Laird Superfood Inc
For the period ended Dec 31, 2024. Filed Feb 26, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 26, 2025
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-K
Period ended 2023-12-31; filed 2024-03-13.
0001437749-24-007658
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-26.
0001437749-25-005236
Item 7. Management’s Discussion and Analysis of Financial Condition 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 86 previous paragraphs and 72 current paragraphs.
34 unchanged; 23 reworded; 15 added; 27 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 12 previous and 11 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 (15)
Current report
On May 4, 2024, we entered into to an accounts receivable factoring agreement (the “Factoring Agreement”) with Alterna Capital Solutions LLC (the “Purchaser”), pursuant to which we agreed to sell certain trade accounts receivable (the “Purchased Accounts”) to the Purchaser from time to time. The Factoring Agreement provides for the Company to have access to up to $2.0 million (the “Maximum Amount”) on a revolving basis, measured by the aggregate amount advanced for the unpaid balance of all Purchased Accounts from time to time. Upon receipt of the upfront purchase price for any Purchased Accounts, the Company will have sold and assigned all of its rights in such Purchased Accounts and all proceeds thereof. The upfront purchase price for a Purchased Account is up to 70% of the face amount thereof and the remaining portion is payable only if and when the Purchaser receives payment from account debtors exceeding the aggregate unadvanced face amount of the unpaid balance of all Purchased Accounts from time to time, plus all amounts due on accounts ineligible to be purchased, plus all accrued fees and expenses. The proceeds from the Factoring Agreement will be used to fund general working capital needs.
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”). 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 (the “2024 Settlement Agreement”). As of December 31, 2024, we had collected this settlement in full.
Current report
Repeat customers who consistently re-order our products are critical to our business. The pace of our growth will be affected by our ability to maintain and establish long-term relationships with existing and new customers to drive repeat orders.
Current report
The increase in net sales in FY2024 was led by e-commerce channel growth of 32% from FY2023, driven by improved subscription revenue and repeat consumer purchases, higher average order values, more efficient promotional strategies. Net sales from our wholesale channel likewise grew during FY2024 by 19% from FY2023, reflecting improved product velocities in retail outlets, distribution expansion, and more efficient promotional spend.
Current report
The increase in cost of goods sold in FY2024 was driven by growth in sales volume, offset by the full benefit realization of the transition to a variable cost third-party co-manufacturing business model, lower raw material costs due to a shift to the direct procurement of key raw materials, as well as recoveries of costs previously incurred in connection with the quality event that we experienced in FY2023 as a result of the 2023 Settlement Agreement.
Current report
Gross margin expanded to 40.9% in FY2024 compared to 30.1% in FY2023. The increase in gross profit and expansion of gross margin in FY2024 was driven by growth in sales volume, offset by the full benefit realization of the transition to a third-party co-manufacturing model, favorable product costs, settlement recoveries, and a reduction in trade discounts due to a pullback in inefficient trade spend.
Current report
General and administrative expense in FY2024 decreased from FY2023 primarily due to a $0.5 million decrease in insurance expense.
Current report
Income tax expense consists of state and local income taxes. We owed no federal income taxes during FY2024 or FY2023, and we do not expect to pay federal income taxes in the near future due to our federal net operating loss carryforwards.
Current report
Cash Flows from Operating Activities
Current report
Positive cash flows from operating activities in FY2024 were the result of strategic cost reduction efforts over the last two years which enabled us to reduce our net loss from $10.2 million in FY2023 to $1.8 million in FY2024. Our $1.8 million net loss included expenses of $1.6 million related to stock-based compensation, which has increased in FY2024 compared to FY2023 as a result of our stock performance, and $1.0 million of other non-cash expenses including inventory obsolescence costs, and depreciation and amortization.
Current report
Cash Flows from Investing Activities
Current report
Cash used in financing activities consisted of taxes withheld on net stock issuances, stock issuance costs incurred in connection with a Registration Statement on Form S-3 that was filed in FY2024, offset by cash collected from stock option exercises. Cash used in FY2023 related to taxes withheld on net settlement of stock issuances.
Current report
As of December 31, 2024 and December 31, 2023, we had $8.5 million and $7.7 million, respectively, of cash-on-hand, and total net working capital of $12.0 million at the end of each year. We are party to the Factoring Agreement, pursuant to which we agreed to sell certain trade accounts receivable to the Purchaser from time to time. The Factoring Agreement provides for the Company to have access to up to $2.0 million on a revolving basis, measured by the aggregate amount advanced for the unpaid balance of all Purchased Accounts from time to time. The proceeds from the Factoring Agreement will be used to fund general working capital needs. As of December 31, 2024, we had access 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.
Current report
Additionally, on September 15, 2023, we entered into the 2023 Settlement Agreement with 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. Both parties disputed liability. As a result of the Litigation, on July 30, 2024, the Company entered into the 2024 Settlement Agreement, pursuant to which, among other things, the Supplier agreed to remit cash payment to us of approximately $500,000. As of December 31, 2024, we had collected such payment pursuant to the 2024 Settlement Agreement in full.
Current report
Impairment of Long-Lived Assets
Removed paragraphs (27)
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 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, the Company's 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 the Company’s current employees, including management. The Redomestication did not affect any of the Company’s material contracts with any third parties, and the Company’s 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
Product quality issue
Previous report
In the first quarter of 2023, prior to the issuance of our consolidated financial statements for the year ended December 31, 2022, we discovered a product quality issue with coconut milk powder from one of our suppliers and immediately initiated a voluntary product withdrawal and contacted all impacted wholesale customers and e-commerce consumers to aggressively pull back as much as of the affected product as possible. In connection with this withdrawal, we incurred costs associated with inventory obsolescence, quality testing, and remedial discounts and replacement orders of $0.5 million in the fourth quarter of 2022 and $0.4 million in the first quarter of 2023. In addition, we implemented a robust new sensory testing program to prevent future quality issues. In the third quarter of 2023, we reached settlement with the vendor to recapture these costs and have recovered $0.3 million to date.
Previous report
Transition to variable cost third-party co-manufacturing business model
Previous report
We ceased in-house manufacturing and fulfillment activities at the end of 2022 and moved strategic raw material, packaging and finished goods inventory to co-manufacturer and third-party logistics partners, disposing of the remaining inventory, and terminating its leases of manufacturing facilities effective January 31, 2023, and eliminated substantially all production and fulfillment labor. Manufacturing equipment, furniture, tools, and internal-use production software are being sold or abandoned and were impaired accordingly in the fourth quarter of 2022. This move was undertaken to transform our supply chain to a variable cost model to strengthen our margins and drastically reduce our overhead costs.
Previous report
We believe that our future performance will depend on many factors, including the following:
Previous report
We believe an ability to consistently acquire and retain customers at a reasonable cost relative to projected life-time value will be a key factor affecting future performance. To accomplish this goal, we intend to balance advertising spend between e-commerce and wholesale channels, as well as balancing more targeted and measurable “direct response” marketing spend with advertising focused on increasing our long-term brand recognition, where success attribution is less directly measurable on a near-term basis.
Previous report
We accrue substantial economic value from repeat users of our products who consistently re-order our products. The pace of our growth will be affected by the repeat usage dynamics of existing and newly acquired customers.
Previous report
Sales, Net
Previous report
Net Sales decreased to $34.2 million in FY2023, compared to $35.8 million in FY2022. The decrease was primarily due to a 13% decrease in our e-commerce channels driven planned reductions in media spending across both channels as well as out-of-stock issues on Amazon and our DTC business related to the product quality issue experienced in the first quarter of 2023. The decrease was partially offset by 9% growth in the Wholesale channel. Overall Gross Sales volume increased by 2%.
Previous report
Cost of Goods Sold
Previous report
Cost of Goods Sold decreased to $23.9 million in FY2023 from $30.6 million in FY2022. The reduction was driven by the transition to a variable cost third-party co-manufacturing business model despite a 2% expansion of Gross Sales volume.
Previous report
Gross Profit
Previous report
Gross Profit increased to $10.3 million in FY2023 from $5.2 million in FY2022. Gross Margin was 30.1% in FY2023 compared to 14.5% in FY2022. This improvement reflects the benefits of the transition to a variable cost third-party co-manufacturing business model and pricing action taken during the year, offset in part by elevated promotional spend.
Previous report
Operating Expenses
Previous report
General and administrative expense decreased to $9.6 million in FY2023 from $30.6 million in FY2022, primarily due to FY2022 charges related to impairment of goodwill and long-lived acquisition intangible assets of $9.6 million, as well as $8.7 million of exit and disposal costs. See Notes 4 and 5, respectively, to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information on the aforementioned impairments and Note 1 for more information on exit and disposal costs. The remaining $2.7 million decrease was driven primarily by a $1.0 million decrease in insurance expense and a decrease in personnel costs, including stock-based compensation, resulting from the organizational rightsizing that occurred in FY2022 and FY2023.
Previous report
Other Income
Previous report
Cash Flows used in Operating Activities
Previous report
Cash used in operating activities was $10.8 million for FY2023 as compared to $14.3 million for FY2022. Cash used in 2023 resulted primarily from operating losses, the relief of exit and disposal related accruals, and the rebuilding of inventory following the product quality issue experienced in the first quarter of FY2023. Cash used in FY2022 resulted from operating losses, offset by decreased inventory and prepaid expense balances and increased current liabilities largely driven by exit and disposal costs.
Previous report
Cash provided by investing activities was $0.7 million in FY2023 as compared to $9.0 million used in FY2022. The cash inflow in FY2023 was primarily related to the sales of equipment. The cash inflow in FY2022 was primarily related to the sales of land, equipment, and available-for-sale securities.
Previous report
Cash used in financing activities was $27.4 thousand in FY2023 compared to cash provided of $102.3 thousand in FY2022. Cash used in FY2023 related to taxes withheld on stock issuances. Cash provided by investing activities in FY2022 primarily related to stock option exercises.
Previous report
As of December 31, 2023, we had $7.7 million of cash and cash equivalents on-hand. As of December 31, 2022, we had $17.8 million of cash and cash equivalents on-hand and investments and $5.0 million of available borrowings under our lines of credit which expired in 2023. As of December 31, 2023 and 2022, no amounts were outstanding under our lines of credit.
Previous report
Impairment of Goodwill and Long-Lived Assets
Previous report
Goodwill is evaluated for impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary. If it is determined, based on qualitative factors, the fair value of the reporting unit may be more likely than not less than its carrying amount or if significant changes to macro-economic factors related to the reporting unit have occurred that could materially impact fair value, a quantitative goodwill impairment test would be required. The quantitative test compares the fair value of a reporting unit with its carrying amount. Upon performing the quantitative test, if the carrying value of the reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, not to exceed the carrying amount of goodwill.
Reworded paragraphs (23)
Previous wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Annual Report on 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“Risk Factors”* and*“Cautionary Note Regarding Forward-Looking Statements”* included elsewhere in this Annual Report on Form 10-K.*
Current wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K (this "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“Risk Factors”* and*“Cautionary Note Regarding Forward-Looking Statements”* included elsewhere in this Form 10-K.*
Previous wording
Laird Superfood is an emerging consumer products platform focused on manufacturing and marketing highly differentiated plant-based and functional foods. The core pillars of the Laird Superfood platform are currently Superfood Creamer coffee creamers, Functional and organic roasted and instant coffees, teas, and hot chocolate, Hydrate hydration products and beverage enhancing supplements, and Harvest snacks and other food items. 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. Laird Superfood’s 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 the Company to maximize penetration of a multi-billion-dollar opportunity in the grocery market.
Current wording
Laird Superfood creates clean, functional, and sustainability-conscious products, many of which incorporate adaptogens which may be beneficial in reducing stress, improving energy levels, enhancing mental performance, mood regulation, and immune system support. Our primary products include (i) coffee creamers, (ii) hydration and beverage enhancing products, (iii) harvest snacks and other food items, and (iv) coffee, tea, and hot chocolate products. 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 and scale a 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
Our e-commerce business is two-pronged and consists of direct-to-consumer sales (lairdsuperfood.com andpickybars.com) and use of third-party platforms, such asAmazon.com. For the years ended December 31, 2023 and 2022, the e-commerce business made up 57% and 62% of our net sales, respectively.Lairdsuperfood.com andpickybars.com are platforms that provide an authentic brand experience for our customers that drives engagement and provides 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. 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 direct-to-consumer sales for the years ended December 31, 2023 and 2022.
Current wording
Our e-commerce channel consists of (i) our Direct-to-consumer ("DTC") business, which includes sales throughlairdsuperfood.comandpickybars.com, and (ii) Amazon. For the years ended December 31, 2024 and 2023, the e-commerce channel made up 59% and 57% of our net sales, respectively.Lairdsuperfood.com andpickybars.com offer an authentic brand experience for our consumers that drive engagement through educational content. These platforms also provide us with direct consumer 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 long-term relationships with these customers. We believe the content on our websites allows Laird Superfood to educate our 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 customers and subscribers, as evidenced by the fact that repeat customers and subscribers account for over 75% of DTC sales for the years ended December 31, 2024 and 2023.
Previous wording
Net sales decreased to $34.2 million for the year ended December 31, 2023, from $35.8 million for the year ended December 31, 2022. Wholesale net sales 2023 increased by 9% compared to 2022 driven by sales growth in Club and distribution expansion in grocery as well as product velocities improvement behind updated packaging launch in Q2 of 2023. This was in part offset by strategic investment in trade spend to drive growth in that channel. E-commerce channel sales for 2023 decreased 13% year over year driven by significant planned reductions in marketing media spend across both DTC and Amazon.com, as well as out-of-stock issues related to the product quality withdrawal issue in Q1 of 2023 as we rebuilt our inventory. These issues were fully resolved in the second half of the year enabling e-commerce growth of 10% in the fourth quarter of 2023 compared to the same period last year.
Current wording
Net sales increased to $43.3 million for the year ended December 31, 2024, from $34.2 million for the year ended December 31, 2023. Wholesale net sales 2024 increased by 19% compared to 2023 driven by velocity improvement and distribution expansion in grocery, as well as more efficient promotional spend. E-commerce channel sales for 2024 increased by 32% year over year driven by growth in subscription revenue and repeat consumer purchases, higher average order values, and the prior year impact of out-of-stock issues related to the product quality withdrawal issue in Q1 of 2023 as we rebuilt our inventory throughout 2023.
Previous wording
For the years ended December 31, 2023 and 2022, wholesale made up 43% and 38% of our net sales, respectively. Laird Superfood products are sold through a diverse set of retail channels, including conventional, natural and specialty grocery, and club. 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 years ended December 31, 2024 and 2023, wholesale channel sales made up 41% and 43% of our net sales, respectively. Laird Superfood products are sold through various retail outlets, including conventional, natural and specialty grocery, and club. The diversity of our retail outlets 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.
Previous wording
Key Factors Affecting our Performance
Current wording
Key Factors Affecting our Future Performance
Previous wording
Ability to Grow Our Customer Base in both E-commerce and Traditional Wholesale Distribution Channels
Current wording
Ability to Grow Our Customer Base in both E-commerce and Traditional Wholesale Distribution Channels at a Reasonable Cost
Previous wording
We are currently seeking to grow our customer base through both paid and organic e-commerce channels, as well as by expanding our presence in a variety of physical retail distribution channels and geographical regions. E-commerce customer acquisitions typically occur at our direct 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 retail channels. Wholesale customers include grocery chains, natural food outlets, club stores, and food service customers which include coffee shops, gyms, restaurants, hospitality venues and corporate dining services, among others. Customer acquisition in physical retail channels depends on, among other things, paid promotions through retailers, display and traditional media.
Current wording
We are continuously growing our customer base through both paid and organic e-commerce channels, as well as by expanding our presence in our wholesale channel through a variety of physical retail outlets and geographical regions. We typically attract new customers in our e-commerce channel through our direct websites,lairdsuperfood.comandpickybars.com, and through Amazon. We also seek to attract new e-commerce customers through paid and unpaid social media, search, display and traditional media. Our products are also sold through a growing number of retail outlets. Customers in our wholesale channel include grocery chains, natural food outlets, club stores, and food service customers. Attracting new customers in physical retail outlets depends on, among other things, paid promotions through retailers, display, and traditional media. We believe an ability to consistently attract and retain customers at a reasonable cost relative to projected life-time value will be a key factor affecting future performance.
Previous wording
Substantially all of our production and logistics are handled by third parties, and our performance is highly dependent on the ability of these partners to produce and deliver our products timely, to our standards, and at a reasonable cost.
Current wording
Our production and logistics are executed by third parties, and our performance is highly dependent on the ability of these partners to produce and deliver our products timely, to our standards, and at a reasonable cost.
Previous wording
Our ability to grow and meet future demand will be affected by our ability to properly plan for and source inventory from a variety of suppliers located inside and outside the United States. We may encounter difficulties in sourcing products.
Current wording
Our ability to grow and meet future demand will be affected by our ability to adequately plan for and source inventory from a variety of suppliers located inside and outside the United States. We may encounter difficulties in sourcing products.
Previous wording
Our ability to reduce cash burn in the near-term and eventually generate positive cash flow will be partially impacted by our ability to effectively manage all the key working capital components that could influence our cash conversion cycle.
Current wording
Our ability to maintain positive cash flows will be partially impacted by our ability to effectively manage all the key working capital components that could influence our cash conversion cycle.
Previous wording
We sell our products indirectly to consumers through a broad set of retail outlets. We also derive revenue from the sale of our products directly to consumers through our direct websites,lairdsuperfood.com andpickybars.com, as well as third-party e-commerce channels such asAmazon.com.
Current wording
We sell our products through two channels: wholesale and e-commerce. Through our wholesale channel, we sell our products indirectly to consumers through a broad set of retail outlets. Through our e-commerce channel, we derive revenue from the sale of our products directly to consumers through our direct websites,lairdsuperfood.com andpickybars.com, as well as third-party e-commerce platforms such as Amazon.
Previous wording
Cost of goods sold includes material, packaging, co-packing fees, inbound and outbound freight costs, labor, and overhead costs incurred in the storage and distribution of products sold in the period. Material costs include the cost of products purchased. In 2023, in addition to material and packaging costs, cost of goods sold consisted of co-packers' tolling fees, third party labor to store and ship our products, indirect labor costs, and inbound and outbound freight. In 2022, it also included wages and benefits for manufacturing, planning, and logistics personnel, depreciation, and facility costs.
Current wording
Cost of goods sold includes the cost of raw materials and packaging, co-packing tolling fees, inbound and outbound freight costs, indirect labor, third party labor to store and ship our products, and overhead costs incurred in the storage and distribution of products sold in the period.
Previous wording
Due to our history of operating losses and expectation of future operating losses, we do not expect any significant income tax expenses and benefits for the foreseeable future.
Current wording
Due to our history of operating losses and expectation of future operating losses, we do not expect any significant federal income tax expenses and benefits for the foreseeable future. We will continue to owe state and local income taxes.
Previous wording
The following table summarizes our results of operations:
Current wording
The following table sets forth our results of operations for FY2024 and FY2023, and the percentage increase or decrease between the years presented:
Previous wording
Sales and marketing expense decreased to $11.2 million in FY2023 from $14.5 million in FY2022, primarily due to a planned reduction in inefficient media spending and lower personnel costs.
Current wording
Sales and marketing expense in FY2024 decreased from FY2023 primarily due to improved efficiencies in media spending and lower personnel costs.
Previous wording
Other income is composed of interest income and expense, rental income, income and losses related to investment securities available-for-sale, and other non-operating gains and losses. The increase was primarily driven by rising interest rates in 2023, and due to 2022 other income being offset by $0.2 million of realized losses on sales of available-for-sale securities.
Current wording
Other income is composed of interest income and expense, rental income, and other non-operating gains and losses. The decrease in FY2024 as compared to FY2023 was primarily driven by declining interest rates on our interest-bearing cash accounts in FY2024.
Previous wording
Cash Flows used in Investing Activities
Current wording
Cash used in investing activities consisted of purchases of property, plant, and equipment in FY2024. Cash provided by investing activities in FY2023 was primarily related to the sales of equipment in connection with the closure of our manufacturing facilities in Sisters, Oregon at the beginning of FY2023.
Previous wording
As of December 31, 2023, we had incurred accumulated net losses of $106.3 million, including operating losses of $10.7 million and $40.4 million for FY2023 and FY2022, respectively. We expect to incur additional operating losses as we continue efforts to grow our business. However, after taking several strategic steps in 2023 and 2022, we have significantly optimized spending, improved gross margins, and significantly reduced cash burn in an effort to bring the business closer to breakeven and profitability in future quarters, with the first quarter of net income and positive cash flows from operations realized in the fourth quarter of 2023. These steps included transitioning out of in-house manufacturing to a variable cost third-party co-manufacturing business model, closing manufacturing facilities and offices in Sisters, Oregon, several rounds of organizational restructuring to optimize our headcount costs, and reducing marketing and administrative investment through eliminating non-essential spending. We will continue to seek to optimize spending and expand gross margins. Additionally, our current business plan is to continue to utilize inventory management to reduce working capital. We have historically financed our operations and capital expenditures through private placements of our common stock, our initial public offering, our 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 December 31, 2024, we had incurred accumulated net losses of $108.1 million, including operating losses of $2.2 million and $10.7 million for FY2024 and FY2023, respectively. While we may incur additional operating losses as we execute our strategy to invest in the growth of our business while maintaining our cash reserves, we believe that the strategic business transformation that we have undertaken over the last two years is reflected 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, our prior lines of credit, term loans, and, for the first time in FY2024, from our core operating activities. Our historical uses of cash have primarily consisted of cash used in operating activities and working capital needs.
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 next twelve months. 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 next twelve months. 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 shareholders, 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.
Previous wording
We have one operating segment and one reportable segment, as our Chief Executive Officer reviews financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance.
Current wording
We have one operating segment and one reportable segment, for which our Chief Operating Decision Maker, our Chief Executive Officer, reviews financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance.
Previous wording
The preparation of consolidated financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“GAAP”) and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported. Note 1, “Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K describes the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities.
Current wording
The preparation of consolidated financial statements and related disclosures in conformity with U.S. generally accepted accounting principles and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported. Note 1, “Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K describes the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities.
Previous wording
SeeRecently Issued Accounting Pronouncementsin Note 1 to our audited consolidated financial statements included elsewhere in this Form 10-K for additional information.
Current wording
See "Recently Issued Accounting Pronouncements" in Note 1 to our audited consolidated financial statements included elsewhere in this Form 10-K for additional information.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Ability to Acquire and Retain Customers at a Reasonable Cost
Previous report — wording carried elsewhere
Comparison of the years ended FY2023 and FY2022