Net Sales Increase 45% Year Over Year to $10.9 Million

Direct-To-Consumer Sales Up 108% Year Over Year

Laird Superfood, Inc. (NYSE:LSF) ("Laird Superfood," "we" and "our"), today reported financial results for its third quarter ended September 30, 2021.

Third Quarter 2021 Highlights

Net Sales increased 45% year over year to $10.9 million.
Online sales contributed 58% of net sales, increasing 70% year over year with direct-to-consumer up 108%.
Wholesale sales contributed 41% of net sales, increasing 21% year over year, with continued traction in coffee creamers.
Gross profit was $3.2 million and gross margin was 29.4% compared to gross profit of $1.8 million and gross margin of 23.4% in the prior year period.
Net loss attributable to common stockholders was $5.4 million, or $0.59 per diluted share, compared to a net loss of $4.0 million, or $0.86 per diluted share, in the prior year period.

"In the third quarter, we delivered solid growth across our portfolio," said Paul Hodge Jr., Co-Founder, President and Chief Executive Officer of Laird Superfood. "The power of our digitally native brand continued to be reflected in our direct-to-consumer sales, which rose 108%, fueled by our expanding product offerings and the ongoing strength of customer metrics around conversion and retention, including leading performance from the newest cohorts. Our new products in hydration and beverage supplements continue to grow at a strong pace, and we remain highly encouraged by results from the recently acquired Picky portfolio," continued Hodge. "Operationally, we are hyper focused on efficiency and have made solid progress on several initiatives to move towards profitability as we continue rapidly scaling our powerful omnichannel platform. We remain steadfast in our vision of delivering better for you, plant-based alternatives for every moment of consumers' daily ritual."

For the Three Months Ended September 30, 2021

	Three months ended September 30,
	2021					2020
	$			% of Total		$			% of Total
Coffee creamers	$	6,489,895		60	%	$	5,261,175		70	%
Hydration and beverage enhancing supplements		1,330,906		12	%		1,037,517		14	%
Coffee, tea, and hot chocolate products		1,724,919		16	%		2,153,702		29	%
Harvest snacks and other food items		1,866,709		17	%		—		0	%
Other		452,002		4	%		159,906		2	%
Gross sales		11,864,431		109	%		8,612,300		115	%
Shipping income		195,085		2	%		25,737		0	%
Returns and discounts		(1,193,602	)	(11	%)		(1,147,395	)	(15	%)
Sales, net	$	10,865,914		100	%	$	7,490,642		100	%

	Three months ended September 30,
	2021					2020
	$			% of Total		$			% of Total
Online	$	6,331,003		58	%	$	3,713,773		50	%
Wholesale		4,415,867		41	%		3,650,854		49	%
Food service		119,044		1	%		126,015		1	%
Sales, net	$	10,865,914		100	%	$	7,490,642		100	%

Net sales increased 45% to $10.9 million in the third quarter of 2021 compared to $7.5 million in the third quarter of 2020, primarily driven by strong gains in direct-to-consumer ("DTC") sales. Growth was broad based, including solid increases in Coffee creamers and Hydration and beverage enhancing supplements from both legacy offerings as well as recent product launches, plus the addition of Harvest Snacks.

Gross profit was $3.2 million, an 82% increase compared to the prior year period of $1.8 million. Gross margin was 29.4% of net sales in the third quarter of 2021, compared to 23.4% of net sales in the prior year period. The year over year increase in gross margin reflected several factors, including optimization of inventory cost and DTC parcel cost, as well as improvement in liquid creamer disposals, partially offset by elevated wholesale fulfilment related expenses.

Operating expenses were $8.5 million compared to $5.1 million in the year ago period and reflect General and Administrative expense increases of $2.0 million, with $0.8 million attributable to increased non-cash expenses, such as stock-based compensation and amortization of intangibles, as well as increased insurance expense, professional fees and personnel costs. Sales and Marketing expense further contributed with increases of $1.2 million, primarily due to advertising and marketing fees.

Loss from operations was $5.3 million in the third quarter of 2021, compared to a loss of $3.4 million in the prior year period.

Net loss attributable to common stockholders was $5.4 million, or $0.59 per diluted share, in the third quarter of 2021, compared to net loss attributable to common stockholders of $4.0 million, or $0.86 per diluted share, in the prior year period.

Valerie Ells, Chief Financial Officer, commented, "Our continued focus on optimization helped drive favorable trends in margins and expense levels during the third quarter, along with robust sales growth. We are very pleased with the direction and progress towards our long-term targets. Our balance sheet remains strong with nearly $40 million of cash and investments and effectively zero debt, and we remain focused on maximizing the leverage across our business to continue driving forward toward profitability, while maintaining strong growth rates."

For the Nine Months Ended September 30, 2021

	Nine months ended September 30,
	2021					2020
	$			% of Total		$			% of Total
Coffee creamers	$	16,590,542		60	%	$	13,285,967		72	%
Hydration and beverage enhancing supplements		3,907,111		14	%		2,877,694		16	%
Coffee, tea, and hot chocolate products		5,286,882		19	%		4,116,891		22	%
Harvest snacks and other food items		3,353,178		12	%		—		0	%
Other		987,076		4	%		378,318		2	%
Gross sales		30,124,789		110	%		20,658,870		112	%
Shipping income		261,495		1	%		221,082		1	%
Returns and discounts		(2,942,890	)	(11	%)		(2,381,455	)	(13	%)
Sales, net	$	27,443,394		100	%	$	18,498,497		100	%

	Nine months ended September 30,
	2021					2020
	$			% of Total		$			% of Total
Online	$	16,492,513		60	%	$	10,049,039		54	%
Wholesale		10,529,593		38	%		8,117,655		44	%
Food service		421,288		2	%		331,803		2	%
Sales, net	$	27,443,394		100	%	$	18,498,497		100	%

Net sales increased 48% to $27.4 million in the first nine months of 2021 compared to $18.5 million in the first nine months of 2020. Year-to-date growth in net sales was due to growth in both online and wholesale channels, and broad based with all categories showing strong double-digit increases.

Gross profit was $7.2 million, an increase of 41% compared to the prior year period of $5.1 million. Gross margin was 26.3% of net sales in the first nine months of 2021, compared to 27.6% of net sales in the prior year period. The year over year decrease in gross margin was primarily due to the full period impact from the launch of a free shipping initiative for direct online purchases made on lairdsuperfood.com combined with increased co-packing and distribution expenses associated with our liquid creamer product line, partially offset by optimization of DTC shipping costs.

Operating expenses were $24.2 million compared to $13.5 million in the first nine months of 2020 and reflect General and Administrative expense increases of $6.4 million, with $2.4 million attributable to increased non-cash expenses, such as stock-based compensation and amortization of intangibles, as well as increased personnel costs, insurance expense, professional fees, and reserves against prepaid assets. Sales and Marketing expense further contributed with increases of $3.7 million, primarily due to advertising and marketing fees.

Loss from operations was $16.9 million in the first nine months of 2021, compared to a loss of $8.4 million in the prior year period.

Net loss attributable to common stockholders was $17.0 million, or $1.90 per diluted share, in the first nine months of 2021, compared to net loss attributable to common stockholders of $10.0 million, or $2.26 per diluted share, in the prior year period.

Balance Sheet and Cash Flow Highlights

The Company had $39.7 million of cash, cash equivalents, and investment securities as of September 30, 2021 and total outstanding debt was $51,000. Net cash used in operating activities was $14.2 million for the nine months ended September 30, 2021, compared to $7.1 million in the comparative prior year period.

Capital expenditures totaled $1.0 million for the nine months ended September 30, 2021, compared to $0.9 million in the prior year period.

Conference Call and Webcast Details

The Company will host a conference call and webcast at 5:00 p.m. ET today to discuss results. The live conference call can be accessed by dialing (833) 772-0381 from the U.S. or (236) 384-2050 internationally. The conference I.D. code is 3562448. Alternatively, participants may access the live webcast on the Laird Superfood Investor Relations website at https://investors.lairdsuperfood.com under "Events."

About Laird Superfood

Laird Superfood, Inc. creates award-winning, plant-based superfood products that are both delicious and functional. The Company's products are designed to enhance your daily ritual and keep consumers fueled naturally throughout the day. The Company was co-founded in 2015 by the world's most prolific big-wave surfer, Laird Hamilton. Laird Superfood's offerings are environmentally conscientious, responsibly tested, and made with real ingredients. Shop all products online at lairdsuperfood.com and join the Laird Superfood community on social media for the latest news and daily doses of inspiration.

Forward-Looking Statements

This press release and the earnings call referencing this press release contain "forward-looking" statements, as that term is defined under the federal securities laws, including but not limited to statements regarding Laird Superfood's future financial performance, including our outlook for fiscal year 2021. These forward-looking statements are based on Laird Superfood's current assumptions, expectations and beliefs and are subject to substantial risks, uncertainties, assumptions and changes in circumstances that may cause Laird Superfood's actual results, performance or achievements to differ materially from those expressed or implied in any forward-looking statement. We expressly disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

The risks and uncertainties referred to above include, but are not limited to:(1) our limited operating history and ability to become profitable; (2) our reliance on third parties for raw materials and production of some of our products; (3) our ability to manage our growth and scale our manufacturing and processing capabilities effectively, including our human resource requirements; (4) our future capital needs; (5) our ability to retain and grow our customer base; (6) our reliance on independent distributors for a substantial portion of our sales; (7) our ability to evaluate and measure our business, prospects and performance metrics; (8) our ability to compete and succeed in a highly competitive and evolving industry; (9) the health of the premium organic and natural food industry as a whole; (10) risks related to our intellectual property rights and developing a strong brand; (11) our reliance on key personnel, including Laird Hamilton and Gabrielle Reece; (12) regulatory risks; (13) risks associated with the COVID-19 pandemic, including those related to any variant strains of the virus that may emerge; (14) risks related to our international operations; (15) the risk of substantial dilution from future issuances of our equity securities; and (16) the other risks described in our most recent Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission.

LAIRD SUPERFOOD, INC.
STATEMENTS OF OPERATIONS

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
		2021			2020			2021			2020
Sales, net	$	10,865,914		$	7,490,642		$	27,443,394		$	18,498,497
Cost of goods sold		(7,667,075	)		(5,734,144	)		(20,225,269	)		(13,384,880	)
Gross profit		3,198,839			1,756,498			7,218,125			5,113,617
General and administrative
Salaries, wages and benefits		1,252,664			1,031,425			3,478,362			2,652,500
Stock-based compensation		911,467			290,148			2,766,071			589,600
Professional fees		551,368			274,244			1,504,438			647,422
Insurance expense		537,174			89,136			1,560,395			146,197
Office expense		235,109			142,269			628,388			364,518
Occupancy		68,251			57,378			187,729			167,151
Merchant service fees		171,050			103,306			429,307			248,355
Netsuite subscription expense		64,886			33,173			194,024			90,491
Impairment on property, plant, and equipment		8,317			—			8,317			239,734
Other expense		453,838			197,740			1,303,398			504,864
Total general and administrative expenses		4,254,124			2,218,819			12,060,429			5,650,832
Research and product development
Salaries, wages and benefits		118,105			54,454			304,653			202,287
Stock-based compensation		7,864			2,310			16,816			6,694
Product development expense		107,418			43,589			520,210			141,506
Other expense		9,217			2,526			16,464			13,503
Total research and product development expenses		242,604			102,879			858,143			363,990
Sales and marketing
Salaries, wages and benefits		589,941			613,961			1,854,020			2,057,517
Stock-based compensation		65,441			520,022			162,536			630,456
Advertising		1,954,377			1,140,369			5,313,881			3,146,592
General marketing		1,131,023			312,402			3,079,181			883,286
Amazon selling fee		196,053			179,425			609,171			575,313
Travel expense		11,828			4,908			32,188			78,872
Other expense		66,090			45,543			182,788			148,911
Total sales and marketing expenses		4,014,753			2,816,630			11,233,765			7,520,947
Total expenses		8,511,481			5,138,328			24,152,337			13,535,769
Operating loss		(5,312,642	)		(3,381,830	)		(16,934,212	)		(8,422,152	)
Other income (expense)
Interest and dividend income		10,721			20,496			36,246			51,521
Gain on sale of available-for-sale securities		—			6,250			—			13,927
Total other income (expense)		10,721			26,746			36,246			65,448
Loss before income taxes		(5,301,921	)		(3,355,084	)		(16,897,966	)		(8,356,704	)
Income tax expense		(49,777	)		—			(86,495	)		—
Net loss	$	(5,351,698	)	$	(3,355,084	)	$	(16,984,461	)	$	(8,356,704	)
Less deemed dividend of beneficial conversion feature		—			—			—			(825,366	)
Less deemed dividend on warrant discount		—			(645,939	)		—			(825,366	)
Net loss attributable to Laird Superfood, Inc. common stockholders	$	(5,351,698	)	$	(4,001,023	)	$	(16,984,461	)	$	(10,007,436	)
Net loss per share attributable to Laird Superfood, Inc common stockholders:
Basic	$	(0.59	)	$	(0.86	)	$	(1.90	)	$	(2.26	)
Diluted	$	(0.59	)	$	(0.86	)	$	(1.90	)	$	(2.26	)
Weighted-average shares of common stock outstanding used in computing net loss per share of common stock, basic and diluted		9,001,912			4,672,041			8,954,875			4,427,114

LAIRD SUPERFOOD, INC.
STATEMENTS OF CASH FLOWS

	For the Nine Months Ended September 30,
		2021			2020
Cash flows from operating activities
Net loss	$	(16,984,461	)	$	(8,356,704	)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation		454,400			344,162
Amortization		243,578			7,599
Loss on disposal of equipment		5,600			—
Stock-based compensation		3,142,517			1,320,433
Reserve for prepaid assets		179,000			—
Restricted stock awards		—			62,431
Impairment on property, plant, and equipment		8,317			239,734
Gain on sale of investment securities available-for-sale		—			13,927
Changes in operating assets and liabilities:
Accounts receivable		(72,150	)		(397,669	)
Inventory		(3,314,086	)		(1,441,766	)
Prepaid expenses and other current assets		1,137,741			(1,582,315	)
Deferred rent		267,787			270,731
Deposits		2,601			33,009
Accounts payable		184,722			1,613,754
Payroll liabilities		81,694			207,675
Accrued expenses		333,246			567,103
Deferred taxes		86,495			—
Net cash from operating activities		(14,242,999	)		(7,097,896	)
Cash flows from investing activities
Purchase of property, plant, and equipment		(1,039,350	)		(874,764	)
Proceeds from sale of property, equipment, and software		700			—
Deposits on equipment to be acquired		(462,507	)		—
Purchase of software		(141,546	)		—
Acquisition of a business, net of cash acquired (note 2)		(10,449,587	)		—
Sale of investment securities available-for-sale		—			516,459
Proceeds from maturities of investment securities available-for-sale		—			4,475,000
Net cash from investing activities		(12,092,290	)		4,116,695
Cash flows from financing activities
Issuance of common stock		—			66,104,477
Issuance of preferred stock		—			10,000,006
Common stock issuance costs		(82,043	)		(1,131,291	)
Preferred stock issuance costs		—			(147,721	)
Withholding tax payments for share based compensation		(219,157	)		—
Restricted stock units issued		31			—
Repurchased common stock		—			(20,532	)
Stock options exercised		485,916			119,838
Net cash from financing activities		184,747			74,924,777
Net change in cash and cash equivalents		(26,150,542	)		71,943,576
Cash and cash equivalents beginning of period		57,208,080			1,004,109
Cash and cash equivalents end of period	$	31,057,538		$	72,947,685
Supplemental disclosures of non-cash information
Unrealized gain (loss) on available-for-sale securities	$	(22,049	)	$	924

Purchases of equipment included in deposits at the beginning of the period	$	—		$	14,699

LAIRD SUPERFOOD, INC.
BALANCE SHEET

	As of
	September 30, 2021			December 31, 2020
Assets
Current assets
Cash and cash equivalents	$	31,057,538		$	57,208,080
Accounts receivable, net		956,870			839,659
Investment securities available-for-sale		8,688,251			8,706,844
Inventory		10,335,990			6,295,898
Prepaid expenses and other current assets, net		1,767,744			2,847,319
Deposits		563,580			97,674
Total current assets		53,369,973			75,995,474
Noncurrent assets
Property and equipment, net		4,139,199			3,513,488
Intangible assets, net		4,965,060			137,092
Goodwill		6,486,000			—
Deferred rent		2,428,859			2,696,646
Total noncurrent assets		18,019,118			6,347,226
Total assets	$	71,389,091		$	82,342,700
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	1,548,009		$	1,315,964
Payroll liabilities		813,798			722,915
Accrued expenses		1,185,900			704,543
Total current liabilities		3,547,707			2,743,422
Long-term liabilities
Deferred tax liability, net		86,495			—
Note payable		51,000			51,000
Total long-term liabilities		137,495			51,000
Total liabilities		3,685,202			2,794,422
Stockholders' equity
Common stock, $0.001 par value, 100,000,000 shares authorized as of September 30, 2021 and December 31, 2020; 9,402,959 and 9,037,499 issued and outstanding at September 30, 2021, respectively; 9,247,758 and 8,892,886 issued and outstanding at December 31, 2020, respectively	$	9,037		$	8,893
Additional paid-in capital		116,614,323			111,452,346
Accumulated other comprehensive income (loss)		(7,842	)		14,207
Accumulated deficit		(48,911,629	)		(31,927,168	)
Total stockholders' equity		67,703,889			79,548,278
Total liabilities and stockholders' equity	$	71,389,091		$	82,342,700

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Laird Superfood Reports Third Quarter 2021 Financial Results