customer base through both paid and organic online channels, as well as by expanding our presence in a variety of physical wholesale distribution channels. E-commerce customer acquisitions typically occur at our websites,lairdsuperfood.comandpickybars.com, and throughAmazon.com. Our e-commerce customer acquisition program includes paid and unpaid social media, search, display, and traditional media. Our products are also sold through a growing number of wholesale channels. Wholesale customers include grocery chains, natural food outlets, club stores, drug stores, and food service customers including coffee shops, gyms, restaurants, hospitality venues and corporate dining services, among others. Customer acquisition in physical wholesale channels depends on, among other things, paid promotions through retailers, display, and traditional media.
Previous wording
All of our production and logistics is handled by third parties, and our performance will be highly dependent on the ability of these partners to produce and deliver our products in a timely manner and to our standards and at a reasonable cost.
Current wording
All of our production and logistics is handled by third parties, and our performance is and will continue to be highly dependent on the ability of these partners to produce and deliver our products in a timely manner and to our standards and at a reasonable cost.
Previous wording
Cost of goods sold includes the cost of raw materials and packaging, and overhead including inbound and outbound freight, direct and indirect labor, third-party logistics ("3PL") fees, warehouse storage costs, and other miscellaneous costs related to manufacturing and distributing our products.
Current wording
Cost of goods sold includes the cost of raw materials and packaging, and overhead including inbound and outbound freight, direct and indirect labor, third-party logistics fees, warehouse storage costs, and other miscellaneous costs related to manufacturing and distributing our products.
Previous wording
Due to our history of operating losses and expectation of future operating losses, we do not expect any significant income tax expenses or benefits for the foreseeable future.
Current wording
Due to our history of operating losses, we do not expect any significant income tax expenses or benefits for the foreseeable future.
Previous wording
The following tables summarize our results of operations for the periods indicated:
Current wording
The following tables summarize our results of operations for the periods indicated, as well as the monetary and percentage increase or decrease between those periods:
Previous wording
Net sales increased to $10.0 million in Q2 2024 from $7.7 million in Q2 2023, representing 30% growth year-over-year. The increase was primarily driven by a 47% increase in sales in the e-commerce channel through both platforms, Amazon.com and DTC, despite a planned reduction in promotional spend in DTC, as compared to reduced sales volume in the 2023 period from out-of-stocks associated with a quality event. Further, the wholesale channel also grew by 9% driven primarily by sales growth in club stores, velocity improvements and distribution gains in grocery stores, and more efficient promotional spend.
Current wording
The increase in net sales was primarily driven by a 42% increase in sales in the e-commerce channel through both Amazon.com and DTC platforms. DTC grew despite planned reductions in media spend and was fueled by a growing subscription and repeat customer base as well as higher average order value ("AOV"). Amazon grew 133% as compared to reduced sales volume in the 2023 period from out-of-stocks associated with a quality event. Further, the wholesale channel also grew by 13% in Q3 2024 compared to Q3 2023 driven primarily by velocity improvements and distribution gains in grocery stores, and more efficient promotional spend.
Previous wording
Gross profit increased to $4.2 million in Q2 2024 from $1.9 million in Q2 2023. Gross margin improved to 41.8% in Q2 2024 from 24.3% in Q2 2023. This expansion of gross margin is driven by full benefit realization of the transition to a third-party co-manufacturing model and a reduction in trade discounts due to a pullback in inefficient trade spend and elevated trade spend in the prior year associated with the quality event that occurred in 2023.
Current wording
Gross margin improved to 43.0% in Q3 2024 from 31.0% in the prior year period. The increase in gross profit and expansion of gross margin is driven primarily by lower ingredient costs due to a shift to the direct procurement of key raw materials, settlement recoveries, and a reduction in trade discounts due to a pullback in inefficient trade spend.
Previous wording
Sales and marketing expenses were $2.4 million in Q2 2024 compared to $2.8 million in Q2 2023, driven by planned reductions in marketing and advertising spend as we improve our media efficiency.
Current wording
The decrease in sales and marketing expenses was driven by planned reductions in marketing and advertising spend as we improve our media efficiency.
Previous wording
Comparison of the six months ended June 30, 2024* ("YTD 2024”) and June 30, 2023**** (“YTD 2023”)***
Current wording
Comparison of the nine months ended September 30, 2024* ("YTD 2024”) and September 30, 2023**** (“YTD 2023”)***
Previous wording
The following tables summarize our results of operations for the periods indicated:
Current wording
The following tables summarize our results of operations for the periods indicated, as well as the monetary and percentage increase or decrease between those periods:
Previous wording
Net sales increased to $19.9 million in YTD 2024 from $15.8 million in YTD 2023, representing 26% growth year-over-year. The increase was primarily driven by a 40% increase in the e-commerce channel in sales through both platforms, Amazon.com and DTC, as well as reductions in promotional spend in DTC, as compared to reduced sales volume in 2023 from out-of-stocks associated with a quality event. Further, the wholesale channel also grew by 9% in the six months ended June 30, 2024 as compared to the corresponding 2023 period, driven primarily by sales growth in club stores, velocity improvements and distribution gains in grocery stores, and more efficient promotional spend.
Current wording
The increase in net sales was primarily driven by 41% growth in the e-commerce channel sales through both the Amazon.com and DTC platforms. DTC grew despite reductions in media spend and was fueled by a growing subscriber and repeat customer base as well as higher AOV. Amazon grew 85% as compared to reduced sales volume in 2023 from out-of-stocks associated with a quality event. Further, the wholesale channel also grew by 11% in the nine months ended September 30, 2024 as compared to the corresponding 2023 period, driven primarily by distribution expansion, growing velocities, and more efficient promotional spend.
Previous wording
Gross profit increased to $8.1 million in YTD 2024 from $3.7 million in YTD 2023. Gross margin improved to 40.9% in YTD 2024 from 23.7% in YTD 2023. This improvement reflects increased net sales as well as the full benefits of the transition to a variable cost third-party co-manufacturing business model and a reduction in trade discounts due to improved promotional efficiencies and elevated trade spend in the prior year associated with the quality event that occurred in 2023.
Current wording
Gross margin improved to 41.7% in YTD 2024 from 26.4% in YTD 2023. The increase in gross profit and gross margin expansion reflects increased net sales, due to both increased sales volume and a reduction in trade discounts due to improved promotional efficiencies compared to elevated trade spend in the prior year associated with the quality event that occurred in 2023, lower ingredient costs, settlement recoveries, and the full benefit realization of outsourcing.
Previous wording
General and administrative expenses decreased to $2.1 million in Q2 2024 from $2.7 million in Q2 2023, primarily driven by lower personnel costs and broad, strategic reductions in spending.
Current wording
The decrease in general and administrative expenses was primarily driven by lower personnel costs and broad, strategic reductions in spending.
Previous wording
Sales and marketing expenses were $5.3 million in YTD 2024 compared to $5.9 million in YTD 2023, driven by planned reductions in marketing and advertising spend.
Current wording
The decrease in sales and marketing expenses was driven by planned reductions in marketing and advertising spend.
Previous wording
The following table shows a summary of our cash flows for the six months ended June 30, 2024 and 2023
Current wording
The following table shows a summary of our cash flows for the nine months ended September 30, 2024 and 2023:
Previous wording
Cash provided by operating activities in FY2024 was enabled by our greatly improved margins and lower overhead enabled by our transition to a third-party co-manufacturing business model which we executed in 2023, reduced selling, marketing, and administrative spend, and efficient working capital management.
Current wording
Cash provided by operating activities for YTD 2024 was enabled by our greatly improved margins and reduced selling, marketing, and administrative expenses resulting from the business model transformation we undertook over the last twelve months, as well as efficient working capital management.
Previous wording
Cash used in investing activities in FY2024 consists of purchases of office equipment. The cash generated in FY2023 was due to the sale of property and equipment related to the Sisters, Oregon exit.
Current wording
Cash used in investing activities for YTD 2024 consists of purchases of office equipment. The cash generated in in the prior year period was due to the sale of property and equipment related to the Sisters, Oregon exit.
Previous wording
Cash used in financing activities consists of common stock related costs. The increase in FY2024 was driven by common stock registration costs incurred, offset in part by stock option exercises.
Current wording
Cash used in financing activities consists of common stock related costs, offset in part by stock option exercises.
Previous wording
As of June 30, 2024, we had an accumulated deficit of $107.6 million, which includes operating losses of $1.4 million and $8.0 million for YTD 2024 and YTD 2023, respectively. While we expect to incur additional operating losses as we continue efforts to grow our business, the strategic business transformation that we have undertaken over the last two years has become evident in our significant gross margin expansion, optimized investments in trade and marketing, lower selling, general, and administrative spending, and reduced cash burn. We will continue to seek opportunities to optimize spending, expand gross margins, and free up cash flow through efficient working capital management. We have historically financed our operations and capital expenditures through private placements of our common stock, our initial public offering ("IPO"), lines of credit, and term loans. Our historical uses of cash have primarily consisted of cash used in operating activities and working capital needs.
Current wording
As of September 30, 2024, we had an accumulated deficit of $107.7 million, which includes operating losses of $1.7 million and $10.7 million for YTD 2024 and YTD 2023, respectively. While we expect to incur additional operating losses as we continue efforts to grow our business, the strategic business transformation that we have undertaken over the last two years has become evident in our significant gross margin expansion, optimized investments in trade and marketing, lower selling, general, and administrative spending, and reduced cash burn. We will continue to seek opportunities to optimize spending, expand gross margins, and free up cash flow through efficient working capital management. We have historically financed our operations and capital expenditures through private placements of our common stock, our initial public offering ("IPO"), lines of credit, and term loans. Our historical uses of cash have primarily consisted of cash used in operating activities and working capital needs.
Previous wording
As of June 30, 2024 and December 31, 2023, we had $7.8 million and $7.7 million, respectively, of cash-on-hand, and total net working capital of $11.4 million and $12.0 million for the same periods. As of June 30, 2024, we had access to up to $0.8 million of advances under an accounts receivable factoring agreement, of which $0.1 million had been utilized and was due to the Purchaser. We have no significant unused sources of liquid assets outside of our working capital.
Current wording
As of September 30, 2024 and December 31, 2023, we had $8.2 million and $7.7 million, respectively, of cash-on-hand, and total net working capital of $11.8 million and $12.0 million for the same periods. As of September 30, 2024, we had access to up to $1.2 million of advances under the Factoring Agreement, of which none had been utilized. We have no significant unused sources of liquid assets outside of our working capital.
Previous wording
Based on our current business plans, we believe that our existing cash balances, including our anticipated cash flow from operations, will be sufficient to finance our operations and meet our foreseeable cash requirements through at least the eighteen months following the date of this filing. In the future, we may raise funds by issuing debt or equity securities, or securities convertible into or exchangeable for our common stock. Such financing and other potential financing may result in dilution to stockholders, reduction in the market price of our common stock, imposition of debt covenants and repayment obligations, or other restrictions that may adversely affect our business. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. However, we may be unable to raise additional funds or enter into such other arrangements when needed, on favorable terms, or at all.
Current wording
Based on our current business plans, we believe that our existing cash balances, including our anticipated cash flow from operations, will be sufficient to finance our operations and meet our foreseeable cash requirements through at least the eighteen months following the date of this report. In the future, we may raise funds by issuing debt or equity securities, or securities convertible into or exchangeable for our common stock. Such financing and other potential financing may result in dilution to stockholders, reduction in the market price of our common stock, imposition of debt covenants and repayment obligations, or other restrictions that may adversely affect our business. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. However, we may be unable to raise additional funds or enter into such other arrangements when needed, on favorable terms, or at all.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
General and administrative expenses decreased to $4.3 million in YTD 2024 from $5.8 million in YTD 2023, primarily driven by lower personnel costs and broad, strategic reductions in spending.