lsf20240331_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-39537

Laird Superfood, Inc.

(Exact Name of Registrant as Specified in its Charter)

Nevada

81-1589788

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

5303 Spine Road, Suite 204, Boulder, Colorado 80301

(Address of principal executive offices, including Zip Code)

Registrant’s telephone number, including area code: (541) 588-3600

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol

Name of each exchange

on which registered

Common Stock, $0.001 par value

LSF

NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 6, 2024 the registrant had 9,611,544 shares of common stock, $0.001 par value per share, outstanding.

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TABLE OF CONTENTS

	Page
Part I. Financial Information

Item 1. Financial Statements	4

Unaudited Consolidated Condensed Balance Sheets	4

Unaudited Consolidated Condensed Statements of Operations	5

Unaudited Consolidated Condensed Statements of Stockholders’ Equity	6

Unaudited Consolidated Condensed Statements of Cash Flows	7

Notes to Unaudited Consolidated Condensed Financial Statements	8

Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations	22

Item 3. Quantitative and Qualitative Disclosures About Market Risk	28

Item 4. Controls and Procedures	28

Part II. Other Information	28

Item 1. Legal Proceedings	28

Item 1A. Risk Factors	28

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	29

Item 3. Defaults Upon Senior Securities	29

Item 4. Mine Safety Disclosures	29

Item 5. Other Information	29

Item 6. Exhibits	30

Signatures	31

Laird, our logo and other trademarks or service marks appearing in this report are the property of Laird Superfood, Inc. Trade names, trademarks and service marks of other companies appearing in this report are the property of their respective owners. Solely for convenience, the trademarks, service marks and trade names included in this report are without the ®, or other applicable symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names.

Unless the context otherwise indicates, references to “Laird Superfood,” “we,” “our,” “us” and the “Company” refer to Laird Superfood, Inc. and its subsidiary on a consolidated basis.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements convey our current expectations or forecasts of future events and are not guarantees of future performance. They are based on numerous assumptions that we believe are reasonable, but they are open to a wide range of uncertainties and business risks. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Any statements contained in this Quarterly Report on Form 10-Q that are not statements of historical fact may be forward-looking statements. When we use the words “anticipates,” “believes,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “seeks,” “should,” “will,” “would,” or the negative of these terms or other comparable terminology, we are identifying forward-looking statements.

Forward-looking statements involve risks and uncertainties, which may cause our actual results, performance, or achievements to be materially different from those expressed or implied by forward-looking statements. Key factors that could cause actual results to be different than expected or anticipated include, but are not limited to:

●

our limited operating history and ability to become profitable;

●

our ability to manage our growth, including our human resource requirements;

●

our reliance on third parties for raw materials and production of our products;

●

our future capital resources and needs;

●

our ability to retain and grow our customer base;

●

our reliance on independent distributors for a substantial portion of our sales;

●

our ability to evaluate and measure our business, prospects, and performance metrics;

●

our ability to compete and succeed in a highly competitive and evolving industry;

●

the health of the premium organic and natural food industry as a whole;

●

risks related to our intellectual property rights and developing a strong brand;

●

our reliance on key personnel, including Laird Hamilton and Gabrielle Reece;

●

regulatory risks;

●

risks related to our international operations;

●

the risk of substantial dilution from future issuances of our equity securities; and

●

the other risks described herein and in our Annual Report on Form 10-K for the year ended December 31, 2023.

In light of these risks, uncertainties and assumptions, you are cautioned not to place undue reliance on forward-looking statements, which are inherently unreliable and speak only as of the date of this Quarterly Report on Form 10-Q. You should read this Quarterly Report on Form 10-Q and the documents that we reference in this report with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. When considering forward-looking statements, you should keep in mind the cautionary statements in this report. We qualify all our forward-looking statements by these cautionary statements. We are not under any obligation, and 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.

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

LAIRD SUPERFOOD, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(unaudited)

	*As of*
	*March 31, 2024*			*December 31, 2023*
Assets
Current assets
Cash, cash equivalents, and restricted cash	$	7,289,286		$	7,706,806
Accounts receivable, net		2,064,745			1,022,372
Inventory, net		5,633,124			6,322,559
Prepaid expenses and other current assets		1,067,675			1,285,564
Total current assets		16,054,830			16,337,301
Noncurrent assets
Property and equipment, net		102,881			122,595
Intangible assets, net		1,033,510			1,085,231
Related party license agreements		132,100			132,100
Right-of-use assets		323,007			354,732
Total noncurrent assets		1,591,498			1,694,658
Total assets	$	17,646,328		$	18,031,959
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	1,718,574		$	1,647,673
Accrued expenses		2,862,394			2,586,343
Related party liabilities		28,167			2,688
Lease liabilities, current portion		148,598			138,800
Total current liabilities		4,757,733			4,375,504
Lease liabilities		208,142			243,836
Total liabilities		4,965,875			4,619,340
Stockholders’ equity
Common stock, $0.001 par value, 100,000,000 shares authorized as of March 31, 2024 and December 31, 2023; 9,885,429 and 9,519,725 issued and outstanding at March 31, 2024, respectively; and 9,749,326 and 9,383,622 issued and outstanding at December 31, 2023, respectively.		9,520			9,384
Additional paid-in capital		119,985,604			119,701,384
Accumulated deficit		(107,314,671	)		(106,298,149	)
Total stockholders’ equity		12,680,453			13,412,619
Total liabilities and stockholders’ equity	$	17,646,328		$	18,031,959

The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.

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LAIRD SUPERFOOD, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	*Three Months Ended*
	*March 31,*
	*2024*			*2023*
Sales, net	$	9,908,938		$	8,112,938
Cost of goods sold		(5,944,837	)		(6,239,062	)
Gross profit		3,964,101			1,873,876
General and administrative
Salaries, wages, and benefits		922,407			1,315,449
Other general and administrative		1,235,341			1,766,861
Total general and administrative expenses		2,157,748			3,082,310
Sales and marketing
Marketing and advertising		2,053,258			2,203,035
Selling expenses		779,156			853,204
Related party marketing agreements		62,501			37,809
Total sales and marketing expenses		2,894,915			3,094,048
Total operating expenses		5,052,663			6,176,358
Operating loss		(1,088,562	)		(4,302,482	)
Other income		110,997			170,994
Loss before income taxes		(977,565	)		(4,131,488	)
Income tax expense		(38,957	)		(12,422	)
Net loss	$	(1,016,522	)	$	(4,143,910	)
Net loss per share:
Basic and diluted	$	(0.11	)	$	(0.45	)
Weighted-average shares of common stock outstanding used in computing net loss per share of common stock, basic and diluted		9,401,605			9,213,723

The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.

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LAIRD SUPERFOOD, INC.

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

	*Stockholders’ Equity*
	*Common Stock*				*Additional*			*Accumulated*
	*Shares*		*Amount*		*Paid-in Capital*			*Deficit*			*Total*
Balances, January 1, 2024		9,383,622	$	9,384	$	119,701,384		$	(106,298,149	)	$	13,412,619
Stock-based compensation		—		—		279,565			—			279,565
Common stock issuances, net of taxes		131,103		131		(5,340	)		—			(5,209	)
Stock options exercised		5,000		5		9,995			—			10,000
Net loss		—		—					(1,016,522	)		(1,016,522	)
Balances, March 31, 2024		9,519,725	$	9,520	$	119,985,604		$	(107,314,671	)	$	12,680,453

	Stockholders’ Equity
	Common Stock				Additional			Accumulated
	Shares		Amount		Paid-in Capital			Deficit			Total
Balances, January 1, 2023		9,210,414	$	9,210	$	118,636,834		$	(96,135,032	)	$	22,511,012
Stock-based compensation		—		—		147,635						147,635
Common stock issuances, net of taxes		9,086		10		(4,420	)		—			(4,410	)
Net loss		—		—		—			(4,143,910	)		(4,143,910	)
Balances, March 31, 2023		9,219,500	$	9,220	$	118,780,049		$	(100,278,942	)	$	18,510,327

The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.

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LAIRD SUPERFOOD, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	*Three Months Ended March 31,*
	*2024*			*2023*
Cash flows from operating activities
Net loss	$	(1,016,522	)	$	(4,143,910	)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization		71,435			87,953
Stock-based compensation		279,565			147,635
Provision for inventory obsolescence		43,204			234,394
Allowance for credit losses		26,865			23,668
Noncash lease costs		38,083			38,546
Other operating activities, net		—			(32,007	)
Changes in operating assets and liabilities:
Accounts receivable		(1,069,238	)		(1,438,063	)
Inventory		646,231			72,007
Prepaid expenses and other current assets		217,889			402,299
Operating lease liability		(32,254	)		(31,315	)
Accounts payable		84,880			1,312,821
Accrued expenses		287,551			(2,728,290	)
Net cash from operating activities		(422,311	)		(6,054,262	)
Cash flows from investing activities		—			135,737
Cash flows from financing activities		4,791			(4,410	)
Net change in cash and cash equivalents		(417,520	)		(5,922,935	)
Cash, cash equivalents, and restricted cash, beginning of period		7,706,806			17,809,802
Cash, cash equivalents, and restricted cash, end of period	$	7,289,286		$	11,886,867
Supplemental disclosures of cash flow information
Right-of-use assets obtained in exchange for operating lease liabilities	$	—		$	344,382
Supplemental disclosures of non-cash investing activities
Receivable from sale of assets held-for-sale included in other current assets at the end of the period	$	—		$	581,835

The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.

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LAIRD SUPERFOOD, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

1. Summary of Significant Accounting Policies and Estimates

Financial Statement Preparation

The accompanying unaudited consolidated condensed financial statements (the "balance sheet(s)," "statement(s) of operations," "statement(s) of stockholders' equity," "statement(s) of cash flows," and, collectively, the "financial statements") include the accounts of Laird Superfood, Inc., a Nevada corporation, and its wholly owned subsidiary, Picky Bars, LLC, (collectively, the “Company,” “Laird Superfood,” “we,” or "our"). In management's opinion, the financial statements contain all adjustments, which are normal recurring adjustments, necessary for a fair presentation of its financial position and its results of operations, changes in stockholders’ equity, and cash flows for the interim periods.

Segment information is prepared on the same basis that the Company's Chief Executive Officer, who is deemed to be the Company's Chief Operating Decision Maker, reviews financial information for operational decision-making purposes.

The financial statements and related financial information should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Form 10-K") filed with the Securities and Exchange Commission (the "SEC") on March 13, 2024. The financial information as of December 31, 2023 was derived from the audited financial statements and notes for the fiscal year ended December 31, 2023 included in Item 8 of the 2023 Form 10-K. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the footnotes and management's discussion and analysis of the consolidated financial statements in the 10-K. Certain information in footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") has been condensed or omitted pursuant to the rules and regulations of the SEC and the accounting standards for interim financial statements.

Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results expected for the fiscal year ending December 31, 2024.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. The expanded annual disclosures are effective for the year ending December 31, 2024, and the expanded interim disclosures are effective in 2025 and will be applied retrospectively to all prior periods presented. While the Company is currently evaluating the expanded disclosure requirements, the Company does not expect the adoption of these amendments to have a material impact on our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), which requires, among other things, additional disclosures primarily related to the income tax rate reconciliation and income taxes paid. The expanded annual disclosures are effective for our year ending December 31, 2025. The Company is currently evaluating the impact that ASU 2023-09 will have on its consolidated financial statements and whether the Company will apply the standard prospectively or retrospectively.

Subsequent Events

Subsequent events are events or transactions that occur after the balance sheet date but before the financial statements are available to be issued. The Company has evaluated events and transactions subsequent to March 31, 2024 for potential recognition of disclosure in the financial statements and determined that there were no such subsequent events aside from the below.

On May 7, 2024, the Company entered into an accounts receivable factoring agreement (the “Factoring Agreement”) with Alterna Capital Solutions LLC (the “Purchaser”). Pursuant to the Factoring Agreement, the Company has agreed to sell certain trade accounts receivable (the “Purchased Accounts”) to the Purchaser from time to time. The Factoring Agreement provides for the Company to have access to up to $2.0 million (the “Maximum Amount”) on a revolving basis, measured by the aggregate amount advanced for the unpaid balance of all Purchased Accounts from time to time. The Factoring Agreement provides for the payment of certain fees by the Company, including, among others, a funds usage fee of prime plus 1.5% per annum with a minimum interest rate of 10.0% per annum. The Company will also be charged a collateral monitoring fee of 0.05% per month, assessed on the average monthly accounts receivable balance, which is payable on the last day of each month. The Factoring Agreement is for an initial term of 12 months and will renew on a year-to-year basis thereafter, unless terminated in accordance with the Factoring Agreement.

The Company has granted the Purchaser a security interest all of the Company’s personal property and fixtures, including, among other things, the Company’s accounts receivable, inventory, equipment, instruments, deposit accounts, general intangibles, and supporting obligations to secure the payment and performance of all obligations of the Company to the Purchaser under the Factoring Agreement. The Factoring Agreement also provides for customary provisions, including representations, warranties and covenants, indemnification, waiver of jury trial, and the exercise of remedies upon a breach or default

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LAIRD SUPERFOOD, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

2. Cash, Cash Equivalents, and Restricted Cash

Cash, cash equivalents, and restricted cash are highly liquid instruments with an original maturity of three months or less when purchased. For the purposes of the statements of cash flows, the Company includes cash on hand, cash in clearing accounts, cash on deposit with financial institutions, investments with an original maturity of three months or less, and restricted cash in determining the total balance.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheets as of:

	*March 31,*		*December 31,*
	*2024*		*2023*
Cash and cash equivalents	$	7,099,755	$	7,566,299
Restricted cash		189,531		140,507
Total cash, cash equivalents, and restricted cash	$	7,289,286	$	7,706,806

Amounts in restricted cash represent those that are required to be set aside by the following contractual agreements:

●

On December 3, 2020, the Company entered into an agreement with Danone Manifesto Ventures, PBC, which provided the Company $298,103 in funds for the purpose of supporting three COVID-19 relief projects. As of March 31, 2024 and December 31, 2023, cash equivalents in the amount of $99,525 were restricted under this agreement. During the three months ended March 31, 2024 and 2023, the Company contributed $0 to these projects. The restriction will be released upon the completion of the projects.

●

Cash equivalents of $530,000 were pledged to secure Company credit card limits. As of March 31, 2024 and December 31, 2023, $90,006 and $40,982, respectively, of these funds were restricted to collateralize borrowings against these Company credit cards.

Cash, cash equivalents, and restricted cash balances that exceeded the Federal Deposit Insurance Corporation (“FDIC”) and Securities Investor Protection Corporation ("SPIC") insurable limits as of March 31, 2024 and December 31, 2023 totaled $6,324,134 and $6,756,207, respectively. The Company has not experienced any losses related to these balances. The Company’s cash, cash equivalents, and restricted cash are with what the Company believes to be a high-quality financial institution and considers the risks associated with these funds in excess of FDIC and SPIC insurable limits to be low.

3. Inventory

Inventory is stated at the lower of cost or net realizable value, or the value of consideration that can be received upon sale of said product, and approximate costs determined on the first-in first-out basis and consists primarily of raw materials and packaging and finished goods and includes co-packing fees, indirect labor, and allocable overhead. The following table presents the components of inventory, net of reserves, as of:

	March 31,		December 31,
	2024		2023
Raw materials and packaging	$	2,470,319	$	2,180,294
Finished goods		3,162,805		4,142,265
Total inventory, net	$	5,633,124	$	6,322,559

The Company periodically reviews the value of items in inventory and provides write-offs of inventory based on current market assessment, which are charged to cost of goods sold. For the three months ended March 31, 2024, the Company recorded $43,204 of inventory obsolescence and disposal costs. For the three months ended March 31, 2023, the Company recorded $234,394 of inventory obsolescence and disposal costs.

As of March 31, 2024 inventory reserves totaled $927,340. This is comprised of estimated reserves based on inventory turnover, quantities on hand, and expiration dates of $248,587, products quarantined for quality issues of $334,269, and discontinued inventories of $344,484. As of December 31, 2023, inventory reserves totaled $1,029,657. This was comprised of estimated reserves based on inventory turnover, quantities on hand, and expiration dates of $385,069, products quarantined for quality issues of $306,276, and discontinued inventories of $338,312.

As of March 31, 2024 and December 31, 2023, the Company had a total of $310,265 and $449,242, respectively, of prepayments for future raw materials inventory which are included in prepaid expenses and other current assets, net on the balance sheets.

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LAIRD SUPERFOOD, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

4. Prepaid Expenses and Other Current Assets

The following table presents the components of prepaid expenses and other current assets, as of:

	*March 31,*		*December 31,*
	*2024*		*2023*
Prepaid insurance	$	237,508	$	371,802
Prepaid inventory		310,265		449,242
Prepaid subscriptions and license fees		287,219		139,590
Deposits		166,647		238,719
Other current assets		66,036		86,211
Prepaid expenses and other current assets	$	1,067,675	$	1,285,564

5. Revolving Lines of Credit

On September 2, 2021, the Company entered into a revolving line of credit with Wells Fargo Bank National Association in a principal amount not exceeding $9,500,000. Any outstanding amounts under the line of credit would have had an interest rate calculated as Daily Simple Secured Overnight Financing Rate (“SOFR”) plus 1.5% per annum until paid in full. The line of credit was renewed on September 1, 2022, with a maturity date of August 31, 2023, and the available credit was reduced to $5,000,000. The line of credit was terminated pursuant to its terms on August 31, 2023, and no amounts were due thereunder. The line of credit was not renewed.

6. Property and Equipment

Property and Equipment

Property and equipment, net is comprised of the following as of:

	*March 31, 2024*							*December 31, 2023*
	*Gross Carrying Amount*		*Accumulated Depreciation*			*Net Carrying Amount*		*Gross Carrying Amount*		*Accumulated Depreciation*			*Net Carrying Amount*
Furniture and office equipment	$	184,242	$	(102,447	)	$	81,795	$	184,241	$	(85,093	)	$	99,148
Leasehold improvements		46,276		(25,190	)		21,086		46,276		(22,829	)		23,447
	$	230,518	$	(127,637	)	$	102,881	$	230,517	$	(107,922	)	$	122,595

Depreciation expense was $19,714 for the three months ended March 31, 2024. Depreciation expense was $36,231 for the three months ended March 31, 2023.

Assets Classified as Held-for-Sale

In the fourth quarter of 2022, the Company entered into purchase agreements for the sale of the production equipment for an aggregate sales price of $

SEC Form 10-Q filed by Laird Superfood Inc.