0001650696 Laird Superfood, Inc. false --12-31 Q1 2024 0.001 0.001 100,000,000 100,000,000 9,885,429 9,519,725 9,749,326 9,383,622 http://fasb.org/us-gaap/2024#PrimeRateMember 99,525 0 http://fasb.org/us-gaap/2024#SecuredOvernightFinancingRateSofrMember 0 0 10 10 10 10 3 3 3 3 3 10 132,000 100 10 10 10 10 1.9 5,570,321 5,132,143 1,399,420 1,730,548 9,908,938 8,112,938 5,868,337 4,427,681 9,908,938 8,112,938 false false false false 00016506962024-01-012024-03-31 xbrli:shares 00016506962024-05-06 thunderdome:item iso4217:USD 00016506962024-03-31 00016506962023-12-31 iso4217:USDxbrli:shares 00016506962023-01-012023-03-31 0001650696lsf:CommonStockOutstandingMember2023-12-31 0001650696us-gaap:AdditionalPaidInCapitalMember2023-12-31 0001650696us-gaap:RetainedEarningsMember2023-12-31 0001650696lsf:CommonStockOutstandingMember2024-01-012024-03-31 0001650696us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-31 0001650696us-gaap:RetainedEarningsMember2024-01-012024-03-31 0001650696lsf:CommonStockOutstandingMember2024-03-31 0001650696us-gaap:AdditionalPaidInCapitalMember2024-03-31 0001650696us-gaap:RetainedEarningsMember2024-03-31 0001650696lsf:CommonStockOutstandingMember2022-12-31 0001650696us-gaap:AdditionalPaidInCapitalMember2022-12-31 0001650696us-gaap:RetainedEarningsMember2022-12-31 00016506962022-12-31 0001650696lsf:CommonStockOutstandingMember2023-01-012023-03-31 0001650696us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-31 0001650696us-gaap:RetainedEarningsMember2023-01-012023-03-31 0001650696lsf:CommonStockOutstandingMember2023-03-31 0001650696us-gaap:AdditionalPaidInCapitalMember2023-03-31 0001650696us-gaap:RetainedEarningsMember2023-03-31 00016506962023-03-31 0001650696lsf:AlternaCapitalSolutionsAcsMemberus-gaap:SubsequentEventMember2024-05-07 00016506962024-05-072024-05-07 xbrli:pure 0001650696lsf:AlternaCapitalSolutionsAcsMemberus-gaap:SubsequentEventMember2024-05-072024-05-07 utr:M 0001650696lsf:DanoneManifestoVenturesPBCMemberlsf:ThreeCovid19ReliefProjectsMember2020-12-03 0001650696lsf:DanoneManifestoVenturesPBCMemberlsf:ThreeCovid19ReliefProjectsMember2024-03-31 0001650696lsf:DanoneManifestoVenturesPBCMemberlsf:ThreeCovid19ReliefProjectsMember2023-12-31 0001650696lsf:DanoneManifestoVenturesPBCMemberlsf:ThreeCovid19ReliefProjectsMember2024-01-012024-03-31 0001650696lsf:DanoneManifestoVenturesPBCMemberlsf:ThreeCovid19ReliefProjectsMember2023-01-012023-03-31 0001650696us-gaap:AssetPledgedAsCollateralMemberlsf:CreditCardLimitsMember2024-03-31 0001650696us-gaap:AssetPledgedAsCollateralMemberlsf:CreditCardLimitsMember2023-12-31 0001650696lsf:InventoryTurnoverQuantitiesOnHandAndExpirationDatesMember2024-03-31 0001650696lsf:ProductsQuarantinedForQualityIssuesMember2024-03-31 0001650696lsf:DiscontinuedInventoriesMember2024-03-31 0001650696lsf:InventoryTurnoverQuantitiesOnHandAndExpirationDatesMember2023-12-31 0001650696lsf:ProductsQuarantinedForQualityIssuesMember2023-12-31 0001650696lsf:DiscontinuedInventoriesMember2023-12-31 0001650696us-gaap:RevolvingCreditFacilityMemberlsf:WellsFargoNationalAssociationLineOfCreditMember2021-09-02 00016506962021-09-022021-09-02 0001650696us-gaap:RevolvingCreditFacilityMemberlsf:WellsFargoNationalAssociationLineOfCreditMember2021-09-022021-09-02 0001650696us-gaap:RevolvingCreditFacilityMemberlsf:WellsFargoNationalAssociationLineOfCreditMember2022-09-01 0001650696us-gaap:RevolvingCreditFacilityMemberlsf:WellsFargoNationalAssociationLineOfCreditMember2023-08-31 0001650696lsf:FactoryAndOfficeEquipmentMember2024-03-31 0001650696lsf:FactoryAndOfficeEquipmentMember2023-12-31 0001650696us-gaap:LeaseholdImprovementsMember2024-03-31 0001650696us-gaap:LeaseholdImprovementsMember2023-12-31 0001650696lsf:ProductionEquipmentMember2022-12-31 0001650696lsf:ProductionEquipmentMember2023-01-012023-03-31 0001650696lsf:ProductionEquipmentMember2023-03-31 0001650696lsf:ProductionEquipmentMember2024-03-31 0001650696lsf:ProductionEquipmentMember2023-12-31 utr:Y 0001650696us-gaap:TradeNamesMember2024-03-31 0001650696us-gaap:TradeNamesMember2023-12-31 0001650696lsf:RecipesMember2024-03-31 0001650696lsf:RecipesMember2023-12-31 0001650696lsf:SocialMediaAgreementMember2024-03-31 0001650696lsf:SocialMediaAgreementMember2023-12-31 0001650696us-gaap:ComputerSoftwareIntangibleAssetMember2024-03-31 0001650696us-gaap:ComputerSoftwareIntangibleAssetMember2023-12-31 0001650696us-gaap:LicensingAgreementsMember2024-03-31 0001650696us-gaap:LicensingAgreementsMember2023-12-31 0001650696srt:WeightedAverageMember2024-03-31 0001650696srt:MinimumMember2024-03-31 0001650696srt:MaximumMember2024-03-31 0001650696lsf:LairdHamiltonMemberus-gaap:LicenseAgreementTermsMember2024-03-31 0001650696lsf:LairdHamiltonMemberus-gaap:LicenseAgreementTermsMember2023-12-31 0001650696lsf:LairdHamiltonMemberus-gaap:LicenseAgreementTermsMember2024-01-012024-03-31 0001650696lsf:GabrielleReeceMemberus-gaap:LicenseAgreementTermsMember2024-03-31 0001650696lsf:GabrielleReeceMemberus-gaap:LicenseAgreementTermsMember2023-12-31 0001650696lsf:LairdHamiltonAndGabrielleRieceMemberus-gaap:LicenseAgreementTermsMember2018-11-192018-11-19 0001650696lsf:LairdHamiltonAndGabrielleRieceMemberus-gaap:LicenseAgreementTermsMember2020-05-262020-05-26 0001650696lsf:CommericialLeaseWithRiiLundgrenMillLlcMember2018-03-012018-03-01 0001650696lsf:SecondCommercialLeaseWithRiiLundgrenMillLlcMember2019-07-012019-07-01 0001650696lsf:ThirdCommercialLeaseWithRiiLundgrenMillLlcMember2021-10-012021-10-01 00016506962023-01-31 00016506962022-01-012022-12-31 0001650696lsf:PickyBarsLlcLeaseMember2021-05-032021-05-03 utr:sqft 0001650696lsf:SomaticExperiencingTraumaInstituteSubleaseMember2023-01-01 0001650696us-gaap:StateAndLocalJurisdictionMember2024-03-31 0001650696us-gaap:StateAndLocalJurisdictionMember2023-12-31 0001650696us-gaap:DomesticCountryMember2024-03-31 0001650696us-gaap:DomesticCountryMember2023-12-31 0001650696us-gaap:DomesticCountryMemberlsf:ExpiringIn2036Member2024-03-31 0001650696us-gaap:DomesticCountryMemberlsf:ExpiringIn2036Member2023-12-31 0001650696us-gaap:DomesticCountryMemberlsf:IndefinitelyMember2024-03-31 0001650696us-gaap:DomesticCountryMemberlsf:IndefinitelyMember2023-12-31 0001650696lsf:EmployeeStockPurchasePlanMember2024-03-31 00016506962023-01-012023-12-31 0001650696us-gaap:RestrictedStockUnitsRSUMember2023-12-31 0001650696us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-12-31 0001650696us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-03-31 0001650696us-gaap:RestrictedStockUnitsRSUMember2024-03-31 0001650696us-gaap:RestrictedStockUnitsRSUMember2022-12-31 0001650696us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-12-31 0001650696us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-03-31 0001650696us-gaap:RestrictedStockUnitsRSUMember2023-03-31 0001650696lsf:MarketBasedStockUnitsMember2023-12-31 0001650696lsf:MarketBasedStockUnitsMember2023-01-012023-12-31 0001650696lsf:MarketBasedStockUnitsMember2024-01-012024-03-31 0001650696lsf:MarketBasedStockUnitsMember2024-03-31 0001650696lsf:MarketBasedStockUnitsMember2022-12-31 0001650696lsf:MarketBasedStockUnitsMember2022-01-012022-12-31 0001650696lsf:MarketBasedStockUnitsMember2023-01-012023-03-31 0001650696lsf:MarketBasedStockUnitsMember2023-03-31 0001650696us-gaap:EmployeeStockOptionMember2024-01-012024-03-31 0001650696us-gaap:EmployeeStockOptionMember2024-03-31 0001650696lsf:AwardWithCostToBeRecognizedInCostOfGoodsSoldMember2024-01-012024-03-31 0001650696lsf:AwardWithCostToBeRecognizedInCostOfGoodsSoldMember2024-03-31 0001650696lsf:AwardWithCostToBeRecognizedInGeneralAndAdministrativeMember2024-01-012024-03-31 0001650696lsf:AwardWithCostToBeRecognizedInGeneralAndAdministrativeMember2024-03-31 0001650696lsf:AwardWithCostToBeRecognizedInSalesAndMarketingMember2024-01-012024-03-31 0001650696lsf:AwardWithCostToBeRecognizedInSalesAndMarketingMember2024-03-31 0001650696us-gaap:EmployeeStockOptionMember2023-01-012023-03-31 0001650696us-gaap:EmployeeStockOptionMember2023-12-31 0001650696us-gaap:EmployeeStockOptionMember2023-01-012023-12-31 0001650696lsf:AwardWithCostToBeRecognizedInCostOfGoodsSoldMember2023-01-012023-03-31 0001650696lsf:AwardWithCostToBeRecognizedInCostOfGoodsSoldMember2023-12-31 0001650696lsf:AwardWithCostToBeRecognizedInCostOfGoodsSoldMember2023-01-012023-12-31 0001650696lsf:AwardWithCostToBeRecognizedInGeneralAndAdministrativeMember2023-01-012023-03-31 0001650696lsf:AwardWithCostToBeRecognizedInGeneralAndAdministrativeMember2023-12-31 0001650696lsf:AwardWithCostToBeRecognizedInGeneralAndAdministrativeMember2023-01-012023-12-31 0001650696lsf:AwardWithCostToBeRecognizedInSalesAndMarketingMember2023-01-012023-03-31 0001650696lsf:AwardWithCostToBeRecognizedInSalesAndMarketingMember2023-12-31 0001650696lsf:AwardWithCostToBeRecognizedInSalesAndMarketingMember2023-01-012023-12-31 0001650696us-gaap:AccountsPayableMemberlsf:VendorsConcentrationRiskMemberMemberlsf:VendorAMember2024-01-012024-03-31 0001650696us-gaap:AccountsPayableMemberlsf:VendorsConcentrationRiskMemberMemberlsf:VendorBMember2023-01-012023-03-31 0001650696us-gaap:AccountsPayableMemberlsf:VendorsConcentrationRiskMemberMemberlsf:VendorCMember2023-01-012023-03-31 0001650696us-gaap:AccountsPayableMemberlsf:VendorsConcentrationRiskMemberMemberlsf:VendorDMember2023-01-012023-03-31 0001650696us-gaap:AccountsPayableMemberlsf:VendorsConcentrationRiskMemberMemberlsf:VendorABCDEMember2024-01-012024-03-31 0001650696us-gaap:AccountsPayableMemberlsf:VendorsConcentrationRiskMemberMemberlsf:VendorABCDEMember2023-01-012023-03-31 0001650696us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMemberlsf:CustomerAMember2024-01-012024-03-31 0001650696us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMemberlsf:CustomerAMember2023-01-012023-03-31 0001650696us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMemberlsf:CustomerBMember2024-01-012024-03-31 0001650696us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMemberlsf:CustomerBMember2023-01-012023-03-31 0001650696us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMemberlsf:CustomerCMember2024-01-012024-03-31 0001650696us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMemberlsf:CustomersAbAndCMember2024-01-012024-03-31 0001650696us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMemberlsf:CustomersAbAndCMember2023-01-012023-03-31 0001650696us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberlsf:CustomerAMember2024-01-012024-03-31 0001650696us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberlsf:CustomerAMember2024-03-31 0001650696us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberlsf:CustomerAMember2023-01-012023-03-31 0001650696us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberlsf:CustomerAMember2023-03-31 0001650696us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberlsf:CustomerBMember2024-01-012024-03-31 0001650696us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberlsf:CustomerBMember2024-03-31 0001650696us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberlsf:CustomerBMember2023-01-012023-03-31 0001650696us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberlsf:CustomerBMember2023-03-31 0001650696us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberlsf:CustomerCMember2024-01-012024-03-31 0001650696us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberlsf:CustomerCMember2024-03-31 0001650696us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberlsf:CustomerCMember2023-01-012023-03-31 0001650696us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberlsf:CustomerCMember2023-03-31 0001650696us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberlsf:CustomersAbAndCMember2024-01-012024-03-31 0001650696us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberlsf:CustomersAbAndCMember2024-03-31 0001650696us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberlsf:CustomersAbAndCMember2023-01-012023-03-31 0001650696us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMemberlsf:CustomersAbAndCMember2023-03-31 0001650696us-gaap:CostOfGoodsTotalMemberus-gaap:SupplierConcentrationRiskMemberlsf:SupplierAMember2024-01-012024-03-31 0001650696us-gaap:CostOfGoodsTotalMemberus-gaap:SupplierConcentrationRiskMemberlsf:SupplierBMember2024-01-012024-03-31 0001650696us-gaap:CostOfGoodsTotalMemberus-gaap:SupplierConcentrationRiskMemberlsf:SupplierCMember2024-01-012024-03-31 0001650696us-gaap:CostOfGoodsTotalMemberus-gaap:SupplierConcentrationRiskMemberlsf:SupplierCMember2023-01-012023-03-31 0001650696us-gaap:CostOfGoodsTotalMemberus-gaap:SupplierConcentrationRiskMemberlsf:SupplierDMember2024-01-012024-03-31 0001650696us-gaap:CostOfGoodsTotalMemberus-gaap:SupplierConcentrationRiskMemberlsf:SupplierEMember2024-01-012024-03-31 0001650696us-gaap:CostOfGoodsTotalMemberus-gaap:SupplierConcentrationRiskMemberlsf:SupplierFMember2023-01-012023-03-31 0001650696us-gaap:CostOfGoodsTotalMemberus-gaap:SupplierConcentrationRiskMemberlsf:SupplierABCDEAndFMember2024-01-012024-03-31 0001650696us-gaap:CostOfGoodsTotalMemberus-gaap:SupplierConcentrationRiskMemberlsf:SupplierABCDEAndFMember2023-01-012023-03-31 0001650696us-gaap:CostOfGoodsTotalMemberus-gaap:GeographicConcentrationRiskMembercountry:LK2024-01-012024-03-31 0001650696us-gaap:CostOfGoodsTotalMemberus-gaap:GeographicConcentrationRiskMembercountry:VN2023-01-012023-03-31 0001650696us-gaap:CostOfGoodsTotalMemberus-gaap:GeographicConcentrationRiskMembercountry:CN2023-01-012023-03-31 0001650696us-gaap:CostOfGoodsTotalMemberus-gaap:GeographicConcentrationRiskMembercountry:ID2023-01-012023-03-31 0001650696us-gaap:CostOfGoodsTotalMemberus-gaap:GeographicConcentrationRiskMemberlsf:SpecificRegionsInExcessOf10Member2024-01-012024-03-31 0001650696us-gaap:CostOfGoodsTotalMemberus-gaap:GeographicConcentrationRiskMemberlsf:SpecificRegionsInExcessOf10Member2023-01-012023-03-31 0001650696lsf:GabbyReeceMember2024-01-012024-03-31 0001650696lsf:GabbyReeceMember2023-01-012023-03-31 0001650696lsf:GabbyReeceMember2024-03-31 0001650696lsf:GabbyReeceMember2023-12-31 0001650696lsf:CoffeeCreamerMember2024-01-012024-03-31 0001650696lsf:CoffeeCreamerMember2023-01-012023-03-31 0001650696lsf:CoffeeTeaAndHotChocolateProductsMember2024-01-012024-03-31 0001650696lsf:CoffeeTeaAndHotChocolateProductsMember2023-01-012023-03-31 0001650696lsf:HydrationAndBeverageEnhancingSupplementsMember2024-01-012024-03-31 0001650696lsf:HydrationAndBeverageEnhancingSupplementsMember2023-01-012023-03-31 0001650696lsf:HarvestSnacksAndOtherFoodItemsMember2024-01-012024-03-31 0001650696lsf:HarvestSnacksAndOtherFoodItemsMember2023-01-012023-03-31 0001650696lsf:OtherMember2024-01-012024-03-31 0001650696lsf:OtherMember2023-01-012023-03-31 0001650696lsf:GrossSalesMember2024-01-012024-03-31 0001650696lsf:GrossSalesMember2023-01-012023-03-31 0001650696lsf:ShippingIncomeMember2024-01-012024-03-31 0001650696lsf:ShippingIncomeMember2023-01-012023-03-31 0001650696lsf:ReturnsAndDiscountMember2024-01-012024-03-31 0001650696lsf:ReturnsAndDiscountMember2023-01-012023-03-31 0001650696lsf:OnlineMember2024-01-012024-03-31 0001650696lsf:OnlineMember2023-01-012023-03-31 0001650696lsf:WholesaleMember2024-01-012024-03-31 0001650696lsf:WholesaleMember2023-01-012023-03-31 00016506962023-01-01
 

 

Table of Contents



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549


FORM 10-Q


(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2024

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number: 001-39537


logo.jpg

Laird Superfood, Inc.

(Exact Name of Registrant as Specified in its Charter)


 

Nevada

81-1589788

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

 

5303 Spine Road, Suite 204, Boulder, Colorado 80301

(Address of principal executive offices, including Zip Code)

 

Registrants telephone number, including area code: (541) 588-3600


Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol

 

Name of each exchange

on which registered

Common Stock, $0.001 par value

 

LSF

 

NYSE American

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

  

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

 

As of May 6, 2024 the registrant had 9,611,544 shares of common stock, $0.001 par value per share, outstanding.



 

 

 

TABLE OF CONTENTS

 

 

Page

Part I. Financial Information

 
   

Item 1. Financial Statements

4

   

Unaudited Consolidated Condensed Balance Sheets

4

   

Unaudited Consolidated Condensed Statements of Operations

5

   

Unaudited Consolidated Condensed Statements of Stockholders Equity

6

   

Unaudited Consolidated Condensed Statements of Cash Flows

7

   

Notes to Unaudited Consolidated Condensed Financial Statements

8

   

Item 2. Managements Discussion and Analysis of Financial Conditions and Results of Operations

22

   

Item 3. Quantitative and Qualitative Disclosures About Market Risk

28

   

Item 4. Controls and Procedures

28

   

Part II. Other Information

28

   

Item 1. Legal Proceedings

28

   

Item 1A. Risk Factors

28

   

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

29

   

Item 3. Defaults Upon Senior Securities

29

   

Item 4. Mine Safety Disclosures

29

   

Item 5. Other Information

29

   

Item 6. Exhibits

30

   

Signatures

31

 

 

Laird, our logo and other trademarks or service marks appearing in this report are the property of Laird Superfood, Inc. Trade names, trademarks and service marks of other companies appearing in this report are the property of their respective owners. Solely for convenience, the trademarks, service marks and trade names included in this report are without the ®, or other applicable symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names.

 

Unless the context otherwise indicates, references to “Laird Superfood,” “we,” “our,” “us” and the “Company” refer to Laird Superfood, Inc. and its subsidiary on a consolidated basis. 

 

 

2

 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements convey our current expectations or forecasts of future events and are not guarantees of future performance. They are based on numerous assumptions that we believe are reasonable, but they are open to a wide range of uncertainties and business risks. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Any statements contained in this Quarterly Report on Form 10-Q that are not statements of historical fact may be forward-looking statements. When we use the words “anticipates,” “believes,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “seeks,” “should,” “will,” “would,” or the negative of these terms or other comparable terminology, we are identifying forward-looking statements.

 

Forward-looking statements involve risks and uncertainties, which may cause our actual results, performance, or achievements to be materially different from those expressed or implied by forward-looking statements. Key factors that could cause actual results to be different than expected or anticipated include, but are not limited to:

 

 

our limited operating history and ability to become profitable;

 

 

our ability to manage our growth, including our human resource requirements;

 

 

our reliance on third parties for raw materials and production of our products;

 

 

our future capital resources and needs;

 

 

our ability to retain and grow our customer base;

 

 

our reliance on independent distributors for a substantial portion of our sales;

 

 

our ability to evaluate and measure our business, prospects, and performance metrics;

 

 

our ability to compete and succeed in a highly competitive and evolving industry;

 

 

the health of the premium organic and natural food industry as a whole;

 

 

risks related to our intellectual property rights and developing a strong brand;

 

 

our reliance on key personnel, including Laird Hamilton and Gabrielle Reece;

 

 

regulatory risks;

 

 

risks related to our international operations;

 

 

the risk of substantial dilution from future issuances of our equity securities; and

 

 

the other risks described herein and in our Annual Report on Form 10-K for the year ended December 31, 2023.

 

In light of these risks, uncertainties and assumptions, you are cautioned not to place undue reliance on forward-looking statements, which are inherently unreliable and speak only as of the date of this Quarterly Report on Form 10-Q. You should read this Quarterly Report on Form 10-Q and the documents that we reference in this report with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. When considering forward-looking statements, you should keep in mind the cautionary statements in this report. We qualify all our forward-looking statements by these cautionary statements. We are not under any obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

3

 

 

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

 

LAIRD SUPERFOOD, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(unaudited)

 

  

As of

 
  March 31, 2024  

December 31, 2023

 

Assets

        

Current assets

        

Cash, cash equivalents, and restricted cash

 $7,289,286  $7,706,806 

Accounts receivable, net

  2,064,745   1,022,372 

Inventory, net

  5,633,124   6,322,559 

Prepaid expenses and other current assets

  1,067,675   1,285,564 

Total current assets

  16,054,830   16,337,301 

Noncurrent assets

        

Property and equipment, net

  102,881   122,595 

Intangible assets, net

  1,033,510   1,085,231 

Related party license agreements

  132,100   132,100 

Right-of-use assets

  323,007   354,732 

Total noncurrent assets

  1,591,498   1,694,658 

Total assets

 $17,646,328  $18,031,959 

Liabilities and Stockholders’ Equity

        

Current liabilities

        

Accounts payable

 $1,718,574  $1,647,673 

Accrued expenses

  2,862,394   2,586,343 

Related party liabilities

  28,167   2,688 

Lease liabilities, current portion

  148,598   138,800 

Total current liabilities

  4,757,733   4,375,504 

Lease liabilities

  208,142   243,836 

Total liabilities

  4,965,875   4,619,340 

Stockholders’ equity

        

Common stock, $0.001 par value, 100,000,000 shares authorized as of March 31, 2024 and December 31, 2023; 9,885,429 and 9,519,725 issued and outstanding at March 31, 2024, respectively; and 9,749,326 and 9,383,622 issued and outstanding at December 31, 2023, respectively.

  9,520   9,384 

Additional paid-in capital

  119,985,604   119,701,384 

Accumulated deficit

  (107,314,671)  (106,298,149)

Total stockholders’ equity

  12,680,453   13,412,619 

Total liabilities and stockholders’ equity

 $17,646,328  $18,031,959 

 

The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.

 

4

 

 

LAIRD SUPERFOOD, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

   

Three Months Ended

 
   

March 31,

 
   

2024

   

2023

 

Sales, net

  $ 9,908,938     $ 8,112,938  

Cost of goods sold

    (5,944,837 )     (6,239,062 )

Gross profit

    3,964,101       1,873,876  

General and administrative

               

Salaries, wages, and benefits

    922,407       1,315,449  

Other general and administrative

    1,235,341       1,766,861  

Total general and administrative expenses

    2,157,748       3,082,310  

Sales and marketing

               

Marketing and advertising

    2,053,258       2,203,035  

Selling expenses

    779,156       853,204  

Related party marketing agreements

    62,501       37,809  

Total sales and marketing expenses

    2,894,915       3,094,048  

Total operating expenses

    5,052,663       6,176,358  

Operating loss

    (1,088,562 )     (4,302,482 )

Other income

    110,997       170,994  

Loss before income taxes

    (977,565 )     (4,131,488 )

Income tax expense

    (38,957 )     (12,422 )

Net loss

  $ (1,016,522 )   $ (4,143,910 )

Net loss per share:

               

Basic and diluted

  $ (0.11 )   $ (0.45 )

Weighted-average shares of common stock outstanding used in computing net loss per share of common stock, basic and diluted

    9,401,605       9,213,723  

 

The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.

 

 

5

 

LAIRD SUPERFOOD, INC.

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS EQUITY

(Unaudited)

 

   

Stockholders’ Equity

         
   

Common Stock

   

Additional

   

Accumulated

         
   

Shares

   

Amount

   

Paid-in Capital

   

Deficit

   

Total

 

Balances, January 1, 2024

    9,383,622     $ 9,384     $ 119,701,384     $ (106,298,149 )   $ 13,412,619  

Stock-based compensation

                279,565             279,565  

Common stock issuances, net of taxes

    131,103       131       (5,340 )           (5,209 )

Stock options exercised

    5,000       5       9,995             10,000  

Net loss

                      (1,016,522 )     (1,016,522 )

Balances, March 31, 2024

    9,519,725     $ 9,520     $ 119,985,604     $ (107,314,671 )   $ 12,680,453  

 

   

Stockholders’ Equity

         
   

Common Stock

   

Additional

   

Accumulated

         
   

Shares

   

Amount

   

Paid-in Capital

   

Deficit

   

Total

 

Balances, January 1, 2023

    9,210,414     $ 9,210     $ 118,636,834     $ (96,135,032 )   $ 22,511,012  

Stock-based compensation

                147,635             147,635  

Common stock issuances, net of taxes

    9,086       10       (4,420 )           (4,410 )

Net loss

                      (4,143,910 )     (4,143,910 )

Balances, March 31, 2023

    9,219,500     $ 9,220     $ 118,780,049     $ (100,278,942 )   $ 18,510,327  

 

The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.

 

6

 

 

LAIRD SUPERFOOD, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   

Three Months Ended March 31,

 
   

2024

   

2023

 

Cash flows from operating activities

               

Net loss

  $ (1,016,522 )   $ (4,143,910 )

Adjustments to reconcile net loss to net cash from operating activities:

               

Depreciation and amortization

    71,435       87,953  

Stock-based compensation

    279,565       147,635  

Provision for inventory obsolescence

    43,204       234,394  

Allowance for credit losses

    26,865       23,668  

Noncash lease costs

    38,083       38,546  

Other operating activities, net

          (32,007 )

Changes in operating assets and liabilities:

               

Accounts receivable

    (1,069,238 )     (1,438,063 )

Inventory

    646,231       72,007  

Prepaid expenses and other current assets

    217,889       402,299  

Operating lease liability

    (32,254 )     (31,315 )

Accounts payable

    84,880       1,312,821  

Accrued expenses

    287,551       (2,728,290 )

Net cash from operating activities

    (422,311 )     (6,054,262 )

Cash flows from investing activities

          135,737  

Cash flows from financing activities

    4,791       (4,410 )

Net change in cash and cash equivalents

    (417,520 )     (5,922,935 )

Cash, cash equivalents, and restricted cash, beginning of period

    7,706,806       17,809,802  

Cash, cash equivalents, and restricted cash, end of period

  $ 7,289,286     $ 11,886,867  

Supplemental disclosures of cash flow information

               

Right-of-use assets obtained in exchange for operating lease liabilities

  $     $ 344,382  

Supplemental disclosures of non-cash investing activities

               

Receivable from sale of assets held-for-sale included in other current assets at the end of the period

  $     $ 581,835  

 

The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.

 

 

7

LAIRD SUPERFOOD, INC.
Notes to Unaudited Consolidated Condensed Financial Statements
 

1. Summary of Significant Accounting Policies and Estimates

 

Financial Statement Preparation

 

The accompanying unaudited consolidated condensed financial statements (the "balance sheet(s)," "statement(s) of operations," "statement(s) of stockholders' equity," "statement(s) of cash flows," and, collectively, the "financial statements") include the accounts of Laird Superfood, Inc., a Nevada corporation, and its wholly owned subsidiary, Picky Bars, LLC, (collectively, the “Company,” “Laird Superfood,” “we,” or "our"). In management's opinion, the financial statements contain all adjustments, which are normal recurring adjustments, necessary for a fair presentation of its financial position and its results of operations, changes in stockholders’ equity, and cash flows for the interim periods.

 

Segment information is prepared on the same basis that the Company's Chief Executive Officer, who is deemed to be the Company's Chief Operating Decision Maker, reviews financial information for operational decision-making purposes.

 

The financial statements and related financial information should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Form 10-K") filed with the Securities and Exchange Commission (the "SEC") on March 13, 2024. The financial information as of  December 31, 2023 was derived from the audited financial statements and notes for the fiscal year ended December 31, 2023 included in Item 8 of the 2023 Form 10-K. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the footnotes and management's discussion and analysis of the consolidated financial statements in the 10-K. Certain information in footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") has been condensed or omitted pursuant to the rules and regulations of the SEC and the accounting standards for interim financial statements.

 

Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results expected for the fiscal year ending December 31, 2024.

 

Recently Issued Accounting Pronouncements

 

In  November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. The expanded annual disclosures are effective for the year ending  December 31, 2024, and the expanded interim disclosures are effective in 2025 and will be applied retrospectively to all prior periods presented. While the Company is currently evaluating the expanded disclosure requirements, the Company does not expect the adoption of these amendments to have a material impact on our consolidated financial statements.

 

In  December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), which requires, among other things, additional disclosures primarily related to the income tax rate reconciliation and income taxes paid. The expanded annual disclosures are effective for our year ending  December 31, 2025. The Company is currently evaluating the impact that ASU 2023-09 will have on its consolidated financial statements and whether the Company will apply the standard prospectively or retrospectively.

 

Subsequent Events

 

Subsequent events are events or transactions that occur after the balance sheet date but before the financial statements are available to be issued. The Company has evaluated events and transactions subsequent to March 31, 2024 for potential recognition of disclosure in the financial statements and determined that there were no such subsequent events aside from the below.

 

On May 7, 2024, the Company entered into an accounts receivable factoring agreement (the “Factoring Agreement”) with Alterna Capital Solutions LLC (the “Purchaser”). Pursuant to the Factoring Agreement, the Company has 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. The Factoring Agreement provides for the payment of certain fees by the Company, including, among others, a funds usage fee of prime plus 1.5% per annum with a minimum interest rate of 10.0% per annum. The Company will also be charged a collateral monitoring fee of 0.05% per month, assessed on the average monthly accounts receivable balance, which is payable on the last day of each month. The Factoring Agreement is for an initial term of 12 months and will renew on a year-to-year basis thereafter, unless terminated in accordance with the Factoring Agreement.

 

The Company has granted the Purchaser a security interest all of the Company’s personal property and fixtures, including, among other things, the Company’s accounts receivable, inventory, equipment, instruments, deposit accounts, general intangibles, and supporting obligations to secure the payment and performance of all obligations of the Company to the Purchaser under the Factoring Agreement. The Factoring Agreement also provides for customary provisions, including representations, warranties and covenants, indemnification, waiver of jury trial, and the exercise of remedies upon a breach or default

 

 

8

LAIRD SUPERFOOD, INC.
Notes to Unaudited Consolidated Condensed Financial Statements
 

2. Cash, Cash Equivalents, and Restricted Cash

 

Cash, cash equivalents, and restricted cash are highly liquid instruments with an original maturity of three months or less when purchased. For the purposes of the statements of cash flows, the Company includes cash on hand, cash in clearing accounts, cash on deposit with financial institutions, investments with an original maturity of three months or less, and restricted cash in determining the total balance.

 

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheets as of:

 

  

March 31,

  

December 31,

 
  

2024

  

2023

 

Cash and cash equivalents

 $7,099,755  $7,566,299 

Restricted cash

  189,531   140,507 

Total cash, cash equivalents, and restricted cash

 $7,289,286  $7,706,806 

 

Amounts in restricted cash represent those that are required to be set aside by the following contractual agreements:

 

 

On December 3, 2020, the Company entered into an agreement with Danone Manifesto Ventures, PBC, which provided the Company $298,103 in funds for the purpose of supporting three COVID-19 relief projects. As of March 31, 2024 and December 31, 2023, cash equivalents in the amount of $99,525 were restricted under this agreement. During the three months ended March 31, 2024 and 2023, the Company contributed $0 to these projects. The restriction will be released upon the completion of the projects.

 

 

Cash equivalents of $530,000 were pledged to secure Company credit card limits. As of  March 31, 2024 and December 31, 2023, $90,006 and $40,982, respectively, of these funds were restricted to collateralize borrowings against these Company credit cards. 

 

Cash, cash equivalents, and restricted cash balances that exceeded the Federal Deposit Insurance Corporation (“FDIC”) and Securities Investor Protection Corporation ("SPIC") insurable limits as of March 31, 2024 and December 31, 2023 totaled $6,324,134 and $6,756,207, respectively. The Company has not experienced any losses related to these balances. The Company’s cash, cash equivalents, and restricted cash are with what the Company believes to be a high-quality financial institution and considers the risks associated with these funds in excess of FDIC and SPIC insurable limits to be low.

 

3. Inventory

 

Inventory is stated at the lower of cost or net realizable value, or the value of consideration that can be received upon sale of said product, and approximate costs determined on the first-in first-out basis and consists primarily of raw materials and packaging and finished goods and includes co-packing fees, indirect labor, and allocable overhead. The following table presents the components of inventory, net of reserves, as of:

 

  

March 31,

  

December 31,

 
  

2024

  

2023

 

Raw materials and packaging

 $2,470,319  $2,180,294 

Finished goods

  3,162,805   4,142,265 

Total inventory, net

 $5,633,124  $6,322,559 

 

The Company periodically reviews the value of items in inventory and provides write-offs of inventory based on current market assessment, which are charged to cost of goods sold. For the three months ended March 31, 2024, the Company recorded $43,204 of inventory obsolescence and disposal costs. For the three months ended March 31, 2023, the Company recorded $234,394 of inventory obsolescence and disposal costs.

 

As of March 31, 2024 inventory reserves totaled $927,340. This is comprised of estimated reserves based on inventory turnover, quantities on hand, and expiration dates of $248,587, products quarantined for quality issues of $334,269, and discontinued inventories of $344,484. As of December 31, 2023, inventory reserves totaled $1,029,657. This was comprised of estimated reserves based on inventory turnover, quantities on hand, and expiration dates of $385,069, products quarantined for quality issues of $306,276, and discontinued inventories of $338,312.

 

As of March 31, 2024 and December 31, 2023, the Company had a total of $310,265 and $449,242, respectively, of prepayments for future raw materials inventory which are included in prepaid expenses and other current assets, net on the balance sheets.

 

9

LAIRD SUPERFOOD, INC.
Notes to Unaudited Consolidated Condensed Financial Statements
 

4. Prepaid Expenses and Other Current Assets

 

The following table presents the components of prepaid expenses and other current assets, as of:

 

  

March 31,

  

December 31,

 
  

2024

  

2023

 

Prepaid insurance

 $237,508  $371,802 

Prepaid inventory

  310,265   449,242 

Prepaid subscriptions and license fees

  287,219   139,590 

Deposits

  166,647   238,719 

Other current assets

  66,036   86,211 

Prepaid expenses and other current assets

 $1,067,675  $1,285,564 
 

5. Revolving Lines of Credit

 

On September 2, 2021, the Company entered into a revolving line of credit with Wells Fargo Bank National Association in a principal amount not exceeding $9,500,000. Any outstanding amounts under the line of credit would have had an interest rate calculated as Daily Simple Secured Overnight Financing Rate (“SOFR”) plus 1.5% per annum until paid in full. The line of credit was renewed on September 1, 2022, with a maturity date of August 31, 2023, and the available credit was reduced to $5,000,000. The line of credit was terminated pursuant to its terms on August 31, 2023, and no amounts were due thereunder. The line of credit was not renewed.

 

6. Property and Equipment

 

Property and Equipment

 

Property and equipment, net is comprised of the following as of:

 

  

March 31, 2024

  

December 31, 2023

 
  

Gross Carrying Amount

  

Accumulated Depreciation

  

Net Carrying Amount

  

Gross Carrying Amount

  

Accumulated Depreciation

  

Net Carrying Amount

 

Furniture and office equipment

 $184,242  $(102,447) $81,795  $184,241  $(85,093) $99,148 

Leasehold improvements

  46,276   (25,190)  21,086   46,276   (22,829)  23,447 
  $230,518  $(127,637) $102,881  $230,517  $(107,922) $122,595 

 

Depreciation expense was $19,714 for the three months ended March 31, 2024. Depreciation expense was $36,231 for the three months ended March 31, 2023.

 

Assets Classified as Held-for-Sale

 

In the fourth quarter of 2022, the Company entered into purchase agreements for the sale of the production equipment for an aggregate sales price of $800,000. In the first quarter of 2023, consideration amounting to $218,165 was received and $581,835 was receivable and included in prepaid expenses and other current assets on the balance sheets. Consideration was received in full by the end of 2023 and no amounts were receivable as of March 31, 2024 and December 31, 2023. 

 

10

LAIRD SUPERFOOD, INC.
Notes to Unaudited Consolidated Condensed Financial Statements
 

7. Intangible Assets

 

Intangible assets are comprised of the following:

 

  

March 31, 2024

  

December 31, 2023

 
  

Gross Carrying Amount

  

Accumulated Amortization

  

Net Carrying Amount

  

Gross Carrying Amount

  

Accumulated Amortization

  

Net Carrying Amount

 

Trade names (10 years)

 $890,827  $(133,624) $757,203  $890,827  $(106,899) $783,928 

Recipes (10 years)

  330,000   (96,250)  233,750   330,000   (88,000)  242,000 

Social media agreements (3 years)

  80,000   (77,778)  2,222   80,000   (71,111)  8,889 

Software (3 years)

  131,708   (91,373)  40,335   131,708   (81,294)  50,414 

Definite-lived intangible assets

  1,432,535   (399,025)  1,033,510   1,432,535   (347,304)  1,085,231 

Licensing agreements (indefinite)

  132,100      132,100   132,100      132,100 

Total intangible assets

 $1,564,635  $(399,025) $1,165,610  $1,564,635  $(347,304) $1,217,331 

 

The weighted-average useful life of all the Company’s intangible assets is 6.8 years.

 

For the three months ended March 31, 2024 and 2023 amortization expense was $51,721 and $51,722, respectively. 

 

Definite-lived intangible assets

 

Definite life intangible assets are evaluated for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. Examples include a significant adverse change in the extent or manner in which the Company uses the asset, or an unexpected change in financial performance. When evaluating definite life intangible assets for impairment, the Company compares the carrying value of the asset to the asset’s estimated undiscounted future cash flows. An impairment is indicated if the estimated future cash flows are less than the carrying value of the asset. The Company considered the above factors when assessing whether the Company’s long-lived assets will be recoverable.

 

Based on the analysis of the qualitative factors above, management determined that there were no triggering events or impairment charges in the three months ended March 31, 2024

 

Intangible assets are amortized using the straight-line method over estimated useful lives ranging from three to ten years. The estimated amortization expense for each of the next five years and thereafter is as follows:

 

2024 (excluding the three months ended March 31, 2024)

 $137,386 

2025

  149,994 

2026

  139,899 

2027

  139,899 

2028

  139,899 

Thereafter

  326,433 
  $1,033,510 

 

Indefinite-lived intangible assets

 

On  August 3, 2015, the Company entered into a license agreement with the Company’s co-founder Laird Hamilton (the “LH License”). The LH License stated Mr. Hamilton’s contribution to the Company was in the form of intellectual property, granting the Company the right to use Mr. Hamilton’s name and likeness. This contribution, which was reported on the balance sheets as of  March 31, 2024 and  December 31, 2023, was valued at $132,000 and satisfied with the issuance of 660,000 shares of common stock. The Company has determined that the intangible asset associated with the LH License has an indefinite life, as there is no foreseeable limit on the period of time over which it is expected to contribute to the cash flows of the Company.

 

11

LAIRD SUPERFOOD, INC.
Notes to Unaudited Consolidated Condensed Financial Statements
 

On  May 2, 2018, the Company entered into a license agreement with Gabrielle Reece, who is married to Mr. Hamilton (the “GR License”). Pursuant to the GR License, Ms. Reece granted the Company rights to her name, signature, voice, picture, image, likeness, and biographical information. This contribution, which is reported on the consolidated balance sheets as of  March 31, 2024 and December 31, 2023, was valued at $100 based on the consideration exchanged. The Company has determined that the intangible asset associated with the GR License has an indefinite life, as there is no foreseeable limit on the period of time over which it is expected to contribute to the cash flows of the Company.

 

On  November 19, 2018, the Company executed a License and Preservation Agreement with Mr. Hamilton and Ms. Reece which superseded the predecessor license agreements with both individuals. The agreement added specific terms related to non-competition and allowable usage of the property under the license. No additional consideration was exchanged in connection with the agreement and the life of the agreement was set at 100 years.

 

On  May 26, 2020, the Company executed a License and Preservation Agreement with Mr. Hamilton, and Ms. Reece (the “2020 License”), which superseded the predecessor license and preservation agreement with both individuals. Among other modifications, the agreement (i) modified certain approval rights of Mr. Hamilton and Ms. Reece for use of their respective images, signatures, voices, and names (other than those owned by the Company), rights of publicity and common law and statutory rights to the foregoing in the Company’s products, (ii) modified certain assignment, change of control and indemnification provisions, and (iii) granted the Company the right to extend the term of the agreement for additional ten-year terms upon the expiration of the initial one-hundred year term. No additional consideration was exchanged in connection with the agreement.

 

8. Leases

 

Lessee

 

The Company leased its warehouse space under a commercial lease with RII Lundgren Mill, LLC, dated March 1, 2018. The lease commenced March 1, 2018. The initial lease term was ten years, and the Company had the option to renew the lease for two additional five-year periods.

 

The Company executed a second lease for additional warehouse and office space under a commercial lease with RII Lundgren Mill, LLC, dated December 17, 2018. The lease commenced on July 1, 2019. However, for accounting purposes the lease commencement date was June 6, 2019. The initial lease term was ten years.

 

The Company executed a third lease for additional warehouse and office space under a commercial lease with RII Lundgren Mill, LLC, dated October 1, 2021. The lease commenced on October 1, 2021. The initial lease term was ten years.

 

The Company executed a lease cancellation agreement dated December 12, 2022. Under this agreement, the Company's three leases with RII Lundgren Mill, LLC, were terminated effective January 31, 2023, and the Company agreed to pay $1,550,000, of which $500,000 was remitted in 2022 and $1,050,000 was satisfied in the first quarter of 2023.

 

The Company assumed an operating lease in the acquisition of Picky Bars, LLC on May 3, 2021. The initial lease term is 62 months, and the Company has the option to renew the lease for two additional three-year periods.

 

The Company entered into a sublease agreement with Somatic Experiencing Trauma Institute with a commencement date of January 1, 2023, for a 5,257 square foot office space in Boulder, Colorado which serves as the Company's current headquarters. This lease will expire on July 1, 2027.

 

12

LAIRD SUPERFOOD, INC.
Notes to Unaudited Consolidated Condensed Financial Statements
 

The components of lease expense were as follows:

 

  

Three Months Ended

  

Three Months Ended

 
  

March 31, 2024

  

March 31, 2023

 

Operating leases

        

Operating lease cost

 $38,085  $38,547 

Variable lease cost

  5,565   12,915 

Operating lease expense

  43,650   51,462 

Short-term lease rent expense

  64,229   115,763 

Total rent expense

 $107,879  $167,225 

 

  

Three Months Ended

  

Three Months Ended

 
  

March 31, 2024

  

March 31, 2023

 

Operating cash flows - operating leases

 $32,254  $31,315 

Right-of-use assets obtained in exchange for operating lease liabilities

 $-  $344,382 

 

  

March 31, 2024

  

March 31, 2023

 

Weighted-average remaining lease term – operating leases (in years)

  2.9   3.9 

Weighted-average discount rate – operating leases

  6.81%  6.51%

 

As of March 31, 2024, future minimum payments during the next five years and thereafter are as follows:

 

2024 (excluding the three months ended March 31, 2024)

 $106,545 

2025

  126,714 

2026

  109,145 

2027

  56,210 

Total

  398,614 

Less imputed interest

  (41,874)

Operating lease liabilities

 $356,740 

 

Lessor

 

The Company executed a sublease agreement of the Picky Bars, LLC operating lease on March 1, 2022. The lease commenced on April 1, 2022. The initial sublease term expires on April 30, 2025. The sublease meets all of the criteria of an operating lease and is accordingly recognized straight line over the sublease term with a related sublease rental asset accounting for abatements and initial direct costs. The Company had $9,994 and $11,881 of sublease rental assets as of March 31, 2024 and December 31, 2023, respectively, included in prepaid expenses and other current assets on the balance sheets.

 

The components of rental income were as follows:

 

  

Three Months Ended

  

Three Months Ended

 
  

March 31, 2024

  

March 31, 2023

 

Operating leases

        

Operating lease income

 $14,055  $14,055 

Variable lease income

  5,317   5,318 

Total rental income

 $19,372  $19,373 

 

13

LAIRD SUPERFOOD, INC.
Notes to Unaudited Consolidated Condensed Financial Statements
 

As of March 31, 2024, future minimum payments to be received during the next five years and thereafter, as applicable, are as follows:

 

2024 (excluding the three months ended March 31, 2024)

 $46,532 

2025

  20,748 

Total

 $67,280 
 

9. Income Taxes

 

The Company had a tax net loss for the three months ended March 31, 2024 and 2023, and therefore has recorded no assessment of current federal income taxes. The Company is subject to minimum state taxes for various jurisdictions as well as subject to franchise taxes considered income taxes under Accounting Standards Codification ("ASC") 740, Income Taxes. A reconciliation of income tax expense at the federal statutory rate to the income tax provision at the Company's effective rate is as follows:

 

  

Three Months Ended

 
  

March 31, 2024

  

March 31, 2023

 
         

Income tax benefit at statutory rates

 $205,289  $873,910 

Valuation allowance for deferred tax assets

  (178,672)  (856,116)

Stock-based compensation

  (42,697)  (6,328)

Other expense, net

  (22,877)  (23,888)

Reported income tax expense

 $(38,957) $(12,422)

Effective tax rate:

  4.0%  0.3%

 

The Company’s deferred tax assets consisted of the following as of:

 

  

March 31, 2024

  

December 31, 2023

 

Deferred tax assets:

        

Net operating loss carryforwards

 $20,346,129  $20,088,873 

Intangible assets

  2,217,760   2,258,079 

Property and equipment

  1,083,199   1,104,854 

Research and development credits

  251,540   235,514 

Research and development

  244,698   268,414 

Inventory

  202,206   246,182 

Accrued expenses

  477,870   496,695 

Right of use asset

  8,904   7,366 

Bad debt allowance

  116,570   64,250 

Charitable contributions

  34,172   40,773 

Unexercised options

  932,412   890,128 

Total deferred tax assets

  25,915,460   25,701,128 

Valuation allowance

  (25,915,460)  (25,701,128)

Total net deferred tax assets

 $  $ 

 

14

LAIRD SUPERFOOD, INC.
Notes to Unaudited Consolidated Condensed Financial Statements
 

As of  March 31, 2024, the Company did not provide a current or deferred U.S. federal income tax provision or benefit for any of the periods presented because the Company has reported cumulative losses since inception. The Company has recorded a provision for state income taxes and a corresponding current state income tax payable of approximately $21,478 and $7,373 as of  March 31, 2024 and December 31, 2023, respectively. 

 

As of  March 31, 2024 and December 31, 2023, the Company had aggregate net operating losses ("NOLs") totaling approximately $138.5 million and $136.8 million, respectively. As of  March 31, 2024 and December 31, 2023, the Company had federal NOLs totaling approximately $1.9 million from 2017 and prior years that can be carried forward for 20 years and which begin to expire in 2036. As of  March 31, 2024 and December 31, 2023, the Company had federal NOLs totaling approximately $78.8 million and $77.8 million, respectively, from 2018 and subsequent years that can be carried forward indefinitely. As of  March 31, 2024 and December 31, 2023, the Company had state NOLs totaling $57.8 million and $57.1 million, respectively, that can be carried forward for between 15 and 20 years. As of  March 31, 2024 and December 31, 2023, the Company had credits totaling $0.3 million and $0.2 million, respectively, that can be carried forward for five years. As of  March 31, 2024 and December 31, 2023, the Company had other carryforwards totaling $0.6 million that can be carried forward for between one and five years.

 

The use of net operating losses  may be subject to certain limitations, such as those triggered by ownership changes under Section 382 of the Internal Revenue Code. Because these provisions, the use of a portion of the Company's NOLs and tax credit carryforwards  may be limited in future periods. Further, a portion of the carryforwards  may expire before being applied to reduce future income tax liabilities.

 

The Company assesses its deferred tax assets and liabilities to determine if it is more likely than not, they will be realized; if not, a valuation allowance is required to be recorded. Management has determined it is more likely than not that the deferred tax assets would not be realized, thus a full valuation allowance was recorded against the deferred tax assets. The Company  may reduce the valuation allowance against definite-lived deferred tax assets at such a time when it becomes more likely than not that the definite-lived deferred tax assets will be realized. The change in the valuation allowance for deferred tax assets and liabilities for the three months ended  March 31, 2024 and 2023 were net increases of $0.2 million and $0.9 million, respectively.

 

GAAP requires management to evaluate and report information regarding its exposure to various tax positions taken by the Company. The Company has determined whether there are any tax positions that have met the recognition threshold and has measured the Company’s exposure to those tax positions. Management believes that the Company has adequately addressed all relevant tax positions and that there are no unrecorded tax liabilities. 

 

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. U.S. and state jurisdictions have statutes of limitations that generally range from 3 to 5 years.

 

10. Stock Incentive Plan

 

The Company adopted an incentive plan (the “2020 Omnibus Incentive Plan”) on September 22, 2020, to provide for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units ("RSUs"), deferred stock units, unrestricted stock, dividend equivalent rights, performance shares, other performance-based awards, other equity-based awards, and cash bonus awards to Company employees, non-employee directors, and certain consultants and advisors. As of March 31, 2024, the Company has no additional authorized shares to award under the 2020 Omnibus Incentive Plan as of March 31, 2024, excluding 2,159,886 of shares to be issued upon vesting and exercise of outstanding options and RSUs. 

 

15

LAIRD SUPERFOOD, INC.
Notes to Unaudited Consolidated Condensed Financial Statements
 

Stock Options

 

The following tables summarize the Company’s stock option activity during the three months ended March 31, 2024 and 2023:

 

      

Weighted

  

Weighted

     
      

Average

  

Average

     
  

Options

  

Exercise Price

  

Contractual

  

Aggregate

 
  

Activity

  

(per share)

  

Term (years)

  

Intrinsic Value

 

Balance at January 1, 2024

  1,234,778  $4.52   7.91  $30,000 

Granted

  799,188  $0.73       

Exercised/released

  (5,000) $2.00       

Cancelled/forfeited

  (1,000) $12.32       

Balance at March 31, 2024

  2,027,966  $3.03   8.56  $2,657,292 

Exercisable at March 31, 2024

  681,464  $5.03   7.09  $559,810 

 

      

Weighted

  

Weighted

     
      

Average

  

Average

     
  

Options

  

Exercise Price

  

Contractual

  

Aggregate

 
  

Activity

  

(per share)

  

Term (years)

  

Intrinsic Value

 

Balance at January 1, 2023

  921,657  $6.86   8.00  $ 

Granted

    $     $ 

Exercised/released

    $     $ 

Cancelled/forfeited

  (24,164) $9.99     $ 

Balance at March 31, 2023

  897,493  $6.78   7.74  $ 

Exercisable at March 31, 2023

  318,041  $8.72   5.43  $ 

 

The fair value of each stock option granted is estimated on the grant date using the Black-Scholes option valuation model. The assumptions used to calculate the fair value of options granted are evaluated and revised, as necessary, to reflect market conditions and our historical experience.

 

Restricted Stock Units

 

The following tables summarize the Company’s RSU activity during the three months ended March 31, 2024 and 2023:

 

      

Weighted Average

  

Weighted Average

     
      

Grant Date Fair

  

Remaining Vesting

  

Aggregate

 
  

Number of RSUs

  

Value (per share)

  

Term (years)

  

Fair Value

 

Balance at January 1, 2024

  771,885  $1.76   1.98  $1,361,696 

Granted

    $     $ 

Exercised/released

  (33,779) $3.29     $ 

Cancelled/forfeited

    $     $ 

Balance at March 31, 2024

  738,106  $1.69   1.81  $1,250,652 

 

16

LAIRD SUPERFOOD, INC.
Notes to Unaudited Consolidated Condensed Financial Statements
 
      

Weighted Average

  

Weighted Average

     
      

Grant Date Fair

  

Remaining Vesting

  

Aggregate

 
  

Number of RSUs

  

Value (per share)

  

Term (years)

  

Fair Value

 

Balance at January 1, 2023

  504,420  $4.22   2.94  $2,127,734 

Granted

    $     $ 

Exercised/released

  (13,146) $11.30     $ 

Cancelled/forfeited

  (16,279) $5.98     $ 

Balance at March 31, 2023

  474,995  $3.96   2.67  $1,881,278 

 

The Company estimates the fair value of each RSU using the fair value of the Company’s common stock on the date of grant.

 

Market-Based Stock Units ("MSUs")

 

The following tables summarize the Company’s MSU activity during the three months ended March 31, 2024 and 2023:

 

      

Weighted Average

  

Weighted Average

     
      

Grant Date Fair

  

Remaining Vesting

  

Aggregate

 
  

Number of MSUs

  

Value (per share)

  

Term (years)

  

Fair Value

 

Balance at January 1, 2024

  621,314  $1.57   0.62  $977,558 

Granted

    $     $ 

Exercised/released

  (100,000) $0.25     $ 

Cancelled/forfeited

  (21,314) $43.53     $ 

Balance at March 31, 2024

  500,000  $0.05   0.37  $24,460 

 

      

Weighted Average

  

Weighted Average

     
      

Grant Date Fair

  

Remaining Vesting

  

Aggregate

 
  

Number of MSUs

  

Value (per share)

  

Term (years)

  

Fair Value

 

Balance at January 1, 2023

  31,083  $43.53   0.60  $1,353,043 

Granted

    $     $ 

Exercised/released

    $     $ 

Cancelled/forfeited

  (9,769) $43.53     $ 

Balance at March 31, 2023

  21,314  $43.53   0.42  $927,798 

 

The MSUs vest upon the 30-day weighted average stock price reaching or exceeding established targets within the requisite service period. We estimate the grant-date fair value of the MSUs using a Monte Carlo simulation which requires assumptions for expected volatility, risk-free rate of return and dividend yield. Compensation expense for these MSUs is recognized over the requisite service period regardless of whether the market conditions are satisfied.

 

17

LAIRD SUPERFOOD, INC.
Notes to Unaudited Consolidated Condensed Financial Statements
 

Stock-Based Compensation

 

Stock-based compensation expense is recognized ratably over the requisite service period for all awards. The following tables summarize the Company’s stock-based compensation recorded as a result of applying the provisions of ASC Topic 718, Compensation - Stock Compensation to equity awards:

 

  

Three Months Ended

  

Unrecognized Compensation Cost Related to Non-Vested Awards as of

  

Weighted-Average Remaining Vesting Period as of

 
  

March 31, 2024

  

March 31, 2024

  

March 31, 2024 (years)

 

Stock options

 $81,506  $939,421   3.19 

RSUs

  178,794   921,177   2.04 

MSUs

  19,265   9,063   0.37 

Total stock-based compensation

 $279,565  $1,869,661   2.61 
             

Cost of goods sold

 $682  $12,615   4.20 

General and administrative

  231,101   1,627,026   2.44 

Sales and marketing

  47,782   230,020   3.73 

Total stock-based compensation

 $279,565  $1,869,661   2.61 

 

  

Three Months Ended

  

Unrecognized Compensation Cost Related to Non-Vested Awards as of

  

Weighted-Average Remaining Vesting Period as of

 
  March 31, 2023  December 31, 2023  December 31, 2023 (years) 

Stock options

 $61,488  $654,313   2.36 

RSUs

  158,715   1,099,972   2.17 

MSUs

  (72,568)  34,281   0.57 

Total stock-based compensation

 $147,635  $1,788,566   2.21 
             

Cost of goods sold

 $(896) $2,976   1.62 

General and administrative

  135,242   1,666,980   2.29 

Sales and marketing

  13,289   118,610   0.99 

Total stock-based compensation

 $147,635  $1,788,566   2.21 

 

18

LAIRD SUPERFOOD, INC.
Notes to Unaudited Consolidated Condensed Financial Statements
 

11. Earnings per Share

 

Basic earnings (loss) per share is determined by dividing the net loss attributable to the Company's common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share is similarly determined, except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if all dilutive potential common shares had been issued. Dilutive potential common shares consist of employee stock options, RSUs, and MSUs. The dilutive effect of employee stock options, RSUs, and MSUs by the Company are calculated using the treasury stock method. Basic earnings per share is reconciled to diluted earnings per share in the following table:

 

  

Three Months Ended March 31,

 
  

2024

  

2023

 

Net loss

 $(1,016,522) $(4,143,910)

Weighted average shares outstanding - basic and diluted

  9,401,605   9,213,723 

Basic and diluted:

        

Net loss per share, basic and diluted

 $(0.11) $(0.45)

Common stock options, restricted stock awards, and market-based stock awards excluded due to anti-dilutive effect

  3,266,072   1,393,802 

 

 

12. Concentrations

 

The following table details the concentration of vendor accounts payable balances in excess of 10% of total accounts payable at each period:

 

  March 31, December 31,
  

2024

 

2023

Vendor A

 

10%

 

*

Vendor B

 

*

 

14%

Vendor C * 10%
Vendor D * 23%

Total

 

10%

 

47%

* Less than 10%.

 

The following table details the concentration of customer accounts receivable balances in excess of 10% of total trade accounts receivable at each period:

 

  March 31, December 31,
  

2024

 

2023

Customer A

 

18%

 

45%

Customer B

 

24%

 

21%

Customer C

 

28%

 

*

Total

 

70%

 

67%

* Less than 10%.

 

19

LAIRD SUPERFOOD, INC.
Notes to Unaudited Consolidated Condensed Financial Statements
 

 

The following table details the concentration of sales to specific customers in excess of 10% of total net sales for each year and the accounts receivable from those customers at the end of each period:

 

  

As of and for the Three Months Ended

  

March 31, 2024

 

March 31, 2023

  

Net Sales

 

Accounts Receivable

 

Net Sales

 

Accounts Receivable

Customer A

 

11%

 

461,132

 

16%

 

1,612,941

Customer B

 

19%

 

623,431

 

13%

 

675,743

Customer C

 

12%

 

710,504

 

12%

 

484,800

Total

 

42%

 

1,795,067

 

41%

 

2,773,484

 

The Company purchased a substantial portion of raw materials and packaging from certain suppliers. The following table details the concentration of purchases from specific suppliers in excess of 10% of total purchases for each period:

 

  

For the Three Months Ended March 31,

  

2024

 

2023

Supplier A

 

17%

 

*

Supplier B

 

11%

 

*

Supplier C

 

11%

 

15%

Supplier D

 

10%

 

*

Supplier E

 

10%

 

*

Supplier F

 

*

 

26%

Total

 

59%

 

41%

* Less than 10%.

 

The Company purchased a substantial portion of raw materials and packaging originating from certain geographical regions. The following table details the concentration of purchases from specific regions in excess of 10% of total purchases for each period:

 

  

For the Three Months Ended March 31,

  

2024

 

2023

Sri Lanka

 

17%

 

*

Vietnam

 

*

 

14%

China

 

*

 

10%

Indonesia

 

*

 

12%

Total

 

17%

 

36%

* Less than 10%. 

 

13. Related Parties

 

FASB ASC Topic 850, Related Party Disclosures, requires that information about transactions with related parties that would influence decision making shall be disclosed so that users of the financial statements can evaluate their significance. The Company conducts business with suppliers and service providers who are also stockholders of the Company. From time to time, service providers are offered shares of common stock as compensation for their services. Shares provided as compensation are calculated based on the grant date fair value of the service provided. Additional material related party transactions are noted below.

 

License Agreements

 

On May 26, 2020, the Company executed a License and Preservation Agreement which superseded the predecessor license and preservation agreement with both Mr. Hamilton and Ms. Reece. Among other modifications, the agreement (i) modified certain approval rights, (ii) modified certain assignment, change of control and indemnification provisions, and (iii) granted the Company the right to extend the term of the agreement for additional ten-year terms upon the expiration of the initial one-hundred-year term. No additional consideration was exchanged in connection with the agreement. See additional discussion related to the 2020 License in Note 7 of the financial statements.

20

LAIRD SUPERFOOD, INC.
Notes to Unaudited Consolidated Condensed Financial Statements

 

Marketing Agreements

 

On October 26, 2022, the Company executed an influencer agreement with Gabby Reece to provide certain marketing services for a term ending December 31, 2023 with an option to renew for one-year terms. In connection with these services, in the three months ended March 31, 2024 and 2023, advertising expenses totaling $62,501 and $37,809, respectively, were included in sales and marketing expenses in the statements of operations. As of March 31, 2024 and December 31, 2023, amounts payable to Gabby Reece of $28,167 and $2,688, respectively, included in related party liabilities in the balance sheets.

 

14. Revenue Recognition

 

The Company’s primary source of revenue is sales of coffee creamers, hydration and beverage enhancing supplements, harvest snacks and other food items, and coffee, tea, and hot chocolate products. The Company recognizes revenue when control of the promised good is transferred to the customer and in amounts that the Company expects to collect. The timing of revenue recognition takes into consideration the various shipping terms applicable to the Company’s sales. Each delivery or shipment made to a customer is considered to satisfy a performance obligation. Performance obligations generally occur at a point in time and are satisfied when control of the goods passes to the customer. The Company is entitled to collect the sales price under normal credit terms. Additionally, the Company estimates the impact of certain common practices employed by us and other manufacturers of consumer products, such as scan-based trading, product rebate and other pricing allowances, product returns, trade promotions, sales broker commissions and slotting fees. These estimates are recorded at the end of each reporting period.

 

In accordance with ASC Topic 606, Revenue from Contracts with Customers, the Company disaggregates net sales from contracts with customers based on the characteristics of the products sold:

 

  

Three Months Ended March 31,

 
  

2024

  

2023

 
  

$

  

% of Total

  

$

  

% of Total

 

Coffee creamers

 $5,570,321   56% $5,132,143   63%

Coffee, tea, and hot chocolate products

  2,175,265   22%  1,955,140   24%

Hydration and beverage enhancing supplements

  2,025,272   20%  670,851   8%

Harvest snacks and other food items

  1,304,060   13%  1,752,397   22%

Other

  122,012   1%  29,729   %

Gross sales

  11,196,930   112%  9,540,260   117%

Shipping income

  111,428   1%  303,226   4%

Returns and discounts

  (1,399,420)  (13)%  (1,730,548)  (21)%

Sales, net

 $9,908,938   100% $8,112,938   100%

 

The Company generates revenue through two channels: e-commerce and wholesale:

 

  

Three Months Ended March 31,

 
  

2024

  

2023

 
  

$

  

% of Total

  

$

  

% of Total

 

E-commerce

 $5,868,337   59% $4,427,681   55%

Wholesale

  4,040,601   41%  3,685,257   45%

Sales, net

 $9,908,938   100% $8,112,938   100%

 

Receivables from contracts with customers are included in accounts receivable. Contract assets include deferred cost of goods sold associated with deferred revenue and are included in finished goods inventories. Contract liabilities include deferred revenue, customer deposits, rewards programs, and refund liabilities, and are included in accrued expenses. All contract liabilities as of December 31, 2023 were recognized in net sales for the three months ended March 31, 2024. The balances of receivables from contracts with customers, contract assets, and contract liabilities were as follow:

 

  

January 1,

  

December 31,

  

March 31,

 
  

2023

  

2023

  

2024

 

Accounts receivable, net

 $1,494,469  $1,022,372  $2,064,745 

Contract assets

 $57,249  $  $ 

Contract liabilities

 $(729,667) $(427,974) $(512,635)
 

 

21

 

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

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.

 

Overview

 

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.

 

Net sales were $9.9 million and $8.1 million, respectively, for the three months ended March 31, 2024 and 2023, representing 22% year-over-year growth. E-commerce channel sales increased by 33% in the first quarter of 2024 compared to the same period last year despite a significant, planned reduction in media spend in the channel. Sales through Amazon.com increased by 48% year-over-year building on the strong performance in the fourth quarter of 2023, as compared to reduced sales volume during the first quarter of 2023 stemming from out-of-stocks associated with the quality event last year. Direct-to-Consumer ("DTC") sales, on lairdsuperfood.com and pickybars.com, increased by 25% year-over year driven by strong performance in both subscription and repeat customers, average order value, and improved discounts rates due to strategic shifts in our promotional strategies. Wholesale channel net sales increased by 10% compared to the first quarter of 2023 driven by sales growth in club stores, as well as velocity improvement and distribution expansion in grocery, and more efficient promotional spend across the channel.

 

Our e-commerce business is two-pronged and consists of DTC (lairdsuperfood.com and pickybars.com) and the use of third-party platforms, such as Amazon.com. For the three months ended March 31, 2024 and 2023, the e-commerce business made up 59% and 55% of our net sales, respectively. 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 months ended March 31, 2024 and 2023.

 

For the three months ended March 31, 2024 and 2023, wholesale made up 41% and 45% of our net sales, respectively. 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.

 

22

 

Recent Developments

 

Redomestication

 

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.

 

As of the Effective Date:

 

 

our domicile changed from the state of Delaware to the state of Nevada; and

 

 

the affairs of the Company ceased to be governed by the Delaware General Corporation Law and the Company’s then existing certificate of incorporation and bylaws, and instead became governed by the Nevada Revised Statutes and the Company's new articles of incorporation and bylaws. 

 

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.

 

Our Strategy and Key Factors Affecting our Performance

 

We believe that our future performance will depend on many factors, including the following:

 

Ability to Grow Our Customer Base in both E-commerce and Traditional Wholesale Distribution Channels

 

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.com and pickybars.com, and Amazon.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.

 

Ability to Manage Co-Manufacturer and Third-Party Logistics Relationships

 

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.

 

Ability to Acquire and Retain Customers at a Reasonable Cost

 

We believe an ability to consistently acquire and retain customers at a reasonable cost relative to projected lifetime value will be a key factor affecting future performance. To accomplish this goal, we intend to balance advertising spend between online and offline 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.

 

Ability to Drive Repeat Usage of Our Products

 

We accrue substantial economic value from repeat customers 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.

 

23

 

Ability to Expand Our Product Line

 

Our goal is to expand our product line over time to increase our growth opportunity and reduce product-specific risks through diversification into multiple products, each designed around daily use. Our pace of growth will be partially affected by the cadence and magnitude of new product launches over time.

 

Ability to Expand Gross Margins

 

Our overall profitability will be impacted by our ability to expand gross margins through effective sourcing of raw materials, controlling labor and shipping costs, controlling the impacts of inflationary market factors, as well as managing co-packer relationships.

 

Ability to Expand Operating Margins

 

Our ability to expand operating margins will be impacted by our ability to cover fixed general and administrative costs and variable sales and marketing costs with higher revenues and gross profit dollars.

 

Ability to Manage Our Global Supply Chain

 

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.

 

Ability to Optimize Key Components of Working Capital

 

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.

 

Components of Results of Operations

 

Sales, net

 

We sell our products indirectly to consumers through a broad set of physical wholesale channels. We also derive revenue from the sale of our products directly to consumers through our direct websites, as well as third-party online channels.

 

Cost of Goods Sold

 

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. 

 

Operating Expenses

 

Our operating expenses consist of general and administrative expenses and sales and marketing expenses.

 

Income Taxes

 

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.

 

24

 

Results of Operations

 

Comparison of the three months ended March 31, 2024 (Q1 2024) and March 31, 2023 (Q1 2023)

 

The following table summarizes our results of operations for the periods indicated:

 

   

Three Months Ended March 31,

   

$

   

%

 
   

2024

   

2023

   

Change

   

Change

 

Sales, net

  $ 9,908,938     $ 8,112,938     $ 1,796,000       22 %

Cost of goods sold

    (5,944,837 )     (6,239,062 )     294,225       (5 )%

Gross profit

    3,964,101       1,873,876       2,090,225       112 %

Gross margin

    40.0 %     23.1 %                

General and administrative

    2,157,748       3,082,310       (924,562 )     (30 )%

Sales and marketing

    2,894,915       3,094,048       (199,133 )     (6 )%

Total operating expenses

    5,052,663       6,176,358       (1,123,695 )     (18 )%

Operating loss

    (1,088,562 )     (4,302,482 )     3,213,920       (75 )%

Other income

    110,997       170,994       (59,997 )     (35 )%

Loss before income taxes

    (977,565 )     (4,131,488 )     3,153,923       (76 )%

Income tax expense

    (38,957 )     (12,422 )     (26,535 )     214 %

Net loss

  $ (1,016,522 )   $ (4,143,910 )   $ 3,127,388       (75 )%

 

   

Three Months Ended March 31,

   

$

   

%

 
   

2024

   

2023

   

Change

   

Change

 

Sales, net

  $ 9,908,938     $ 8,112,938     $ 1,796,000       22 %

 

Net sales increased to $9.9 million in Q1 2024 from $8.1 million in Q1 2023, representing 22% growth year-over-year. The increase was primarily driven by a 33% 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 Q1 2023 from out-of-stocks associated with a quality event. Further, the wholesale channel also grew by 10% driven primarily by sales growth in club stores, velocity improvements and distribution gains in grocery stores, and more efficient promotional spend. 

 

   

Three Months Ended March 31,

   

$

   

%

 
   

2024

   

2023

   

Change

   

Change

 

Cost of goods sold

  $ (5,944,837 )   $ (6,239,062 )   $ 294,225       (5 )%

 

Cost of goods sold decreased to $5.9 million in Q1 2024 from $6.2 million in Q1 2023, a reduction of 5%, 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. 

 

   

Three Months Ended March 31,

   

$

   

%

 
   

2024

   

2023

   

Change

   

Change

 

Gross profit

  $ 3,964,101     $ 1,873,876     $ 2,090,225       112 %

 

Gross profit increased to $4.0 million in Q1 2024 from $1.9 million in Q1 2023. Gross margin improved to 40.0% in Q1 2024 from 23.1% in Q1 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 Q1 2023. 

 

25

 

   

Three Months Ended March 31,

   

$

   

%

 
   

2024

   

2023

   

Change

   

Change

 

Operating Expenses

                               

General and administrative

  $ 2,157,748     $ 3,082,310     $ (924,562