Revenue Performance - Total revenues decreased by $2,606,680, or 48.66%, to $2,750,305 for the three months ended September 30, 2023, compared to $5,356,985 for the same period in 2022[244]. - Revenues from the nutraceutical business decreased by $1,757,351, or 39.04%, to $2,744,306 for the three months ended September 30, 2023, from $4,501,657 for the same period in 2022, primarily due to cash constraints affecting the ability to purchase raw materials[246]. - Digital marketing business revenues decreased by $849,329, or 99.30%, to $5,999 for the three months ended September 30, 2023, from $855,328 for the same period in 2022[247]. - Total revenues decreased by $6,658,787, or 47.23%, to $7,438,575 for the nine months ended September 30, 2023, from $14,097,362 for the same period in 2022[261]. - Revenues from the nutraceutical business decreased by $4,459,936, or 38.66%, to $7,077,105 for the nine months ended September 30, 2023, from $11,537,041 for the same period in 2022[262]. Profitability and Loss - Gross profit for the three months ended September 30, 2023, was $1,061,686, representing a gross margin of 38.60%, down from $2,632,664 and a gross margin of 49.14% in the same period of 2022[245]. - Gross profit decreased by $1,570,978, or 59.67%, to $1,061,686 for the three months ended September 30, 2023, from $2,632,664 for the same period in 2022[252]. - Gross profit decreased by $3,299,962, or 55.64%, to $2,631,435 for the nine months ended September 30, 2023, from $5,931,397 for the same period in 2022[267]. - Net loss for the three months ended September 30, 2023, was $(4,344,107), or (157.95)% of total revenues, compared to $(1,947,721), or (36.36)% in the same period of 2022[245]. - Net loss increased by $2,396,386, or 123.04%, to $4,344,107 for the three months ended September 30, 2023, from $1,947,721 for the same period in 2022[259]. - The net loss for the nine months ended September 30, 2023, was $12,848,419, a reduction of $9,058,974 or 41.35% compared to a net loss of $21,907,393 in the prior year[276]. Operating Expenses - Operating loss increased to $(3,207,206) for the three months ended September 30, 2023, compared to $(1,446,385) for the same period in 2022, reflecting a significant rise in operating expenses[245]. - Total operating expenses rose to $4,268,892, or 155.22% of revenues, for the three months ended September 30, 2023, compared to $4,079,049, or 76.14% of revenues, in the same period of 2022[245]. - Selling, general and administrative expenses decreased by $521,756, or 29.64%, to $1,238,625 for the three months ended September 30, 2023, from $1,760,381 for the same period in 2022[253]. - Compensation expenses increased by $566,404, or 38.28%, to $2,046,220 for the three months ended September 30, 2023, from $1,479,816 for the same period in 2022[254]. Financial Position - As of September 30, 2023, the company had a working capital deficiency of approximately $11.4 million and cash of only $8,890[278]. - The company has outstanding debt of $12,909,530 as of September 30, 2023, with $4,404,462 due within the next 12 months[297]. - Cash used in operating activities for the nine months ended September 30, 2023, was $5,065,754, an improvement from $7,491,867 in the same period of 2022[283]. - Net cash provided by financing activities for the nine months ended September 30, 2023, was $5,008,380, down from $10,662,578 in the same period of 2022[285]. Strategic Initiatives - The company is executing a buy-and-build strategy aiming to aggregate companies generating a minimum of $300 million in revenues by Q4 2026[233]. - The company operates a network platform in the affiliate marketing space, compensating third-party digital marketers to generate traffic for its products[234]. - The company has engaged a middle market investment banking firm to assist in raising additional capital through equity and debt financing[279]. - The company completed two registered direct offerings in May 2023, raising total gross proceeds of $2,484,383[291][295]. - A 1-for-3 reverse stock split was executed on October 27, 2023, reducing authorized common stock from 166,666,667 shares to 55,555,556 shares[241]. Impairment and Other Expenses - Impairment of intangible assets recognized was $466,737 during the nine months ended September 30, 2023, with no impairment recognized in the same period in 2022[273]. - The company recognized an impairment of $466,737 related to the affiliate relationship asset associated with Nexus due to decreased revenues[302]. - Total other expense, net for the nine months ended September 30, 2023, was $2,818,762, a decrease of 80.7% from $14,580,624 for the same period in 2022[275].
Smart for Life(SMFL) - 2023 Q3 - Quarterly Report