Smart for Life Reports $3.24 Million Net Loss and 43.5% Revenue Decline in Q3 2024

Smart for Life, Inc. reported significant financial challenges in its latest 10-Q filing for the third quarter of 2024, revealing a net loss of $3.24 million, a decrease from a loss of $4.34 million in the same period last year. Total revenues fell by 43.5% to $1.27 million, down from $2.25 million in Q3 2023, primarily due to cash constraints that hindered the company’s ability to procure raw materials for production. The nutraceutical segment, which constitutes the bulk of the company's revenue, saw a 43.3% decline in sales, reflecting a decrease in product volume rather than pricing changes.

The company’s operational expenses also saw a notable reduction, with total operating expenses decreasing by 54% to $1.72 million from $3.75 million year-over-year. This decline was attributed to lower general and administrative costs and a significant reduction in compensation expenses, which dropped by 70% to $570,126. The company reported a gross profit margin of 40.8%, an improvement from 37.3% in the previous year, indicating better cost management despite lower sales.

In terms of strategic developments, Smart for Life has undergone significant organizational changes, including the relocation of its Bonne Sante Natural Manufacturing facility from Doral to Riviera Beach, Florida. The company also completed the sale of its Ceautamed subsidiary, which has been classified as a discontinued operation, further streamlining its focus on core nutraceutical products. The company’s total assets decreased to $12.73 million from $19.66 million at the end of 2023, while total liabilities were reduced to $11.79 million from $26.05 million, reflecting a substantial restructuring of its financial obligations.

Despite these challenges, Smart for Life is actively seeking to stabilize its financial position. The company reported cash reserves of $35,608 as of September 30, 2024, down from $154,666 at the end of 2023, and indicated a working capital deficiency of approximately $8.2 million. Management has expressed concerns about the company's ability to continue as a going concern without additional capital, which they plan to raise through equity and debt financing. The outlook remains cautious, with management emphasizing the need for improved operational efficiency and financial stability in the coming quarters.