Quarterly report pursuant to Section 13 or 15(d)


9 Months Ended
Sep. 30, 2022
Liquidity [Abstract]  

Note 2 - Liquidity


The Company incurred net losses of approximately $28.6 million during the nine months ended September 30, 2022. Cash used in operating activities was approximately $25.5 million for the nine months ended September 30, 2022. We have historically funded our operations with cash flow from operations, equity capital raises, and note payable agreements from shareholders and private investors, in addition to bank loans. Our principal uses of cash have been debt service, capital expenditures, net losses and investment in working capital. As of September 30, 2022, we have working capital of $10.9 million which compares favorably to the $3.2 million working capital we maintained as of December 31, 2021 and have approximately $5.2 million of indebtedness.


Late in the third quarter of 2022, we secured $21 million of non-dilutive, committed borrowing capacity through a combination of facilities to augment our liquidity, as needed, through the execution of management's plan of which $4.3 million had been drawn upon as of September 30, 2022.


We have examined every area of spending throughout our business and believe we identified ways to drive efficiencies, eliminate unnecessary expense, and focus on the highest and best use of each dollar. The resulting impact is a 46.3% reduction in total operating expenses leading to a $3.7 million improvement in our pre-tax net loss despite lower sales when comparing to the prior year quarter. Further, we have instituted a continuous price action review process in which we look to protect our unit economics in light of the inflationary environment. This process has already resulted in two meaningful price increases this year. We have also sought to optimize our channel strategy and rationalize our customer and product portfolio to eliminate sales that detract from our profitability goals.


In the third quarter of 2022, we invested more heavily into our inventories than our sales volumes would indicate as being required. Given that prevailing beef prices are rising, this investment in inventory was driven in part by opportunistic commodity beef purchases made towards the end of the quarter to secure attractive pricing. We anticipate drawing down on these inventory levels in the coming quarters which would be a near-term source of liquidity.


The Company believes that cash from operations, our working capital, and our borrowing ability should be sufficient to fund the Company’s base projections for at least the next twelve months from the date these financial statements are made available.