Revenue and Sales Performance - Viactiv generated net revenues of approximately $10,640,000 in 2022, accounting for 96% of the company's total revenues[217]. - For the year ended December 31, 2021, pro forma total revenues would have been approximately $12,766,000, with Viactiv products accounting for 94% of those revenues[217]. - For the year ended December 31, 2022, revenue increased by approximately $3,817,000 or 53% to $11,050,000 compared to $7,233,000 in 2021, primarily driven by the Viactiv product line[274]. - One customer accounted for 57% of total revenue in 2022, up from 49% in 2021, indicating a high concentration of revenue risk[247]. - As of December 31, 2022, one customer comprised approximately 88% of accounts receivable, highlighting significant reliance on a single customer[248]. Product Development and Launches - The company launched its new Omega Boost Gel Bites product in 2022, expanding its product line under the Viactiv brand[215]. - The launch of Viactiv® Omega Boost Gel Bites in February 2022 introduced a product with 1,200 mg of Omega-3, showing a 50% improvement in Omega-3 levels in just 4 weeks of usage during clinical trials[235][246]. - The company plans to focus on commercializing the Omega Boost Gel Bites and evaluating plans for another product launch in 2023[246]. - The company launched the Omega Boost Gel Bites in 2022, contributing to its product strategy aimed at increasing product breadth and market presence[270]. Financial Performance and Losses - The company expects to continue incurring substantial losses and negative cash flow from operations for the foreseeable future[219]. - For the year ended December 31, 2022, the net loss was approximately $14,922,000, a decrease of approximately $9,823,000 or 36% compared to a net loss of approximately $24,745,000 for the year ended December 31, 2021[287]. - The company incurred cash used in operating activities of approximately $7,447,000 for the year ended December 31, 2022, compared to approximately $10,644,000 for the prior year[294]. - Cost of goods sold for 2022 was approximately $6,529,000, an increase of 58% from $4,123,000 in 2021, largely due to costs associated with the Viactiv product line[275]. - Gross profit for 2022 was approximately $4,520,000, representing a 45% increase from $3,110,000 in 2021, with gross profit margin at 41% of revenues[276]. Capital and Financing Activities - The company raised gross proceeds of $4,750,000 from a private placement of preferred stock in November 2022[225]. - Net cash provided by financing activities was approximately $14,268,000 for the year ended December 31, 2022, compared to approximately $37,231,000 for the year ended December 31, 2021[297]. - The company recorded a deemed dividend of approximately $942,000 due to the issuance of Preferred Stock on November 29, 2022[288]. - The company plans to continue seeking additional debt and/or equity capital to fund future operations and acquisitions as necessary[292]. Operational Challenges and Risks - The company experienced supply chain constraints starting in December 2021, impacting inventory fulfillment for Viactiv products, resulting in approximately $83,000 in out-of-stock fees in 2022[234]. - The company utilized one manufacturer for 48% of its production and packaging in 2022, down from 70% in 2021, indicating a slight diversification in vendor reliance[249]. - As of December 31, 2022, one vendor accounted for 88% of total accounts payable, up from 46% in 2021, reflecting increased vendor concentration risk[250]. - The company recognized an impairment loss of $10,065,833 on intangible assets as of December 31, 2022, due to supply chain disruptions[281]. - Goodwill impairment of $11,893,134 was recorded for the year ended December 31, 2021, following a decrease in the company's share price[282]. Strategic Initiatives - The company added direct-to-consumer eCommerce capabilities on its website to expand sales channels for Viactiv products[217]. - The acquisition of Activ Nutritional has provided valuable attributes, including established distribution networks and experienced management[216]. - The company is exploring strategic alternatives to maximize stockholder value, including potential sales or mergers, with no set timetable for the review process[244][245]. - The company plans to explore strategic options, including potential mergers or acquisitions, to enhance growth and shareholder value[266]. - The company aims to strengthen its clinical nutrition strategy by advancing clinical evidence and increasing product awareness within the healthcare community[246]. Research and Development - Research and development costs rose by 201% to approximately $194,000 in 2022 from $64,000 in 2021, focusing on clinical studies for clinical nutrition products[277]. Stock and Compliance - A reverse stock split of 1-for-50 was approved on January 5, 2023, to regain compliance with Nasdaq's minimum bid requirement[222]. - The Series C Preferred Stock is convertible at a price of $0.15768 per share, adjusted to $7.884 post-reverse stock split[228]. - As of February 8, 2023, no shares of Preferred Stock were outstanding, and all investors were paid in full[233]. - The company intends to rely on certain exemptions under the JOBS Act as an "emerging growth company" until specific conditions are met[300].
Guardion Health Sciences(GHSI) - 2022 Q4 - Annual Report