Acquisition and Strategic Focus - The acquisition of Activ Nutritional, LLC on June 1, 2021, has materially changed the company's financial position and market profile, expanding opportunities for growth [113]. - The Company ceased operations of VectorVision in December 2021 to focus resources on growth-oriented brands like Viactiv [141]. - The Company is exploring strategic alternatives, including potential mergers or acquisitions, to enhance stockholder value and grow the business [127]. - The Company is exploring strategic acquisitions to capitalize on growth opportunities and enhance its business model [150]. Product Development and Sales Strategy - The company plans to focus on commercializing the Omega Boost Gel Bites and preparing for another product launch in 2023, with no new product launches planned for the remainder of 2022 [125]. - New product development, such as the Omega Boost Gel Bites, is a key component of the Company's sales growth strategy and aims to diversify the customer base [156]. - The company reported a 51% improvement in Omega-3 levels in just 4 weeks of customer usage for its new Viactiv Omega Boost Gel Bites product [117]. - Approximately 1% of sales revenue was derived from the newly launched direct-to-consumer e-commerce channel during the nine months ended September 30, 2022 [123]. - The Company intends to improve sales channels by enhancing product commercialization and has added direct-to-consumer eCommerce capabilities on viactiv.com [156]. Financial Performance and Challenges - Sales in the first nine months of 2022 were impacted by supply chain challenges, limiting inventory distribution, and overall sales declined during the three months ended September 30, 2022 [119]. - The Viactiv brand has a strong history of financial success, but sales have been adversely affected by general economic conditions impacting the broader vitamin, mineral, and supplement category [119]. - For the three months ended September 30, 2022, revenue was $2,663,550, a decrease of $485,062 or 15% compared to $3,148,612 in the same period of 2021 [158]. - Gross profit for the three months ended September 30, 2022 was $1,088,184, down $299,842 or 22% from $1,388,026 in 2021, with a gross margin of 40.9% compared to 44.08% in 2021 [160]. - Net loss for the three months ended September 30, 2022 was $1,696,112, a reduction of $1,318,724 or 44% from a net loss of $3,014,836 in the same period of 2021 [164]. - For the nine months ended September 30, 2022, revenue increased to $8,323,382, an increase of $3,717,754 or 81% compared to $4,605,628 in 2021 [166]. - Gross profit for the nine months ended September 30, 2022 was $3,584,185, an increase of $1,537,397 or 75% from $2,046,788 in 2021, with a gross margin of 43.1% compared to 44.4% in 2021 [168]. - Net loss for the nine months ended September 30, 2022 was $6,016,562, a decrease of $4,208,087 or 41% from a net loss of $10,224,649 in 2021 [172]. Cash Flow and Financing Activities - Cash on hand as of September 30, 2022 was approximately $12,946,000, with working capital of approximately $16,078,000 [173]. - The company closed a securities offering on February 23, 2022, generating net proceeds of approximately $9,969,000 [174]. - The gross proceeds from the February 2022 Offering were $11,100,000, with net proceeds of approximately $9,969,000 after deducting fees and expenses [135]. - Net cash provided by financing activities was $9,944,928 for the nine months ended September 30, 2022, primarily from the sale of common stock and warrant exercises [181]. - Net proceeds from the sale of common stock in financing activities were $8,834,899 for the nine months ended September 30, 2022 [181]. - Net cash provided by financing activities was $37,231,013 for the nine months ended September 30, 2021, with net proceeds from common stock sales at $33,662,597 [181]. - Warrant exercises resulted in net proceeds of $1,134,040 for the nine months ended September 30, 2022 [181]. - Warrant exercises in the previous year generated net proceeds of $3,568,414 [181]. Operational Challenges - The Company has been affected by supply chain constraints due to the COVID-19 pandemic, impacting inventory availability for Viactiv products [146]. - Significant broad-based inflation has increased manufacturing and distribution costs, with a price increase communicated to retail partners expected to be implemented by year-end 2022 [147]. - The company expects to continue incurring substantial losses and negative cash flow from operations for the foreseeable future [129]. - Research and development expenses for the three months ended September 30, 2022 increased by $43,969 or 271% to $60,203 compared to $16,234 in 2021 [162]. - Total operating expenses for the three months ended September 30, 2022 were $2,827,578, a decrease of $1,575,966 or 36% from $4,403,544 in 2021 [161]. Compliance and Regulatory Matters - The Company was granted a second 180-day compliance period by Nasdaq to regain compliance with the $1.00 minimum bid price requirement, expiring on January 23, 2023 [138]. - The results of operations for the nine months ended September 30, 2022, are not comparable to the same period in 2021 due to the acquisition of Activ [154].
Guardion Health Sciences(GHSI) - 2022 Q3 - Quarterly Report