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

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

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 ☒

AtAs of August ~~12, 2022,~~7, 2023, ~~21,799,556~~1,853,460 shares of the registrant’s Class A common stock, $0.0001 par value, and ~~7,488,343~~405,313 shares of the registrant’s Class V common stock, $0.0001 par value, were issued and outstanding.

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


	For The Three Months Ended June 30,						For The Six Months Ended June 30,
													Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021			2023			2022			2023			2022
SALES, net	$	10,946,158		$	7,351,323		$	18,366,712		$	14,185,798		$	5,996,541		$	10,946,158		$	10,642,794		$	18,366,712

COST OF GOODS SOLD (exclusive of depreciation shown separately below)		15,371,112			3,770,271			21,667,739			7,926,921			4,945,856			15,371,112			8,628,859			21,667,739

GROSS (LOSS) MARGIN		(4,424,954	)		3,581,052			(3,301,027	)		6,258,877
GROSS PROFIT														1,050,685			(4,424,954	)		2,013,935			(3,301,027	)

OPERATING EXPENSES
Selling expenses		4,717,178			5,593,122			8,743,233			12,046,413			1,778,274			4,717,178			3,747,283			8,743,233
Operations expense		1,349,157			970,302			2,579,540			2,030,086			625,289			1,349,157			1,138,878			2,579,540
Salaries and wages		3,510,076			1,601,664			6,095,976			3,003,310			1,469,307			3,510,076			3,632,459			6,095,976
Depreciation and amortization expense		503,360			396,708			947,725			791,556			552,224			503,360			1,103,880			947,725
Prepaid media reserve		1,489,028			—			1,489,028			—			—			1,489,028			—			1,489,028
Gain on disposal of fixed assets		(24,012	)		(9,654	)		(24,012	)		(8,578	)
(Gain) loss on disposal of fixed assets														1,295			(24,012	)		1,295			(24,012	)
Total operating expenses		11,544,787			8,552,142			19,831,490			17,862,787			4,426,389			11,544,787			9,623,795			19,831,490

OPERATING LOSS		(15,969,741	)		(4,971,090	)		(23,132,517	)		(11,603,910	)		(3,375,704	)		(15,969,741	)		(7,609,860	)		(23,132,517	)

OTHER (EXPENSE) INCOME
Interest expense		(180,536	)		(1,147,168	)		(369,031	)		(1,957,257	)		(963,784	)		(180,536	)		(1,362,729	)		(369,031	)
PPP loan forgiveness		-			—			-			1,669,552
Change in fair value of Private Warrants		39,996			—			85,310			-			10,400			39,996			18,650			85,310
Gain on debt extinguishment		-			545,200			-			545,200
Other (expense) income		(215,383	)		12,341			(215,382	)		24,548
Other income (expense)														7,417			(215,383	)		(6,956	)		(215,383	)
Total other (expense) income		(355,923	)		(589,627	)		(499,103	)		282,043			(945,967	)		(355,923	)		(1,351,035	)		(499,103	)

NET LOSS BEFORE INCOME TAXES		(16,325,664	)		(5,560,717	)		(23,631,620	)		(11,321,867	)		(4,321,671	)		(16,325,664	)		(8,960,895	)		(23,631,620	)
Income taxes		28,655			—			36,441			—
Income tax (benefit) expense														(12,854	)		28,655			(9,523	)		36,441

NET LOSS		(16,354,319	)	$	(5,560,717	)		(23,668,061	)	$	(11,321,867	)	$	(4,308,817	)	$	(16,354,319	)	$	(8,951,372	)	$	(23,668,061	)
Loss per common share:
Basic and diluted	$	(0.53	)	$	(0.55	)	$	(0.78	)	$	(1.12	)	$	(2.05	)	$	(7.93	)	$	(4.27	)	$	(11.70	)

Weighted average shares outstanding:
Basic and diluted		30,946,486			10,139,422			30,355,697			10,141,928			2,105,620			2,063,099			2,095,621			2,023,713

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

Inventories consist of raw materials, work in process, and finished goods, are stated at lower of cost or net realizable value determined using the standard cost method. The Company reviews the value of items in inventory and provides write-downs and write-offs of inventory for obsolete, damaged, or expired inventory. Write-downs and write-offs are included in cost of goods sold.

Accordingly, the Company classifies the private warrants issued to Andina's original stockholders (the "Private Warrants") as liabilities at their fair value and adjusts the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the ~~Company’s statement~~condensed consolidated statements of operations.

~~The company repaid approximately $6,842,000~~ ~~debt with Origin bank on January 28, 2022 and $40,000~~ ~~debt with First United Bank on May 6, 2022.~~

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

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company has based these forward-looking statements on the Company’s current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. These risks, uncertainties, assumptions and other important factors, which could cause actual results to differ materially from those described in these forward-looking statements, include: (i) the inability to achieve profitability due to commodity prices, inflation, supply chain interruption, transportation costs and/or labor shortages; (ii) the ability to ~~recognize the anticipated benefits of the Business Combination or~~ meet financial and strategic goals, which may be affected by, among other things, competition, supply chain interruptions, the ability to pursue a growth strategy and manage growth profitability, maintain relationships with customers, suppliers and retailers and retain its management and key employees; (iii) the risk that retailers will choose to limit or decrease the number of retail locations in which Stryve’s products are carried or will choose not to carry or not to continue to carry Stryve’s products; (iv) the possibility that Stryve may be adversely affected by other economic, business, and/or competitive factors; (v) the ~~effect of the COVID-19 pandemic on Stryve; (vi) the~~ possibility that Stryve may not achieve its financial outlook ~~(vii) Strye's~~(vi) Stryve's ability to maintain its listing on the Nasdaq Capital market; ~~(viii)~~(vii) Stryve's ability to ~~secure debt financing,~~ maintain its liquidity position and implement cost savings measures; (viii) Stryve's ability to continue as a going concern, (ix) adverse developments affecting the financial services industry, including events or concerns involving liquidity, defaults or non-performance by financial institutions or transactional counterparties, and ~~(ix)~~(x) other risks and uncertainties described herein and in other filings with the Securities and Exchange Commission (“SEC”) filings.

Unless the context otherwise requires, all references in this report to “Stryve,” the “Company,” “we,” “us” and “our” herein refer to ~~the parent entity formerly named Andina Acquisition Corp. III, after giving~~Stryve Foods, Inc..

We effected a 1-for-15 reverse stock split (the “Reverse Stock Split”) of our issued and outstanding shares of Class A and Class V common stock, par value $0.0001 per share, effective as of 12:01 a.m. Eastern Time on July 14, 2023. All share and per share amounts were retroactively adjusted for all periods presented to give effect to ~~the Business Combination, and as renamed Stryve Foods, Inc., and where appropriate, our consolidated subsidiaries, and references in~~ this ~~report to “Andina” refer to Andina Acquisition Corp. III before giving effect~~reverse stock split, including reclassifying an amount equal to the ~~Business Combination.~~reduction in par value of the Company’s common stock to additional paid-in capital. See Note 13 for additional information.

The following discussion should be read in conjunction with our condensed consolidated financial statements and related notes thereto included elsewhere in this report. Due to rounding, certain totals and subtotals may not foot and certain percentages may not reconcile.

Stryve is an emerging healthy snacking company which manufactures, markets and sells highly differentiated healthy snacking products that Stryve believes can disrupt traditional snacking categories. Stryve’s mission is “to help Americans snack better and live happier, better lives.” Stryve offers convenient snacks that are lower in sugar and carbohydrates and higher in protein than other snacks. Stryve offers all-natural, delicious snacks which it believes are nutritious and offer consumers a convenient healthy snacking option for their on-the-go lives.

Stryve’s current product portfolio consists primarily of air-dried meat snack products marketed under the Stryve®, Kalahari®, Braaitime®, and Vacadillos® brand names. ~~Biltong is a process for preserving meat through air drying that originated centuries ago in South Africa.~~ Unlike beef jerky, Stryve’s all-natural air-dried meat snack products are made of beef and spices, are never cooked, most contain zero grams of sugar, and are free of monosodium glutamate (MSG), gluten, nitrates, nitrites, and preservatives. As a result, Stryve’s products are Keto and Paleo diet friendly. Further, based on protein density and sugar content, Stryve believes that its air-dried meat snack products are some of the healthiest shelf-stable snacks available today.

Stryve distributes its products in major retail channels, primarily in North America, including mass, convenience, grocery, ~~club stores, e-retailers,~~ and other retail outlets, as well as directly to consumers through its e-commerce ~~websites.~~websites and through the Amazon platform.

Stryve believes increased consumer focus in the U.S. on health and wellness will continue to drive growth of the healthy snacking category and increase demand for Stryve’s products. ~~Stryve has shown strong sales growth since its inception in 2017.~~ Stryve has made substantial investments since its inception in product development, establishing its manufacturing facility, and building its marketing, sales and operations infrastructure to grow its business. As a result, Stryve has reported net losses since its inception. Stryve intends to continue to invest in productivity, product innovation, improving its supply chain, enhancing and expanding its manufacturing capabilities, and expanding its marketing and sales initiatives to drive continued growth. Additionally, moving forward management anticipates additional expenses not previously experienced related to internal controls, regulatory compliance, and other expenses relating to its go-forward operations as a public company.

A key piece of ~~operations~~our retail growth strategy is tied to making the product more available and ~~statements~~approachable. To accomplish this we completed a strategic redesign of ~~assets~~our packaging with retail conversion at the forefront of design considerations. We collaborated with both consumers and ~~liabilities may not be comparable between periods~~retailers as we sought to optimize the packaging for retail conversion. We received a ~~result~~positive response from many retail partners on the new designs, garnering additional distribution in the process. We began manufacturing select items in the new packaging throughout the second quarter of 2023 and towards the end of the ~~Business Combination~~second quarter, our new packaging began to ship to select retailers. Over the last two months, we have seen significant year-over-year gains in our retail distribution footprint, in-store dollar velocity, and ~~becoming a public company.~~price-mix ultimately leading to increased retail sales and market share.

~~On January 6, 2022,~~We are encouraged by the ~~Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with select accredited investors (the “2022 PIPE Investors”), relating~~initial consumer and retailer response to our updated packaging and are excited to track what we believe will be attractive retail velocities across our portfolio as the ~~issuance and sale of 2,496,934 shares~~new packaging continues to roll out over the balance of the Company’s Class A common stock and, in lieu of Class A Common Stock, pre-funded warrants to purchase 7,797,184 shares of Class A common stock (the “PIPE Pre-Funded Warrants”), and accompanying warrants (the “PIPE Warrants”) to purchase up to 10,294,118 shares of Class A common stock with an exercise price equal to $3.60 and a term of five years (the “Offering”). The Offering closed on January 11, 2022. The Class A common stock and PIPE Warrants were sold at a combined purchase price of $3.40 per share (less $0.0001 per share for PIPE Pre-Funded Warrants). The Company received net proceeds from the Offering of $32.3 million. The securities were issued in reliance on the exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended, and/or Regulation D promulgated thereunder.year.

On July 20, 2021 (the “Closing Date”), Andina completed the business combination (the "Business Combination") pursuant to that certain Business Combination Agreement (the "Business Combination Agreement") by and among the Company, Andina Holdings LLC, a Delaware limited liability company and a wholly-owned subsidiaryImproving Quality of the Company (“Holdings”), B. Luke Weil, in the capacity from and after the closing of the transactions contemplated by the Business Combination Agreement (the “Closing”) as the representative for the shareholders of the Company (other than the Seller), Stryve Foods, LLC, a Texas limited liability company, Stryve Foods Holdings, LLC, a Texas limited liability company (the “Seller”), and R. Alex Hawkins, in the capacity from and after the Closing as the representative for the members of the Seller.Revenue

As contemplated by the Business Combination Agreement, on or before the Closing Date, the following occurred: (i) the Seller and Stryve Foods, LLC (“Stryve LLC”) conducted a reorganization via a merger pursuant to which the Seller became a holding company for Stryve LLC, the former owners of Stryve LLC became the ownersan extension of the Seller, and the former holders of convertible notes of Stryve LLC became holders of convertible notes of the Seller, and pursuant to which Stryve LLC retained all of its subsidiaries, business, assets and liabilities, and became a wholly-owned subsidiary of the Seller (the “Merger”), (ii) the Company was transferred by way of continuation out of the Cayman Islands and domesticated as a corporation in the State of Delaware, (iii) the Seller contributed to Holdings all of the issued and outstanding equity interests of Stryve LLC in exchange for 11,502,355 newly issued non-voting Class B common units of Holdings (the "Seller Consideration Units") and voting (but non-economic) Class V common stock of the Company (that was previously subject to a post-Closing working capital true-up), (iv) the Company contributed all of its cash and cash equivalents to Holdings, approximately $37.9 million, after the payment of approximately $7.8 million to the Company’s shareholders that elected to have their shares redeemed in connection with the Closing (the “Redemption”) and the payment of approximately $10.4 million of the Company’s expenses and other liabilities due at the Closing, in exchange for newly issued voting Class A common units of Holdings and (v) the Company issued $10.9 million of Class A common stock, satisfied by the offset of principal and accrued interest under $10.6 million of outstanding unsecured promissory notes (the "Bridge Notes") issued by Stryve LLC to certain investors in a private placement on the Closing Date (the "Bridge Investors"); and (vi) the Company changed its name to “Stryve Foods, Inc.” In addition, the Company’s ordinary shares converted into shares of Class A common stock, par value of $0.0001 per share, without any action of the holder. On March 25, 2022, the Company finalized the post-closing adjustments under the Business Combination Agreement (the "Post-Closing Adjustment"), which resulted in the release of all 115,023 escrowed shares of Class V common stock, an equal number of Holdings Class B common units, and the net payment of approximately $238,000 by the Company to the Seller. As a result, no additional Post-Closing Adjustment remains outstanding.

Following the consummation of the Business Combination, the combined company is organized in an “Up-C” structure in which the business of Stryve LLC and its subsidiaries is held by Holdings, which is a subsidiary of the Company. By virtue of the “Up-C” structure, the Company’s only direct assets consist of its equity interests in Holdings, an entity of which the Company maintains 100% voting control. As the sole voting member of Holdings, the Company has full, exclusive and complete discretion to manage and control the business of Stryve LLC and to take all action it deems necessary, appropriate, advisable, incidental, or convenient to accomplish the purposes of Stryve LLC and, accordingly, the financial statements are prepared on a consolidated basis.

On July 20, 2021, in connection with the completion of the Business Combination and as contemplated by the Business Combination Agreement, the Company: (i) issued 4,250,000 shares of Class A common stock to private placement investors for aggregate consideration of $42.5 million; and (ii) the Company issued 1,357,372 shares of Class A common stock to the Bridge Investors satisfied by the offset of $10.9 million of principal and accrued interest under outstanding Bridge Notes issued by Stryve LLC, as part of the Business Combination.

The Business Combination is accounted for as a reverse capitalization in accordance with generally accepted accounting principles in the United States ("GAAP"). Under this method of accounting, Stryve LLC is treated as the acquirer and Andina is treated as the acquired company for financial statement reporting purposes. Because Stryve LLC was deemed the accounting acquirer, the historical financial statements of Stryve LLC became the historical financial statements of the combined company, upon the consummation of the Business Combination.

~~Through the beginning of the COVID-19 pandemic,~~restructuring plans, we ~~had been successful at avoiding disruptions to~~evaluated our ~~supply chain and operations through these measures and maintained continuity of supply for its customers. However, beginning~~revenue base in the second half of ~~2021, we experienced certain supply chain challenges that negatively affected our ability~~2022 and have taken steps to supply the demands to all of our channels of trade and negatively impacted our gross margins. While our efforts to mitigate these challenges are beginning to show positive signs, these challenges nonetheless continued to have an impact on the first half of 2022. We believe that many of the supply chain disruptions we experiencedimprove or eliminate low-quality revenue sources in ~~our operations are temporary but may persist in the near term.~~

In the first half of 2022, we experienced a more expensive operating environment throughout the business, including higher prices for raw materials, packaging, beef, transportation, storage, services, labor, and advertising than we the comparable period in 2021. We expect these inflationary pressures to continue throughout at least 2022, which may continue to negatively impact our gross margins. We continue to track new developments affecting these inflationary pressures as we execute on our mitigating strategies to lessen the impact of these challenges and cost increases including but not limited to, price increases, improving our manufacturing yields through capacity enhancements, investing in further automation, and rationalizing and optimizing marketing spendorder to drive ~~greater returns~~long-term value-creating growth. Key considerations in these rationalization decisions included assessments of strategic alignment, complexity, and ~~retail velocities.~~

~~Investments~~profitability. And with respect to ~~Grow Asset Base~~assessing the profitability of a particular revenue stream specifically, we evaluated our revenues on a gross margin basis, a net margin basis, and ~~Strengthen Balance Sheet~~

~~Since the consummation~~a cash conversion basis. Accordingly, we acknowledge that meaningful portion of the Business Combination in July 2021, we have made considerable investments to strengthen our balance sheet in light of the uncertain macroeconomic environment. Meaningful investments made to reduce debt, grow working capital, acquire capital equipment, and expand facilities throughout the first and second quarter of 2022 were a continuation of this trend. In the first quarter, we retired approximately $6.84 million of debt and separately announced the completion of our first major expansion to our manufacturing facility in Madill, Oklahoma. This expansion has allowed us to augment our capacities so that we can more efficiently flex our run rate production levels, if needed, to satisfy outsized new distribution lay-in orders and/or national programs without materially straining our ordinary course day-to-day production. Additionally, we have made considerable investments in our inventory and current assets to help service our expanded distribution base moving forward.

~~From a tonnage perspective, the second quarter of 2022 was by far the largest in the Company's history. While the achievement of $10.9 million in~~ net sales in the ~~quarter shows nearly 51% sequential growth over Q1'22, it fails~~prior year first half came from products, customers, and/or channels that have been rationalized. Despite the negative impact to ~~illustrate~~net sales that this rationalization has had, our ~~tonnage output was nearly three times that~~most valuable revenues are growing meaningfully, and retail consumption of ~~the prior quarter. These outsized production and fulfillment volumes in Q2 2022 were primarily attributable to a limited time retailer specific savings event which placed~~ our products ~~in chain-wide distribution for a limited period of time tied to the event. This nationwide sales event began~~is strong and ended within the second quarter of 2022, which not only presented a price mix challenge to our gross sales and gross margins, but also resulted in over $3.0 million in coupon redemptions and other deductions which were tied to the event. While our price-mix-affected gross revenue was approximately $14.9 million for the quarter,importantly, our net ~~revenue was $10.9 million. This dynamic had a compounding effect on our gross margins for the quarter as well.~~losses are significantly improved.

Further, we faced several challenges in our execution of this brief, yet outsized, demand spike which negatively affected our manufacturing yields and in turn, our gross margins. Additionally, these production and fulfillment challenges led to short-term supply gaps in our wider distribution network which resulted in lower than target in-stock percentages at retail. While the deleterious effects of these execution challenges have been significant, we believe they are temporary in nature. With the non-normal demand spike behind us, we have been able to quickly return to a more normalized production cadence allowing for improved yields and quickly recovering in-stock percentages at retail.

In the second quarter of 2022, Stryve announced a leadership change with Chris Boever stepping in as the new Chief Executive Officer of the Company. With this change in leadership, management has thoughtfully reviewed the business, strategy, near-term prospects, and it's previously discussed path to profitability. From this, management has identified certain one-time write-downs for assets that are non-core to the go-forward plan as well as identified necessary accruals related to actions to be taken to reorganize the business and it's objectives in line with the strategic direction that Mr. Boever has for the enterprise. These charges have largely been incurred in these second quarter results. For comparability of the financial statements, we have identified many of these charges as non-GAAP pro-forma adjustments in calculating Adjusted EBITDA and Adjusted Earnings per Share, which are reconciled to the nearest GAAP figure below.

~~While we made material progress in reducing our net loss in the first~~Our second quarter ~~of 2022, the overall impact~~results are a product of the ~~limited-time retailer specific savings event and the reorganization-related charges negatively affected our net loss for the period. While the price increases~~progress we took yielded improvements in our average selling price in Q2'22 (excluding sales related to the savings event), the impact to profitability was more than offset by the aggregate price mix (including sales related to the savings event), the aforementioned execution challenges, and one-time charges. That said, we firmly believe that certain key factors influencing our Q2'22 net loss were temporary in nature and will not recur in the future. Accordingly, despite this quarter's increased net loss, we are still making solid progresshave made on our cost mitigation strategies. We ~~have~~ examined every area of spending throughout our business and believe we ~~have~~ identified ways to drive efficiencies, eliminate unnecessary expense, and focus on the highest and best use of each dollar. The resulting impact is a 61.6% year-over-year reduction in total operating expenses in the second quarter of 2023, resulting in a $12.0 million improvement in our pre-tax net loss despite lower sales when comparing to the prior year period. Moving forward, we believe our optimized spending plan will begin to materially benefit from portfolio-wide price increases ~~that will be evident~~taken in 2022 and productivity initiatives throughout our ~~third-quarter financial reporting.~~supply chain. While we intend to continue to invest to drive meaningful growth in net sales, we are doing so in a more disciplined manner that acknowledges the fundamental changes in direct-to-consumer advertising markets. By monitoring our unit economics closely, maintaining an optimized spending profile, and seeking to meaningfully grow net sales, we believe we will be able to drive further reductions in our net losses moving forward.

In June 2023, the Company entered into an at-the-market equity offering sales agreement with Craig-Hallum Capital Group LLC, that established a program pursuant to which they may offer and sell up to $5.7 million of our Class A common stock from time to time in at-the-market transactions. No shares were sold under the at-the-market equity facility during the three months ended June 30, 2023.

On April 19, 2023, the we issued an aggregate of $4.1 million in principal amount of secured promissory notes (the “Notes”) to select accredited investors (including certain members of the Company’s management and Board of Directors) (the “Lenders”). The Notes carry an interest rate of 12% and have a maturity December 31, 2023. Each Lender that purchased Notes received a warrant (the “Warrants”) to purchase 1/15th of one share of the Company’s Class A common stock for each $0.5134 of principal amount of the Notes, for an aggregate of 7,964,550 Warrants convertible to 530,970 shares of Class A common stock. Each Warrant is exercisable immediately, has an exercise price per share of Class A common stock equal to $7.701 per whole share and will expire three years and three months from the date of issuance and may be exercised on a cashless basis if a registration statement registering the resale of the shares issuable upon exercise is not effective. The Company accounted for the transaction by allocating the proceeds between the Notes and Warrants based on their relative fair values as of the closing date of the facility. The allocation resulted in the fair value of the warrants to be treated as a discount to the Notes of $1.4 million that is being amortized over the term of the Notes. Accordingly, the Company recognized non-cash interest expense of $0.4 million in connection with the discount for the quarter ended June 30, 2023.

Throughout 2022, we experienced certain supply chain challenges that negatively affected our ability to supply the demands to all of our channels of trade and negatively impacted our gross margins. While have made efforts to mitigate these challenges, these factors may continue to have an impact on our financial results in 2023.

We expect many of these inflationary pressures to persist in the near future, which may negatively impact our gross margins if we are unsuccessful in mitigating these through our procurement strategies and pricing initiatives. We continue to track new developments affecting these inflationary pressures as we execute on our strategies to lessen the impact of these challenges and cost increases including but not limited to, price increases, strategic sourcing, improving our manufacturing yields, investing in further automation, and rationalizing and optimizing marketing spend to drive greater returns and retail velocities.

Since the consummation of the Business Combination in July 2021, we have made considerable investments to strengthen our balance sheet in light of the uncertain macroeconomic environment. Meaningful investments made to reduce debt, grow working capital, acquire capital equipment, and expand facilities. These investments have augmented our capacities so that we can more efficiently flex our run-rate production levels, if needed, to satisfy outsized new distribution lay-in orders and/or national programs without materially straining our ordinary course day-to-day production. Additionally, considerable investments have been made in our inventory and current assets to help service our expanded distribution base moving forward.

In May of 2022, Stryve announced a leadership change with Chris Boever stepping in as the new Chief Executive Officer of the Company. With this change in leadership, management thoughtfully reviewed the business, strategy, near-term prospects, and its path to profitability. From this, management identified certain one-time write-downs for assets that were non-core to the go-forward plan as well as identified necessary write-downs of inventory and incurring one-time employee costs related to actions taken to reorganize the business and its objectives in line with the strategic direction that Mr. Boever has for the enterprise. These charges began in the second quarter of 2022, and continued with a tapering effect throughout the balance of the year.

We experienced atypical order patterns from our retail and distribution customers in the first half of 2023, mostly in the first quarter as a continuation of what we experienced in the fourth quarter of 2022. Notwithstanding orders related to new distribution pipeline fills, typically retailer and distributor order patterns closely mirror consumers' consumption of a brand's product off of the shelves. In the fourth quarter of 2022, we saw orders and consumption diverge which we believe indicates that retailers and distributors have been managing down their inventory levels. The net effect of this dynamic is two-fold for our business. First, there was a negative impact to our net sales in the first half as the rationalization occurred. Second, with so much industry-wide inventory rationalization, our ability to quickly monetize our slow moving and obsolete inventory has also been impacted throughout the first and second quarter.

Results of Operations –Three Months Ended June 30, ~~2022~~2023 Compared to Three Months Ended June 30, ~~2021~~2022

The following table sets forth selected items in our consolidated financial data in dollar amounts and as a percentage of net sales for the three months ended June 30, ~~2022~~2023 compared to the three months ended June 30, ~~2021.~~
2022.

Net sales. Net sales ~~increased~~decreased by ~~$3.5~~$4.9 million from ~~$7.4 million during the three months ended June 30, 2021 to~~ $10.9 million during the three months ended June 30, 2022 to $6.0 million during the three months ended June 30, 2023, representing ~~growth~~a reduction of ~~48.9%~~45.2% for the comparable periods. The primary driver of ~~the increase in~~ net sales in the prior year period was ~~the nationwide~~a chainwide limited-time savings event with the one of the nation's largest retailers. While this event presented several challenges for the business as described above, we believe the consumer response was positive with sell-through rates far in excess of our expectations. Given the long-term importance of driving consumer awareness and trial of our products, we believe that the household penetration afforded by this event will benefit the business in all of our channels of trade.

As we have previously discussed, during the latter part of 2021, the digital advertising behind our DTC business became significantly more expensive and less effective due to industry wide changes related to data privacy and app tracking that affected nearly all DTC advertisers. As a result, we elected to significantly scale back digital advertising midway through the fourth quarter of 2021 and throughout the first half of 2022. We anticipate that these trends in digital advertising will continue for the foreseeable future, and as such, plan to proceed with what we believe to be a more prudent approach to DTC digital advertising spending in 2022. Accordingly, we have seen softness in our DTC business relative to prior periods.

We added a significant number of new doors of distribution in the year ended December 31, 2021 across most of our brands, which contributed to our growth year-over-year. Further, we garnered expanded distribution with a number of its existing retail relationships. Most significantly, however, the significant growth in our net sales stem from the limited-time savings event with one of the nation's largest retailers that occurred in the quarter and placed our products in full-chain distribution on an in-and-out basis. We acknowledge that the previously discussed execution challenges hindered our ability to fully service all of the retail orders that should have converted to net sales in the second quarter of 2022. ~~With~~As an extension of our restructuring plans, this program, along with other rationalized revenue, was not repeated in the ~~driving force behind many~~second quarter of ~~these execution related challenges now behind us, we are utilizing our excess capacity~~2023. The strategic rationalization of revenue was the largest contributor to ~~quickly work through this backlog of orders to recover our in-stock percentages.~~the year-over-year decline.

Cost of Goods Sold. Cost of goods sold ~~increased~~decreased by ~~$11.6~~$10.5 million from ~~$3.8~~$15.4 million in the three months ended June 30, ~~2021~~2022 to ~~$15.4~~$4.9 million in the three months ended June 30, 2023, which was driven primarily by decreased sales volume and productivity initiatives. However, inflationary pressures on inputs, primarily beef, have partially offset some of the productivity and yield improvements we have made to our cost of goods on a variable rate basis. Overall commodity beef prices were higher in the second quarter of 2023 compared to the second quarter of the prior year.

Gross Profit. Gross profit increased $5.5 million from $(4.4) million in the three months ended June 30, 2022 to $1.1 million in the three months ended June 30, 2023. As a percent of net sales, gross profit was 17.5% in the second quarter of 2023, compared to a negative 40.4% in the second quarter of 2022. A few primary factors contribute to this performance:

•

Operations expense. Operations expenses decreased by $0.7 million for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 which was primarily driven ~~by increased~~be reduced sales ~~volume followed by significant increases~~volume. Additionally, our overall sales mix in direct labor and input costs including packaging, and other ingredients. Overall commodity beef prices have trended favorably throughout the second quarter of 2022, compared to prior recent quarters, and are generally in line with what we experienced the prior year period. However, as previously discussed, certain execution issues gave rise to yield challenges which caused our effective meat cost to worsen year-over-year.

~~Gross Profit (Loss).~~ ~~Gross profit (loss) decreased $8.0 million from $3.6 million in the~~ three months ended June 30, ~~2021~~2023 allowed us to ~~$(4.4) million in the three months ended June 30, 2022. As a percent~~utilize more favorable modes of ~~net sales, gross profit was negative 40.4% in the second quarter of 2022, compared~~transportation relative to ~~48.7% in the first quarter of 2021. A few primary factors contribute to this performance:~~

•

~~The pull back in DTC e-commerce paired with greater volume from the club channel than in~~ the prior year has resulted in an unfavorable price mix shift. While we acknowledge the growth prospects of brick and mortar distribution, we recognize that any mix shift away from higher margin DTC e-commerce will likely negatively influence our gross margin profile.

•

As 2021 progressed, we experienced increasing pressure on direct labor wage rates. These inflationary pressures necessitated several increases to our direct labor rates throughout 2021 and again during six months ended June 30, 2022. We anticipate that our investments in automation and process improvements will help to offset some of these pressures moving forward.

•

Aside from the effects of mix, there were over $3.9 million in coupons, promotions, deductions, and credits incurred in the second quarter of 2022. This gross-to-net dilution of 26.5% far exceeds the prior year period's dilution of 8.9%. This increase is primarily attributableperiod which helped contribute to the ~~limited-time savings event which led to over $3.0 million in coupon redemptions and deductions alone.~~

~~Operating Expenses.~~

•

~~Selling and marketing expenses~~. Selling and marketing expenses decreased by $0.9 million from $5.6 million in the three months ended June 30, 2021 to $4.7 million in the three months ended June 30, 2022. Stryve decreased its spend with respect to its marketing efforts primarily digital media advertising and paid search in the second quarter of 2022 compared to the same period in 2021. We intend to temper this type of marketing spending for the foreseeable future in favor of increasing our focus on strategies to support retail velocities. Further, management anticipates experiencing operating leverage on its marketing expenses as the Company continues to add points of retail distribution, which has the potential to facilitate more efficient marketing spend. Other expenses contributing to the decrease relate to legal and consulting fees incurred in the three months ended June 30, 2021 related to the Business Combination which did not reoccur in the most recent period.

•

~~Operations expenses~~. Operations expenses increased by $0.4 million for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021. These increases are primarily attributable to the increase in shipped volume as compared to the prior year. Increases in rates across most modes of transportation have also contributed to the increase. Additionally, expenses related to supplies, maintenance, training, and warehousing increased from the second quarter of 2021 compared to the second quarter of 2022.reduction.

•

Salaries and wages. Salaries and wages ~~increased $1.9~~decreased $2.0 million for the three months ended June 30, ~~2022~~2023 compared to the three months ended June 30, ~~2021, increasing~~2022, decreasing from ~~$1.6~~$3.5 million to ~~$3.5~~$1.5 million. This ~~increase~~decrease is ~~in part~~mostly attributable to ~~retention bonus compensation related to a prior acquisition as well as to key contributors within~~ the ~~organization. Further,~~restructuring and productivity efforts of the second quarter results include an accrual of approximately $1.0 million of non-recurring compensation expense that relate to the Company's Business Combination. Additionally, the Company incurred $384 thousand of non-cash, stock-based compensation expense in the second quarter of 2022 which was not present in the second quarter of 2021 when Stryve was still a private company. Despite these increases year-over-year, through our restructuring efforts under new leadership, we anticipate that these expenses will be further optimized to align with the Company's go forward strategy to maximize productivity.Company.

•

Depreciation and amortization expense. Depreciation and amortization expense increased $0.1 million from ~~$0.4~~$0.5 million in the three months ended June 30, ~~2021~~2022 to ~~$0.5~~$0.6 million compared to the three months ended June 30, ~~2022.~~2023 which stems primarily from the timing of capital expenditures.

•

~~One-time prepaid~~Prepaid media reserve.As part of management's go-forward plan in the second quarter of 2022, certain non-core assets have been written down or reserved against. This includes fully reserving against approximately $1.5 million of prepaid media assets which had been held on the balance sheet. There was no activity against such reserves during the second quarter of 2023.

Operating Loss. Operating loss ~~increased~~decreased by ~~$11.0~~$12.6 million from ~~$5.0 million in the three months ended June 30, 2021 to~~ $16.0 million in the three months ended June 30, 2022 ~~and is primarily attributable~~ to a material decrease in gross profit stemming from unprofitable sales relating to the limited-time savings event occurring in the second quarter of 2022 as well as significant one-time charges as described above.

~~Interest Expense.~~ ~~Interest expense decreased by $0.9 million from $1.1~~$3.4 million in the three months ended June 30, ~~2021~~2023 and is primarily attributable to our restructuring efforts resulting in improved gross margins and decreased total operating expenses.

Interest Expense. Interest expense increased by $0.8 million from $0.2 million in the three months ended June 30, ~~2022. While we relied, in part, on debt capital~~2022 to support the business throughout 2021, we significantly deleveraged the business in the first half of 2022 as well as upon the consummation of the Business Combination in the third quarter of 2021 thus reducing the overall interest expense of the business year-over-year.

~~Net Loss.~~ ~~Net loss increased $10.7 million from $5.6 million in three months ended June 30, 2021 to $16.4~~$1.0 million in the three months ended June 30, ~~2022, with~~2023. Interest expense includes non-cash interest of $0.4 million stemming from the ~~increase primarily attributable~~accounting treatment of the warrants issued in connection the debt financing consummated in April 2023. In addition, interest expense increased by $0.1 million related to ~~a decrease~~the Loan Agreement, $0.1 million related to the PSA, and $0.1 million related to the Notes which were not in ~~gross profit as well as significant one-time charges occurring~~place in the ~~second quarter of 2022, as described above.~~prior year period.

25Net Loss Before Income Taxes.

~~Results of Operations –six~~ Net loss before income taxes decreased $12.0 million from $16.3 million in three months ended June 30, 2022 ~~Compared~~ to ~~six~~$4.3 million in the three months ended June 30, ~~2021~~2023, with the decrease primarily attributable to our restructuring efforts resulting in decreased operating expenses and improved gross margins and partially offset by an increase in interest expense.

Results of Operations –Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022

The following table sets forth selected items in our consolidated financial data in dollar amounts and as a percentage of net sales for the six months ended June 30, ~~2022~~2023 compared to the six months ended June 30, ~~2021.~~2022.

Six Months Ended

Six Months Ended

June 30, 2022

June 30, 2021

(unaudited)

(unaudited)

(In thousands)

% of sales

% of sales

Net sales

$
18,367

100.0
%

$
14,186

100.0
%
Cost of goods sold (exclusive of depreciation shown separately below)

21,668

118.0
%

7,927

55.9
%
Gross profit (loss)

$
(3,301
)

(18.0
)%

$
6,259

44.1
%

Operating expenses

Selling and marketing expenses

$
8,743

47.6
%

$
12,047

84.9
%
Operations expense

2,580

14.0
%

2,030

14.3
%
Salaries and wages

6,096

33.2
%

3,003

21.2
%
Depreciation and amortization expense

948

5.2
%

792

5.6
%
Prepaid media reserve

1,489

8.1
%

—

—

Gain on disposal of fixed assets

(24
)

(0.1
)%

(9
)

(0.1
)%
Total operating expenses

19,832

108.0
%

17,863

125.9
%
Operating loss

(23,133
)

(125.9
)%

(11,604
)

(81.8
)%

Other income (expense):

Interest expense

(369
)

(2.0
)%

(1,957
)

(13.8
)%
PPP loan forgiveness

—

—

1,670

11.8
%
Change in fair value of Private Warrants

85

0.5
%

—

—

Gain on debt extinguishment

—

—

545

3.8
%
Other income

(215
)

(1.2
)%

24

0.2
%
Other income (expense)

(499
)

(2.7
)%

282

2.0
%
Net loss before income taxes

$
(23,632
)

(128.7
)%

$
(11,322
)

(79.8
)%


	Six Months Ended June 30,
	2023						2022
	(unaudited)						(unaudited)
(In thousands)				% of sales						% of sales
SALES, net	$	10,643			100.0	%	$	18,367			100.0	%
COST OF GOODS SOLD (exclusive of depreciation shown separately below)		8,629			81.1	%		21,668			118.0	%
GROSS PROFIT		2,014			18.9	%		(3,301	)		(18.0	)%

OPERATING EXPENSES
Selling expenses		3,747			35.2	%		8,743			47.6	%
Operations expense		1,139			10.7	%		2,580			14.0	%
Salaries and wages		3,632			34.1	%		6,096			33.2	%
Depreciation and amortization expense		1,104			10.4	%		948			5.2	%
Prepaid media reserve		—			0.0	%		1,489			8.1	%
(Gain) loss on disposal of fixed assets		1			0.0	%		(24	)		(0.1	)%
Total operating expenses		9,624			90.4	%		19,831			108.0	%
OPERATING LOSS		(7,610	)		(71.5	)%		(23,133	)		(125.9	)%

OTHER (EXPENSE) INCOME
Interest expense		(1,363	)		(12.8	)%		(369	)		(2.0	)%
Change in fair value of Private Warrants		19			0.2	%		85			0.5	%
Other expense		(7	)		(0.1	)%		(215	)		(1.2	)%
Total other (expense) income		(1,351	)		(12.7	)%		(499	)		(2.7	)%
NET LOSS BEFORE INCOME TAXES	$	(8,961	)		(84.2	)%	$	(23,632	)		(128.7	)%

Net sales. Net sales ~~increased~~decreased by ~~$4.2~~$7.8 million from ~~$14.1 million during the six months ended June 30, 2021 to $18.3~~$18.4 million during the six months ended June 30, 2022 to $10.6 million during the six months ended June 30, 2023, representing ~~growth~~a reduction of ~~29.5%~~42.1% for the comparable periods. The primary ~~drivers~~driver of ~~the increased~~net sales of Stryve’s products to existing accounts, and net new sales related to additional distribution secured by Stryve in 2021 at a number of key retailers. Throughout the six months ended June 30, 2022 Stryve has secured new distribution with several marquee customers in the ~~club, mass, grocery, and convenience channels. Further, Stryve garnered expanded distribution with~~prior year period was a ~~number of its existing retail relationships. Overall, the largest contributor of growth stems from the~~chainwide limited-time savings event ~~which resulted in significant in-and-out sales volume~~with the one of the nation's largest retailers in the second quarter of 2022. ~~This growth has been partially offset by a pullback in~~As an extension of our ~~e-commerce sales stemming from our reduction in digital media spending. Further, supply chain and execution challenges~~restructuring plans, this program, along with other rationalized revenue, was not repeated in the first half of ~~2022 have hindered our ability~~2023. The strategic rationalization of revenue was the largest contributor to ~~effectively service several retail and private label accounts leaving unmet demand in~~ the ~~period.~~year-over-year decline.

Six Month
Period Ended

Six Month
Period Ended

June 30, 2022

June 30, 2021

(unaudited)

(unaudited)

(In thousands)

Gross Sales

$
23,617

$
15,562

Trade Promotions/Discounts & Credits

(5,250
)

(1,377
)

Net Sales

$
18,367

$
14,186

Cost of Goods Sold.Cost of goods sold ~~increased~~decreased by ~~$13.7~~$13.1 million from ~~$7.9 million in the six months ended June 30, 2021 ,to~~ $21.7 million in the six months ended June 30, 2022 to $8.6 million in the six months ended June 30, 2023, which was driven primarily ~~driven~~ by ~~increased~~decreased sales volume ~~followed by increased direct labor~~ and ~~commodity input costs,~~productivity initiatives. However, inflationary pressures on inputs, primarily ~~beef. On~~beef, have partially offset some of the ~~whole, overall commodity beef prices~~productivity and yield improvements we have ~~increased significantly year-over-year. However, throughout the six-month period ending June 2022, meat prices have consistently trended favorably relative~~made to ~~their peak in the second half~~our cost of ~~2021. Notwithstanding this trend in beef pricing, the aforementioned execution related yield challenges largely muted the impact of this improvement.~~goods on a variable rate basis.

Gross ~~Profit (Loss).~~ Profit.Gross profit ~~(loss) fell $9.6~~increased $5.3 million from ~~a $6.3~~$(3.3) million ~~profit~~ in the ~~first~~ six months ~~of 2021~~ended June 30, 2022 to ~~$3.3~~$2.0 million ~~gross profit loss~~ in the ~~first~~ six months ~~of 2022.~~ended June 30, 2023. As a percent of net sales, gross profit ~~(loss) for the first six months of 2022~~ was ~~negative 18% which represents a significant decline from 44.1%~~18.9% in the first ~~six months~~half of ~~2021.~~2023, compared to a negative 18.0% in the first half of 2022. A few primary factors contribute to this performance:

•

~~The pull back~~We instituted a continuous price action review process in ~~DTC e-commerce paired with greater volume from other channels, particularly~~which we look to ~~club retailers, than~~protect our unit economics in light of the inflationary environment. This process resulted in two meaningful portfolio-wide price increases in the second half of 2022.

•

During the second half of 2022 and into the first half of 2023, we implemented mitigating strategies to lessen the impact of supply chain challenges and cost increases including but not limited to, strategic sourcing, improving our manufacturing yields, and labor optimization.

•

We evaluated our revenue base in the second half of 2022 and have taken steps to improve or eliminate low-quality revenue sources in order to drive long-term value-creating growth. While this has benefited margins by eliminating negative gross margin sales that occurred in the prior year period, this has also resulted in ~~an unfavorable mix shift. While we acknowledge~~lower plant utilization in the ~~growth prospects~~first half of 2023 which has partially muted the ~~brick-and-mortar distribution, we recognize that any mix shift away from DTC e-commerce will likely negatively influence our~~ gross margin ~~profile.~~impact we expect to receive from progress we've made on a unit economic basis.

•

~~As 2021 progressed, we~~We experienced increasing pressure on direct labor wage ~~rates.~~rates in 2022. These inflationary pressures necessitated ~~several~~ increases to our direct labor rates throughout ~~2021~~2022 and ~~again during six months ended June 30, 2022. We are hopeful that our investments~~resulting in ~~automation and process improvements will help to offset some of these pressures moving forward.~~

•

~~Aside from the effects of mix, there were over $5.2 million in coupons, promotions, deductions, and credits incurred~~a higher labor rate in the first half of ~~2022. This gross-to-net dilution of 22.2% exceeds~~2023 as compared to the prior year ~~period's dilution of 8.8%. This increase is primarily attributable to the limited-time event which led to over $3.0 million in coupons and deductions alone in the first half of 2022.~~period.

Operating Expenses.

•

Selling expenses. Selling ~~and marketing~~ expenses ~~fell~~decreased by ~~$3.3~~$5.0 million from ~~$12.0 million in the six months ended June 30, 2021, to~~ $8.7 million in the six months ended June 30, ~~2022. Stryve~~2022 to $3.7 million in the six months ended June 30, 2023. We decreased ~~its~~our spend with respect to ~~its~~our marketing efforts including digital media advertising and paid search in the first ~~six months~~half of ~~2022~~2023 compared to the same period in ~~2021. We intend to temper this type of marketing spending for the foreseeable future~~2022 in favor of increasing our focus on strategies to support retail velocities. ~~Further, management anticipates~~We anticipate experiencing operating leverage on ~~these~~our marketing expenses over time as the Company continues to add points of retail distribution, which has the potential to facilitate more efficient marketing spend. Further, by streamlining the organization and creating a more focused approach, we were able to make meaningful progress in reducing our spend attributable to third party professional fees.

•

Operations ~~expenses~~expense. Operations expenses ~~increased~~decreased by ~~$0.6~~$1.5 million ~~from~~for the six months ended June 30, ~~2021,~~2023 as compared to the six months ended June 30, 2022. ~~The primary driver of this was increased shipped sales volumes in the first half of 2022 as compared~~In addition to the ~~first half~~reduction in volume, our overall sales mix in six months ended June 30, 2023 allowed us to utilize more favorable modes of ~~2021.~~transportation relative to the prior year period which helped contribute to the reduction.

•

Salaries and wages. Salaries and wages ~~increased $3.1~~decreased $2.5 million ~~from~~for the six months ended June 30, ~~2021,~~2023 compared to the six months ended June 30, 2022, ~~increasing~~decreasing from ~~$3.0~~$6.1 million to ~~$6.1~~$2.5 million. This ~~increase~~decrease is ~~in part~~mostly attributable to ~~certain non-recurring retention bonus compensation related to a prior acquisition as well as to key contributors within~~ the ~~organization incurred in~~restructuring and productivity efforts of the first half of 2022. Further, the second quarter results include an accrual of approximately $1.0 million of non-recurring compensation expense that relate to the Company's Business Combination. Additionally, the Company incurred $712 thousand of non-cash, stock based compensation expense in the first half of 2022 which wasn't present in the first half of 2021 when Stryve was still a private company. Despite these increases year-over-year, through our restructuring efforts under new leadership, we anticipate that these expenses will be further optimized to align with the Company's go forward strategy to maximize productivity.Company.

•

Depreciation and amortization expense. Depreciation and amortization expense increased $0.2 million from $0.9 million in the six months ended June 30, ~~2021,~~2022 to $1.1 million compared to the six months ended June 30, ~~2022 and is~~2023 which stems primarily ~~attributable to~~from the timing of capital ~~expenditures and dispositions of assets.~~expenditures.

•

Prepaid media reserve.As part of management's go-forward plan in the second quarter of 2022, certain non-core assets have been written down or reserved against. This includes fully reserving against approximately $1.5 million of prepaid media assets which had been held on the balance sheet. There was no activity against such reserves during the first half of 2023.

Operating Loss. Operating loss ~~increased~~decreased by ~~$11.5~~$15.5 million from ~~($11.6)~~$23.1 million ~~through~~in the ~~first~~ six months ~~of 2021~~ended June 30, 2022 to ~~($23.1)~~$7.6 million ~~through~~in the ~~first~~ six months ~~of 2022~~ended June 30, 2023 and is primarily attributable to our restructuring efforts resulting in improved gross margins and decreased ~~gross profit on sales.and certain significant one-time restructuring charges occurring in the first half of 2022, as described above.~~total operating expenses.

Interest Expense. Interest expense ~~decreased~~increased by ~~$1.5~~$1.0 million from ~~$(1.9)~~$0.4 million ~~through~~in the ~~first~~ six months ~~of 2021~~ended June 30, 2022 to ~~$(.4)~~$1.4 million ~~through~~in the ~~first~~ six months ended June 30, 2023. Interest expense includes non-cash interest of ~~2022. While we relied,~~$0.4 million stemming from the accounting treatment of the warrants issued in ~~part, on~~connection to the debt ~~capital~~financing consummated in April 2023. In addition, interest expense increased by $0.2 million related to ~~support~~ the ~~business throughout 2021, we significantly deleveraged~~Loan Agreement, $0.2 million related to the ~~business~~PSA, and $0.1 million related to the Notes which were not in place in the first quarter of 2022 as well as upon the consummation of the Business Combination in the third quarter of 2021 thus reducing the overall interest expense of the business year-over-year for the comparable periods.prior year period.

Net ~~Loss.~~ Loss Before Income Taxes.Net loss ~~increased $12.3~~before income taxes decreased $14.6 million from ~~$(11.3)~~$23.6 million in six months ended June 30, ~~2021~~2022 to ~~$(23.6)~~$9.0 million in the six months ended June 30, ~~2022 and is~~2023, with the decrease primarily attributable to ~~a decrease~~our restructuring efforts resulting in decreased operating expenses and improved gross ~~profit on sales~~margins and ~~certain significant one-time restructuring charges occurring~~partially offset by an increase in ~~the first half of 2022, as described above.~~interest expense.

Non-GAAP Financial Measures

We use non-GAAP financial measures and believe ~~it is~~they are useful to investors as ~~it provides~~they provide additional information to facilitate comparisons of historical operating results, identify trends in operating results, and provide additional insight on how the management team evaluates the business. Our management team uses EBITDA, Adjusted EBITDA, and Adjusted Earnings per Share to make operating and strategic decisions, evaluate performance and comply with indebtedness related reporting requirements. Below are details on these non-GAAP measures and the non-GAAP adjustments that the management team makes in the definition of EBITDA, Adjusted EBITDA, and Adjusted Earnings per Share. We believe these non-GAAP ~~measure~~measures should be considered along with ~~net income (loss),~~Net Loss Before Income Taxes, Net Loss and Net Loss per Share, the most closely related GAAP financial ~~measure.~~measures. Reconciliations between EBITDA, Adjusted EBITDA, Adjusted Earnings per Share, Net Loss Before Income Taxes, Net Loss and ~~net income (loss)~~Net Loss per Share are below, and discussion regarding underlying GAAP results throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

EBITDA. Stryve defines EBITDA as ~~net income (loss)~~Net Loss before ~~interest expense, income tax expense (benefit),~~Interest Expense, Income Tax Expense, and ~~depreciation~~Depreciation and ~~amortization~~Amortization Expense.

Adjusted EBITDA. Stryve defines Adjusted EBITDA as EBITDA adjusted as necessary for certain items listed below in the table.

The table below provides a reconciliation of EBITDA and Adjusted EBITDA to ~~their most directly comparable GAAP measure, which is net income (loss) before taxes,~~Net Loss Before Income Taxes, for the three and six months ended June 30, ~~2022~~2023 and ~~2021.~~2022.


	Three Month Period Ended			Three Month Period Ended			Six Month Period Ended			Six Month Period Ended			Three Months Ended June 30,						Six Months Ended June 30,
	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021			2023			2022			2023			2022
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)						(unaudited)
(In thousands)
Net loss before income taxes	$	(16,326	)	$	(5,561	)	$	(23,632	)	$	(11,322	)	$	(4,322	)	$	(16,326	)	$	(8,961	)	$	(23,632	)
Interest expense		181			1,147			369			1,957			964			181			1,363			369
Depreciation and amortization		503			397			948			792
Depreciation and amortization expense														552			503			1,104			948
EBITDA	$	(15,642	)	$	(4,017	)	$	(22,315	)	$	(8,573	)	$	(2,806	)	$	(15,642	)	$	(6,494	)	$	(22,315	)
Additional Adjustments*:
PPP loan forgiveness		—			—			—			(1,670	)
Additional Adjustments:
Severances and One-Time Employee Related Costs		1,346			—			1,425			—			—			1,346			—			1,425
One-Time Reserves and Write Downs		2,562			—			2,562			—			—			2,562			—			2,562
Business combination expenses		—			193			—			1,077
Stock based compensation expense		384			—			712			—
Comparability adjustment - Public vs. Private		—			(527	)		—			(1,049	)
Stock Based Compensation Expense														432			384			618			712
Adjusted EBITDA	$	(11,350	)	$	(4,351	)	$	(17,616	)	$	(10,215	)	$	(2,374	)	$	(11,350	)	$	(5,876	)	$	(17,616	)

Adjusted EBITDA. ~~Stryve achieved~~The Company improved its negative Adjusted EBITDA ~~of $(17.6)~~by 79.1% when comparing the three months ended June 30, 2023 and 2022 with a $9.0 million improvement year-over-year driven by the Company's improved gross margins and rationalized spending. Stryve decreased its negative Adjusted EBITDA during the six months ended June 30, ~~2022. compared~~2023 from $(17.6) million to ~~$(10.2) million in the six months ended June 30, 2021.~~$(5.9) million. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

*Additional Adjustments to EBITDA:

~~PPP Loan Forgiveness~~: The Company secured a Paycheck Protection Program loan in April of 2020 which was ultimately fully forgiven in the first quarter of 2021. The forgiveness of $1.6 million of principal and interest resulted in a gain during the three months ended June 30, 2021. This item is one-time and has been adjusted out of Other Income (Expense) to provide better comparability of results.

~~Business Combination Expenses~~: The Company signed the Business Combination Agreement on January 28, 2021. and prepared an S-4 and S-1 filing in furtherance of the Business Combination. In doing so, the Company incurred significant legal and professional services fees in the three months ended June 30, 2021. The Business Combination was ultimately consummated on July 20, 2021. These non-recurring expenses have been adjusted out of Selling and Marketing Expense to provide better comparability of results.

~~Comparability Adjustment - Public vs Private~~: For the duration of the three-month period ended June 31, 2021, Stryve was a private company. The Company consummated the Business Combination on July 20, 2021. As a public company, the Company incurs significant expenses by virtue of being public. These public company expenses affect the comparability of results between the comparable periods shown. Accordingly, these public company expenses have been added to the three months ended June 30, 2021, to adjust the comparative quarter for comparative purposes. These expenses include public filing fees and preparation services, the extra cost of directors & officers insurance for public companies, and board fees.

~~Severances and One-Time Employee Related Costs~~: The Company incurred significant one-time charges related to employees, including severances and future one-time payments, in the second quarter of 2022. These non-recurring expenses have been adjusted out of Salaries & Wages to provide better comparability of results.

~~One-Time Reserves and Write Downs~~: As part of management's go-forward plan, certain non-core assets have been written down or reserved against. This includes the write down of approximately $1.5M of pre-paid media, reserves for non-core SKUs, and other non-recurring items. These non-recurring expenses have been adjusted out to provide better comparability of results.

Adjusted Earnings per Share. Stryve defines Adjusted Earnings per Share as ~~it's~~its Basic/Diluted Net Income (Loss) per Share adjusted as necessary for certain items listed below in the table.

The table below provides a reconciliation of Adjusted Earnings per Share to ~~its most directly comparable GAAP measure, which is~~ Basic/Diluted Net ~~Income (Loss)~~Loss per Share, for the three and six months ended June 30, ~~2022~~2023 and ~~2021.~~2022.


		Three Month Period Ended			Three Month Period Ended			Six Month Period Ended			Six Month Period Ended				Three Months Ended June 30,						Six Months Ended June 30,
		June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021				2023			2022			2023			2022
		(unaudited)			(unaudited)			(unaudited)			(unaudited)				(unaudited)						(unaudited)
(In thousands except share and per share information)
Net loss		$	(16,354	)	$	(5,561	)	$	(23,668	)	$	(11,322	)		$	(4,309	)	$	(16,354	)	$	(8,951	)	$	(23,668	)
Weighted average shares outstanding			30,946,486			10,139,422			30,355,697			10,141,928				2,105,620			2,063,099			2,095,621			2,023,713
Basic & Diluted Net Loss per Share		$	(0.53	)	$	(0.55	)	$	(0.78	)	$	(1.12	)		$	(2.05	)	$	(7.93	)	$	(4.27	)	$	(11.70	)
Additional Adjustments*:
PPP loan forgiveness			—			—			—			(0.16	)
Severances and One-Time Employee Related Costs			0.04			—			0.05			—				—			0.65			—			0.70
Reserves and Write Downs			0.08			—			0.08			—
Business combination expenses			—			0.02			—			0.11
Stock based compensation expense			0.01			—			0.02			—
Comparability adjustment - Public vs. Private			—			(0.05	)		—			(0.10	)
One-Time Reserves and Write Downs																—			1.24			—			1.27
Stock Based Compensation Expense																0.21			0.19			0.29			0.35
Non-Cash Interest Attributable to Warrants Issued in Connection with Notes **																0.18			—			0.18			—
Adjusted Earnings per Share		$	(0.39	)	$	(0.58	)	$	(0.62	)	$	(1.28	)		$	(1.66	)	$	(5.85	)	$	(3.80	)	$	(9.38	)

* Information regarding these adjustments can be found in the Additional Adjustments to EBITDA section above.	* Information regarding these adjustments can be found in the Additional Adjustments to EBITDA section above.													* Information regarding these adjustments can be found in the Additional Adjustments to EBITDA section above.

** The Company allocated the proceeds from the April 2023 Financing transaction between the Notes and Warrants based on their relative fair values as of the closing date of the facility. The allocation resulted in the fair value of the warrants to be treated as a discount to the Notes of $1.4 million that is being amortized through December 31, 2023. Accordingly, the Company recognized non-cash interest expense of $0.4 million in connection with the discount for the three and six months ended June 30, 2023.														** The Company allocated the proceeds from the April 2023 Financing transaction between the Notes and Warrants based on their relative fair values as of the closing date of the facility. The allocation resulted in the fair value of the warrants to be treated as a discount to the Notes of $1.4 million that is being amortized through December 31, 2023. Accordingly, the Company recognized non-cash interest expense of $0.4 million in connection with the discount for the three and six months ended June 30, 2023.

Liquidity and Capital Resources

Overview. The accompanying condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. In accordance with ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going concern (Subtopic 205-40), we have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued.

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, ~~and investment in~~ working capital, ~~to fund~~and funding operations. For the six months ended June 30, ~~2022,~~2023, we incurred an operating loss of ~~$23.1~~$7.6 million and used cash in operations of ~~$20.4~~$5.2 million. As of June 30, ~~2022, we have~~2023, the Company has approximately $11.2 million of indebtedness and working capital excluding cash and debt of ~~$12.2~~$5.8 million which compares ~~favorably~~ to the ~~$3.2~~$7.6 million ~~working capital we maintained~~ as of December 31, ~~2021, and have only approximately $0.2~~2022.

~~million~~During the third quarter of ~~indebtedness. On January 11,~~ 2022, we ~~closed~~secured a ~~private placement offering~~term loan in ~~which we raised $35.0 million of gross proceeds to significantly strengthen our liquidity position. We have used a portion of~~ the funds raised for working capital to support near term growth, capital expansion projects, including increasing manufacturing capacity and adding manufacturing capabilities, and general corporate purposes, including marketing and sales initiatives and repaying $6.8 million of debt.

On May 26, 2021, the Company entered into a Purchase and Sale Agreement with OK Biltong Facility, LLC (the “Buyer”), an entity controlled by Ted Casey, a member of the Company’s Board of Directors, pursuant to which the parties consummated a sale and leaseback transaction (the “Sale and Leaseback Transaction). Under the terms of the Sale and Leaseback Transaction, the Company agreed to sell its manufacturing facility and the surrounding property in Madill, Oklahoma (the “Real Property”). The Sale and Leaseback Transaction was consummated on June 4, 2021, for a total purchase price of $7.5 million. The consummation of the Sale and Leaseback Transaction provided the Company with net proceeds (after transaction related costs) of approximately $7.3 million. The net proceeds were used for general corporate purposes and to retire debt facilities in an aggregatemaximum amount of ~~$6.5 million.~~

~~In connection~~$6.0 million, with ~~the consummation~~$4.0 million being advanced upon execution and up to two additional $1.0 million advances available to us subject to performance hurdles. Additionally, we secured an asset based line of ~~the Business Combination, on July 20, 2021, the Company raised proceeds~~credit with a $15.0 million credit limit subject to accounts receivable and inventory balances. The term loan and asset based line of $37.9 million (net of Andina’s transaction costs and expenses). Following the Closing, Stryve retired various debt facilities for an aggregate amount of approximately $11.1 million including principal and interest.

~~We are currently under a letter of intent to secure~~credit were secured in ~~excess of $20M in non-dilutive, committed borrowing capacity through a combination of facilities~~order to augment our liquidity, as needed, through the execution of management's plan. The Company ~~believes that cash~~had drawn $4.0 million of the term loan and $3.0 million (net of repayments) of the asset based line of credit as of June 30, 2023. See Note 5 to our financial statements included herein for a description of the asset based line of credit and Note 6 for a description of the term loan.

We have experienced a slower sell-through of our rationalized slow-moving, and obsolete inventory than expected due to many other consumer packaged goods companies conducting similar inventory management and rationalization programs at the same time creating a surplus of goods in the channels commonly used to sell off this type of rationalized, slow-moving, or obsolete inventory. Additionally, as previously mentioned, in the fourth quarter of 2022 and during the first half of 2023, we experienced irregular order patterns from ~~operations,~~our retail and distribution customers due to what we believe to be working capital management activities not specific to our products in which retailers and distributors may have sought to bring down their inventory levels broadly.

In 2023, we have had to make significant investments in our working capital to support increased distribution with marquee retailers coming online throughout the year. Many of these distribution resets have been secured in large part due to our new packaging design. Accordingly, we have had to build net new inventories to support these upcoming resets. This investment in inventory ahead of sales has put pressure on our liquidity position given the structure and terms of our ~~borrowing ability (given~~credit facilities and has required us to seek external financing. While we anticipate the ~~lack~~increased volumes will result in improved financial results and a significantly narrowed cash loss over time, we do anticipate continued growth which, depending on the rate of ~~debt against our assets) will be sufficient to fund the Company’s cash requirements for at least the next twelve months from the date these financial statements are made available.~~growth, may require more external financing.

On April 19, 2023, we issued an aggregate of $4.1 million in principal amount of secured promissory notes to select accredited investors carrying a 12% accrued interest rate to help support the working capital and growth needs of the business. The aggregate principal amount of the notes is inclusive of $1.2 million from related parties. These notes have a maturity date of December 31, 2023.

In June 2023, we entered into an at-the-market equity offering sales agreement with Craig-Hallum Capital Group LLC, that established a program pursuant to which they may offer and sell up to $5.7 million of our Class A common stock from time to time in at-the-market transactions. No shares were sold under the at-the-market equity facility during the three months ended June 30, 2023.

While these most recent financings have provided us with liquidity to support our near-term goals, given the December 31, 2023 maturity date of the April 2023 debt financing, we are still evaluating several different strategies to enhance our liquidity position. These strategies may include, but are not limited to, pursuing additional actions under our business reorganization plan, and seeking additional financing from both the public and private markets through the issuance of equity or debt securities. The outcome of these matters cannot be predicted with any certainty at this time. If capital is not available to us when, and in the amounts needed, we could be required to delay, scale back, or abandon some of our operations, which could materially harm our business, financial condition and results of operations.

Notwithstanding the foregoing, we have examined spending throughout our business and we identified ways to drive efficiencies, eliminate unnecessary expense, and focus on the highest and best use of each dollar. The resulting impact was a 51.5% reduction in total operating expenses leading to a $15.5 million improvement in our pre-tax net loss in the first half of 2023 despite lower sales when comparing to the first half of 2022. 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 resulted in two meaningful price increases in 2022. 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. We also anticipate reducing our inventory levels throughout 2023 which would be a near-term source of liquidity

We have prepared cash flow forecasts which indicate that based on our expected operating losses and cash consumption due to growth in working capital, we believe that absent an infusion of sufficient capital there is substantial doubt about our ability to continue as a going concern for twelve months after the date the condensed consolidated financial statements for the three months ended June 30, 2023 are issued. The Company's plan includes the items noted above as well as securing additional external financing which may include raising debt or equity capital. While we believe our plan, if successfully executed, will alleviate the conditions that raise substantial doubt, these plans are not entirely within the Company's control including our ability to raise sufficient capital on favorable terms.

Cash Flows. The following tables show summary cash flows information for the six months ended June 30, ~~2022~~2023 and ~~2021.~~2022.


	Six Months Ending			Six Months Ending			Six Months Ended June 30,
	June 30, 2022			June 30, 2021			2023			2022
	(unaudited)			(unaudited)			(unaudited)
(In thousands)
Net cash used in operating activities	$	(20,379	)	$	(15,443	)	$	(5,213	)	$	(20,379	)
Net cash used in investing activities		(1,992	)		(175	)		(64	)		(1,992	)
Net cash provided by financing activities		25,165			16,227			4,974			25,165
Net increase in cash and cash equivalents	$	2,794		$	609
Net (decrease) increase in cash and cash equivalents							$	(303	)	$	2,794

Net Cash used in Operating Activities. Net cash used in operating activities ~~increased $5.0~~decreased $15.1 million from ~~$15.4~~$20.4 million in the six months ended June 30, 2022 compared to $5.2 million through the six months ended June 30, ~~2021 compared to $20.4 million through the six months ended June 30, 2022.~~2023. This ~~increase~~decrease is primarily attributable to the ~~increase~~decrease in net losses ~~paired with an investment in net working capital~~ during the six months ended June 30, ~~2022 ,as~~2023, as compared to the prior year period.

Net Cash used in Investing Activities. Net cash used in investing activities ~~increased~~decreased from ~~$0.2 million in the six months ended June 30, 2021, to~~ $2.0 million in the six months ended June 30, 2022, to $0.1 million in the six months ended June 30, 2023, representing a ~~$1.8~~$1.9 million ~~increase~~decrease when comparing the same period year over year. We ~~anticipate increased investment in~~believe our current manufacturing and fulfillment assets ~~moving forward, in order to ensure we have adequate run rate capacities~~are generally sufficient to meet the near-term potential demand for our ~~products.~~products and don't foresee the need for significant capital expenditures to facilitate growth in the coming quarters.

Net Cash provided by Financing Activities. Net cash provided by financing activities generated ~~$9.0~~$20.2 million ~~more~~less in cash for the Company in the six months ended June 30, ~~2022~~2023, compared to the comparable period a year ~~ago.~~ago due the January 2022 PIPE transaction. In the ~~first half of 2022,~~six months ended June 30, 2023, we generated cash from financing activities of ~~$25.2~~$5.0 million ~~which included approximately $32.3 million in net~~primarily driven by the proceeds from the ~~January Offering offset by approximately $6.8~~$4.1 million ~~of cash used to retire debt~~ in ~~the period.~~secured promissory notes.

Debt and credit facilities. The information below represents an overview of the Company’s debt and prior credit facilities. ~~The Company’s outstanding indebtedness as~~

As of June 30, ~~2022 ,and~~2023 and December 31, ~~2021 is as follows:~~2022, long-term debt consisted of the following:

As of
June 30,

As of
December 31,

2022

2021

Long term debt

$
158

$
1,567

Short term debt

—

2,000

Line of credit (Note 5)

—

3,500

Total notes payable

158

7,067

Less: current portion

(122
)

(3,447
)
Less: line of credit

—

(3,500
)
Total notes payable, net of current portion

$
36

$
120


(In thousands)	June 30, 2023			December 31, 2022
Revenue Loan and Security Agreement	$	3,842		$	3,889
Invoice Purchase and Security Agreement		2,000			—
Broken Stone Agreement		35			52
Less: current portion		(272	)		(245	)
Total long-term debt, net of current portion	$	5,605		$	3,697

As of June 30, 2023 and December 31, 2022, short-term borrowings and current portion of long-term debt consisted of the following:


(In thousands)	June 30, 2023		December 31, 2022
Invoice Purchase and Security Agreement	$	882	$	1,046
Promissory Notes		2,974		—
Commercial Premium Finance Agreement		128		725
Current portion of long-term obligations		272		245
Total short-term borrowings and current portion of long-term debt	$	4,257	$	2,016

Future minimum principal payments on the notes payable as of June 30, ~~2022,~~2023, are as follows:


2022 (for the remainder of)	$	60,180
2023		72,118
2023 (for the remainder of)			$	5,400
2024		18,255		332
2025		7,299		601
2026		—		1,179
2027				1,695
Thereafter				2,000
	$	157,852	$	11,206

On ~~January 28, 2022,~~April 19, 2023, we ~~paid off approximately $6.8~~issued an aggregate of $4.1 million in principal amount of ~~outstanding~~secured promissory notes to select accredited investors carrying a 12% accrued interest rate to help support the working capital and growth needs of the business. The aggregate principal ~~and interest owed to Origin.~~amount of the notes is inclusive of $1.2 million from related parties. These notes have a maturity date of December 31, 2023.

Certain Factors Affecting Our Performance

Stryve’s management believes that the Company’s future performance will depend on many factors, including the following:

Ability to Expand Distribution in both Online and Traditional Retail Channels. Stryve’s products are sold through a growing number of traditional retail channels where the Company has an opportunity to acquire new consumers. Traditional retail channels include mass stores, grocery chains, natural food outlets, club stores, convenience stores, and drug stores, all either direct or through distribution partners. Stryve works closely with retailers to establish plans for distribution expansion and promotional opportunities. Stryve is ~~currently~~also growing its consumer base through both paid and organic means both online as ~~well as by expanding its presence in a variety of physical retail distribution channels.~~well. Online consumer acquisitions typically occur through the Company’s portfolio of DTC e-commerce websites and Amazon.com. The Company’s online consumer acquisition program includes paid and unpaid social media, search, and display media. Stryve’s products are also sold through a growing number of traditional retail channels where the Company has an opportunity to acquire new consumers. Traditional retail channels include grocery chains, natural food outlets, club stores, convenience stores, and drug stores, all either direct or through distribution partners.

Ability to Acquire and Retain Consumers at a Reasonable Cost. Stryve’s management believes an ability to consistently acquire and retain consumers at a reasonable cost relative to projected life-time value will be a key factor affecting future performance. To accomplish this goal, Stryve intends to strategically allocate advertising spend between online and offline channels favoring digital media, as well as emphasizing more targeted and measurable “direct response” digital marketing spend with advertising focused on increasing consumer awareness and driving trial of our products. Further, we acknowledge that changes to third-party algorithms that may be utilized directly, or indirectly, by Stryve in its advertising efforts may impact the effectiveness of Stryve's advertising which may increase its overall cost to acquire and retain consumers.

Ability to Drive Repeat Usage of Our Products. Stryve accrues substantial economic value from repeat consumers who consistently purchase its products either online or in traditional retail. The pace of Stryve’s growth rate will be affected by the repeat usage dynamics of existing and newly acquired customers. The Company utilizes a number of methods to drive repeat behavior including intelligent e-mail and text campaigns, targeted digital media, and subscribe and save incentives.

Ability to Expand Gross Margins. Stryve’s overall profitability will be impacted by its ability to expand gross margins through effective sourcing of raw materials, managing production yields and drying times, controlling labor and shipping costs, as well as spreading other production-related costs over greater manufacturing volumes. Additionally, Stryve's ability to expand gross margins will be influenced by its revenue channel and customer mix as well as by Stryve's ability to pass price increases to its customers.

Ability to Expand Operating Margins. The Company’s ability to expand operating margins will be impacted by its ability to effectively manage its fixed and variable operating expenses as net sales increase.

Ability to Manage Supply Chain and Expand Production In-line with Demand. Stryve’s ability to grow and meet future demand will be affected by its ability to effectively plan for and source inventory from a variety of suppliers located inside and outside the United States. Additionally, efficiently scaling production capacity ahead of growth in net sales will be critical to the Company’s ability to meet future demand without disruption.

Ability to Optimize Key Components of Working Capital. Stryve’s ability to reduce cash burn in the near-term and eventually generate positive cash flow will be partially impacted by the Company’s ability to effectively manage the key components of working capital which have a direct impact on the cash conversion cycle.

Seasonality. Because Stryve is so early in its lifecycle of growth, it is difficult to discern the exact magnitude of seasonality affecting its business. Any evidence of seasonality is not clearly ~~discernable~~discernible from the Company’s historical growth. However, understanding potential trends in seasonality will be key in Stryve’s management of its expenses, liquidity, and working capital.

Off-Balance Sheet Arrangements

We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements as of June 30, ~~2022.~~2023. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.

Critical Accounting Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our condensed consolidated financial statements which have been prepared in accordance with GAAP. In preparing our financial statements, we make estimates, assumptions, and judgments that can have a significant impact on our reported revenue, results of operations, and comprehensive net income or loss, as well as on the value of certain assets and liabilities on our balance sheet during, and as of, the reporting periods. These estimates, assumptions, and judgments are necessary and are made based on our historical experience, market trends and on other assumptions and factors that we believe to be reasonable under the circumstances because future events and their effects on our results of operations and value of our assets cannot be determined with certainty. These estimates may change as new events occur or additional information is obtained. We may periodically be faced with uncertainties, the outcomes of which are not within our control and may not be known for a prolonged period of time. Because the use of estimates is inherent in the financial reporting process, actual results could differ from those estimates or assumptions.

~~The critical accounting estimates, assumptions, and judgments that we believe have the most significant impact on our consolidated financial statements are described below.~~

Our significant accounting policies are ~~more fully~~ described in Note 3 of Part I, Item 1 of this Quarterly Report on Form 10-Q and in Note 3 of Part II, Item 8, “Significant Accounting Policies” in our Annual Report on Form 10-K. There have been no changes to our ~~consolidated financial statements.~~

~~Accounts Receivable~~critical accounting policies and ~~Allowance for Doubtful Accounts, Returns, and Deductions.~~ Accounts receivable are customer obligations due under normal trade terms. The Company records accounts receivable at their net realizable value, which requires management to estimate the collectability of the Company’s receivables. Judgment is required in assessing the realization of these receivables, including the credit worthiness of each counterparty and the related aging of past due balances. Management provides for an allowance for doubtful accounts equal to the estimated uncollectable amounts, in addition to a general provision basedestimates since our Annual Report on ~~historical experience. Management provides~~Form 10-K for the customer accommodations based upon a general provision of 11% percentage of sales in addition to known deductions. The estimates are based on collection experience and a review of trade accounts. As of June 30, 2022 andyear ended December 31, 2021, the allowance for doubtful accounts and returns and deductions totaled $1,350,080 and $1,236,497, respectively. Total bad debt expense for the three months ended three months ended June 30, 2022 and 2021 was $288,623 and $262,888, respectively.2022.

As of June 30,

As of December 31,

(In thousands)

2022

2021

2021

2020

Beginning balance

$
1,236

$
1,603

$
1,603

$
688

Provisions

456

254

$
1,154

$
915

Write-offs/ reversals

(474
)

(559
)

$
(1,521
)

$
—

Ending balance

$
1,218

$
1,298

$
1,236

$
1,603

~~Reporting Unit Analysis~~

The Company presents a single segment for purposes of financial reporting and prepared its consolidated financial statements upon that basis. The Company considered ASC 350-20-35-35 related to reporting unit determination and the aggregation of components into one reporting unit.

~~The economic characteristics considered were whether:~~

~~1) The nature of the products and services are similar~~

~~2) The type of class of customer for products and services are similar~~

~~3) The methods used to distribute the products or provide the services are similar~~

~~4) The manner in which an entity operates and the nature of those operations is similar~~

~~Currently, the Company has one reporting unit due to the similarity of its components when evaluated against the aforementioned economic characteristics.~~

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Stryve’s future income, cash flows and fair values relevant to financial instruments are dependent upon prevalent market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates.

Concentration of credit risk. The balance sheet items that potentially subject the Company to concentrations of credit risk are primarily cash ~~accounts receivable,~~ and accounts ~~payable.~~receivable. The Company continuously evaluates the credit worthiness of its customers’ financial condition and generally does not require collateral. The Company maintains cash balances in bank accounts that may, at times, exceed Federal Deposit Insurance Corporation (“FDIC”) limits of $250,000 per institution. The Company incurred no losses from such accounts and management considers the risk of loss to be minimal.

As of and for the six months ended June 30, ~~2022,~~2023, customer and vendor concentrations in excess of 10% consolidated sales, purchases accounts receivable, and accounts payable are as follows:


	Sales	Purchases	Accounts Receivable	Accounts Payable	Sales	Purchases	Accounts Receivable	Accounts Payable
Customer A	46%	—	22%	—	23%	—	23%	—
Customer B	—	—	29%	—	18%	—	—	—
Customer C					10%	—	10%	—
Customer D					—	—	10%	—
Vendor A	—	12%	—	—	—	36%	—	—
Vendor B	—	—	—	13%	—	24%	—	—
Vendor C					—	21%	—	—

Interest rate risk. Stryve is subject to interest rate risk in connection with borrowing based on a variable interest rate. Derivative financial instruments, such as interest rate swap agreements and interest rate cap agreements, are not currently but may be used for the purpose of managing fluctuating interest rate exposures that exist from Stryve’s variable rate debt obligations that are expected to remain outstanding. Interest rate changes do not affect the market value of such debt, but could impact the amount of Stryve’s interest payments, and accordingly, Stryve’s future earnings and cash flows, assuming other factors are held constant. Additionally, changes in prevailing market interest rates may affect Stryve’s ability to refinance existing debt or secure new debt financing. Notwithstanding the foregoing,

management acknowledges that both foreign and domestic central bank actions as well as geopolitical uncertainty and conflict, such as Russia's ~~recent~~ invasion of Ukraine, may have unpredictable effects on the Company's exposure to interest rate risk either directly or indirectly.

Foreign currency risk. Stryve is exposed to changes in currency rates as a result of its revenue generated in currencies other than U.S. dollars. Revenue and profit generated by international operations will increase or decrease compared to prior periods as a result of changes in foreign currency exchange rates. However, the operations that are impacted by foreign currency risk are less than 5% of Stryve’s net ~~income (loss)~~loss for the six months ended June 30, ~~2022~~2023 and the ~~52-week period~~year ended December 31, ~~2021~~2022 and therefore, the risk of this is ~~insignificant.~~not significant. Notwithstanding the foregoing, management acknowledges that both foreign and domestic central bank actions as well as geopolitical uncertainty and conflict, such as Russia's ~~recent~~ invasion of Ukraine, may have unpredictable effects on the Company's exposure to foreign currency risk either directly or indirectly.

Raw material risk. Stryve’s profitability depends, among other things, on its ability to anticipate and react to raw material costs, primarily beef. The price of beef and other raw materials are subject to many factors beyond Stryve’s control, including general economic

conditions, inflation, processing labor shortages, cost of feed, demand, natural disasters, weather and other factors that may affect beef supply chain participants. Changes in the prices of beef and other raw materials have already negatively affected Stryve's results of operations, and any continued or further changes could have a material impact on Stryve’s business, financial condition and results of operations. Notwithstanding the foregoing, management acknowledges that both foreign and domestic central bank actions as well as geopolitical uncertainty and conflict, such as Russia’s ~~recent~~ invasion of Ukraine, may have unpredictable effects on the Company's exposure to raw material commodity risks.

Inflation risk. Inflation may impact Stryve’s revenue and cost of services and products, Stryve believes the effects of inflation ~~if any,~~ on its business, financial condition and results of operations have been material to date which management hopes to alleviate through mitigating strategies. However, there can be no assurance that any mitigation strategies management employs will be effective or that its business, financial condition and results of operations will not be materially impacted by continued inflation in the future. Notwithstanding the foregoing, management acknowledges that both foreign and domestic central bank actions as well as geopolitical uncertainty and conflict, such as Russia’s ~~recent~~ invasion of Ukraine, may have unpredictable effects on the Company's exposure to inflation risk either directly or indirectly.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains a system of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act") designed to ensure that the information required to be disclosed by the Company in the reports that are filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and is accumulated and communicated to our management, including our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), as appropriate, to allow timely decisions regarding required disclosure.

The Company's management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures under the Exchange Act as of June 30, ~~2022,~~2023, the end of the period covered by this report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, as identified in connection with the evaluation required by Rule 13a-15(d) and Rule 15d-15(d) of the Exchange Act, that occurred during the three months ended June 30, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3435

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of its business. WeExcept as set forth in Note 12 to our condensed consolidated financial statements, we are not currently a party to any material legal proceedings. Regardless of outcome, such proceedings or claims can have an adverse impact on us because of defense and settlement costs, diversion of resources and other factors and there can be no assurances that favorable outcomes will be obtained.

Item 1A. Risk Factors

There have been no material changes to the factors disclosed in Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

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

~~During~~Lender Warrants

On April 19, 2023, we issued an aggregate of $4.1 million in principal amount of secured promissory notes (the “Notes”) to select accredited investors (including certain members of the ~~three-months ended June 30, 2022, 3,553,589 pre-funded~~Company’s management and Board of Directors) (the “Lenders”). The Notes accrue interest annually at a rate of 12% and will mature upon the earlier of (i) December 31, 2023, or (ii) the closing of the next sale (or series of related sales) by the Company of its equity securities (other than pursuant to warrants ~~were exercised~~described below), following the date of the Notes, from which the Company receives gross proceeds of not less than $3.0 million. The Notes are secured by a security interest on substantially all the assets of the Company that is subordinate to the security interests of the Company’s existing first and second lien lenders.

Each Lender that purchased Notes received a warrant (the “Warrants”) to purchase 1/15th of a share of the Company’s Class A common stock for each $0.5134 of principal amount of the Notes, for an aggregate of ~~3.553.589 shares~~7,964,550 Warrants. Each Warrant is exercisable immediately, has an exercise price per share of Class A common ~~stock. The~~stock equal to $7.701 per whole share and will expire three years and three months from the date of issuance and may be exercised ~~pre-funded warrants do~~on a cashless basis if a registration statement registering the resale of the shares issuable upon exercise is not ~~affect the EPS calculation as pre-funded warrants are included in the weighted EPS calculation.~~effective.

The securities were issued in reliance on the exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended, and/or Regulation D promulgated thereunder. Each Lender has represented that it is an accredited investor, as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended.

At-The-Market Facility

Item 3. Defaults Upon Senior ~~Securities~~.Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other ~~Information~~.Information.

~~None.~~During the three months ended June 30, 2023, there were no modifications, adoptions or terminations by any directors or officers to any contract, instruction or written plan for the purchase or sale of securities of the Company that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or non-Rule 10b5-1 trading agreements.

3536

Item 6. Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.


Exhibit No.		Document
3.1		First Certificate of Amendment to First Amended and Restated Certificate of Incorporation (Incorporated herein by reference to the Registrant’s Current Report on Form 8-K filed on July 13, 2023)
4.1		Form of Warrant (Incorporated herein by reference to the Registrant’s Current Report on Form 8-K filed on April 21, 2023)
10.1		Form of Note (Incorporated herein by reference to the Registrant’s Current Report on Form 8-K filed on April 21, 2023)
31.1*		Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		Inline XBRL Instance Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

* Furnished.

3637

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	STRYVE FOODS, INC. ~~(f/k/a ANDINA ACQUISITION CORP. III)~~

Date: August~~15, 2022~~ 14, 2023	By:	/s/ Christopher Boever
	Name:	Christopher Boever
	Title:	Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ R. Alex Hawkins
	Name:	R. Alex Hawkins
	Title:	Chief Financial Officer
		(Principal Financial Officer)

3738


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock	SNAX	The NASDAQ Stock Market LLC
Warrants, each exercisable for 1/15th of one share of Class A common stock at an exercise price of ~~$11.50~~$172.50 per whole share	SNAXW	The NASDAQ Stock Market LLC


	June 30,			December 31,
	2023			2022
ASSETS	(Unaudited)
CURRENT ASSETS
Cash and cash equivalents	$	320,182		$	623,163
Accounts receivable, net		2,972,643			2,488,693
Inventory, net		8,351,295			8,258,642
Prepaid expenses and other current assets		1,071,912			1,550,717
Total current assets		12,716,032			12,921,215

Property and equipment, net		7,896,713			8,816,573
Right of use asset, net		4,812,977			5,009,954
Goodwill		8,450,000			8,450,000
Intangible asset, net		4,240,857			4,362,024
TOTAL ASSETS	$	38,116,579		$	39,559,766

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	4,512,232		$	3,009,875
Accrued expenses		1,815,200			1,727,555
Current portion of lease liability		337,829			327,915
Line of credit, net of debt issuance costs		882,174			1,046,101
Promissory notes payable, net of debt discount and debt issuance costs		2,246,307			—
Promissory notes payable due to related parties, net of debt discount and debt issuance costs		854,678			—
Current portion of long-term debt and other short-term borrowings		273,359			969,421
Total current liabilities		10,921,779			7,080,867

Long-term debt, net of current portion, net of debt issuance costs		5,604,568			3,696,578
Lease liability, net of current portion		4,558,100			4,734,128
Financing obligation - related party operating lease		7,500,000			7,500,000
Deferred tax liability, net		1,555			1,555
Deferred stock compensation liability		167,883			89,828
Warrant liability		1,975			20,625
TOTAL LIABILITIES		28,755,860			23,123,581

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock - $0.0001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding		—			—
Class A common stock - $0.0001 par value, 400,000,000 shares authorized, 1,757,588 and 1,715,186 shares issued and outstanding, respectively		176			171
Class V common stock - $0.0001 par value, 15,000,000 shares authorized, 405,313 and 419,974 shares issued and outstanding		41			42
Additional paid-in-capital		135,563,491			133,687,588
Accumulated deficit		(126,202,989	)		(117,251,616	)
TOTAL STOCKHOLDERS' EQUITY		9,360,719			16,436,185

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	38,116,579		$	39,559,766


	June 30,			December 31,
	2022			2021
ASSETS	(Unaudited)
CURRENT ASSETS
Cash and cash equivalent	$	5,011,077		$	2,217,191
Accounts receivable, net		4,255,802			2,900,281
Inventory, net		6,652,527			7,215,981
Prepaid media spend, net of reserve		—			450,000
Prepaid expenses and other current assets		1,689,297			2,255,539
Total current assets		17,608,703			15,038,992

Property and equipment, net		8,015,522			6,825,895
Right of use asset, net		669,043			767,382
Goodwill		8,450,000			8,450,000
Intangible asset, net		4,483,191			4,604,359
Prepaid media spend, net of reserve and net of current portion		—			1,084,548
Other assets		—			4,192
TOTAL ASSETS	$	39,226,459		$	36,775,368

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable		2,557,320		$	3,097,516
Accrued expenses		2,568,054			1,634,978
Current portion of lease liability		210,901			168,482
Line of credit		-			3,500,000
Current portion of long-term debt		122,023			3,447,056
Total current liabilities		5,458,298			11,848,032

Long-term debt, net of current portion		35,829			119,542
Lease liability, net of current portion		491,399			598,900
Financing obligation - related party operating lease		7,500,000			7,500,000
Deferred tax liability, net		67,223			67,223
Deferred stock compensation liability		504,810			71,197
Warrant liability		43,065			128,375
TOTAL LIABILITIES		14,100,624			20,333,269

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock - $0.0001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding		—			—
Class A common stock - $0.0001 par value, 400,000,000 shares authorized, 16,750,794 and 8,633,755 shares issued and outstanding, respectively		1,675			863
Class V common stock - $0.0001 par value, 200,000,000 shares authorized, 11,502,355 shares issued and outstanding		1,150			1,150
Additional paid-in-capital		132,902,242			100,551,257
Accumulated deficit		(107,779,232	)		(84,111,171	)
TOTAL STOCKHOLDERS' EQUITY		25,125,835			16,442,099

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	39,226,459		$	36,775,368



	Class A Common Stock				Class V Common Stock						Additional		Accumulated
	Shares		Amount		Shares			Amount			Paid-in-Capital		Deficit			Total
BALANCE, JANUARY 1, 2023		1,714,973	$	172		419,941		$	42		$	133,687,587	$	(117,251,616	)	$	16,436,185
Exchange of Class B units and Class V shares for Class A shares		10,241		1		(10,241	)		(1	)		—		—			—
Net loss		—		—		—			—			—		(4,642,556	)		(4,642,556	)
BALANCE, MARCH 31, 2023		1,725,214	$	173		409,700		$	41		$	133,687,587	$	(121,894,172	)	$	11,793,629
Exchanged BV for Class A shares		4,387		—		(4,387	)		—			—		—			—
Issuance of Restricted Stock Awards		26,814		3		—			—			477,155		—			477,158
Issuance of Restricted Stock Units		1,173		—		—			—			62,752		—			62,752
Issuance of Warrants in connection with Debt Instrument		—		—		—			—			1,335,997		—			1,335,997
Net loss		—		—		—			—			—		(4,308,817	)		(4,308,817	)
BALANCE, JUNE 30, 2023		1,757,588	$	176		405,313		$	41		$	135,563,491	$	(126,202,989	)	$	9,360,719



	Common Stock Class A				Common Stock Class B/V				Additional			Accumulated
	Shares		Amount		Shares		Amount		Paid-in-Capital			Deficit			Total
BALANCE, JANUARY 1, 2022		8,633,755	$	863		11,502,355	$	1,150	$	100,551,257		$	(84,111,171	)	$	16,442,099

PIPE Investment		2,496,934		250		—		—		32,310,937			—			32,311,187
Prefunded Warrants converted into Common Stock Class A		1,443,557		144		—		—		(69	)		—			75

Post closing adjustment of BCA		—		—		—		—		(238,089	)		—			(238,089	)

Issuance of Restricted Stock Awards		108,500		11		—		—		36,698			—			36,709

Net loss		—		—		—		—		—			(7,313,742	)		(7,313,742	)

BALANCE, MARCH 31, 2022		12,682,746		1,268		11,502,355		1,150		132,660,734			(91,424,913	)		41,238,239

Prefunded Warrant converted into Common Stock Class A		3,553,589		356		—		—		(96	)		—			259

Issuance of Restricted Stock Awards		501,125		50		—		—		172,802			—			172,852
Issuance of Restricted Stock Units		13,334		1		—		—		68,802			—			68,803

Net Loss		—		-		—		—		—			(16,354,319	)		(16,354,319	)

BALANCE, JUNE 30, 2022		16,750,794		1,675		11,502,355		1,150		132,902,242			(107,779,232	)		25,125,835


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


	Page
Part I. Financial Information	1
Item 1. Unaudited Condensed Consolidated Financial Statements	1
Condensed Consolidated Balance Sheets	1
Condensed Consolidated Statements of Operations	2
Condensed Consolidated Statements of Changes in Stockholders’ Equity ~~(Deficit)~~	3
Condensed Consolidated Statements of Cash Flows	5
Notes to ~~Unaudited~~ Condensed Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2023
Item 3. Quantitative and Qualitative Disclosures ~~Regarding~~About Market Risk	3334
Item 4. Controls and Procedures	3435
Part II. Other Information	3536
Item 1. Legal Proceedings	3536
Item 1A. Risk Factors	3536
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	3536
Item 3. Defaults Upon Senior Securities	3536
Item 4. Mine Safety Disclosures	3536
Item 5. Other Information	3536
Item 6. Exhibits	3637
Part III. Signatures	3738


Condensed Statement of Changes in Stockholders' Deficit
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021


	Common Stock Class B/V						Additional			Accumulated
	Shares			Amount			Paid-in-Capital			Deficit			Total

BALANCE, JANUARY 1, 2021		10,152,020		$	1,015		$	42,783,367		$	(52,121,249	)	$	(9,336,867	)

Repurchase of member shares		(12,598	)		(1	)	$	(99,949	)		—			(99,950	)

Net loss		—			—			—			(5,761,151	)	$	(5,761,151	)

BALANCE, MARCH 31, 2021		10,139,422		$	1,014		$	42,683,418		$	(57,882,400	)	$	(15,197,968	)

Net loss		—			—			—			(5,560,717	)	$	(5,560,717	)

BALANCE, JUNE 30, 2021		10,139,422		$	1,014		$	42,683,418		$	(63,443,117	)	$	(20,758,685	)


	For The Six Months Ended June 30,			For The Six Months Ended June 30,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(23,668,061	)	$	(11,321,867	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		826,558			667,485
Amortization of intangible assets		121,167			124,071
Amortization of debt issuance costs		—			280,798
Amortization of right-of-use asset		98,340
Gain on disposal of fixed assets		(24,012	)		(8,578	)
Gain on debt extinguishment		—			(545,200	)
Prepaid media reserve		1,489,028			—
Obsolete inventory reserve		821,782			—
Interest income on members loan receivable		—			(24,547	)
Bad debt expense		288,623			262,888
Forgiveness on paycheck protection program loan		—			(1,669,552	)
Stock based compensation expense		711,978			—
Change in fair value of Private Warrants		(85,310	)		—
Changes in operating assets and liabilities:
Accounts receivable		(1,644,144	)		(2,727,652	)
Inventory		(258,328	)		(1,433,481	)
Vendor deposits		4,193			—
Prepaid media spend		45,520			(170,632	)
Prepaid expenses and other current assets		566,241			(800,209	)
Accounts payable		(540,196	)		1,645,302
Accrued liabilities		933,077			278,621
Operating lease payments		(65,083	)		-
Net cash used in operating activities		(20,378,627	)		(15,442,553	)

CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for purchase of equipment		(2,033,174	)		(249,048	)
Cash received for sale of equipment		41,000			73,681
Net cash used in investing activities		(1,992,174	)		(175,367	)

CASH FLOWS FROM FINANCING ACTIVITIES
PIPE capital raise		32,311,187			—
Exercise of Prefunded Warrants		334			—
Repurchase of member shares		—			(99,950	)
Post closing adjustment of BCA		(238,089	)		—
Repayments on long-term debt		(4,908,745	)		(4,360,359	)
Borrowings on related party debt		—			9,294,000
Repayments on related party debt		—			(7,793,604	)
Borrowings on short-term debt		—			19,694,550
Repayments on short-term debt		(2,000,000	)		—
Debt issuance costs		—			(507,166	)
Net cash provided by financing activities		25,164,687			16,227,471

Net change in cash and cash equivalents		2,793,886			609,551
Cash and cash equivalents at beginning of period		2,217,191			591,634
Cash and cash equivalents at end of period	$	5,011,077			1,201,185

SUPPLEMENTAL INFORMATION:
Cash paid for interest		403,121			1,506,847


	Six Months Ended June 30,		Period Ended June 30,
	2022	2021	2022	2021
	Sales		Accounts Receivable
Customer A	46%	—	22%	—
Customer B	—	—	29%	—
Customer C	—	15%	—	23%
Customer D		—	—	13%
Customer E	—	12%	—	—


	June 30, 2023		December 31, 2022
Raw materials	$	1,628,508	$	1,614,712
Work in process		1,286,417		308,569
Finished goods		5,436,370		6,335,361
Total Inventory, net	$	8,351,295	$	8,258,642


	As of		As of
	June 30, 2022		December 31, 2021
Raw materials	$	2,471,495	$	2,188,284
Work in process		1,918,469		2,128,894
Finished goods		2,262,563		2,898,803
Total Inventory, net	$	6,652,527	$	7,215,981


	●	at any time while the public warrants are exercisable,

	●	upon not less than 30 days’ prior written notice of redemption to each public warrant holder,

	●	if, and only if, the reported last sale price of shares of Class A common stock equals or exceeds $~~18.00~~270.00 per share, for any 20 trading days within a 30-trading day period ending on the third business day prior to the notice of redemption to public warrant holders, and

	●	if, and only if, there is a current registration statement in effect with respect to shares of Class A common stock underlying such public warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption.


Nonvested Restricted Stock Units
				Weighted Average
	Restricted Stock			Award Date Fair Value
	Units			Per Share
Restricted Stock at January 1, 2022		399,000		$	5.20
Added		-			—
Forfeiture		(35,166	)		5.16
Vested		-			—
Restricted Stock at June 30, 2022		363,834		$	5.21


Nonvested Restricted Stock Awards
				Weighted Average					Weighted Average
	Restricted Stock			Award Date Fair Value		Director			Award Date Fair Value
	Awards			Per Share		Stock Awards			Per Share
Restricted Stock at January 1, 2022		328,500		$	5.31		-		$	—
Added		550,000		$	1.29		59,625		$	2.48
Forfeiture		—			—		—		$	—
Vested		(43,750	)	$	5.43		(33,875	)	$	2.46
Restricted Stock at June 30, 2022		834,750		$	2.90		25,750		$	2.51


	Level 1:	Observable inputs such as quoted prices (unadjusted), for identical instruments in active markets.
	Level 2:	Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
	Level 3:	Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.


Description	Level		June 30, 2022		December 31, 2021		Level		June 30, 2023		December 31, 2022
Liabilities:
Warrant liability - Private Warrants		3	$	43,065	$	128,375		3	$	1,975	$	20,625


Input	June 30, 2022
Risk-free interest rate		3.0	%
Dividend yield		0.0	%
Selected volatility		79.6	%
Exercise price	$	11.50
Market stock price	$	0.88


Warrant Fair Values	Private
Fair value as of December 31, 2021	$	128,375
Change in fair value		(85,310	)
Fair value as of June 30, 2022	$	43,065


Warrant Fair Values	Private
Fair value as of December 31, 2022	$	20,625
Change in fair value		(18,650	)
Fair value as of June 30, 2023	$	1,975


	Three Months Ended						Three Months Ended
	June 30, 2022						June 30, 2021
	(unaudited)						(unaudited)
(In thousands)				% of sales						% of sales
Net sales	$	10,946			100.0	%		7,351			100.0	%
Cost of goods sold (exclusive of depreciation shown separately below)		15,371			140.4	%		3,770			51.3	%
Gross profit (loss)	$	(4,425	)		(40.4	)%	$	3,581			48.7	%

Operating expenses
Selling and marketing expenses	$	4,717			43.1	%	$	5,593			76.1	%
Operations expense		1,350			12.3	%		970			13.2	%
Salaries and wages		3,510			32.1	%		1,602			21.8	%
Depreciation and amortization expense		503			4.6	%		397			5.4	%
Prepaid media reserve		1,489			13.6	%		—			—
Gain on disposal of fixed assets		(24	)		(0.2	)%		(10	)		(0.1	)%
Total operating expenses		11,545			105.5	%		8,552			116.3	%
Operating loss		(15,970	)		(145.9	)%		(4,971	)		(67.6	)%

Other income (expense):
Interest expense		(181	)		(1.7	)%		(1,147	)		(15.6	)%
PPP loan forgiveness		—			—			—			—
Change in fair value of Private Warrants		40			0.4	%		—			—
Gain on debt extinguishment		—			—			545			7.4	%
Other income		(215	)		(2.0	)%		12			0.2	%
Total other income (expense)		(356	)		(3.3	)%		(590	)		(8.0	)%
Net loss before income taxes	$	(16,326	)		(149.1	)%	$	(5,561	)		(75.6	)%


	Six Months Ended						Six Months Ended
	June 30, 2022						June 30, 2021
	(unaudited)						(unaudited)
(In thousands)				% of sales						% of sales
Net sales	$	18,367			100.0	%	$	14,186			100.0	%
Cost of goods sold (exclusive of depreciation shown separately below)		21,668			118.0	%		7,927			55.9	%
Gross profit (loss)	$	(3,301	)		(18.0	)%	$	6,259			44.1	%

Operating expenses
Selling and marketing expenses	$	8,743			47.6	%	$	12,047			84.9	%
Operations expense		2,580			14.0	%		2,030			14.3	%
Salaries and wages		6,096			33.2	%		3,003			21.2	%
Depreciation and amortization expense		948			5.2	%		792			5.6	%
Prepaid media reserve		1,489			8.1	%		—			—
Gain on disposal of fixed assets		(24	)		(0.1	)%		(9	)		(0.1	)%
Total operating expenses		19,832			108.0	%		17,863			125.9	%
Operating loss		(23,133	)		(125.9	)%		(11,604	)		(81.8	)%

Other income (expense):
Interest expense		(369	)		(2.0	)%		(1,957	)		(13.8	)%
PPP loan forgiveness		—			—			1,670			11.8	%
Change in fair value of Private Warrants		85			0.5	%		—			—
Gain on debt extinguishment		—			—			545			3.8	%
Other income		(215	)		(1.2	)%		24			0.2	%
Other income (expense)		(499	)		(2.7	)%		282			2.0	%
Net loss before income taxes	$	(23,632	)		(128.7	)%	$	(11,322	)		(79.8	)%


	As of June 30,			As of December 31,
	2022			2021
Long term debt	$	158		$	1,567
Short term debt		—			2,000
Line of credit (Note 5)		—			3,500
Total notes payable		158			7,067
Less: current portion		(122	)		(3,447	)
Less: line of credit		—			(3,500	)
Total notes payable, net of current portion	$	36		$	120


	As of June 30,						As of December 31,
(In thousands)	2022			2021			2021			2020
Beginning balance	$	1,236		$	1,603		$	1,603		$	688
Provisions		456			254		$	1,154		$	915
Write-offs/ reversals		(474	)		(559	)	$	(1,521	)	$	—
Ending balance	$	1,218		$	1,298		$	1,236		$	1,603