FitLife Brands(FTLF) - 2022 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents FitLife Brands, Inc.'s unaudited financial statements and management's discussion and analysis Item 1. Condensed Consolidated Financial Statements (unaudited) This section presents FitLife Brands, Inc.'s unaudited condensed consolidated financial statements and accompanying notes Condensed Consolidated Balance Sheets (unaudited) This section provides FitLife Brands, Inc.'s unaudited condensed consolidated balance sheets as of June 30, 2022, and December 31, 2021 Condensed Consolidated Balance Sheet Highlights (June 30, 2022 vs. December 31, 2021) | Metric | June 30, 2022 (USD) | December 31, 2021 (USD) | Change (USD) | % Change | | :-------------------------------- | :------------ | :---------------- | :------- | :------- | | Cash | $12,304,000 | $9,897,000 | $2,407,000 | 24.3% | | Accounts receivable, net | $2,122,000 | $945,000 | $1,177,000 | 124.5% | | Inventories, net | $6,348,000 | $6,520,000 | $(172,000) | (2.6)% | | Total current assets | $21,284,000 | $17,684,000 | $3,600,000 | 20.4% | | TOTAL ASSETS | $24,355,000 | $21,507,000 | $2,848,000 | 13.2% | | Total current liabilities | $3,964,000 | $4,058,000 | $(94,000) | (2.3)% | | TOTAL LIABILITIES | $4,040,000 | $4,161,000 | $(121,000) | (2.9)% | | TOTAL STOCKHOLDERS' EQUITY | $20,315,000 | $17,346,000 | $2,969,000 | 17.1% | Condensed Consolidated Statements of Operations (unaudited) This section presents FitLife Brands, Inc.'s unaudited condensed consolidated statements of operations for the periods ended June 30 Condensed Consolidated Statements of Operations Highlights (Three Months Ended June 30) | Metric | 2022 (USD) | 2021 (Restated) (USD) | Change (USD) | % Change | | :---------------------- | :----------- | :-------------- | :------- | :------- | | Revenue | $7,999,000 | $8,406,000 | $(407,000) | (4.8)% | | Cost of goods sold | $4,334,000 | $4,725,000 | $(391,000) | (8.3)% | | Gross profit | $3,665,000 | $3,681,000 | $(16,000) | (0.4)% | | Operating expenses | $1,840,000 | $1,648,000 | $192,000 | 11.6% | | OPERATING INCOME | $1,825,000 | $2,033,000 | $(208,000) | (10.2)% | | PRE-TAX NET INCOME | $1,834,000 | $2,038,000 | $(204,000) | (10.0)% | | NET INCOME | $1,446,000 | $1,632,000 | $(186,000) | (11.4)% | | Basic EPS | $0.32 | $0.37 | $(0.05) | (13.5)% | | Diluted EPS | $0.29 | $0.34 | $(0.05) | (14.7)% | Condensed Consolidated Statements of Operations Highlights (Six Months Ended June 30) | Metric | 2022 (USD) | 2021 (Restated) (USD) | Change (USD) | % Change | | :---------------------- | :----------- | :-------------- | :------- | :------- | | Revenue | $15,454,000 | $14,005,000 | $1,449,000 | 10.3% | | Cost of goods sold | $8,517,000 | $7,529,000 | $988,000 | 13.1% | | Gross profit | $6,937,000 | $6,476,000 | $461,000 | 7.1% | | Operating expenses | $3,516,000 | $3,182,000 | $334,000 | 10.5% | | OPERATING INCOME | $3,421,000 | $3,294,000 | $127,000 | 3.9% | | PRE-TAX NET INCOME | $3,437,000 | $3,758,000 | $(321,000) | (8.5)% | | NET INCOME | $2,736,000 | $3,037,000 | $(301,000) | (9.9)% | | Basic EPS | $0.60 | $0.70 | $(0.10) | (14.3)% | | Diluted EPS | $0.55 | $0.64 | $(0.09) | (14.1)% | Condensed Consolidated Statements of Stockholders' Equity (unaudited) This section details changes in FitLife Brands, Inc.'s stockholders' equity for the six months ended June 30, 2022 and 2021 Stockholders' Equity Changes (Six Months Ended June 30, 2022) | Item | Amount (USD) | | :-------------------------- | :----------- | | Balance, December 31, 2021 | $17,346,000 | | Exercise of stock options | $29,000 | | Stock-based compensation | $204,000 | | Net income | $2,736,000 | | Balance, June 30, 2022 | $20,315,000 | Stockholders' Equity Changes (Six Months Ended June 30, 2021) | Item | Amount (USD) | | :-------------------------- | :----------- | | Balance, December 31, 2020 | $11,874,000 | | Repurchase of common stock | $(260,000) | | Exercise of stock options | $54,000 | | Repurchase of options | $(184,000) | | Stock-based compensation | $238,000 | | Net income | $3,037,000 | | Balance, June 30, 2021 | $14,759,000 | Condensed Consolidated Statements of Cash Flows (unaudited) This section presents FitLife Brands, Inc.'s unaudited condensed consolidated statements of cash flows for the six months ended June 30 Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) | Cash Flow Activity | 2022 (USD) | 2021 (Restated) (USD) | Change (USD) | | :-------------------------------- | :----------- | :-------------- | :------- | | Net cash provided by operating activities | $2,378,000 | $3,008,000 | $(630,000) | | Net cash used in investing activities | $0 | $(529,000) | $529,000 | | Net cash provided by (used in) financing activities | $29,000 | $(390,000) | $419,000 | | CHANGE IN CASH | $2,407,000 | $2,089,000 | $318,000 | | CASH, END OF PERIOD | $12,304,000 | $8,425,000 | $3,879,000 | Notes to Condensed Consolidated Financial Statements (unaudited) This section provides explanatory notes to FitLife Brands, Inc.'s unaudited condensed consolidated financial statements NOTE 1 - DESCRIPTION OF BUSINESS This note outlines FitLife Brands, Inc.'s business, product offerings, distribution, and recent significant developments - FitLife Brands, Inc. is a national provider of nutritional supplements under brands like NDS Nutrition, PMD Sports, SirenLabs, CoreActive, Nutrology, Metis Nutrition (NDS Products) and iSatori, BioGenetic Laboratories, Energize (iSatori Products)[18] - NDS Products are primarily distributed through franchised and corporate GNC stores, while iSatori Products are sold through over 17,000 retail locations including specialty, mass, and online channels[18] - The Company filed a Form 15 on July 18, 2022, to deregister its Common Stock under Section 12(g) of the Exchange Act and terminate its duty to file reports, with an intent to withdraw it upon returning to current filer status[20] - Financial statements for 2019, 2020, and 2021 (quarterly and annual) were restated due to incorrect revenue recognition for FOB destination terms, where revenue was recognized at shipment instead of delivery[21][22][23] - A 4-for-1 forward stock split was effective December 2, 2021, increasing authorized common shares from 15.0 million to 60.0 million[24] - The Board approved an amendment to the Share Repurchase Program on February 1, 2021, authorizing repurchases of up to $5.0 million of Common Stock, warrants, and other securities over 24 months[26] - The COVID-19 pandemic negatively impacted operations due to retail closures but was offset by increased online sales, with future resurgences posing potential adverse effects on supply chain, manufacturing, and demand[28] NOTE 2 - BASIS OF PRESENTATION This note clarifies that interim unaudited financial statements adhere to GAAP and Form 10-Q, not full-year results - Interim financial statements are unaudited and prepared in accordance with GAAP for interim information, Form 10-Q, and Article 8 of Regulation S-X[29] - Operating results for the three months ended June 30, 2022, are not necessarily indicative of the full year's expected results[29] NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines significant accounting policies, including consolidation, estimates, EPS, leases, goodwill, and revenue - The Company's financial statements are prepared in accordance with GAAP and include the accounts of the Company and its wholly-owned subsidiaries, with intercompany transactions eliminated[30] - Management makes estimates and assumptions for items such as uncollectible accounts, inventory obsolescence, depreciable lives, goodwill impairment, deferred tax assets, and contingent liabilities[31][32] - Basic EPS is income available to common stockholders divided by weighted average common shares outstanding, while Diluted EPS includes potential dilution from stock options and warrants using the treasury stock method[33] Basic and Diluted EPS (Three and Six Months Ended June 30) | Metric | 3 Months 2022 (USD) | 3 Months 2021 (USD) | 6 Months 2022 (USD) | 6 Months 2021 (USD) | | :----------------------------------- | :------------ | :------------ | :------------ | :------------ | | Net income | $1,446,000 | $1,632,000 | $2,736,000 | $3,037,000 | | Weighted average common shares - basic | 4,555,957 | 4,392,000 | 4,555,036 | 4,349,540 | | Dilutive effect of outstanding warrants and stock options | 403,692 | 387,520 | 416,425 | 406,736 | | Weighted average common shares - diluted | 4,959,649 | 4,779,520 | 4,971,461 | 4,756,276 | | Basic EPS | $0.32 | $0.37 | $0.60 | $0.70 | | Diluted EPS | $0.29 | $0.34 | $0.55 | $0.64 | - The Company leases corporate office space and equipment, recognizing operating lease right-of-use assets and lease liabilities[35] - Goodwill impairment testing follows ASU 2017-04, where impairment is the amount by which a reporting unit's carrying value exceeds its fair value, with no triggering event in Q2 2022, though COVID-19 could lead to future charges[38][39] Customer Concentration (Net Sales to GNC) | Period | 2022 | 2021 | | :-------------------------------- | :--- | :--- | | Three months ended June 30 | 70% | 74% | | Six months ended June 30 | 70% | 69% | Online Sales as % of Net Revenue | Period | 2022 | 2021 | | :-------------------------------- | :--- | :--- | | Three months ended June 30 | 26% | 21% | | Six months ended June 30 | 26% | 24% | - Revenue is recognized under ASC 606 when performance obligations are satisfied, typically upon shipment or delivery of products to customers, with control transferring at that time[42][43][45] - The Company allows returns within 30 days for direct-to-consumer sales and under specific circumstances for wholesale customers, with less than 5% of products returned[46][47] - Federal income tax expense is non-cash due to the utilization of federal net operating loss (NOL) carryforwards, totaling $11.8 million as of June 30, 2022[48][49] - The Company is evaluating the impact of ASU 2016-13 (CECL model) on its financial statements, with implementation delayed to fiscal years beginning after December 15, 2022, for smaller reporting companies[51] NOTE 4 – INVENTORIES This note details inventory accounting policies, including FIFO valuation, obsolescence allowance, and inventory balances - Inventory is carried at the lower of cost or net realizable value using the FIFO method[53] - An allowance for obsolescence is recognized for expiring, excess, and slow-moving inventory, calculated based on sales projections relative to product shelf life[54] Inventory Balances (June 30, 2022 vs. December 31, 2021) | Category | June 30, 2022 (USD) | December 31, 2021 (USD) | | :------------------------ | :------------ | :---------------- | | Finished goods | $5,329,000 | $5,908,000 | | Components | $1,122,000 | $668,000 | | Allowance for obsolescence | $(103,000) | $(56,000) | | Total | $6,348,000 | $6,520,000 | NOTE 5 - PROPERTY AND EQUIPMENT This note summarizes property and equipment, net of depreciation, and details depreciation expense for the periods presented Property and Equipment (June 30, 2022 vs. December 31, 2021) | Category | June 30, 2022 (USD) | December 31, 2021 (USD) | | :-------------------- | :------------ | :---------------- | | Equipment | $902,000 | $902,000 | | Accumulated depreciation | $(843,000) | $(832,000) | | Total | $59,000 | $70,000 | Depreciation Expense (Three and Six Months Ended June 30) | Period | 2022 (USD) | 2021 (USD) | | :-------------------------- | :--- | :--- | | Three months ended June 30 | $7,000 | $5,000 | | Six months ended June 30 | $11,000 | $13,000 | NOTE 6 – NOTES PAYABLE This note describes the Company's debt obligations, including a revolving line of credit and a fully forgiven PPP loan - The Company has a $2.5 million revolving Line of Credit with CIT Bank N.A., secured by all Company assets, bearing interest at one-month LIBOR plus 2.75%, with no advances outstanding as of June 30, 2022[57][58] - The Line of Credit Maturity Date was extended to December 23, 2022, on September 20, 2022[58] - A $449,700 PPP Loan received on April 27, 2020, was fully forgiven on January 15, 2021[59] NOTE 7 - RIGHT OF USE ASSETS AND LIABILITIES This note details lease accounting under ASC 842, including right-of-use assets, lease liabilities, terms, and present values - The Company leases office facilities and equipment with lease agreements ranging from 36 to 84 months[60] - As of June 30, 2022, the lease liability amounted to $130,000, with a right-of-use asset of $131,000 (net of amortization)[61][63] Lease Liabilities Maturities (in thousands) | Year ending | Operating leases (USD in thousands) | | :------------------------ | :--------------- | | 2022 (remaining six months) | $33,000 | | 2023 | $61,000 | | 2024 | $51,000 | | Less: Imputed interest/present value discount | $(15,000) | | Present value of lease liabilities | $130,000 | - The weighted average remaining lease term for operating leases is 2.1 years, with an average discount rate of 9%[62] NOTE 8 - EQUITY This note details the Company's equity structure, including stock split, RSUs, share repurchase program, options, and warrants - A 4-for-1 forward stock split was effective December 2, 2021, increasing authorized common stock to 60.0 million shares, with 4,555,957 shares issued and outstanding as of June 30, 2022[64] - 160,000 restricted share units (RSUs) were granted to the CEO in February 2021, vesting upon specific volume-weighted average price targets, with a fair value of $666,000[65] Stock Compensation Expense Related to RSUs (Three and Six Months Ended June 30) | Period | 2022 (USD) | 2021 (USD) | | :-------------------------- | :--- | :--- | | Three months ended June 30 | $85,000 | $95,000 | | Six months ended June 30 | $180,000 | $214,000 | - As of June 30, 2022, there was $137,000 of unamortized compensation expense associated with RSUs[66] - The Share Repurchase Program was amended on February 1, 2021, to authorize repurchases of up to $5.0 million, with no shares repurchased during the six months ended June 30, 2022[67][68] Stock Options Outstanding (June 30, 2022) | Category | Number of Options | Weighted Average Exercise Price (USD) | | :------------------------ | :---------------- | :------------------------------ | | Outstanding, Dec 31, 2021 | 380,300 | $3.44 | | Exercised | (3,472) | $8.27 | | Outstanding, June 30, 2022 | 376,828 | $3.40 | | Exercisable, June 30, 2022 | 312,828 | $3.06 | - The intrinsic value of outstanding options was $2,954,000 as of June 30, 2022, with a closing stock price of $10.50[70] Stock Option Compensation Expense (Three and Six Months Ended June 30) | Period | 2022 (USD) | 2021 (USD) | | :-------------------------- | :--- | :--- | | Three months ended June 30 | $12,000 | $12,000 | | Six months ended June 30 | $24,000 | $24,000 | - Total outstanding warrants as of June 30, 2022, amounted to 143,480, with an exercise price of $1.15 and an intrinsic value of $1,342,000[72][73] NOTE 9 – COMMITMENTS AND CONTINGENCIES This note confirms no material litigation or commitments are expected to adversely affect the Company's financial condition - The Company is not involved in any litigation that is believed to have a material adverse effect on its financial condition or results of operations[74] Item 2. Management's Discussion & Analysis of Financial Condition and Results of Operations This section provides management's analysis of FitLife Brands, Inc.'s financial condition, operations, liquidity, and policies Overview This section provides a brief overview of FitLife Brands, Inc.'s business as a national nutritional supplement provider - FitLife Brands, Inc. is a national provider of nutritional supplements under various brand names, distributed through GNC stores and other retail/online channels[76] Recent Developments This section highlights recent significant events impacting the Company, including deregistration, restatements, and stock split - The Company filed a Form 15 on July 18, 2022, to deregister its Common Stock, with plans to withdraw it upon achieving current filer status[78] - Financial statements for 2019, 2020, and 2021 (quarterly and annual) were restated due to errors in revenue recognition for FOB destination terms, impacting various financial accounts[79][80][81] - A 4-for-1 forward stock split was effective December 2, 2021, increasing authorized common shares to 60.0 million[82] - The Share Repurchase Program was amended on February 1, 2021, authorizing repurchases of up to $5.0 million, with no repurchases occurring in Q2 2022 and $3,170,000 remaining available[84][85] - The COVID-19 pandemic's negative impact on retail partners was largely offset by increased online sales, but future resurgences could still pose risks to supply chain and demand[86] - The Company has managed inflationary pressures through price increases to customers, but sustained inflation could adversely affect operating performance if price pass-through becomes difficult[87] Results of Operations This section analyzes FitLife Brands, Inc.'s financial performance for the three and six months ended June 30 Financial Performance (Three Months Ended June 30, 2022 vs. 2021) | Metric | 2022 (USD) | 2021 (USD) | Change (USD) | % Change | | :---------------------- | :----------- | :----------- | :------- | :------- | | Revenue | $7,999,000 | $8,406,000 | $(407,000) | (5)% | | Cost of goods sold | $4,334,000 | $4,725,000 | $(391,000) | (8)% | | Gross profit | $3,665,000 | $3,681,000 | $(16,000) | (0)% | | Operating expenses | $1,840,000 | $1,648,000 | $192,000 | 12% | | Income from operations | $1,825,000 | $2,033,000 | $(208,000) | (10)% | | Net income | $1,446,000 | $1,632,000 | $(186,000) | (11)% | | Gross margin | 45.8% | 43.8% | 2.0 pp | 4.6% | - Revenue decreased by 5% for the three months ended June 30, 2022, primarily due to fluctuations in wholesale customer order timing[89] - Online revenue increased to 26% of total revenue in Q2 2022 from 21% in Q2 2021, reflecting a shift to online purchasing[90] - Gross profit decreased slightly by 0.4%, but gross margin increased to 45.8% from 43.8%, driven by a manufacturer rebate and higher online sales[92] - General and administrative expenses increased by 26.5% due to $203,000 in M&A expenses and $55,000 in restatement-related costs[93] - Net income decreased by 11% for the three months ended June 30, 2022, primarily due to lower revenue and increased G&A expenses from M&A and restatement activities[96] Financial Performance (Six Months Ended June 30, 2022 vs. 2021) | Metric | 2022 (USD) | 2021 (USD) | Change (USD) | % Change | | :---------------------- | :----------- | :----------- | :------- | :------- | | Revenue | $15,454,000 | $14,005,000 | $1,449,000 | 10% | | Cost of goods sold | $8,517,000 | $7,529,000 | $988,000 | 13% | | Gross profit | $6,937,000 | $6,476,000 | $461,000 | 7% | | Operating expenses | $3,516,000 | $3,182,000 | $334,000 | 10% | | Income from operations | $3,421,000 | $3,294,000 | $127,000 | 4% | | Net income | $2,736,000 | $3,037,000 | $(301,000) | (10)% | | Gross margin | 44.9% | 46.2% | (1.3 pp) | (2.8)% | - Revenue increased by 10% for the six months ended June 30, 2022, driven by increased sales through both wholesale and online channels[97] - Gross margin decreased to 44.9% from 46.2% for the six months ended June 30, 2022, primarily due to higher product costs associated with supply chain disruptions[100] - General and administrative expenses increased by 20.7% due to $208,000 in M&A expenses and $55,000 in restatement analysis professional fees[101] - Net income decreased by 10% for the six months ended June 30, 2022, mainly due to the forgiveness of the PPP loan in 2021 and increased G&A expenses in 2022[104] Non-GAAP Measures This section presents non-GAAP financial measures, including EBITDA and Adjusted EBITDA, for core operating insights - The Company presents non-GAAP EBITDA (excluding interest, income taxes, depreciation, and amortization) and Adjusted non-GAAP EBITDA (further excluding stock-based compensation, acquisition-related costs, restatement-related costs, and non-recurring gains/losses) to provide insights into core operating results[105][106] Non-GAAP EBITDA and Adjusted EBITDA (Three and Six Months Ended June 30) | Metric | 3 Months 2022 (USD) | 3 Months 2021 (USD) | 6 Months 2022 (USD) | 6 Months 2021 (USD) | | :------------------------------ | :------------ | :------------ | :------------ | :------------ | | Net income | $1,446,000 | $1,632,000 | $2,736,000 | $3,037,000 | | EBITDA | $1,842,000 | $2,048,000 | $3,452,000 | $3,770,000 | | Stock compensation expense | $97,000 | $107,000 | $204,000 | $238,000 | | M&A/integration expenses | $203,000 | $71,000 | $208,000 | $95,000 | | Restatement related costs | $55,000 | $0 | $55,000 | $0 | | Non-recurring gains | $0 | $0 | $0 | $(453,000) | | Adjusted EBITDA | $2,197,000 | $2,226,000 | $3,919,000 | $3,650,000 | Liquidity and Capital Resources This section discusses FitLife Brands, Inc.'s liquidity position, working capital, cash flows, and available capital resources - As of June 30, 2022, the Company had positive working capital of approximately $17,320,000, with $12,304,000 in cash and $2,122,000 in accounts receivable[108] - The Company has a $2.5 million revolving Line of Credit, with no outstanding borrowings as of June 30, 2022, and its maturity date was extended to December 23, 2022[109][110][111] - The $449,700 PPP Loan received in April 2020 was fully forgiven on January 15, 2021[112] - Management anticipates that cash flow from operations, existing cash resources, and available borrowings under the Line of Credit will be sufficient for liquidity over the next twelve months[113][114] Cash Flow from Operations (Six Months Ended June 30) | Metric | 2022 (USD) | 2021 (USD) | Change (USD) | | :-------------------------------- | :----------- | :----------- | :------- | | Cash provided by operating activities | $2,378,000 | $3,008,000 | $(630,000) | - The decrease in cash provided by operating activities for the six months ended June 30, 2022, was primarily due to increased working capital needs[115] Cash Flow from Investing and Financing Activities (Six Months Ended June 30) | Metric | 2022 (USD) | 2021 (USD) | Change (USD) | | :-------------------------------- | :--- | :----------- | :------- | | Cash used in investing activities | $0 | $(529,000) | $529,000 | | Cash provided by (used in) financing activities | $29,000 | $(390,000) | $419,000 | Critical Accounting Policies and Estimates This section outlines critical accounting policies and significant estimates requiring management judgment in financial reporting - The preparation of financial statements requires management to make significant estimates and judgments, which can affect reported asset/liability amounts and disclosures[117][120] - Key estimates include those related to accounts receivable, inventories, goodwill, revenue, costs, long-term asset valuations, deferred tax assets, and equity instruments[121] - Goodwill impairment testing follows ASU 2017-04, where impairment is recognized if a reporting unit's carrying value exceeds its fair value, with no triggering event in Q2 2022, though the COVID-19 pandemic could lead to future impairment charges[122][123] - Revenue recognition adheres to ASC 606, recognizing revenue when performance obligations are satisfied upon shipment or delivery of products, and control is transferred to the customer[124][125] - The Company allows product returns, but based on evaluation, less than 5% of products are returned, making it probable that returns will not cause a significant revenue reversal[128][129] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses the Company's market risk exposures, primarily interest rate and foreign currency, concluding they are not material - The Company's business is primarily conducted in the United States, so financial results are not materially affected by foreign currency exchange rates or foreign economic conditions[132] - Exposure to interest rate risk relates to borrowings under the Line of Credit (zero balance as of June 30, 2022) and investments in short-term financial instruments[133] - The Company does not hold derivative instruments or engage in hedging activities[135] Item 4. Controls and Procedures This section details the evaluation of disclosure controls and internal control, identifying material weaknesses that led to restatements and outlining remediation - Management concluded that disclosure controls and procedures were not effective as of June 30, 2022, due to material weaknesses that resulted in reporting errors and a restatement of financial statements for 2019, 2020, and 2021 interim periods[136][140] - Despite material weaknesses, management concluded that consolidated financial statements for the periods covered are prepared in accordance with GAAP and fairly present the financial position, results of operations, and cash flows[137] - Material weaknesses were identified in the control environment (managerial functions, organizational structure, segregation of duties, personnel adequacy), risk oversight, control activities (policies, IT systems), information processing and communication, and monitoring activities[141][142][143][144][147] - These weaknesses led to errors in revenue, cost of sales, accounts receivable, inventory, and income tax provision[148] - Remediation efforts include hiring expert accounting consultants (since March 2022) and a new highly qualified CFO (August 2022) with public company experience[149][150][152] - Management is developing a checklist based on the COSO Framework to assess and improve entity-level and activity-level controls, with deficiencies to be discussed with the Audit Committee and independent auditors quarterly[151] PART II - OTHER INFORMATION This section covers other required information, including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings This section confirms no material legal proceedings are expected to adversely affect the Company's financial condition or operations - The Company is not currently involved in any litigation that is believed to have a material adverse effect on its financial condition or results of operations[154] Item 1A. Risk Factors This section refers to the Annual Report on Form 10-K for risk factors, noting no material changes except as stated - Readers should refer to the Annual Report on Form 10-K for the fiscal year ended December 31, 2021, for a comprehensive discussion of risk factors[156] - Management is not aware of any material changes to the risk factors discussed in the Annual Report on Form 10-K, except as set forth in this Quarterly Report[156] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section confirms no unregistered sales of equity securities occurred during the reporting period - There were no unregistered sales of equity securities during the period[157] Item 3. Defaults Upon Senior Securities This section confirms no defaults upon senior securities occurred during the three-month period ended June 30, 2022 - There were no defaults upon senior securities during the three-month period ended June 30, 2022[158] Item 5. Other Information This section indicates no other information is required to be reported under this item - No other information to report[159] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including Sarbanes-Oxley certifications and Inline XBRL documents - Exhibits include certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[160] - Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents) are also filed as exhibits[160]