Laird Superfood(LSF) - 2023 Q4 - Annual Report

Financial Performance - Net sales for 2023 were $34,224,198, down from $35,828,392 in 2022, representing a decrease of about 4.5%[271] - Gross profit increased significantly from $5,187,267 in 2022 to $10,313,277 in 2023, reflecting an increase of approximately 98%[271] - Net loss for 2023 was $(10,163,117), compared to $(40,337,318) in 2022, indicating a 75% improvement[274] - Operating loss improved from $(40,364,137) in 2022 to $(10,698,986) in 2023, a reduction of about 73%[271] - The net loss for 2023 was $10,163,117, resulting in a basic and diluted loss per share of $1.09, compared to a net loss of $40,337,318 and a loss per share of $4.41 in 2022[379] Assets and Liabilities - Total assets decreased from $30,039,340 in 2022 to $18,031,959 in 2023, a decline of approximately 40%[268] - Total liabilities decreased from $7,528,328 in 2022 to $4,619,340 in 2023, a reduction of approximately 39%[268] - Stockholders' equity fell from $22,511,012 in 2022 to $13,412,619 in 2023, a decline of about 40%[268] - Cash flows from operating activities resulted in a net cash outflow of $10,765,881 for 2023, compared to an outflow of $14,312,439 in 2022, indicating a 24.5% improvement[280] - Total cash, cash equivalents, and restricted cash decreased to $7,706,806 as of December 31, 2023, down from $17,809,802 in 2022, reflecting a decline of 56.7%[292] Expenses - Research and product development expenses decreased from $427,537 in 2022 to $219,723 in 2023, a reduction of approximately 48%[271] - Advertising expenses decreased from $6,914,706 in 2022 to $3,825,969 in 2023, a decline of about 45%[271] - The Company recorded total rent expense of $519,498 for the year ended December 31, 2023, a decrease of 64.6% from $1,466,222 in 2022[359] - Operating lease expense for 2023 was $181,914, down 84.9% from $1,204,334 in 2022[359] - The total stock-based compensation expense for 2023 was $1,092,146, a decrease from $1,788,566 in 2022, with unrecognized compensation cost related to non-vested awards amounting to $654,313[378] Inventory and Receivables - Inventory reserves as of December 31, 2023, totaled $1,029,657, a decrease from $1,545,033 in 2022, indicating a reduction of approximately 33.3%[296] - Accounts receivable allowances for credit losses increased to $243,416 in 2023 from $77,436 in 2022, reflecting a significant rise of 213.5%[294] - Accounts receivable, net, as of December 31, 2023, was $1,022,372, a decrease from $1,494,469 at the end of 2022[385] Revenue Recognition and Sales - The company recognizes revenue when control of the promised good is transferred to the customer, considering various shipping terms and performance obligations[384] - Coffee creamers generated $20,381,166 in sales, accounting for 60% of total sales in 2023, up from 55% in 2022[385] - E-commerce sales decreased to $19,443,885, representing 57% of total sales, down from 62% in 2022[385] - Returns and discounts increased to $7,709,115, representing 23% of gross sales in 2023, compared to 16% in 2022[385] Stock and Equity - The weighted-average shares of common stock outstanding increased from 9,146,008 in 2022 to 9,297,226 in 2023[271] - The Company issued 1,430,500 stock options to employees on February 23, 2024, with an exercise price of $0.73[329] - The Company granted 700,000 stock options in 2023, with a weighted average exercise price of $0.89[372] - The balance of Restricted Stock Units (RSUs) at December 31, 2023, was 771,885, with a weighted average grant date fair value of $1.77 per share[374] Tax and Deferred Assets - The Company reported a tax benefit at statutory rates of $2,131,064 for 2023, down from $8,430,127 in 2022[362] - The Company recorded a total of $25,701,128 in deferred tax assets as of December 31, 2023, compared to $23,928,265 in 2022[363] - The Company has a valuation allowance for deferred tax assets of $25,701,128 as of December 31, 2023, unchanged from 2022[363] Quality and Compliance - The company implemented a new sensory testing program to prevent future quality issues following a product withdrawal in 2023[322] - The company incurred costs of $0.5 million in Q4 2022 and $0.4 million in Q1 2023 due to a product quality issue, with recoveries of $0.3 million recognized in 2023[322] - The company recorded $1,273,171 in costs related to the disposal of and reserve for obsolete inventory in 2023, down from $2,761,476 in 2022, representing a decrease of 53.8%[295]