Revenue Growth - Total revenues increased by $8,743,768, or 96.91%, to $17,766,361 for the year ended December 31, 2022, compared to $9,022,593 for the year ended December 31, 2021, primarily due to acquisitions completed in 2021 [238]. - Revenues from the nutraceutical business increased by $6,000,911, or 72.03%, to $14,331,482 for the year ended December 31, 2022, driven by acquisitions and increased sales of contract manufacturing services [241]. - Revenues from the digital marketing business were $3,434,879 for the year ended December 31, 2022, compared to $692,022 for the period from November 8, 2021, to December 31, 2021 [242]. Cost of Revenues - Total cost of revenues increased by $6,764,599, or 110.45%, to $12,889,232 for the year ended December 31, 2022, from $6,124,633 for the year ended December 31, 2021, primarily due to acquisitions [243]. - Cost of revenues for the nutraceutical business increased by $4,731,709, or 84.55%, to $10,327,956 for the year ended December 31, 2022, with cost of revenues as a percentage of product revenues rising from 67.18% in 2021 to 72.55% in 2022 [244]. Operating and Net Loss - Operating loss for the year ended December 31, 2022, was $(12,206,586), representing (68.71)% of total revenues, compared to an operating loss of $(5,240,821), or (58.09)% of total revenues in 2021 [238]. - Net loss for the year ended December 31, 2022, was $(29,977,815), or (168.73)% of total revenues, compared to a net loss of $(7,765,523), or (86.07)% of total revenues in 2021 [238]. Expenses - General and administrative expenses increased to $6,321,672, or 35.58% of total revenues, for the year ended December 31, 2022, compared to $2,948,466, or 32.68% of total revenues, in 2021 [238]. - Compensation expenses rose to $6,690,889, or 37.66% of total revenues, for the year ended December 31, 2022, compared to $3,564,978, or 39.51% of total revenues, in 2021 [238]. - Professional services expenses increased by $1,018,301, or 112.22%, to $1,925,713 for the year ended December 31, 2022, with expenses as a percentage of revenues rising from 10.06% in 2021 to 10.84% in 2022 [249]. Gross Profit - Gross profit increased by $1,979,169, or 68.30%, to $4,877,129 for the year ended December 31, 2022, while gross profit as a percentage of revenues decreased from 32.12% in 2021 to 27.45% in 2022 [246]. Cash Flow and Financing - Cash and cash equivalents at the end of the year were $69,714, down from $205,093 at the beginning of the year [258]. - Net cash used in operating activities was $9,377,916 for the year ended December 31, 2022, compared to $4,965,458 for the year ended December 31, 2021 [258]. - Net cash provided by financing activities was $12,306,993 for the year ended December 31, 2022, compared to $12,926,986 for the year ended December 31, 2021 [260]. - The company intends to raise additional capital for acquisitions through debt financing and equity offerings, estimating the need for $10 million to $30 million in outside capital over the next 12 months [254]. - The IPO completed on February 18, 2022, generated net proceeds of approximately $12,684,739, which will be used for working capital and general corporate purposes [266]. Debt and Obligations - As of December 31, 2022, the outstanding principal balance of original issue discount subordinated debentures was $3,911,770, with an original issue discount of 15% totaling $586,770 [271]. - The original issue discount secured subordinated note issued on July 29, 2022, had an outstanding principal balance of $2,242,853 and a total purchase price of $2,000,000 [272]. - The 6% secured subordinated promissory note related to the acquisition of DSO had an outstanding principal balance of $3,050,000 as of December 31, 2022 [274]. - The total outstanding principal balance of secured subordinated convertible promissory notes issued for the acquisition of Ceautamed was $2,150,000 as of December 31, 2022 [276]. - The outstanding principal balance of the term loan with Diamond Creek Capital was $1,125,000 as of December 31, 2022, after repaying $1,325,000 from the IPO proceeds [280]. - As of December 31, 2022, the outstanding amount for cash advance agreements totaled $67,624 from a $341,150 agreement, with a required repayment amount of $490,000 [284]. - The outstanding principal balance of revolving lines of credit as of December 31, 2022, was $670,096, with interest rates of 8.99% and 7.99% [289]. - The equipment financing loan for $146,765 had an outstanding amount of $133,211 as of December 31, 2022, with an interest rate of 10.18% [291]. - The company entered into cash advance agreements totaling $293,000, with an outstanding amount of $323,853 as of December 31, 2022 [288]. - The company has issued promissory notes with an outstanding balance of $200,000 at December 31, 2022, accruing interest at 12% and due on April 1, 2023 [281]. - The company entered into a promissory note for an EIDL loan with a principal amount of $300,000, maturing in 30 years at an interest rate of 3.75% [293]. - An additional PPP loan of $261,164 was received, with an outstanding balance of $197,457 as of December 31, 2022, after $63,707 was forgiven [294]. - The company has no off-balance sheet arrangements that could affect its financial condition or results of operations [296]. Revenue Recognition and Inventory - Revenue is primarily generated through the manufacturing and packaging of nutraceutical products, recognized upon transfer of control to customers [300]. - Nexus generates advertising revenues based on sales from product vendors, with revenue recognized upon sale, net of fraudulent traffic [302]. - Inventory is valued at the lower of cost or net realizable value, with an allowance for obsolescence based on slow-moving inventory [304]. Goodwill and Impairment - Goodwill from the acquisition of DSO was recorded at $1,342,000 as of December 31, 2022 [307]. - The company assesses potential impairments to long-lived assets and had no impairment losses recognized at December 31, 2022 [308]. Stock-Based Compensation - Stock-based compensation expenses are recognized over the vesting period based on the fair value of the awards at grant date [310].
Smart for Life(SMFL) - 2022 Q4 - Annual Report