Smart for Life, Inc. (Nasdaq: SMFL) (“Smart for Life” or the
“Company”), a high growth global leader in the Health &
Wellness sector marketing and manufacturing nutritional foods and
supplements worldwide, today provided a business update and
reported financial results for the three months ended June 30,
2023.
“We continue to advance our operations and have
made significant progress growing our brands. During the quarter,
we launched a new line of Sports Illustrated protein bars. We made
these bars to address a growing demand for clean and nutritional
products. The bars are non-GMO, cold-pressed, with no sucralose and
no preservatives, and include options that are gluten-free. We look
forward to launching them in select markets this quarter. Recently,
we entered into a distribution agreement with Boxout, a national
distributor of medical, rehabilitation, and health & wellness
products, for nationwide distribution of our proprietary Sports
Illustrated Nutrition products through Boxout’s distribution
channels to sports and fitness chains across North America. We look
forward to working with Boxout and leveraging their broad
distribution network.”
“We also executed a comprehensive Canadian
distribution agreement with Two Hands Corporation for our
nutritional food products. We expect this agreement to
significantly expand our geographic reach by adding additional
distribution partners and retail channels in Canada. Expansion of
our sales in both domestic and international markets is a key
component of our growth strategy as part of our stated goal of
reaching $100 million in revenue. Although our revenues decreased
in Q2 2023, due to cash constraints and fulfillment delays, we are
confident that as we execute on the growing sales pipeline and
purchase orders, our sales should rapidly increase. Notably, during
the quarter, we enhanced our balance sheet, by converting over $5.8
million of debt to equity. We also converted $1.2 million of
deferred executive and board compensation to equity as well.”
“We continue to execute on our “Buy and Build”
strategy by acquiring cash flow positive companies at attractive
multiples. Towards that end, we expect to close the eCommerce
nutraceuticals company acquisition in the next several weeks. The
target is currently generating estimated revenue in excess of $10
million, with over $2 million of EBITDA for the trailing twelve
months. Overall, we believe we are well positioned to achieve
strong revenue growth and drive significant value for our
shareholders.”
Financial Results
Revenue was $2.3 million for the three months
ended June 30, 2023, compared to $4.3 million for the three months
ended June 30, 2022. The decrease in revenue was primarily due to a
delay in financing, which led to a temporary delay in production.
Gross profit was approximately $742 thousand for the three months
ended June 30, 2023, compared to $1.8 million for the same period
last year. Net loss attributable to common shareholders was $4.2
million for the three months ended June 30, 2023, as compared to
$3.5 million for the three months ended June 30, 2022.
Revenue was $4.7 million for the six months
ended June 30, 2023 compared to $8.7 million for the six months
ended June 30, 2022. Gross profit was $1.6 million for the six
months ended June 30, 2023 compared to $3.3 million for same period
last year. Net loss attributable to common shareholders was $8.5
million for the six months ended June 30, 2023 compared to $20.2
million for same period last year.
EBITDA and Adjusted EBITDA
The Company reported Adjusted EBITDA loss of
$2.6 million in Q2 2023, as compared to Adjusted EBITDA loss of
$1.9 million in Q2 2022. For the six months ended June 30, 2023,
the Company reported Adjusted EBITDA loss of $4.5 million versus an
Adjusted EBITDA loss of $4.5 million for the same period last year.
The Company defines EBITDA as earnings before interest, taxes and
depreciation and amortization. The Company defines Adjusted EBITDA
as earnings before related party consulting fees, stock-based
compensation, stock issued for services, bad debt expense, IPO
related expenses, impairment of intangible assets, and gain on debt
extinguishment. Both EBITDA and Adjusted EBITDA are not measures of
performance calculated in accordance with Generally Accepted
Accounting Principles in the United States of America (“GAAP”), and
should not be considered in isolation of, or as a substitute for,
earnings as an indicator of operating performance or cash flows
from operating activities as a measure of liquidity. The Company
believes the presentation of EBITDA and Adjusted EBITDA is relevant
and useful by enhancing the readers’ ability to understand the
Company’s operating performance. The Company’s management utilizes
EBITDA and Adjusted EBITDA as means to measure performance. The
Company’s measurements of EBITDA and Adjusted EBITDA may not be
comparable to similar titled measures reported by other companies.
The table below reconciles EBITDA and Adjusted EBITDA, both
non-GAAP measures, to GAAP numbers for net loss for net loss for
the three and six months ended June 30, 2023 and 2022.
|
3 Months ended June 20, |
|
6 Months ended June 20, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
Net loss |
(4,219,996 |
) |
|
(3,385,195 |
) |
|
(8,504,311 |
) |
|
(19,959,762 |
) |
Interest expense |
707,714 |
|
|
984,427 |
|
|
2,252,576 |
|
|
13,741,907 |
|
Taxes |
- |
|
|
- |
|
|
- |
|
|
- |
|
Depreciation and amortization |
507,593 |
|
|
430,092 |
|
|
1,198,803 |
|
|
853,102 |
|
EBITDA |
(3,004,689 |
) |
|
(1,970,676 |
) |
|
(5,052,932 |
) |
|
(5,364,753 |
) |
Related party consulting fees |
- |
|
|
- |
|
|
27,547 |
|
|
- |
|
Stock based compensation |
27,735 |
|
|
- |
|
|
80,208 |
|
|
- |
|
Change in fair value of derivative liability |
- |
|
|
38,997 |
|
|
- |
|
|
38,997 |
|
Stock issued for services |
99,200 |
|
|
- |
|
|
99,200 |
|
|
- |
|
IPO related expenses |
- |
|
|
- |
|
|
- |
|
|
702,581 |
|
Bad debt expense |
28,040 |
|
|
- |
|
|
107,532 |
|
|
|
Gain on debt extinguishment |
(257,037 |
) |
|
- |
|
|
(257,037 |
) |
|
134,956 |
|
Impairment of intangible asset |
466,737 |
|
|
|
|
466,737 |
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED EBITDA |
(2,640,014 |
) |
|
(1,931,679 |
) |
|
(4,528,745 |
) |
|
(4,488,219 |
) |
|
|
|
|
|
|
|
|
About Smart for Life, Inc.
Smart for Life, Inc. (Nasdaq: SMFL) is engaged
in the development, marketing, manufacturing, acquisition,
operation and sale of a broad spectrum of nutritional and related
products with an emphasis on health and wellness. Structured as a
publicly held global holding company, the Company is executing a
Buy-and-Build strategy with serial accretive acquisitions creating
a vertically integrated company with an objective of aggregating
companies generating a minimum of $300 million in revenues by the
fourth quarter of 2026. To drive growth and earnings, Smart for
Life is developing proprietary products as well as acquiring other
profitable companies, encompassing brands, manufacturing and
distribution channels. The Company currently operates five
subsidiaries including Doctors Scientific Organica, Nexus Offers,
Bonne Santé Natural Manufacturing, GSP Nutrition/Sports Illustrated
Nutrition and Ceautamed Worldwide/Greens First. For more
information about Smart for Life, please visit:
www.smartforlifecorp.com.
Video regarding the Company’s manufacturing facility at Bonne
Santé Natural Manufacturing is available at:
www.bonnesantemanufacturing.com/video.
Investor material and a Fact Sheet with additional information
about Smart for Life is available at:
www.smartforlifecorp.com/investor-center.
Forward-Looking Statements
This press release may contain information about
our views of future expectations, plans and prospects that
constitute forward-looking statements. All forward-looking
statements are based on management’s beliefs, assumptions and
expectations of Smart for Life’s future economic performance,
taking into account the information currently available to it.
These statements are not statements of historical fact. Although
Smart for Life believes the expectations reflected in such
forward-looking statements are based on reasonable assumptions, it
can give no assurance that its expectations will be attained. Smart
for Life does not undertake any duty to update any statements
contained herein (including any forward-looking statements), except
as required by law. Forward-looking statements are subject to a
number of factors, risks and uncertainties, some of which are not
currently known to us, that may cause Smart for Life’s actual
results, performance or financial condition to be materially
different from the expectations of future results, performance or
financial position. Actual results may differ materially from the
expectations discussed in forward-looking statements. Factors that
could cause actual results to differ materially from expectations
include general industry considerations, regulatory changes,
changes in local or national economic conditions and other risks
set forth in “Risk Factors” included in our filings with the
Securities and Exchange Commission.
Investor Relations Contact
Crescendo Communications, LLCTel: (212)
671-1021SMFL@crescendo-ir.com
Smart for Life (NASDAQ:SMFL)
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