Reed’s, Inc. (OTCQX: REED) (“Reed’s” or the “Company”), owner of
the nation’s leading portfolio of handcrafted, natural ginger
beverages, is reporting financial results for the three and twelve
months ended December 31, 2023.
Q4 2023 Financial Highlights (vs. Q4 2022):
- Net sales were $11.7 million
compared to $15.0 million.
- Gross profit was $0.5 million
compared to $3.4 million, with gross margin of 4.0% compared to
22.9%.
- Adjusted gross profit, which
excludes non-cash inventory adjustments and a one-time change to
policy for discounts, increased 26% to $4.3 million with gross
margin of 34.9%.
- Delivery and handling costs were
reduced by 32% to $2.82 per case.
- Selling, general and administrative
expenses were reduced by 23% to $3.0 million.
- Operating loss was $5.0 million
compared to $3.7 million.
- Modified EBITDA improved to $43,000
compared to $(2.8) million.
FY 2023 Financial Highlights (vs. FY 2022):
- Net sales were $44.7 million compared to $53.0 million.
- Gross profit was $9.7 million compared to $12.1 million, with
gross margin of 21.7% compared to 22.8%.
- Adjusted gross profit, which excludes non-cash inventory
adjustments and a one-time change to policy for discounts,
increased 12% to $13.6 million with gross margin of 29.9%.
- Delivery and handling costs were reduced by 35% to $3.07 per
case.
- Selling, general and administrative expenses were reduced by
26% to $11.0 million.
- Operating loss improved to $9.4 million compared to $14.8
million.
- Modified EBITDA improved to $(3.7) million compared to $(13.1)
million.
Management Commentary
“I am proud of our team’s hard work in 2023 as
they executed on our strategic initiatives to consistently lower
input costs and optimize our cost structure, resulting in more than
$6 million of expense reductions and a material improvement to our
bottom line,” said Norman E. Snyder, Jr., CEO of Reed’s. “We
experienced solid order volume across our retail network during the
year, however we were unable to fulfill the entire demand due to
inflated short order shipments, which we believe offset net sales
by approximately $5 million in 2023. We have taken the appropriate
steps to increase production capacity and are actively building our
finished goods inventory. With an improving inventory position, we
are well on track to dramatically reduce short shipments and
capitalize on the demand for our fan-favorite products.
“Looking ahead, we have several key initiatives
to drive growth and profitability. As we build our inventory
levels, we will sharpen our focus on returning to growth through
our key product categories: Reed’s Ginger Ale, Ginger Beer,
Virgil’s Zero Sugar and our ready-to-drink alcohol portfolio. We
also plan to uncover additional cost-saving opportunities
throughout our business to ensure we are operating as efficiently
as possible. We expect these initiatives will enable us to deliver
on our growth and profitability objectives in 2024.”
Fourth Quarter 2023 Financial
Results
During the fourth quarter of 2023, net sales
were $11.7 million compared to $15.0 million in the year-ago
period. The decrease was primarily driven by short order shipments
and lower sales from seasonal programs due to timing of customer
orders and a third-party manufacturing deficiency, both related to
the Company’s swing-lid products. Reed’s expects to receive an
insurance claim to cover the cost of these products. The Company
also implemented a one-time change to policy for discounts that
offset net sales by approximately $0.8 million this quarter.
Gross profit for the fourth quarter of 2023 was
$0.5 million compared to $3.4 million for the same period in 2022.
Gross margin was 4.0% compared to 22.9% in the year-ago quarter.
The decrease was primarily driven by a one-time, non-cash packaging
inventory valuation adjustment of $1.8 million, a one-time
provision for product hold related to the Company’s swing-lid
program of $1.3 million, as well as the aforementioned one-time
change to policy for discounts. Adjusted gross profit, which
excludes these non-cash items, for the fourth quarter of 2023 was
$4.3 million or 34.9% of revenue.
Delivery and handling costs were reduced by 32%
to $1.8 million during the fourth quarter of 2023 compared to $2.7
million in the fourth quarter of 2022. The decrease was primarily
driven by continued reductions in freight rates, as well as
improved throughput and efficiencies related to the Company’s
streamlined distribution model. Delivery and handling costs were
reduced to 16% of net sales or $2.82 per case, compared to 18% of
net sales or $3.44 per case during the same period last year.
Selling, general and administrative costs
declined by 23% to $3.0 million during the fourth quarter of 2023
compared to $3.9 million in the year-ago quarter. As a percentage
of net sales, selling, general and administrative costs remained
flat at 26%.
Operating loss during the fourth quarter of 2023
was $5.0 million or $(1.55) per share, compared to $3.7 million or
$(1.54) per share in the fourth quarter of 2022.
Modified EBITDA improved to $43,000 in the
fourth quarter of 2023 compared to $(2.8) million in the fourth
quarter of 2022.
Update on Recent Financing
During the first quarter of 2024, Reed’s closed
on a $4.1 million SAFE (“Simple Agreement for Future Equity”)
agreement as part of a planned $6.0 million financing. Reed’s plans
to utilize the funds to build its finished goods inventory reserves
to reduce short shipments in 2024.
Liquidity and Cash Flow
For the fourth quarter of 2023, cash used in
operations was $0.2 million compared to cash flow from operations
of $1.0 million for the same period in 2022. The decrease in
operating cash flow was primarily driven by higher inventory
purchases compared to the year-ago period.
As of December 31, 2023, the Company had
approximately $0.6 million of cash and $27.4 million of total debt
net of capitalized financing fees. This cash balance does not
include the aforementioned $4.1 million of SAFE proceeds from the
Company’s recent financing. The debt includes $17.6 million from a
convertible note and $9.8 million from the Company’s revolving line
of credit, which has $3.0 million of additional borrowing
capacity.
FY 2024 Financial Outlook
The Company projects net sales growth, gross
margin expansion, and to achieve modified EBITDA profitability for
the full year 2024. Reed’s also expects to generate positive cash
flow from operations for the full year 2024.
Conference Call
The Company will conduct a conference call
today, March 28, 2024, at 5:00 p.m. Eastern time to discuss its
results for the three and twelve months ended December 31,
2023.
Reed’s management will host the conference call,
followed by a question-and-answer period.
Date: Thursday, March 28, 2024Time: 5:00 p.m.
Eastern timeToll-free dial-in number: (844) 850-0544International
dial-in number: (412) 542-4115Conference ID: 10187056Webcast:
Reed’s Q4 & FY 2023 Conference Call
Please dial into the conference call 5-10
minutes prior to the start time. An operator will register your
name and organization. If you have any difficulty connecting with
the conference call, please contact the company’s investor
relations team at (720) 330-2829.
The conference call will also be broadcast live
and available for replay on the investor relations section of the
Company’s website at https://investor.reedsinc.com.
About Reed's, Inc.
Reed’s is an innovative company and category
leader that provides the world with high quality, premium and
naturally bold™ better-for-you beverages. Established in 1989,
Reed's is a leader in craft beverages under the Reed’s®, Virgil’s®
and Flying Cauldron® brand names. The Company’s beverages are now
sold in over 45,000 stores nationwide.
Reed’s is known as America's #1 name in natural,
ginger-based beverages. Crafted using real ginger and premium
ingredients, Reed’s portfolio includes ginger beers, ginger ales,
ready-to-drink ginger mules and hard ginger ales. The brand has
recently successfully expanded into the zero-sugar segment with its
proprietary, natural sweetener system.
Virgil's® is an award-winning line of craft
sodas, made with the finest natural ingredients and without GMOs or
artificial preservatives. The brand offers an array of great
tasting, bold flavored sodas including Root Beer, Vanilla Cream,
Black Cherry, Orange Cream, and more. These flavors are also
available in six zero sugar varieties which are naturally sweetened
and certified ketogenic.
Flying Cauldron® is a non-alcoholic butterscotch
beer prized for its creamy vanilla and butterscotch flavors. Sought
after by beverage aficionados, Flying Cauldron is made with natural
ingredients and no artificial flavors, sweeteners, preservatives,
gluten, caffeine, or GMOs.
For more information,
visit drinkreeds.com, virgils.com and flyingcauldron.com.
To receive exclusive perks for Reed’s investors, please visit the
Company’s page on the Stockperks app here.
Forward-Looking Statements
Statements in this release that are not
historical are forward-looking statements made pursuant to the safe
harbor provisions of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements are typically identified
by terms such as "estimate," "expect,” “intend,” "project," "will,"
“plan,” and similar expressions. These forward-looking statements
are based on current expectations and include our management’s
expectations and guidance for fiscal year 2024 under the heading
“FY 2024 Financial Outlook”. The achievement or success of the
matters covered by such forward-looking statements involves risks,
uncertainties, and assumptions, many of which involve factors or
circumstances that are beyond our control. Reed‘s 2024 guidance
reflects year-to-date and expected future business trends and
includes impacts of the inventory shortage as of the date hereof.
New supply chain challenges that may develop and further potential
inflation cannot be reasonably estimated and are not factored into
current fiscal 2024 guidance. These risks could materially impact
our ability to access raw materials, production, transportation
and/or other logistics needs.
Financial guidance should not be viewed as a
substitute for full financial statements prepared in accordance
with GAAP.
If any such risks or uncertainties materialize
or if any of the assumptions prove incorrect, Reed’s actual results
could differ materially from the results expressed or implied by
the forward-looking statements we make, including our ability to
achieve our targets for the fiscal year ending December 31, 2024.
The risks and uncertainties referred to above include, but are not
limited to: inventory shortages; risks associated with new product
releases; the impacts of further inflation; risks that customer
demand may fluctuate or decrease; risks that we are unable to
collect unbilled contractual commitments, particularly in the
current economic environment; our ability to compete successfully
and manage growth; our significant debt obligations; our ability to
develop and expand strategic and third party distribution channels;
our dependence on third party suppliers, brewers and distributors;
third party co-packers meeting contractual commitments; risks
related to our international operations; our ability to continue to
innovate; our strategy of making investments in sales to drive
growth; increasing costs of fuel and freight, protection of
intellectual property; competition; general political or
destabilizing events, including the wars in Ukraine and Israel,
conflict or acts of terrorism; financial markets, commodity and
currency impacts of the wars; the effect of evolving domestic and
foreign government regulations, including those addressing data
privacy and cross-border data transfers; and other risks detailed
from time to time in Reed’s public filings, including Reed’s annual
report on Form 10-K expected to filed on April 1, 2024, which will
be) available on the Securities and Exchange Commission’s web site
at www.sec.gov. These forward-looking statements are based on
current expectations and speak only as of the date hereof. Reed’s
assumes no obligation and does not intend to update these
forward-looking statements, except as required by law.
Investor Relations Contact
Sean Mansouri, CFAElevate IRir@reedsinc.com (720) 330-2829
REED’S,
INC. |
STATEMENTS
OF OPERATIONS |
For the
Years Ended December 31, 2023 and 2022 |
(Amounts in
thousands, except share and per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
|
2022 |
|
Net
Sales |
$ |
11,693 |
|
|
|
$ |
15,040 |
|
|
$ |
44,711 |
|
|
|
$ |
53,041 |
|
Cost of
goods sold |
|
8,106 |
|
|
|
|
11,594 |
|
|
|
31,884 |
|
|
|
|
40,929 |
|
Inventory
write-offs associated with exited categories and major packaging
and formula changes |
|
1,848 |
|
|
|
|
0 |
|
|
|
1,848 |
|
|
|
|
|
Provision
for product hold |
|
1,267 |
|
|
|
|
- |
|
|
|
1,267 |
|
|
|
|
- |
|
Gross profit |
|
472 |
|
|
|
|
3,446 |
|
|
|
9,712 |
|
|
|
|
12,112 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Delivery and
handling expense |
|
1,847 |
|
|
|
|
2,710 |
|
|
|
7,561 |
|
|
|
|
11,603 |
|
Selling and
marketing expense |
|
1,298 |
|
|
|
|
1,693 |
|
|
|
4,865 |
|
|
|
|
7,316 |
|
General and
administrative expense |
|
1,691 |
|
|
|
|
2,170 |
|
|
|
6,118 |
|
|
|
|
7,489 |
|
Provision
for receivable with former related party |
|
585 |
|
|
|
|
538 |
|
|
|
585 |
|
|
|
|
538 |
|
Total operating expenses |
|
5,421 |
|
|
|
|
7,111 |
|
|
|
19,129 |
|
|
|
|
26,946 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations |
|
(4,949 |
) |
|
|
|
(3,665 |
) |
|
|
(9,417 |
) |
|
|
|
(14,834 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
(1,647 |
) |
|
|
|
(3,104 |
) |
|
|
(6,106 |
) |
|
|
|
(5,223 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
(6,596 |
) |
|
|
|
(6,769 |
) |
|
|
(15,523 |
) |
|
|
|
(20,057 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends on Series A Convertible Preferred
Stock |
|
- |
|
|
|
|
- |
|
|
|
(5 |
) |
|
|
|
(5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss attributable to common stockholders |
$ |
(6,596 |
) |
|
|
$ |
(6,769 |
) |
|
$ |
(15,528 |
) |
|
|
$ |
(20,062 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per share – basic and diluted |
$ |
(2.07 |
) |
|
|
$ |
(2.84 |
) |
|
$ |
(4.39 |
) |
|
|
$ |
(9.07 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares outstanding – basic and diluted |
|
3,186,246 |
|
|
|
|
2,384,507 |
|
|
|
3,537,882 |
|
|
|
|
2,211,319 |
|
REED’S,
INC, |
BALANCE
SHEETS |
(Amounts in
thousands, except share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, |
|
|
December
31, |
|
2023 |
2022 |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
603 |
|
|
$ |
533 |
|
Accounts
receivable, net of allowance of $860 and $252, respectively |
|
|
4,788 |
|
|
|
5,671 |
|
Inventory,
net |
|
|
11,300 |
|
|
|
16,175 |
|
Receivable
from former related party |
|
|
259 |
|
|
|
777 |
|
Prepaid
expenses and other current assets |
|
|
811 |
|
|
|
939 |
|
Total
current assets |
|
|
17,761 |
|
|
|
24,095 |
|
|
|
|
|
|
|
|
|
|
Property and
equipment, net of accumulated depreciation of $1,068 and $787,
respectively |
|
|
493 |
|
|
|
766 |
|
Intangible
assets |
|
|
629 |
|
|
|
626 |
|
Total assets |
|
$ |
18,883 |
|
|
$ |
25,487 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
9,133 |
|
|
$ |
9,805 |
|
Accrued
expenses |
|
|
1,096 |
|
|
|
233 |
|
Revolving
line of credit, net of capitalized financing costs of $201 and
$363, respectively |
|
|
9,758 |
|
|
|
10,974 |
|
Payable to
former related party |
|
|
259 |
|
|
|
2,025 |
|
Current
portion of convertible notes payable, net of debt discount of $10
and $414, respectively |
|
|
7,325 |
|
|
|
2,434 |
|
Current
portion of lease liabilities |
|
|
207 |
|
|
|
187 |
|
Total
current liabilities |
|
|
27,778 |
|
|
|
25,658 |
|
|
|
|
|
|
|
|
|
|
Convertible
note payable, net of debt discount of $148 and $562, respectively,
less current portion |
|
|
10,286 |
|
|
|
8,092 |
|
Lease
liabilities, less current portion |
|
|
- |
|
|
|
207 |
|
Total liabilities |
|
|
38,064 |
|
|
|
33,957 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity (deficit): |
|
|
|
|
|
|
|
|
Series A
Convertible Preferred stock, $10 par value, 500,000 shares
authorized, 9,411 shares issued and outstanding |
|
|
94 |
|
|
|
94 |
|
Common
stock, $.0001 par value, 180,000,000 shares authorized; 4,187,291
and 2,519,485 shares issued and outstanding, respectively |
|
|
- |
|
|
|
- |
|
Additional
paid in capital |
|
|
119,452 |
|
|
|
114,635 |
|
Accumulated
deficit |
|
|
(138,727 |
) |
|
|
(123,199 |
) |
Total stockholders’ equity (deficit) |
|
|
(19,181 |
) |
|
|
(8,470 |
) |
Total liabilities and stockholders’ equity
(deficit) |
|
$ |
18,883 |
|
|
$ |
25,487 |
|
|
|
|
|
|
|
|
|
|
REED’S,
INC. |
|
STATEMENTS
OF CASH FLOWS |
|
For the
Years Ended December 31, 2023 and 2022 |
|
(Amounts in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, |
|
|
December
31, |
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
Cash flows
from operating activities: |
|
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(15,523 |
) |
|
|
$ |
(20,057 |
) |
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
142 |
|
|
|
|
108 |
|
|
|
Loss on disposal of property & equipment |
|
|
8 |
|
|
|
|
- |
|
|
|
Amortization of debt discount |
|
|
1,137 |
|
|
|
|
530 |
|
|
|
Amortization of prepaid financing costs |
|
|
- |
|
|
|
|
431 |
|
|
|
Fair value of vested options |
|
|
490 |
|
|
|
|
701 |
|
|
|
Fair value of vested restricted shares granted to directors and
officers for services |
|
|
3 |
|
|
|
|
158 |
|
|
|
Common shares issued as financing costs |
|
|
|
|
|
|
37 |
|
|
|
Common shares issued for compensation |
|
|
36 |
|
|
|
|
- |
|
|
|
Provision for product hold |
|
|
1,267 |
|
|
|
|
- |
|
|
|
Change in allowance for doubtful accounts |
|
|
608 |
|
|
|
|
37 |
|
|
|
Provision for receivable with former related party |
|
|
585 |
|
|
|
|
538 |
|
|
|
Change in inventory reserve |
|
|
955 |
|
|
|
|
344 |
|
|
|
Accrued interest on convertible note |
|
|
2,831 |
|
|
|
|
2,313 |
|
|
|
Lease liability |
|
|
-187 |
|
|
|
|
-161 |
|
|
|
Changes in
operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
275 |
|
|
|
|
-525 |
|
|
|
Inventory |
|
|
2,653 |
|
|
|
|
531 |
|
|
|
Prepaid expenses and other assets |
|
|
528 |
|
|
|
|
55 |
|
|
|
Decrease in right of use assets |
|
|
140 |
|
|
|
|
117 |
|
|
|
Accounts payable |
|
|
-1073 |
|
|
|
|
-629 |
|
|
|
Accrued expenses |
|
|
859 |
|
|
|
|
-58 |
|
|
|
Net
cash used in operating activities |
|
|
(4,266 |
) |
|
|
|
(15,530 |
) |
|
|
Cash flows
from investing activities: |
|
|
|
|
|
|
|
|
|
Intangible asset trademark costs |
|
|
(3 |
) |
|
|
|
(2 |
) |
|
|
Purchase of property and equipment |
|
|
(85 |
) |
|
|
|
- |
|
|
|
Sale of property and equipment |
|
|
68 |
|
|
|
|
- |
|
|
|
Net
cash used in investing activities |
|
|
(20 |
) |
|
|
|
(2 |
) |
|
|
Cash flows
from financing activities: |
|
|
|
|
|
|
|
|
|
Proceeds from line of credit |
|
|
43,836 |
|
|
|
|
54,564 |
|
|
|
Payments on the line of credit |
|
|
(45,213 |
) |
|
|
|
(53,456 |
) |
|
|
Payment of debt issuance costs |
|
|
- |
|
|
|
|
(483 |
) |
|
|
Proceeds from sale of common stock |
|
|
4,016 |
|
|
|
|
5,034 |
|
|
|
Proceeds from convertible note payable, net of expenses |
|
|
3,751 |
|
|
|
|
12,430 |
|
|
|
Payment of convertible note payable |
|
|
(200 |
) |
|
|
|
(3,100 |
) |
|
|
Amounts from former related party, net |
|
|
(1,833 |
) |
|
|
|
1,029 |
|
|
|
Repurchase of common stock |
|
|
(1 |
) |
|
|
|
(2 |
) |
|
|
Net
cash provided by financing activities |
|
|
4,356 |
|
|
|
|
16,016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash |
|
|
70 |
|
|
|
|
484 |
|
|
|
Cash at beginning of period |
|
|
533 |
|
|
|
|
49 |
|
|
|
Cash
at end of period |
|
$ |
603 |
|
|
|
$ |
533 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow
information: |
|
|
|
|
|
|
|
|
|
Cash paid
for interest |
|
$ |
1,046 |
|
|
|
$ |
1,911 |
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
|
Dividends on
Series A Convertible Preferred Stock |
|
$ |
5 |
|
|
|
$ |
5 |
|
|
|
Common
Shares issued for financing costs |
|
$ |
273 |
|
|
|
|
- |
|
|
|
Common
Shares issued for principal payment |
|
$ |
- |
|
|
|
$ |
200 |
|
|
|
Common
Shares issued for interest payment |
|
$ |
- |
|
|
|
$ |
1,261 |
|
|
|
Modified EBITDA
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, legal and insurance settlements, inventory
write-offs associated with exited categories and major packaging
and formula changes, one-time changes to policy, impact of changes
to accounting methodology and one-time restructuring-related costs
including employee severance and asset impairment.
Management 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.
Set forth below is a reconciliation of net loss to Modified
EBITDA for the three and twelve months ended December 31, 2023, and
2022 (unaudited; in thousands):
|
|
Year Ended December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
Net
loss |
|
$ |
(15,523 |
) |
|
|
$ |
(20,057 |
) |
|
|
|
|
|
|
|
|
|
|
Modified
EBITDA adjustments: |
|
|
|
|
|
|
|
|
Depreciation
and amortization |
|
|
281 |
|
|
|
|
225 |
|
|
Interest
expense |
|
|
6,106 |
|
|
|
|
5,223 |
|
|
Tax
expense |
|
|
251 |
|
|
|
|
|
|
Stock option
and other noncash compensation |
|
|
493 |
|
|
|
|
859 |
|
|
Provision
for product hold |
|
|
1,267 |
|
|
|
|
|
|
Provision
for receivable with former related party |
|
|
585 |
|
|
|
|
538 |
|
|
Inventory
write-offs associated with exited categories and major packaging
and formula changes |
|
|
1,848 |
|
|
|
|
|
|
One time
change to policy for discounts |
|
|
756 |
|
|
|
|
|
|
Legal
settlement |
|
|
12 |
|
|
|
|
|
|
Severance
costs |
|
|
256 |
|
|
|
|
66 |
|
|
|
|
|
|
|
|
|
|
|
Total EBITDA adjustments |
|
$ |
11,855 |
|
|
|
$ |
6,911 |
|
|
|
|
|
|
|
|
|
|
|
Modified
EBITDA |
|
$ |
(3,668 |
) |
|
|
$ |
(13,146 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months Ended December 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
Net
loss |
|
$ |
(6,596 |
) |
|
|
$ |
(6,769 |
) |
|
|
|
|
|
|
|
|
|
|
Modified
EBITDA adjustments: |
|
|
|
|
|
|
|
|
Depreciation
and amortization |
|
|
67 |
|
|
|
|
60 |
|
|
Interest
expense |
|
|
1,647 |
|
|
|
|
3,104 |
|
|
Tax
expense |
|
|
251 |
|
|
|
|
0 |
|
|
Stock option
and other noncash compensation |
|
|
139 |
|
|
|
|
274 |
|
|
Provision
for product hold |
|
|
1,267 |
|
|
|
|
|
|
Provision
for receivable with former related party |
|
|
585 |
|
|
|
|
538 |
|
|
Inventory
write-offs associated with exited categories and major packaging
and formula changes |
|
|
1,848 |
|
|
|
|
|
|
One time
change to policy for discounts |
|
|
756 |
|
|
|
|
|
|
Legal
settlement |
|
|
0 |
|
|
|
|
|
|
Severance
costs |
|
|
79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total EBITDA adjustments |
|
$ |
6,639 |
|
|
|
$ |
3,976 |
|
|
|
|
|
|
|
|
|
|
|
Modified
EBITDA |
|
$ |
43 |
|
|
|
$ |
(2,793 |
) |
|
|
|
|
|
|
|
|
|
|
We 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 performance.
Modified EBITDA has limitations as an analytical tool, which
includes, among others, the following:
- Modified EBITDA does not reflect our
cash expenditures, or future requirements, for capital expenditures
or contractual commitments;
- Modified EBITDA does not reflect
changes in, or cash requirements for, our working capital
needs;
- Modified EBITDA does not reflect
future interest expense, or the cash requirements necessary to
service interest or principal payments, on our debts; and
- Although 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.
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