Liquidity	9 Months Ended
Sep. 30, 2024
Liquidity
Liquidity	Note 8. Liquidity During the nine months ended September 30, 2024, the Company used $1,544,000 in operations. As of September 30, 2024, the Company had $1,371,000 of working capital, including $401,000 in cash and excluding $499,000 in disputed co-manufacturer accounts payable (Note 4). The Company has a history of negative cash flow and operating losses, which were expected to improve with growth. As described more fully in Note 4, the dispute and subsequent contract termination with the Manufacturer has resulted in limitations in the Company’s ability to procure certain products necessary to achieve our growth projections and in elevated legal costs. To mitigate the impact of procurement constraints, the Company built and paid for inventory in anticipation of third quarter seasonal requirements, contributing $320,000 to the cash used in operations in the first half of 2024. The inventory build allowed the Company to generate a 40% increase in revenue in the three months ended September 30, 2024 compared to the prior year quarter. Accounts receivable increased with revenue by $504,000 compared with September 30, 2023. The Company secured a receivables-based line of credit in August 2024 of $1,500,000, with $1,400,000 available to borrow as of September 30, 2024. Management expects that the cash cycle will shorten as additional contracted capacity commences production in the fourth quarter of 2024, offset by additional working capital necessary for further anticipated growth. Additionally, in May 2024, the Company obtained non-recourse litigation financing to allow vigorous pursuit of the complaint against the Manufacturer without further expense to the Company. Although alleviated, the financial position at September 30, 2024 and historical results raise substantial doubt about the Company’s ability to continue as a going concern. As described, the Company has taken and partially completed steps to mitigate the dispute related issues. Management believes that other potential actions are feasible, including raising additional financing and reducing growth-related expenditures. While management cannot predict with certainty whether additional actions would achieve the predicted outcome, the availability of such options, along with the actions already taken, resulted in the alleviation of the substantial doubt about the Company’s ability to continue as a going concern.

Liquidity

9 Months Ended

Sep. 30, 2024

Note 8. Liquidity

During the nine months ended September 30, 2024, the Company used $1,544,000 in operations. As of September 30, 2024, the Company had $1,371,000 of working capital, including $401,000 in cash and excluding $499,000 in disputed co-manufacturer accounts payable (Note 4).

The Company has a history of negative cash flow and operating losses, which were expected to improve with growth. As described more fully in Note 4, the dispute and subsequent contract termination with the Manufacturer has resulted in limitations in the Company’s ability to procure certain products necessary to achieve our growth projections and in elevated legal costs.

To mitigate the impact of procurement constraints, the Company built and paid for inventory in anticipation of third quarter seasonal requirements, contributing $320,000 to the cash used in operations in the first half of 2024. The inventory build allowed the Company to generate a 40% increase in revenue in the three months ended September 30, 2024 compared to the prior year quarter. Accounts receivable increased with revenue by $504,000 compared with September 30, 2023. The Company secured a receivables-based line of credit in August 2024 of $1,500,000, with $1,400,000 available to borrow as of September 30, 2024. Management expects that the cash cycle will shorten as additional contracted capacity commences production in the fourth quarter of 2024, offset by additional working capital necessary for further anticipated growth. Additionally, in May 2024, the Company obtained non-recourse litigation financing to allow vigorous pursuit of the complaint against the Manufacturer without further expense to the Company.

Although alleviated, the financial position at September 30, 2024 and historical results raise substantial doubt about the Company’s ability to continue as a going concern. As described, the Company has taken and partially completed steps to mitigate the dispute related issues. Management believes that other potential actions are feasible, including raising additional financing and reducing growth-related expenditures. While management cannot predict with certainty whether additional actions would achieve the predicted outcome, the availability of such options, along with the actions already taken, resulted in the alleviation of the substantial doubt about the Company’s ability to continue as a going concern.