........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................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.....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................wf

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

[X]

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

For the quarter ended March 31, 2019September 30, 2023

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

For the transition period from to

Commission file number:001-38785

STRYVE FOODS, INC.

(Exact Name of Registrant as Specified in Its Charter)

ANDINA ACQUISITION CORP. III
(Exact Name of Registrant as Specified in Its Charter)

Cayman IslandsN/A

Delaware

87-1760117

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

Calle 113 # 7-45 Torre BPost Office Box 864

Oficina 1012Frisco, TX75034

Bogotá, Colombia

(Address of principal executive offices)

(646) 565-3861(972) 987-5130

(Issuer’s telephone number)

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

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 $172.50 per whole share

SNAXW

The NASDAQ Stock Market LLC

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 [X] 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 [X] 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.

Large accelerated filer

[  ]

Accelerated filer

[  ]

Non-accelerated filer

[X]

Smaller reporting company

[  ]

Emerging growth company

[X]

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 [X] No [  ]

Securities registered pursuant to Section 12(b)As of November 7, 2023, 1,995,480 shares of the Act:

Title of each classTrading Symbol(s)

Name of each exchange on

which registered

Units, each consisting of one ordinary share, one right, and one redeemable warrantANDAUThe NASDAQ Stock Market LLC
Ordinary Shares,registrant’s Class A common stock, $0.0001 par value, and 404,276 shares of the registrant’s Class V common stock, $0.0001 par value, $0.0001 per shareANDAThe NASDAQ Stock Market LLC
Rights, each to receive one-tenth (1/10) of one ordinary shareANDARThe NASDAQ Stock Market LLC
Redeemable warrants, exercisable for ordinary shares at a price of $11.50 per shareANDAWThe NASDAQ Stock Market LLC

As of May 14, 2019, 13,895,000 ordinary shares, par value $0.0001 per share, were issued and outstanding.


STRYVE FOODS, INC.

ANDINA ACQUISITION CORP. III

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2019SEPTEMBER 30, 2023

TABLE OF CONTENTS

Page

Page

Part I. Financial Information

1

Item 1. Unaudited Condensed Consolidated Financial Statements

1

Condensed Consolidated Balance Sheets

3

1

Condensed Consolidated Statements of Operations

4

2

Condensed Consolidated Statements of Changes in Shareholders’Stockholders’ Equity

5

3

Condensed Consolidated Statements of Cash Flows

6

5

Notes to Unaudited Condensed Consolidated Financial Statements

7

6

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

15

24

Item 3. Quantitative and Qualitative Disclosures RegardingAbout Market Risk

17

36

Item 4. Controls and Procedures

17

37

Part II. Other Information

38

Item 1. Legal Proceedings

38

Item 1A. Risk Factors

38

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

18

38

Item 3. Defaults Upon Senior Securities

38

Item 4. Mine Safety Disclosures

38

Item 5. Other Information

38

Item 6. Exhibits

18

39

Part III. Signatures

19

40

ANDINA ACQUISITION CORP. III

i


PART I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

STRYVE FOODS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

  March 31,  December 31, 
  2019  2018 
  (unaudited)  (audited) 
ASSETS        
Current Assets        
Cash $526,236  $ 
Prepaid expenses  140,141    
Total Current Assets  666,377    
         
Deferred offering costs     156,276 
Marketable securities held in Trust Account  108,413,905    
Total Assets $109,080,282  $156,276 
         
LIABILITIES AND SHAREHOLDERS’ EQUITY        
Current liabilities        
Account payable and accrued expenses $29,963  $10,075 
Accrued offering costs     43,700 
Advance from related party     72,239 
Promissory note – related party     34,259 
Total Current Liabilities  29,963   160,273 
         
Commitments        
         
Ordinary shares subject to possible redemption, 10,365,307 shares at redemption value at March 31, 2019  104,050,316    
         
Shareholders’ Equity        
Preferred shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding      
Ordinary shares, $0.0001 par value; 100,000,000 shares authorized; 3,529,693 and 2,875,000 shares issued and outstanding (excluding 10,365,307 and -0- shares subject to possible redemption) at March 31, 2019 and December 31, 2018, respectively(1)  353   287 
Additional paid-in capital  4,719,880   24,713 
Retained earnings (Accumulated deficit)  279,770   (28,997)
Total Shareholders’ Equity  5,000,003   (3,997)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $109,080,282  $156,276 

 

 

September 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

ASSETS

 

(Unaudited)

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

226,475

 

 

$

623,163

 

Accounts receivable, net

 

 

3,045,723

 

 

 

2,488,693

 

Inventory, net

 

 

6,273,367

 

 

 

8,258,642

 

Prepaid expenses and other current assets

 

 

1,017,331

 

 

 

1,550,717

 

Total current assets

 

 

10,562,896

 

 

 

12,921,215

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

7,491,276

 

 

 

8,816,573

 

Right of use asset, net

 

 

4,712,825

 

 

 

5,009,954

 

Goodwill

 

 

8,450,000

 

 

 

8,450,000

 

Intangible asset, net

 

 

4,180,273

 

 

 

4,362,024

 

TOTAL ASSETS

 

$

35,397,270

 

 

$

39,559,766

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Accounts payable

 

$

3,971,356

 

 

$

3,009,875

 

Accrued expenses

 

 

2,407,248

 

 

 

1,727,555

 

Current portion of lease liability

 

 

349,847

 

 

 

327,915

 

Line of credit, net of debt issuance costs

 

 

2,754,443

 

 

 

1,046,101

 

Promissory notes payable, net of debt discount and debt issuance costs

 

 

2,580,156

 

 

 

 

Promissory notes payable due to related parties, net of debt discount and debt issuance costs

 

 

1,014,836

 

 

 

 

Current portion of long-term debt and other short-term borrowings

 

 

736,242

 

 

 

969,421

 

Total current liabilities

 

 

13,814,128

 

 

 

7,080,867

 

 

 

 

 

 

 

 

Long-term debt, net of current portion, net of debt issuance costs

 

 

3,519,933

 

 

 

3,696,578

 

Lease liability, net of current portion

 

 

4,467,894

 

 

 

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

 

 

358,390

 

 

 

89,828

 

Warrant liability

 

 

790

 

 

 

20,625

 

TOTAL LIABILITIES

 

 

29,662,690

 

 

 

23,123,581

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES (Note 12)

 

 

 

 

 

 

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, 1,968,482 and 1,714,973 shares issued and outstanding, respectively

 

 

196

 

 

 

172

 

Class V common stock - $0.0001 par value, 15,000,000 shares authorized, 405,313 and 419,941 shares issued and outstanding

 

 

41

 

 

 

42

 

Additional paid-in-capital

 

 

136,716,539

 

 

 

133,687,587

 

Accumulated deficit

 

 

(130,982,196

)

 

 

(117,251,616

)

TOTAL STOCKHOLDERS' EQUITY

 

 

5,734,580

 

 

 

16,436,185

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

35,397,270

 

 

$

39,559,766

 

(1)As of December 31, 2018, this amount included an aggregate of 375,000 shares that were subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full. As a result of the underwriters’ election to partially exercise their over-allotment option in January 2019, an aggregate of 200,000 shares were no longer subject to forfeiture and 175,000 shares were subject to forfeiture to the extent that the underwriters’ over-allotment was not exercised in full. The remaining over-allotment option expired unexercised on March 17, 2019 (see Note 7).

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

ANDINA ACQUISITION CORP. III

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

  

Three Months Ended

March 31,

 
  2019  2018 
       
Operating costs $105,138  $1,797 
Loss from operations  (105,138)  (1,797)
         
Other income:        
Interest income  413,855    
Unrealized gain on marketable securities held in Trust Account  50    
Other income  413,905    
         
Net income (loss) $308,767  $(1,797)
         
Weighted average shares outstanding, basic and diluted(1)  3,169,234   2,500,000 
         
Basic and diluted net loss per ordinary share(2) $(0.03) $(0.00)

(1)Excludes an aggregate of up to 10,365,307 shares subject to possible redemption at March 31, 2019. As of March 31, 2018, this amount excluded an aggregate of 375,000 shares that were subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full. As a result of the underwriters’ election to partially exercise their over-allotment option in January 2019, an aggregate of 200,000 shares were no longer subject to forfeiture and 175,000 shares were subject to forfeiture to the extent that the underwriters’ over-allotment was not exercised in full. The remaining over-allotment option expired unexercised on March 17, 2019 (see Note 7).
(2)Net income (loss) per ordinary share – basic and diluted excludes income attributable to ordinary shares subject to possible redemption of $397,266 for the three months ended March 31, 2019 (see Note 2).

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

ANDINA ACQUISITION CORP. III1


STRYVE FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITYOPERATIONS

(Unaudited)

  Ordinary Shares  Additional Paid  Accumulated  Total Shareholders’ 
  Shares  Amount  in Capital  Deficit  Equity 
Balance – January 1, 2018  2,875,000  $287  $24,713  $(14,225) $10,775 
                     
Net loss           (1,797)  (1,797)
                     
Balance – March 31, 2018 (unaudited)  2,875,000  $287  $24,713  $(16,022) $8,978 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

SALES, net

 

$

4,180,193

 

 

$

6,170,468

 

 

$

14,822,987

 

 

$

24,537,180

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF GOODS SOLD (exclusive of depreciation shown separately below)

 

 

3,624,236

 

 

 

4,786,054

 

 

 

12,253,094

 

 

 

26,453,793

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT (LOSS)

 

 

555,957

 

 

 

1,384,414

 

 

 

2,569,893

 

 

 

(1,916,613

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling expenses

 

 

1,771,042

 

 

 

2,640,667

 

 

 

5,518,325

 

 

 

12,872,928

 

 

Operations expense

 

 

325,829

 

 

 

1,084,596

 

 

 

1,464,708

 

 

 

3,664,135

 

 

Salaries and wages

 

 

1,572,177

 

 

 

1,939,670

 

 

 

5,204,637

 

 

 

8,035,646

 

 

Depreciation and amortization expense

 

 

552,169

 

 

 

518,240

 

 

 

1,656,049

 

 

 

1,465,966

 

 

Gain on disposal of fixed assets

 

 

(11,000

)

 

 

(50,280

)

 

 

(9,705

)

 

 

(74,292

)

 

Total operating expenses

 

 

4,210,217

 

 

 

6,132,893

 

 

 

13,834,013

 

 

 

25,964,383

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING LOSS

 

 

(3,654,260

)

 

 

(4,748,479

)

 

 

(11,264,120

)

 

 

(27,880,996

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER (EXPENSE) INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(1,121,274

)

 

 

(189,794

)

 

 

(2,484,004

)

 

 

(558,825

)

 

Change in fair value of Private Warrants

 

 

1,185

 

 

 

14,644

 

 

 

19,835

 

 

 

99,954

 

 

Other income (expense)

 

 

2,423

 

 

 

(43,470

)

 

 

(4,533

)

 

 

(258,853

)

 

Total other (expense) income

 

 

(1,117,666

)

 

 

(218,620

)

 

 

(2,468,702

)

 

 

(717,724

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS BEFORE INCOME TAXES

 

 

(4,771,926

)

 

 

(4,967,099

)

 

 

(13,732,822

)

 

 

(28,598,720

)

 

Income tax expense (benefit)

 

 

7,281

 

 

 

507

 

 

 

(2,242

)

 

 

36,948

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

$

(4,779,207

)

 

$

(4,967,606

)

 

$

(13,730,580

)

 

$

(28,635,668

)

 

Loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(2.14

)

 

$

(2.40

)

 

$

(6.41

)

 

$

(14.05

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

2,237,211

 

 

 

2,066,130

 

 

 

2,143,336

 

 

 

2,037,895

 

 

(1)As of March 31, 2018, this amount included an aggregate of 375,000 shares that were subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full. As a result of the underwriters’ election to partially exercise their over-allotment option in January 2019, an aggregate of 200,000 shares were no longer subject to forfeiture and 175,000 shares were subject to forfeiture to the extent that the underwriters’ over-allotment was not exercised in full. The remaining over-allotment option expired unexercised on March 17, 2019 (see Note 7).

  Ordinary Shares  Additional Paid  (Accumulated Deficit)/ Retained  Total
Shareholders’ Equity
 
  Shares  Amount  in Capital  Earnings  (Deficit) 
Balance – January 1, 2019  2,875,000  $287  $24,713  $(28,997) $(3,997)
                     
Sale of 10,800,000 Units, net of underwriting discounts  10,800,000   1,080   104,794,469      104,795,549 
                     
Sale of 395,000 Private Units  395,000   40   3,949,960      3,950,000 
                     
Forfeiture of Founder Shares  (175,000)  (17)  17       
                     
Ordinary shares subject to possible redemption  (10,365,307)  (1,037)  (104,049,279)     (104,050,316)
                     
Net income           308,767   308,767 
                     
Balance – March 31, 2019 (unaudited)  3,529,693  $353  $4,719,880  $279,770  $5,000,003 

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

ANDINA ACQUISITION CORP. III2


STRYVE FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSCHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023

  Three Months Ended March 31, 
  2019  2018 
       
Cash Flows from Operating Activities:        
Net income (loss) $308,767  $(1,797)
Adjustments to reconcile net income (loss) to net cash used in operating activities:        
Interest earned on marketable securities held in Trust Account  (413,855)   
Unrealized gain on marketable securities held in Trust Account  (50)   
Changes in operating assets and liabilities:        
Prepaid expenses  (140,141)   
Accounts payable and accrued expenses  19,888   1,797 
Net cash used in operating activities  (225,391)   
         
Cash Flows from Investing Activities:        
Investment of cash in Trust Account  (108,000,000)   
Net cash used in investing activities  (108,000,000)   
         
Cash Flows from Financing Activities:        
Proceeds from sale of Units, net of underwriting discounts paid  105,300,000     
Proceeds from sale of Private Units  3,950,000     
Advances from related party  9,041     
Repayment of advances from related party  (81,280)    
Repayment of promissory note – related party  (34,259)    
Payments of offering costs  (391,875)   
Net cash provided by financing activities  108,751,627    
         
Net Change in Cash  526,236    
Cash – Beginning      
Cash – Ending $526,236  $ 
         
Non-Cash Investing and Financing Activities:        
Initial classification of ordinary shares subject to possible redemption $103,741,340  $ 
Change in value of ordinary shares subject to possible redemption $308,976  $ 

(Unaudited)

 

 

 

 

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

 

Exchanged BV 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

 

Issuance of Restricted Stock Awards

 

 

 

 

14,329

 

 

 

1

 

 

 

 

 

 

 

 

 

117,797

 

 

 

 

 

 

117,798

 

Issuance of Restricted Stock Units

 

 

 

 

1,616

 

 

 

 

 

 

 

 

 

 

 

 

21,500

 

 

 

 

 

 

21,500

 

Payments in Lieu of Fractional Shares in connection with the Reverse Stock Split

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,318

)

 

 

 

 

 

(2,318

)

Issuance of Class A Shares in connection with At-The-Market Offerings, net

 

 

 

 

194,949

 

 

 

19

 

 

 

 

 

 

 

 

 

1,016,069

 

 

 

 

 

 

1,016,088

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,779,207

)

 

 

(4,779,207

)

BALANCE, SEPTEMBER 30, 2023

 

 

 

 

1,968,482

 

 

$

196

 

 

 

405,313

 

 

$

41

 

 

$

136,716,539

 

 

$

(130,982,196

)

 

$

5,734,580

 

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

ANDINA ACQUISITION CORP. III 3


STRYVE FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022

(Unaudited)

 

 

 

 

Class A Common Stock

 

 

Class V Common Stock

 

 

Additional

 

 

Accumulated

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Paid-in-Capital

 

 

Deficit

 

 

Total

 

BALANCE, JANUARY 1, 2022

 

 

 

 

575,584

 

 

$

58

 

 

 

766,824

 

 

$

77

 

 

$

100,553,135

 

 

$

(84,111,171

)

 

$

16,442,099

 

PIPE Investment

 

 

 

 

166,462

 

 

 

17

 

 

 

 

 

 

 

 

 

32,311,170

 

 

 

 

 

 

32,311,187

 

Prefunded Warrants converted into Class A Common Stock

 

 

 

 

96,237

 

 

 

10

 

 

 

 

 

 

 

 

 

65

 

 

 

 

 

 

75

 

Post closing adjustment of Business Combination Agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(238,089

)

 

 

 

 

 

(238,089

)

Issuance of Restricted Stock Awards

 

 

 

 

7,233

 

 

 

1

 

 

 

 

 

 

 

 

 

36,708

 

 

 

 

 

 

36,709

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,313,742

)

 

 

(7,313,742

)

BALANCE, MARCH 31, 2022

 

 

 

 

845,516

 

 

$

86

 

 

 

766,824

 

 

$

77

 

 

$

132,662,989

 

 

$

(91,424,913

)

 

$

41,238,239

 

Prefunded Warrant converted into Common Stock Class A

 

 

 

 

236,906

 

 

 

17

 

 

 

 

 

 

 

 

 

243

 

 

 

 

 

 

260

 

Issuance of Restricted Stock Awards

 

 

 

 

33,408

 

 

 

3

 

 

 

 

 

 

 

 

 

172,849

 

 

 

 

 

 

172,852

 

Issuance of Restricted Stock Units

 

 

 

 

889

 

 

 

 

 

 

 

 

 

 

 

 

68,803

 

 

 

 

 

 

68,803

 

Net Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,354,319

)

 

 

(16,354,319

)

BALANCE, JUNE 30, 2022

 

 

 

 

1,116,719

 

 

$

106

 

 

 

766,824

 

 

$

77

 

 

$

132,904,884

 

 

$

(107,779,232

)

 

$

25,125,835

 

Prefunded Warrant converted into Common Stock Class A

 

 

 

 

146,667

 

 

 

15

 

 

 

 

 

 

 

 

 

205

 

 

 

 

 

 

220

 

Exchanged BV for Class A shares

 

 

 

 

267,601

 

 

 

27

 

 

 

(267,601

)

 

 

(27

)

 

 

 

 

 

 

 

 

 

Net Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,967,606

)

 

 

(4,967,606

)

BALANCE, SEPTEMBER 30, 2022

 

 

 

 

1,530,987

 

 

 

148

 

 

 

499,223

 

 

 

50

 

 

 

132,905,089

 

 

 

(112,746,839

)

 

 

20,158,448

 

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

4


STRYVE FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net loss

 

$

(13,730,580

)

 

$

(28,635,668

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation expense

 

 

1,474,298

 

 

 

1,284,215

 

Amortization of intangible assets

 

 

181,751

 

 

 

181,751

 

Amortization of debt issuance costs

 

 

222,666

 

 

 

 

Amortization of debt discount

 

 

880,623

 

 

 

 

Amortization of right-of-use asset

 

 

297,129

 

 

 

149,246

 

Gain on disposal of fixed assets

 

 

(9,705

)

 

 

(74,292

)

Prepaid media reserve

 

 

 

 

 

1,489,028

 

Bad debt expense

 

 

199,145

 

 

 

322,946

 

Stock based compensation expense

 

 

947,757

 

 

 

809,773

 

Change in fair value of Private Warrants

 

 

(19,835

)

 

 

(99,954

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(756,175

)

 

 

434,401

 

Inventory

 

 

1,985,275

 

 

 

(1,711,074

)

Vendor deposits

 

 

 

 

 

4,193

 

Prepaid media spend

 

 

 

 

 

45,520

 

Prepaid expenses and other current assets

 

 

533,386

 

 

 

(63,883

)

Accounts payable

 

 

961,482

 

 

 

(554,144

)

Accrued liabilities

 

 

679,693

 

 

 

1,000,225

 

Operating lease obligations

 

 

(244,302

)

 

 

(115,904

)

Net cash used in operating activities

 

 

(6,397,391

)

 

 

(25,533,621

)

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Cash paid for purchase of equipment

 

 

(150,297

)

 

 

(2,321,587

)

Cash received for sale of equipment

 

 

11,000

 

 

 

41,000

 

Net cash used in investing activities

 

 

(139,297

)

 

 

(2,280,587

)

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

PIPE capital raise

 

 

 

 

 

32,311,187

 

Exercise of Prefunded Warrants

 

 

 

 

 

555

 

Post closing adjustment of Business Combination Agreement

 

 

 

 

 

(238,089

)

Proceeds from the issuance of common stock, net

 

 

1,016,088

 

 

 

 

Borrowings on long-term debt

 

 

 

 

 

3,940,035

 

Repayments on long-term debt

 

 

(120,643

)

 

 

(4,989,218

)

Borrowings on related party debt

 

 

1,175,000

 

 

 

 

Borrowings on short-term debt

 

 

16,555,768

 

 

 

1,135,883

 

Repayments on short-term debt

 

 

(12,268,986

)

 

 

(2,000,000

)

Debt issuance costs

 

 

(176,287

)

 

 

(208,712

)

Deferred offering costs

 

 

(38,622

)

 

 

 

Payments in lieu of fractional shares in connection with the reverse stock split

 

 

(2,318

)

 

 

 

Net cash provided by financing activities

 

 

6,140,000

 

 

 

29,951,641

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

 

(396,688

)

 

 

2,137,433

 

Cash and cash equivalents at beginning of period

 

 

623,163

 

 

 

2,217,191

 

Cash and cash equivalents at end of period

 

$

226,475

 

 

$

4,354,624

 

 

 

 

 

 

 

 

SUPPLEMENTAL INFORMATION:

 

 

 

 

 

 

Cash paid for interest

 

$

1,160,466

 

 

$

401,862

 

NON-CASH INVESTING AND FINANCING ACTIVITY:

 

 

 

 

 

 

Non-cash commercial premium finance borrowing

 

$

843,127

 

 

$

1,012,693

 

Issuance of warrants in connection with debt instrument

 

$

1,374,631

 

 

$

 

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

5


STRYVE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019SEPTEMBER 30, 2023

(Unaudited)

Note 1 - Organization and PlanDescription of Business Operations

Andina Acquisition Corp. III (theStryve Foods, Inc. (“Stryve” or the “Company”) was incorporatedis an emerging healthy snacking company which manufactures, markets and sells highly differentiated healthy snacking products. The Company offers convenient snacks that are lower in the Cayman Islands on July 29, 2016 as a blank check company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization orsugar and carbohydrates and higher in protein than other similar business combination with one or more businesses or entities (a “Business Combination”). The Company’s efforts to identify a prospective target business will not be limited to a particular industry or geographic region, although the Company initially intends to focus on target businesses in the Americas.

All activity through March 31, 2019 relates to the Company’s formation and its initial public offering (the “Initial Public Offering”), which is described below.snacks. The Company is subjectheadquartered in Plano, TX and recently changed its mailing address to alla post office box while it navigates a potential office relocation for its corporate staff. The Company has manufacturing operations in Madill, Oklahoma and fulfillment operations in Frisco, Texas.

Reverse Stock Split

On July 13, 2023, the Company filed with the Secretary of State of the risks associated with early stageState of Delaware a First Certificate of Amendment to its First Amended and emerging growth companies.

Initial Public Offering

The registration statement for the Initial Public Offering was declared effective on January 24, 2019 pursuant to Section 8(a)Restated Certificate of the Securities Act of 1933, as amended. On January 31, 2019, the Company consummated the Initial Public Offering of 10,800,000 unitsIncorporation (the “Units” and, with respect to the ordinary shares included in the Units offered, the “Public Shares”), which includes a partial exercise by the underwriters of their over-allotment option in the amount of 800,000 Units, at $10.00 per Unit, generating gross proceeds of $108,000,000, which is described in Note 3.

Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 395,000 units (the “Private Units”) at a price of $10.00 per Unit in a private placement (the “Private Placement”“Certificate”) to certain shareholders, or their affiliates (collectively, the “Initial Shareholders”) and the underwriters, generating gross proceeds of $3,950,000, which is described in Note 4.

Transaction costs amounted to $3,204,451, consisting of $2,700,000 of underwriting fees and $504,451 of offering costs. In addition, as of March 31, 2019, $526,236 of cash was held outside of the Trust Account (defined below) and is available for working capital purposes.

Following the closing of the Initial Public Offering on January 31, 2019, an amount of $108,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Units was placed ineffect a trust account1-for-15 reverse stock split (the “Trust Account”“Reverse Stock Split”), which has been invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the Trust Account to its shareholders, as described below. The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and sale of the Private Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. Placing funds in the Trust Account may not protect those funds from third party claims against the Company. Although the Company will seek to have all vendors, service providers, prospective target businesses or other entities it engages, execute agreements with the Company waiving any claim of any kind in or to any monies held in the Trust Account, there is no guarantee that such persons will execute such agreements. One of the Company’s directors has agreedissued and outstanding shares of common stock, par value $0.0001 per share, effective as of 12:01 p.m. Eastern Time on July 14, 2023.

As a result of the Reverse Stock Split, every fifteen shares of common stock issued and outstanding were automatically reclassified into one share of common stock. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who otherwise would have been entitled to be personally liable ifreceive fractional shares because they held a number of shares of common stock not evenly divisible by the Reverse Stock Split ratio were automatically entitled to receive a cash payment equal to the value of such fractional share based on the closing price of the common stock as of the effective time of the Reverse Stock Split adjusted for the Reverse Stock Split.

The Reverse Stock Split reduced the number of authorized shares of Class V common stock from 200,000,000 to 15,000,000 while the number of authorized shares of Class A common stock and the par value for both Class A and Class V common stock remained unchanged.

All outstanding options, warrants, restricted stock units and similar securities entitling their holders to receive or purchase shares of common stock were adjusted as a result of the Reverse Stock Split, as required by the terms of each security.

All share and per share amounts were retroactively adjusted in the Company's financial statements for all periods presented to give effect to this reverse stock split, including reclassifying an amount equal to the reduction in par value of the Company’s common stock to additional paid-in capital.

Note 2 - Liquidity

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), the Company liquidateshas evaluated whether there are conditions and events, considered in the Trust Account prioraggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued.

The Company has historically funded its operations with cash flow from operations, equity capital raises, and note payable agreements from investors, in addition to bank loans. The Company's principal uses of cash have been debt service, capital expenditures, working capital, and funding operations. The Company incurred net losses of approximately $13.7 million during the nine months ended September 30, 2023. Cash used in operating activities was approximately $6.4 million for the nine months ended September 30, 2023. As of September 30, 2023, the Company has approximately $11.4 million of indebtedness and working capital excluding cash and debt of $3.6 million which compares to the consummation$7.6 million as of December 31, 2022 .

During the third quarter of 2022, the Company secured a Business Combination to ensure that the proceeds heldterm loan in the Trust Account are not reduced by the claimsmaximum amount of target businesses or claims of vendors or other entities that are owed money by the Company for services rendered or contracted for or products sold$6.0 million, with $4.0 million being advanced upon execution and up to the Company. However, such director may not be able to satisfy those obligations should they arise. The remaining net proceeds (not held in the Trust Account) may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. Additionally, the interest earned on the Trust Account balance may be releasedtwo additional $1.0 million advances available to the Company subject to payperformance hurdles. Additionally, the Company’s tax obligationsCompany secured an asset based line of credit with a $8.0 million credit limit subject to accounts receivable and upinventory balances. The term loan and asset based line of credit were secured in order to $100,000 mayaugment the Company's liquidity, as needed, through the execution of management's plan. The Company had drawn $4.0 million of the term loan and $2.9 million (net of repayments) of the asset based line of credit as of September 30, 2023. See Note 5 for a description of the asset based line of credit and Note 6 for a description of the term loan.

6


The Company has experienced a slower sell-through of its 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, the Company experienced irregular order patterns from its retail and distribution customers due to what it believes to be released to pay for the Company’s working capital obligations, including any necessary liquidation or dissolution expenses.management activities not specific to the Company's products in which retailers and distributors may have sought to bring down their inventory levels broadly.

In order2023, the Company has had to meetmake significant investments in its working capital needs followingto support increased distribution with marquee retailers coming online throughout the consummationyear. Many of these distribution gains have been secured in large part due to the new packaging design. Accordingly, the Company has had to build and projects continuing to build net new inventories to support these upcoming resets.

The investment in inventory ahead of sales has put pressure on the Company's liquidity position given the structure and terms of its credit facilities and has required it to seek external financing. Ultimately, these conditions, events, and general uncertainty around the current state of the Initial Public Offering,capital markets has raised substantial doubt about the Company’s Initial Shareholders, officers and directors or their affiliates may, but are not obligatedCompany's ability to loancontinue as a going concern.

On April 19, 2023, the Company funds,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, 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 or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note.at-the-market transactions. The notes would either be paid upon consummationCompany sold an aggregate of 194,949 shares under the Company’s initial Business Combination, without interest, or, atat-the-market equity facility for gross proceeds of $1.0 million as of September 30, 2023. As of September 30, 2023, $4.7 million remains available under the lender’s discretion, up to $500,000facility.

Throughout the third quarter of the notes may be converted upon consummation of the Company’s initial Business Combination into additional Private Units at a price of $10.00 per unit. In the event that the initial Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from the Trust Account would be used for such repayment.

7

ANDINA ACQUISITION CORP. III 

NOTES TO CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2019

(Unaudited)

Initial Business Combination

Pursuant to the Nasdaq Capital Markets listing rules, the Company’s initial Business Combination must be with a target business or businesses whose collective fair market value is at least equal to 80% of the balance in the Trust Account at the time of the execution of a definitive agreement for such Business Combination, although this may entail simultaneous acquisitions of several target businesses. The fair market value of the target will be determined by the Company’s board of directors based upon one or more standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). The target business or businesses that the Company acquires may have a collective fair market value substantially in excess of 80% of the Trust Account balance. In order to consummate such a Business Combination, the Company may issue a significant amount of its debt or equity securities to the sellers of such business and/or seek to raise additional funds through a private offering of debt or equity securities. There are no limitations on the Company’s ability to incur debt or issue securities in order to consummate a Business Combination. Since2023, the Company has no specific Business Combination under consideration,strategically managed down its inventory levels, as planned, which has yielded a positive contribution to operating cash flow of approximately $2.0 million.

While these most recent financings have provided the Company has not entered into any arrangementwith liquidity to issue debt or equity securities. Ifsupport its near-term goals, given the net proceeds of Initial Public Offering prove to be insufficient, either becauseDecember 31, 2023 maturity date of the size of the Business Combination, the depletion of the available net proceeds in search of a target business, or the obligation to convert a significant number of shares from shareholders into cash,April 2023 debt financing, the Company willis still evaluating several different strategies to enhance its liquidity position. These strategies may include, but are not limited to, pursuing additional actions under the Company's business reorganization plan, seeking to refinance or extend the term of such debt 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 the Company when, and in the amounts needed, it could be required to seek additional financing in order to completedelay, scale back, or abandon some of its initial Business Combination. In addition, if the Company consummates a Business Combination, it may require additional financing to fund the operations, or growthwhich could materially harm its business, financial condition and results of the target business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business. None of the Company’s officers, directors or shareholders is required to provide any financing to the Company in connection with or after a Business Combination.operations.

In connection with any proposed initial Business Combination, the Company will either (1) seek shareholder approval of such initial Business Combination at a meeting called for such purpose at which public shareholders may seek to convert their Public Shares, regardless of whether they vote for or against the proposed Business Combination, into their pro rata share of the aggregate amount then on deposit in the Trust Account (net of taxes payable) or (2) provide public shareholders with the opportunity to sell their Public Shares to the Company by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the Trust Account (net of taxes payable), in each case subject to the limitations described herein. Notwithstanding the foregoing, the Initial Shareholders have agreed, pursuantCompany has examined spending throughout its business and continues to written letter agreements withidentify ways to drive efficiencies, eliminate unnecessary expense, and focus on the highest and best use of each dollar. The Company nothas also sought to convert any Public Shares held by them into their pro rata shareoptimize its channel strategy and rationalize its customer and product portfolio to eliminate sales that detract from its profitability goals.The Company also anticipates further reductions in its inventory levels through the balance of the aggregate amount then on deposit in the Trust Account. If theyear which could be a near-term source of liquidity augmenting its existing debt and equity facilities.

The Company determines to engage in a tender offer, such tender offer will be structured sohas prepared cash flow forecasts which indicate that each public shareholder may tender any or all of his, her or its Public Shares rather than some pro rata portion of his, her or its shares. The decision as to whether the Company will seek shareholder approval of a proposed Business Combination or will allow shareholders to sell their Public Shares to it in a tender offer will be made by the Company based on its expected operating losses and cash consumption due to growth in working capital, it believes that absent an infusion of sufficient capital there is substantial doubt about its ability to continue as a variety of factors such as the timing of the transaction, whether the terms of the transaction would otherwise require it to seek shareholder approval or whether the Company is deemed to be a foreign private issuer (which would require us to conduct a tender offer rather than seeking shareholder approval under the U.S. Securities and Exchange Commission (the “SEC”) rules). If the Company engages in a tender offer in connection with an initial Business Combination, the Company will file tender offer documents with the SEC, which will contain substantially the same financial and other information about the initial Business Combination as is required under the SEC’s proxy rules. The Company will consummate an initial Business Combination only if it has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, solely if it seeks shareholder approval, a majority of the issued and outstanding ordinary shares voted are voted in favor of the Business Combination. The $5,000,001 net tangible asset value would be determined once a target business is located and the Company can assess all of the assets and liabilities of the combined company.

The Initial Shareholders have agreed (i) to vote their insider shares, Private Shares (as defined in Note 4) and any Public Shares purchased in orgoing concern for twelve months after the Initial Public Offering in favor of any proposed Business Combination and (ii)date the condensed consolidated financial statements for the quarter ended September 30, 2023 are issued. The Company's plan includes the items noted above as well as securing external financing which may include raising debt or equity capital. These plans are not entirely within the Company's control including its ability to convert any shares (including the insider shares) in connection with a shareholder vote to approve, or sell their shares to the Company in any tender offer in connection with, a proposed initial Business Combination.

Failure to Consummate a Business Combination

Pursuant to theraise sufficient capital on favorable terms, of the Company’s amended and restated memorandum and articles of association, failure to consummate a Business Combination by July 31, 2020 will trigger the automatic winding up, dissolution and liquidation of the Company. As a result, this has the same effect as if the Company had formally gone through a voluntary liquidation procedure under the Cayman Islands Companies Law. Accordingly, no vote would be required from shareholders to commence such a voluntary winding up, dissolution and liquidation. The holders of the insider shares will not participate in any liquidation distribution from the Trust Account with respect to their insider shares.at all.

8

ANDINA ACQUISITION CORP. III 

NOTES TO CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2019

(Unaudited)

Note 2 —3 - Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”("GAAP") for interim financial information and in accordance with the instructions to Form 10-Qrules and Article 10 of Regulation S-Xregulations of the Securities and Exchange Commission (“SEC”("SEC"). Accordingly, these interim financial statements do not include all information and footnotes required under GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of results of operations, balance sheet, cash flows, and shareholders' equity for the periods presented. The unaudited

7


condensed consolidated results of operations for the interim periods presented are not necessarily indicative of results for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2022. The Company’s condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain information orand footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted, pursuantomitted.

Prior period reclassifications

Certain prior period amounts in the condensed consolidated financial statements have been reclassified to conform to the rules and regulations ofcurrent period presentation. Specifically, the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The accompanying unaudited condensed financial statements should be readchanges in conjunctioninventory to conform with the Company’s Annual Reportcurrent period presentation on Form 10-K for the year ended December 31, 2018 as filed with the SEC on March 27, 2019, which contains the audited financialcondensed consolidated statements and notes thereto. The financial information as of December 31, 2018 is derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. The interim results for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or for any future interim periods.cash flows.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformityaccordance with accounting principles generally accepted in the United States of AmericaGAAP requires management to make estimates and assumptions that affect the amounts reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date ofin the condensed consolidated financial statements and the reported amountsaccompanying notes. Accounting estimates and assumptions discussed herein are those that management considers to be the most critical to an understanding of expenses during the reporting period. Actualcondensed consolidated financial statements because they inherently involve significant judgments and uncertainties. Estimates are used for, but not limited to revenue recognition, allowance for doubtful accounts and customer allowances, useful lives for depreciation and amortization, standard costs of inventory, provisions for inventory obsolescence, impairments of goodwill and long-lived assets, incremental borrowing rate for leases, warrant liabilities and valuation allowances for deferred tax assets. All of these estimates reflect management’s judgment about current economic and market conditions and their effects based on information available as of the date of these consolidated financial statements. If such conditions persist longer or deteriorate further than expected, it is reasonably possible that the judgments and estimates could change, which may result in future impairments of assets among other effects.

Going Concern

In accordance with ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued.

Determining the extent to which conditions or events raise substantial doubt about the Company's ability to continue as a going concern and the extent to which mitigating plans sufficiently alleviate any such substantial doubt requires significant judgment and estimation by us. The Company's significant estimates related to this analysis may include identifying business factors such as size, growth and profitability used in the forecasted financial results and liquidity. Further, the Company makes assumptions about the probability that management's plans will be effectively implemented and alleviate substantial doubt and its ability to continue as a going concern. The Company believes that the estimated values used in its going concern analysis are based on reasonable assumptions. However, such assumptions are inherently uncertain and actual results could differ materially from those estimates. See Note 2, Liquidity, for more information about the Company's going concern assessment.

Accounts Receivable 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 based on historical experience. Management provides for the customer accommodations based upon a general provision of a percentage of sales in addition to known deductions. As of September 30, 2023, and December 31, 2022, the allowance for doubtful accounts and returns and deductions totaled $771,446 and $117,360, respectively. Total bad debt expense for the three and nine months ended September 30, 2023 was $118,939 and $199,145, respectively. Total bad debt expense for the three and nine months ended September 30, 2022, was $34,323 and $322,946, respectively.

Concentration of Credit Risk

CashThe balance sheet items that potentially subject the Company to concentrations of credit risk are primarily cash and Cash Equivalentsaccounts 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.

8


For the nine months ended September 30, 2023 and 2022, the following customers and vendors represented more than 10% of consolidated sales and purchases, respectively.

 

 

 

 

 

 

 

2023

 

2022

Customer A

 

20%

 

10%

Customer B

 

15%

 

Customer C

 

11%

 

Customer D

 

10%

 

Customer E

 

 

36%

Vendor A

 

39%

 

Vendor B

 

21%

 

61%

Vendor C

 

19%

 

Vendor D

 

 

10%

Vendor E

 

 

10%

As of September 30, 2023 and 2022, the following customers and vendors represented more than 10% of accounts receivable and accounts payable balances, respectively.

 

 

 

 

 

 

 

2023

 

2022

Customer A

 

12%

 

10%

Customer C

 

20%

 

10%

Customer F

 

15%

 

Customer G

 

 

27%

Revenue Recognition Policy

The Company manufactures and markets a broad range of protein snack products through multiple distribution channels. The products are offered through branded and private label items. Generally, the Company considers all short-term investmentsrevenues as arising from contracts with customers. Revenue is recognized based on the five-step process outlined in Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers:

(1)
Identification of the contract with a customer
(2)
Identification of the performance obligations in the contract
(3)
Determination of the transaction price
(4)
Allocation of the transaction price to the performance obligations in the contract
(5)
Recognition of revenue when, or as, the Company satisfies a performance obligation

The Company’s revenue derived from the sale of branded and private label products is considered variable consideration as the contract includes discounts, rebates, incentives and other similar items. Generally, revenue is recognized at the point in time when the customer obtains control of the product, which may occur upon either shipment or delivery of the product. The payment terms of the Company’s contracts are generally net 30 to 60 days, although early pay discounts are offered to customers.

The Company regularly experiences customer deductions from amounts invoiced due to product returns, product shortages, and delivery nonperformance penalty fees. This variable consideration is estimated using the expected value approach based on the Company’s historical experience, and it is recognized as a reduction to the transaction price in the same period that the related product sale is recognized.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products to customers. Revenue is recognized when the Company satisfies its performance obligations under the contract by transferring the promised product to its customer.

The Company’s contracts generally do not include any material significant financing components.

9


Performance Obligations

The Company has elected the following practical expedients provided for in ASC 606:

(1)
The Company has excluded from its transaction price all sales and similar taxes collected from its customers.
(2)
The Company has elected to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less.
(3)
The Company has elected to account for shipping and handling activities that occur after control of the related good transfers as fulfillment activities instead of assessing such activities as performance obligations.
(4)
The portfolio approach has been elected by the Company as it expects any effects would not be materially different in application at the portfolio level compared with the application at an individual contract level.
(5)
The Company has elected not to disclose information about its remaining performance obligations for any contract that has an original maturityexpected duration of threeone year or less.

Neither the type of good sold nor the location of sale significantly impacts the nature, amount, timing, or uncertainty of revenue and cash flows.

Inventory

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.

Debt Issuance Costs

Debt issuance costs are costs incurred to obtain new debt financing. Debt issuance costs are presented in the accompanying condensed consolidated balance sheet as a reduction in the carrying value of the debt and are accreted to interest expense using the effective interest method.

Leases

In accordance with FASB ASC Topic 842, Leases, the Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (ROU) assets, current operating lease liabilities, and noncurrent operating lease liabilities in the consolidated balance sheets. Finance leases are included in property, plant and equipment, current maturities of long-term debt, and long-term debt, net of debt issuance costs and current maturities in the condensed consolidated balance sheets.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. Variable payments are not included in ROU assets or lease liabilities and can vary from period to period based on asset usage or the Company's proportionate share of common costs. The implicit rate within the Company's leases is generally not determinable and, therefore, the incremental borrowing rate at lease commencement is utilized to determine the present value of lease payments. The Company estimates its incremental borrowing rate based on third-party lender quotes to obtain secured debt in a like currency for a similar asset over a timeframe similar to the term of the lease. The ROU asset also includes any lease prepayments made and any initial direct costs incurred and excludes lease incentives. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company has elected not to recognize ROU assets or lease liabilities for leases with a term of 12 months or less when purchased to be cash equivalents. less.

The Company didhas elected the “package of practical expedients” and as a result is not have any cash equivalentsrequired to reassess its prior accounting conclusions about lease identification, lease classification and initial direct costs for lease contracts that exist as of March 31, 2019 and December 31, 2018.

Cash and Marketable Securities Held in Trust Account

At March 31, 2019 the assets held in the Trust Account were substantially held in U.S. Treasury Bills.

Ordinary Shares Subject to Possible Redemption

transition date. The Company accounts for its ordinary shares subject to possible redemptioneach lease and any non-lease components associated with that lease as a single lease component for all asset classes.

Recognition, measurement and presentation of expenses and cash flows arising from a lease will depend on classification as a finance or operating lease. Operating lease expense is recognized on a straight-line basis over the lease term, whereas the amortization of finance lease assets is recognized on a straight-line basis over the shorter of the estimated useful life of the underlying asset or the lease term. Operating lease expense and finance lease amortization are presented in cost of goods sold or operations expense in the consolidated statements of operations depending on the nature of the leased item. Interest expense on finance lease obligations is recorded over the lease term and is presented in interest expense, based on the effective interest method. All operating lease cash payments and interest on finance leases are presented within cash flows from operating activities and all finance lease principal payments are presented within cash flows from financing activities in the consolidated statements of cash flows.

10


Stock Based Compensation

Stock-based compensation awards are accounted for in accordance with ASC 718, Compensation –Stock Compensation. The Company expenses the fair value of stock awards granted to employees and members of the board of directors over the requisite service period, which is typically the vesting period. Compensation cost for stock-based awards issued to employees is measured using the estimated fair value at the grant date and is adjusted to reflect actual forfeitures.

Stock-based awards issued to non-employees, including directors for non-board-related services, are accounted for based on the fair value of such services received or the fair value of the awards granted on the grant date, whichever is more reliably measured. Stock-based awards subject to service-based vesting conditions are expensed on a straight-line basis over the vesting period.

Warrant Liability

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards CodificationBoard (“ASC”FASB”) TopicASC 480, “DistinguishingDistinguishing Liabilities from Equity.” Ordinary shares subjectEquity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to mandatory redemption are classified asASC 480, meet the definition of a liability instrumentpursuant to ASC 480, and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either withinwhether the controlwarrants meet all of the holder or subjectrequirements for equity classification under ASC 815, including whether the warrants are indexed to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s ordinary shares feature certain redemption rights that are considered to beown common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter.

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 occurrencere-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the condensed consolidated statements of uncertain future events. Accordingly, ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ equity section of the Company’s condensed balance sheet.operations.

Net Income (Loss) per Share

Net LossThe Company reports both basic and diluted earnings per Ordinary Share

Net lossshare. Basic earnings per ordinary share is computed by dividing net loss bycalculated based on the weighted average number of ordinary shares of common stock outstanding and excludes the dilutive effect of warrants, stock options, and other types of convertible securities. However, for the period. The Company applies the two-class methodnine months ended September 30, 2022, certain pre-funded warrants are included in calculating earnings per share. Ordinary shares subject to possible redemption at March 31, 2019, which are not currently redeemable and are not redeemable at fair value, have been excluded from the calculation of basic net loss per ordinary share since such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. The Company has not considered the effect of (1) warrants sold in the Initial Public Offering and the private placement to purchase 11,195,000 ordinary shares, and (2) rights sold in the Initial Public Offering and the private placement that convert into 1,119,500 ordinary shares, in the calculation of diluted lossearnings per share sinceas the exercise of thepre-funded warrants and the conversion of the rights into ordinary shares are contingent upon the occurrence of future events. As a result, diluted net losswere exercisable for nominal value. Diluted earnings per ordinary share is the same as basic net loss per ordinary share for the periods presented.

9

ANDINA ACQUISITION CORP. III 

NOTES TO CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2019

(Unaudited)

Reconciliation of Net Loss per Ordinary Share

The Company’s net income is adjusted for the portion of income that is attributable to ordinary shares subject to possible redemption, as these shares only participate in the earnings of the Trust Account and not the income or losses of the Company. Accordingly, basic and diluted loss per ordinary share is calculated based on the weighted average number of shares of common stock outstanding and the dilutive effect of stock options, warrants and other types of convertible securities are included in the calculation. Dilutive securities are excluded from the diluted earnings per share calculation if their effect is anti-dilutive, such as follows:in periods where the Company would report a net loss.

  

Three Months Ended

March 31,

 
  2019  2018 
Net income (loss) $308,767  $(1,797)
Less: Income attributable to ordinary shares subject to possible redemption  (397,266)   
Adjusted net loss $(88,499) $(1,797)
         
Weighted average shares outstanding, basic and diluted  3,169,234   2,500,000 
         
Basic and diluted net loss per ordinary share $(0.03) $(0.00)

As of September 30, 2023 and 2022, the Company excluded the common stock equivalents summarized below, which entitle the holders thereof to ultimately acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive.

 

 

September 30,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Private Warrants

 

 

197,500

 

 

 

197,500

 

Public Warrants

 

 

10,800,000

 

 

 

10,800,000

 

Warrants - January 2022 Offering

 

 

10,294,118

 

 

 

10,294,118

 

Warrants - April 2023 Financing

 

 

7,964,550

 

 

 

 

Restricted Stock Awards - unvested

 

 

39,910

 

 

 

26,700

 

 

 

29,296,078

 

 

 

21,318,318

 

11


The weighted average number of shares outstanding for purposes of per share calculations includes the pre-funded warrants as if they had been exercised as well as the Class V shares on as-exchanged basis.

Income Taxes

The Company complies withaccounts for income taxes pursuant to the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approachmethod of ASC 740, Income Taxes, which requires the Company to financial accountingrecognize current tax liabilities or receivables for the amount of taxes as estimated are payable or refundable for the current year, and reporting for income taxes. Deferred incomedeferred tax assets and liabilities are computed for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts and their respective tax bases of assets and liabilities that will result in future taxable or deductible amounts, based onand the expected benefits of net operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax laws and rates applicableexpected to apply to taxable income in the periodsyears in which thethose temporary differences are expected to affectbe recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period enacted. A valuation allowance is provided when it is more likely than not that a portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. Valuation allowancesincome and the reversal of deferred tax liabilities during the period in which related temporary differences become deductible.

Under the terms of a Tax Receivable Agreement (the “TRA”) as part of the Business Combination Agreement, the Company generally will be required to pay to the Seller 85% of the applicable cash savings, if any, in U.S. federal and state income tax based on its ownership in Andina Holdings, LLC that the Company is deemed to realize in certain circumstances as a result of the increases in tax basis and certain tax attributes resulting from the Business Combination as described below. This is accounted for in conjunction with the methods used to record income tax described above.

The Company follows the provisions of ASC 740-10 related to the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. ASC 740-10 prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns.

The benefit of tax positions taken or expected to be taken in the Company income tax returns is recognized in the financial statements if such positions are established,more likely than not of being sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits”. A liability is recognized (or amount of net operating loss carryover or amount of tax refundable is reduced) for an unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC 740-10. Interest costs and related penalties related to unrecognized tax benefits are required to be calculated, if applicable. The Company's policy is to classify assessments, if any, for tax related interest and penalties as a component of income tax expense. As of September 30, 2023, no liability for unrecognized tax benefits was required to be reported. The Company does not expect any significant changes in its unrecognized tax benefits in the next year.

Tax Receivable Agreement

In conjunction with the Business Combination, the Company entered into the TRA with Seller and Holdings. Pursuant to the TRA, the Company is required to pay Seller 85% of the amount of savings, if any, in U.S. federal, state, local and foreign income tax that the Company actually realizes as a result of (a) tax basis adjustments resulting from taxable exchanges of Class B common units of Holdings and Class V common stock of the Company acquired by the Company in exchange for Class A common stock of the Company and (b) tax deductions in respect of portions of certain payments made under the TRA. All such payments to the Seller are the obligations of the Company. As of September 30, 2023, there have been 361,477 shares of Class B common units of Holdings and Class V common stock of the Company exchanged for and equal number of shares of Class A common stock of the Company. The Company has not recognized any change to the deferred tax asset for changes in tax basis, as the asset is not more-likely-than-not to be realized. Additionally, the company has not recognized the TRA liability as it is not probable that the TRA payments would be paid based on the Company's historical loss position and would not be payable until the company realizes tax benefit.

Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of cash, accounts receivable, accounts payable, and a line of credit. The carrying amounts of cash, accounts receivable, and accounts payable approximate their respective fair values because of the short-term maturities or expected settlement date of these instruments. The line of credit has fixed interest rates the Company believes reflect current market rates for notes of this nature. The Company believes the current carrying value of long-term debt approximates its fair value because the terms are comparable to similar lending arrangements in the marketplace.

12


Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC 815. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.

Recently Adopted Accounting Standards

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. For SEC filers, excluding smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021 including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. For all other entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company adopted ASU 2020-06 as of January 1, 2023 using the modified retrospective method which did not result in any changes to the Company’s financial statements.

Note 4 - Inventory, net

As of September 30, 2023, and December 31, 2022, inventory consisted of the following:

 

 

September 30, 2023

 

 

December 31, 2022

 

Raw materials

 

$

1,500,258

 

 

$

1,614,712

 

Work in process

 

 

364,776

 

 

 

308,569

 

Finished goods

 

 

4,408,333

 

 

 

6,335,361

 

Total Inventory, net

 

$

6,273,367

 

 

$

8,258,642

 

Reserves for inventory obsolescence are recorded as necessary to reduce deferred tax assetsobsolete inventory to estimated net realizable value or to specifically reserve for obsolete inventory. As of September 30, 2023 and December 31, 2022 the reserve for slow moving and obsolete inventory was $713,366 and $708,858 respectively. Inventory write-offs for the three and nine months ended September 30, 2023 was $86,461 and $66,659, respectively. Inventory write-offs for the three and nine months ended September 30, 2022, was $34,720 and $856,502, respectively.

Note 5 - Line of Credit

On September 28, 2022, certain subsidiaries of the Company entered into an Invoice Purchase and Security Agreement (together with an Inventory Finance Rider thereto, the “PSA”) with Alterna Capital Solutions LLC (the “Lender”) providing for (a) the purchase by the Lender of certain of the subsidiaries’ accounts receivable, and (b) financing based upon a percentage of the value of the subsidiaries’ inventory. Pursuant to the PSA, the subsidiaries agree to sell eligible accounts receivable to the Lender for an amount equal to the face amount of each account receivable less a reserve percentage. The PSA was amended to decrease the maximum amount potentially available to be deployed by the Lender at any given time $15,000,000 to $8,000,000. The maximum amount may be increased to an amount up to $20,000,000. Pursuant to the Inventory Finance Rider to the RSA, the subsidiaries may request advances from time to time based upon the value of the subsidiaries’ inventory. Such advances bear interest at the current prime rate plus 2.25% and are required to be repaid at any time the aggregate outstanding amount of such advances exceed a designated percentage of the value of such inventory.

The PSA provides for the payment of fees by the subsidiaries and includes customary representations and warranties, indemnification provisions, covenants and events of default. Subject in some cases to cure periods, amounts outstanding under the PSA may be accelerated for typical defaults including, but not limited to, the failure to make when due payments, the failure to perform any covenant, the inaccuracy of representations and warranties, the occurrence of debtor-relief proceedings and the occurrence of liens against the purchased accounts receivable and collateral. The subsidiaries have granted the Lender a security interest in all of their respective

13


personal property to secure their obligations under the PSA; provided that the Lender has a first priority security interest in the Subsidiaries’ accounts receivable, payment intangibles and inventory. A named executive officer of the Company granted the Lender a security interest in certain personal property owned by the named executive officer to further secure the Company's obligations under the PSA.

The PSA provides for an initial twenty four (24) month term, followed by automatic annual renewal terms unless the subsidiaries provide written notice pursuant to the PSA prior to the end of any term.

As of September 30, 2023 and December 31, 2022, $2,872,694 and $1,257,301, respectively, was borrowed under the financing agreement. The Company recognized approximately $113,167 and $324,798 in interest expense for the three and nine months ended September 30, 2023, respectively. No interest was recorded in the comparable periods in prior year.

14


Note 6 - Debt

As of September 30, 2023 and December 31, 2022, long-term debt consisted of the following:

 

 

September 30, 2023

 

 

December 31, 2022

 

Revenue Loan and Security Agreement, net of debt issuance costs

 

$

3,812,725

 

 

$

3,889,442

 

Broken Stone Agreement

 

 

24,775

 

 

 

51,918

 

Less: current portion

 

 

(317,567

)

 

 

(244,782

)

Total long-term debt, net of current portion

 

$

3,519,933

 

 

$

3,696,578

 

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

 

 

September 30, 2023

 

 

December 31, 2022

 

Invoice Purchase and Security Agreement, net of debt issuance costs

 

$

2,754,443

 

 

$

1,046,101

 

Promissory Notes, net of debt discount and debt issuance costs

 

 

3,531,639

 

 

 

 

Commercial Premium Finance Agreement

 

 

482,029

 

 

 

724,639

 

Current portion of long-term obligations

 

 

317,567

 

 

 

244,782

 

Total short-term borrowings and current portion of long-term debt

 

$

7,085,677

 

 

$

2,015,522

 

Outstanding as of September 30, 2023

On March 12, 2021, the Company entered into a note payable agreement (“Broken Stone Agreement”) with Broken Stone Investments, LLC. for the principal amount of $200,000, bearing interest at 5% per annum, with all principal and accrued interest thereon due and payable at maturity of June 1, 2023. The Broken Stone Agreement calls for monthly principal and interest payments of $8,774 to commence on July 1, 2021, through maturity on June 1, 2023. As of September 30, 2023, the balance on this loan was $24,775.

The Company entered into Commercial Premium Finance Agreements with terms less than one year and with interest rates ranging from 4.64% to 7.50%. The proceeds from these transactions were used to partially fund the premiums due under some of the Company's insurance policies. The amounts payable are secured by the Company's rights under such policies. As of September 30, 2023 and December 31, 2022, the combined remaining balance totaled $482,029 and $724,639, respectively. The Company recognized approximately $7,130 and $30,068 in interest expense for the three and nine months ended September 30, 2023, respectively. The Company recognized approximately $2,696 in interest expense for the three and nine months ended September 30, 2022.

Revenue Loan and Security Agreement

On September 28, 2022, the Company entered into a Revenue Loan and Security Agreement (the “Loan Agreement”) with Decathlon Alpha V, L.P. providing for a loan facility for the Company in the maximum amount of $6,000,000, with $4,000,000 being advanced to the Company upon execution of the Loan Agreement and up to two additional $1,000,000 advances available to the Company upon request, provided that the Company has satisfied all conditions with respect to such advance. The Loan Agreement requires monthly payments, calculated as a percentage of the Company’s revenue from the previous month (subject to an annual payment cap) with all outstanding advances and the interest (as defined in the Loan Agreement) being due at maturity on June 13, 2027 (unless accelerated upon a change of control or the occurrence of other events of default). Interest does not accrue on advance(s) pursuant to the Loan Agreement, rather a minimum amount of interest (as defined in the Loan Agreement) is due pursuant to the terms of the Loan Agreement. The Loan Agreement further provides for the payment of fees by the Company and includes customary representations and warranties, indemnification provisions, covenants and events of default. Subject in some cases to cure periods, amounts outstanding and otherwise due under the Loan Agreement may be accelerated for typical defaults including, but not limited to, the failure to make when due payments, the failure to perform any covenant, the inaccuracy of representations and warranties, and the occurrence of debtor-relief proceedings. The advances are secured by all property of the Company and is guaranteed by the Company and certain of the Company’s Subsidiaries.

The Company has accounted for the loan facility as debt in accordance with ASC 470-10-25-2 and use the effective interest rate method to estimate the timing and amount of future cash flows in accordance with ASC 835-30. The current effective interest rate is 12.0%. As of September 30, 2023 and December 31, 2022, the balance on this loan was $3,890,111 and $3,983,611, respectively. The Company recognized approximately $130,273 and $357,936 in interest expense for the three and nine months ended September 30, 2023, respectively. The Company recognized approximately $1,398 in interest expense for the three and nine months ended September 30, 2022.

15


Promissory Notes

On April 19, 2023, the Company issued an aggregate of $4,089,000 in principal amount of secured promissory notes (the “Notes”) to select accredited investors (the “Lenders”). The aggregate principal amount of the Notes is inclusive of $1,175,000 from related parties (the "Related Party Notes"). 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 described below), following the date of the Notes, from which the Company receives gross proceeds of not less than $3,000,000. 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 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. The aggregate amount of the Warrants is inclusive of 2,288,664 warrants convertible to 152,577 shares of Class A common stock associated with the Related Party Notes.

The Company has accounted for the Notes as debt in accordance with ASC 470-10-25 and use the effective interest rate method to estimate the timing and amount of future cash flows in accordance with ASC 835-30. The current effective interest rate is 66.1%. As of September 30, 2023 , the outstanding balance on the Notes was $4,089,000 of which $1,175,000 was due to related parties. In accordance with ASC 470-20-25-2, the Company allocated the proceeds between the Notes and Warrants based on their relative fair values. The allocation resulted in a discount to the Notes of $1,374,631 that is being amortized over the term of the Notes. The Company recognized approximately $681,040 and $1,214,027 in interest expense inclusive of debt discount amortization of $494,008 and $880,623 for the three and nine months ended September 30, 2023, respectively. The unamortized debt discount is $494,008 as of September 30, 2023.


Future minimum principal payments on debt as of September 30, 2023 are as follows:

2023 (for the remainder of)

 

$

5,212,855

 

2024

 

 

2,641,910

 

2025

 

 

589,109

 

2026

 

 

1,155,911

 

2027

 

 

1,758,821

 

Thereafter

 

 

 

 

 

$

11,358,606

 

16


Note 7 - Income Taxes

The Company’s sole material asset is Andina Holdings, LLC, which is treated as a partnership for U.S. federal income tax purposes and for purposes of certain state and local income taxes. Andina Holdings, LLC owns 100% of Stryve Foods, LLC which is treated as a disregarded entity for the U.S. federal income tax purposes. Stryve Foods Holdings, LLC's net taxable income and any related tax credits are passed through to its members and are included in the members’ tax returns, even though such net taxable income or tax credits may not have actually been distributed. The income tax burden on the earnings taxed to the non-controlling interests is not reported by the Company in its condensed consolidated financial statements under GAAP. As a result, the Company’s effective tax rate is expected to be realized.differ materially from the statutory rate.

ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company’s management determined that the Cayman Islands is the Company’s major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of March 31, 2019September 30, 2023 and December 31, 2018, there were 2022, no liability for unrecognized tax benefits was required to be reported and no amounts accrued for interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position over the next twelve months.

The Company maycurrently estimates its annual effective income tax rate to be subject(0.017)%, which differs from the federal rate of 21% primarily due to potential examination by foreign taxing authoritiestax benefit related to income passed through to non-controlling interest, increase in the areas ofvaluation allowances, and state and local income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with foreign tax laws.

The Company is considered an exempted Cayman Islands company and is presently not subject to income taxes orhas reported income tax filing requirements inexpense (benefit) of $7,281 and ($2,242) for the Cayman Islands orthree and nine months ended September 30, 2023. For the United States. As such, the Company’s tax provision is zero for all periods presented.

Concentration of Credit Risk

Financial instruments that potentially subjectthree and nine months ended September 30, 2022, the Company to concentrationhas reported income tax expense of credit risk consist of a cash account in a financial institution which, at times may exceed$507 and $36,948.

Tax Receivable Agreement Liability

In conjunction with the Federal depository insurance coverage of $250,000. At March 31, 2019 and December 31, 2018,Business Combination, the Company had not experienced losses on this accountalso entered into a TRA with the Seller and management believesHoldings. Pursuant to the TRA, the Company is not exposedrequired to pay the Seller 85% of the amount of savings, if any, in United States federal, state, local and foreign income tax that the Company actually realizes as a result of (a) tax basis adjustments resulting from taxable exchanges of Class B common units of Holdings and Class V common stock of the Company acquired by the Company in exchange for Class A common stock of the Company and (b) tax deductions in respect of portions of certain payments made under the TRA. All such payments to the Seller are the obligations of the Company.

As of September 30, 2023, there have been 361,477 shares of Class B common units of Holdings and Class V common stock of the Company exchanged for an equal number of shares of Class A common stock of the Company. The estimation of liability under the TRA is by its nature imprecise and subject to significant risks on such account.assumptions regarding the amount and timing of future taxable income.

Fair ValueAs of Financial InstrumentsSeptember 30, 2023, the Company has recorded a full valuation allowance against its net deferred tax assets as the realizability of the tax benefit is not at the more likely than not threshold. Since the benefit has not been recorded, the Company has determined that the TRA liability is not probable and therefore no TRA liability existed as of September 30, 2023.

17


Note 8 - Shareholders’ Equity

The fairCompany’s Amended and Restated Certificate of Incorporation (“Charter”) authorizes the issuance of 425,000,000 shares, of which 400,000,000 shares are Class A common stock, par value $0.0001 per share, 15,000,000 shares of Class V common stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share. The Reverse Stock Split reduced the number of authorized shares of Class V common stock from 200,000,000 to 15,000,000 while the number of authorized shares of Class A common stock and the par value for both Class A and Class V common stock remained unchanged.

Warrants

Public Warrants

The Company has outstanding 10,997,500 warrants convertible into 733,166 shares of Class A common stock that were issued prior to the Business Combination, of which 10,800,000 convertible into 720,000 shares of Class A common stock are referred to as public warrants and 197,500 convertible into 13,166 shares of Class A common stock are Private Warrants. Each warrant represents the right to purchase 1/15th of a share of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying condensed financial statements, primarily due to their short-term nature.

10

ANDINA ACQUISITION CORP. III 

NOTES TO CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2019

(Unaudited)

Recent Accounting Standards

Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed financial statements.

Note 3 — Initial Public Offering

Pursuant to the Initial Public Offering, the Company sold 10,800,000 Units at a purchase price of $10.00 per Unit, which includes a partial exercise by the underwriters of their over-allotment option in the amount of 800,000 Units at $10.00 per Unit. Each Unit consists of one ordinary share of the Company, one right (the “Public Right”) and one redeemable warrant (the “Public Warrant”). Each Public Right entitles the holder to receive one-tenth (1/10) of an ordinary share upon consummation of a Business Combination. Each Public Warrant entitles the holder to purchase one ordinary share at an exercise price of $11.50 per share (see Note 7).

If the Company is unable to complete an initial Business Combination by July 31, 2020 and the Company redeems the public shares for the funds held in the Trust Account, holders of the rights and warrants will not receive any of such funds for their rights and warrants and the rights and warrants will expire worthless.

Note 4 — Private Units

Simultaneously with the closing of the Initial Public Offering, certain of the Initial Shareholders, including the underwriters in the Initial Public Offering (and their respective designees), purchased an aggregate of 395,000 Private UnitsClass A common stock at a price of $10.00$172.50 per Private Unit, for an aggregate purchase price of $3,950,000. Each Private Unit consists of one ordinary share (“Private Share”), one right (the “Private Right”) and one redeemable warrant (each, a “Private Warrant”). The proceeds from the Private Units have been added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination by July 31, 2020, the proceeds of the sale of the Private Units will be used to fund the redemption of the public shares (subject to the requirements of applicable law), and the Private Units and all underlying securities will expire worthless.

The Private Units are identical to the Units sold in the Initial Public Offering except that the Private Warrants are non-redeemable and exercisable on a cashless basis so long as they are held by the initial purchasers or their permitted transferees. Additionally, the purchasers of the Private Units have agreed (A) to vote the Private Shares in favor of any proposed Business Combination, (B) not to propose, or vote in favor of, an amendment to the Company’s amended and restated memorandum and articles of association with respect to its pre-Business Combination activities prior to the consummation of such a Business Combination unless the Company provides public shareholders with the opportunity to convert their Public Shares in connection with any such vote, (C) not to convert any Private Shares into the right to receive cash from the Trust Account in connection with a shareholder vote to approve a proposed initial Business Combination or a vote to amend the provisions of the Company’s amended and restated memorandum and articles of association relating to shareholders’ rights or pre-Business Combination activity and (D) that the Private Shares shall not participate in any liquidating distribution from the Trust Account upon winding up if a Business Combination is not consummated. The purchasers of the Private Units have also agreed not to transfer, assign or sell any of the Private Units or underlying securities (except to permitted transferees) until the completion of an initial Business Combination.

Note 5 — Related Party Transactions

Promissory Note – Related Party

On November 7, 2016, the Company issued a promissory note to a director of the Company, pursuant to which the Company borrowed an aggregate of $34,259. The promissory note was payable without interest on the earlier of (i) July 1, 2019, (ii) the date on which the Company consummated the Initial Public Offering or (iii) the date on which the Company determined to not proceed with such Initial Public Offering. The promissory note was repaid upon the consummation of the Initial Public Offering on January 31, 2019.

Advance from Related Party

A director of the Company advanced the Company an aggregate of $81,280 to cover expenses related to the Initial Public Offering. The advances were non-interest bearing and due on demand. The advances were repaid upon the consummation of the Initial Public Offering.

11

ANDINA ACQUISITION CORP. III 

NOTES TO CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2019

(Unaudited)

Note 6 — Commitments

Business Combination Marketing Agreement

The Company engaged the joint book-running managers in the Initial Public Offering as advisors in connection with a Business Combination to assist the Company in holding meetings with its shareholders to discuss the potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities in connection with a Business Combination, assist the Company in obtaining shareholder approval for the Business Combination and assist the Company with its press releases and public filings in connection with the Business Combination. The Company will pay the joint book-running managers aggregate cash fees for such services upon the consummation of a Business Combination in an amount equal to $3,240,000 (exclusive of any applicable finders’ fees which might become payable).

Fee Arrangements

Following the Initial Public Offering, the Company entered into a letter agreement with a member of the Company’s board of directors that provides for a success fee to be paid to such director upon consummation of a Business Combination with a target business introduced to the Company by such director in an amount equal to 0.6% of the total consideration paid by the Company in the transaction, subject to certain minimum and maximum amounts set forth in the agreement.

In addition, the Company entered into several letter agreements with unaffiliated third parties that provide for a success fee to be paid to each such third party upon consummation of a Business Combination with a target business introduced to the Company by such third party in amounts ranging from 0.75% to 1.0% of the total consideration paid by the Company in the transaction, subject to certain minimum and maximum amounts set forth in the various agreements.

Registration Rights

Pursuant to a registration rights agreement entered into on January 28, 2019, the holders of the insider shares, as well as the holders of the Private Units (and underlying securities) and any securities issued in payment of working capital loans made to the Company, are entitled to registration rights. The holders of a majority of these securities are entitled to make up to three demands that the Company register such securities. Notwithstanding anything to the contrary, the underwriters (and their designees) may only make a demand registration (i) on one occasion and (ii) during the five year period beginning on January 28, 2019. The holders of the majority of the insider shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these ordinary shares are to be released from escrow. The holders of a majority of the Private Units (and underlying securities) and securities issued in payment of working capital loans (or underlying securities) can elect to exercise these registration rights at any time after the Company consummates a Business Combination. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination. Notwithstanding anything to the contrary, the underwriters (and their designees) may participate in a “piggy-back” registration only during the seven year period beginning January 28, 2019. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

12

ANDINA ACQUISITION CORP. III 

NOTES TO CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2019

(Unaudited)

Note 7 — Shareholders’ Equity

Preferred Shares

The Company is authorized to issue 1,000,000 preferred shares with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s board of directors. As of March 31, 2019 and December 31, 2018, no preferred shares were issued or outstanding.

Ordinary Shares

The Company is authorized to issue 100,000,000 ordinary shares with a par value of $0.0001 perwhole share. As of March 31, 2019 and December 31, 2018, there were 3,529,693 and 2,875,000 ordinary shares issued and outstanding, excluding 10,365,307 and -0- ordinary shares subject to possible redemption, respectively.

In connection with the organization of the Company, a total of 2,875,000 ordinary shares were sold to the Initial Shareholders for an aggregate purchase price of $25,000. The 2,875,000 shares included an aggregate of up to 375,000 shares subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full or in part so that the Company’s Initial Shareholders would own 20% of the issued and outstanding shares after the Initial Public Offering. As a result of the underwriters’ election to partially exercise their over-allotment option to purchase an additional 800,000 Units, 200,000 shares are no longer subject to forfeiture and 175,000 shares were forfeited, resulting in an aggregate of 2,700,000 shares issued and outstanding at the Initial Public Offering date.

The Initial Shareholders have agreed not to transfer, assign or sell any of the insider shares (except to certain permitted transferees) until (1) with respect to 50% of the insider shares, the earlier of one year after the date of the consummation of an initial Business Combination and the date on which the closing price of the Company’s ordinary shares equals or exceeds $12.50 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after an initial Business Combination and (2) with respect to the remaining 50% of the insider shares, one year after the date of the consummation of an initial Business Combination, or earlier, in either case, if, subsequent to an initial Business Combination, the Company consummates a liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s shareholders having the right to exchange their ordinary shares for cash, securities or other property.

Rights

Each holder of a right will receive one-tenth (1/10) of one ordinary share upon consummation of a Business Combination, even if a holder of such right converted all ordinary shares held by it in connection with a Business Combination. No fractional shares will be issued upon exchange of the rights. No additional consideration will be required to be paid by a holder of rights in order to receive its additional shares upon consummation of a Business Combination as the consideration related thereto has been included in the Unit purchase price paid for by investors in the Initial Public Offering. If the Company enters into a definitive agreement for a Business Combination in which the Company will not be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same per share consideration the holders of the ordinary shares will receive in the transaction on an as-converted into ordinary shares basis and each holder of rights will be required to affirmatively covert its rights in order to receive 1/10 of an ordinary share underlying each right (without paying additional consideration). The ordinary shares issuable upon exchange of the rights will be freely tradable (except to the extent held by affiliates of the Company).

If the Company is unable to complete a Business Combination by July 31, 2020 and the Company liquidates the funds held in the Trust Account, holders of rights will not receive any of such funds with respect to their rights, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such rights, and the rights will expire worthless. Further, there are no contractual penalties for failure to deliver securities to the holders of the rights upon consummation of a Business Combination. Additionally, in no event will the Company be required to net cash settle the rights. Accordingly, the rights may expire worthless.

Warrants

The Public Warrants will become exercisable on the later of the completion of an initial Business Combination or January 28, 2020. However, except as set forth below, no Public Warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the ordinary shares issuable upon exercise of the Public Warrants and a current prospectus relating to such ordinary shares. Notwithstanding the foregoing, if a registration statement covering the ordinary shares issuable upon exercise of the Public Warrants is not effective within 90 days from the consummation of an initial Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption from registration provided by Section 3(a)(9) of the Securities Act provided that such exemption is available. If an exemption from registration is not available, holders will not be able to exercise their Public Warrants on a cashless basis. The warrants will expire five years from the consummation of an initial Business Combination.on July 20, 2026.

ANDINA ACQUISITION CORP. III 

NOTES TO CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2019

(Unaudited)

The Company may call the Public Warrantspublic warrants for redemption (excluding(but not the Private Warrants), in whole and not in part, at a price of $.01$.15 per warrant:Public Warrant:

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 the ordinary shares of Class A common stock equals or exceeds $18.00$270.00 per share, for any 20 trading days within a 30 trading30-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 the ordinary 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.

The right to exercise will be forfeited unless the warrants are exercised prior to the date specified in the notice of redemption.

Private Warrants

The Company has agreed that so long as the Private Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that thestill held by its initial shareholders or their affiliates, it will not redeem such Private Warrants and will allow the ordinary shares issuable upon theholders to exercise of thesuch Private Warrants will not be transferable, assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the(even if a registration statement covering shares of Class A common stock issuable upon exercise of such warrants is not effective). As of September 30, 2023, there were 197,500 Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Privateoutstanding.

Pre-Funded Warrants will be redeemable by

On September 15, 2021, the Company and exercisable by such holders onentered into a Share Repurchase Agreement with various entities (collectively, the same basis as the Public Warrants

If“Investors”) whereby the Company callsrepurchased an aggregate of 53,333 shares of Class A common stock (the “Repurchase Shares”) from the PublicInvestors. The purchase price for the Repurchase Shares was the issuance of an aggregate of 53,333 pre-funded warrants to acquire an equal number of shares of Class A common stock (the “Pre-Funded Warrants”). The Pre-Funded Warrants do not expire and are exercisable at any time after their original issuance. During May 2022, the Pre-Funded Warrants were exercised in full.

On January 6, 2022, the Company sold 166,462 shares of the Company’s Class A common stock, and, in lieu of common stock, pre-funded warrants to purchase 519,812 shares of common stock and accompanying warrants to purchase up to 686,274 shares of common stock (the “January 2022 Offering”). The common stock and warrants were sold at a combined purchase price of $51.00 per share (less $0.0001 per share for redemption, managementpre-funded warrants). Each warrant has an exercise price per share of common stock equal to $54.00 and will haveexpire five years from the option to require all holders that wish to exercise the Public Warrants to do sodate of issuance and may be exercised on a “cashlesscashless basis” as described in if a registration statement registering the warrant agreement. The exercise price and number of ordinary shares issuable upon exercise is not effective. The Company received gross proceeds from the offering of approximately $35 million before deducting estimated offering expenses. As of December 31, 2022, the pre-funded warrants may be adjusted in certain circumstances includingissued in the eventJanuary 2022 Offering were exercised in full on a cashless basis.

On April 19, 2023, the Company issued certain lenders warrants (the “April 2023 Warrants”) to purchase 1/15th of a share dividend, extraordinary dividendof 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

18


to 530,970 shares of Class A common stock. The aggregate amount of the April 2023 Warrants is inclusive of 2,288,664 warrants convertible to 152,577 shares of Class A common stock associated with related parties. 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 warrant holder will be prohibited, subject to certain exceptions, from exercising the Warrants for shares of the Company’s Class A common stock to the extent that immediately prior to or recapitalization, reorganization, mergerafter giving effect to such exercise, the warrant holder, together with its affiliates and other attribution parties, would own more than 4.99% or consolidation. In addition, if  (x)9.99%, as applicable, of the total number of shares of the Company’s Class A common stock then issued and outstanding, which percentage may be changed at the warrant holders’ election to a higher or lower percentage not in excess of 9.99% upon 61 days’ notice to the Company. The Company agreed to use commercially reasonable efforts to register the shares of Class A common stock underlying the Warrants within 60 days and to have the registration statement declared effective within 30 days thereafter. As of September 30, 2023, there were 7,964,550 April 2023 Warrants outstanding.

Stryve Foods, Inc. 2021 Omnibus Incentive Plan (the “Incentive Plan”)

The Incentive Plan allows the Company issues additional ordinary shares to grant stock options, restricted stock unit awards and other awards at levels determined appropriate by its board of directors and/or equity-linked securities for capital raising purposescompensation committee. The Incentive Plan also allows the Company to use a broad array of equity incentives and performance cash incentives in connectionorder to secure and retain the services of its employees, directors and consultants, and to provide long-term incentives that align the interests of its employees, directors and consultants with the closinginterests of its initial business combination at an issue price or effective issue price of less than $8.50 per ordinary share (with such issue price or effective issue price to be determined in good faithstockholders. The Incentive Plan is administered by the Company’s board of directors or its compensation committee, or any other committee or subcommittee or one or more of its officers to whom authority has been delegated (collectively, the “Administrator”). The Administrator has the authority to interpret the Incentive Plan and award agreements entered into with respect to the Incentive Plan; to make, change and rescind rules and regulations relating to the Incentive Plan; to make changes to, or reconcile any inconsistency in, the caseIncentive Plan or any award agreement covering an award; and to take any other actions needed to administer the Incentive Plan.

The Incentive Plan permits the Administrator to grant stock options, stock appreciation rights (“SARs”), performance shares, performance units, shares of Class A common stock, restricted stock, restricted stock units (“RSUs”), cash incentive awards, dividend equivalent units, or any such issuanceother type of award permitted under the Incentive Plan. The Administrator may grant any type of award to any participant it selects, but only employees of the Company affiliates, without taking into account any insider shares held by such affiliates prioror its subsidiaries may receive grants of incentive stock options within the meaning of Section 422 of the Internal Revenue Code. Awards may be granted alone or in addition to, such issuance) (where “insider shares” refersin tandem with, or (subject to the 2,875,000 ordinaryrepricing prohibition described below) in substitution for any other award (or any other award granted under another plan of the Company or any affiliate, including the plan of an acquired entity).

The Company has reserved a total of 457,664 shares held by the Company’s Initial Shareholders priorof Class A common stock for issuance pursuant to the Company’s initial public offering), (y)Incentive Plan. The number of shares reserved for issuance under the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the Company’s initial business combinationIncentive Plan will be reduced on the date of the consummationgrant of any award by the maximum number of shares, if any, with respect to which such award is granted. However, an award that may be settled solely in cash will not deplete the Incentive Plan’s share reserve at the time the award is granted. If (a) an award expires, is canceled, or terminates without issuance of shares or is settled in cash, (b) the Administrator determines that the shares granted under an award will not be issuable because the conditions for issuance will not be satisfied, (c) shares are forfeited under an award, (d) shares are issued under any award and the Company reacquires them pursuant to its initial business combination (net of redemptions) and (z)reserved rights upon the volume weighted average trading priceissuance of the Company’s ordinary shares, during the 20 trading day period starting on the trading day prior to the day on which the Company consummates its initial business combination (such price, the “Market Value”) is below $8.50 per share,(e) shares are tendered or withheld in payment of the exercise price of an option or as a result of the warrants willnet settlement of outstanding stock appreciation rights or (f) shares are tendered or withheld to satisfy federal, state or local tax withholding obligations, then those shares are added back to the reserve and may again be adjusted (toused for new awards under the nearest cent)Incentive Plan. However, shares added back to the reserve pursuant to clauses (d), (e) or (f) in the preceding sentence may not be issued pursuant to incentive stock options.

As of September 30, 2023, the Company had 321,166 shares of Class A common stock remain available for issuance under the Incentive Plan.

19


Note 9 - Stock Based Compensation

The Company's stock-based awards that result in compensation expense consist of restricted stock units (RSUs) and restricted stock awards (RSAs). As of September 30, 2023, the Company had 321,166 shares available for grant under its stock plans. As of September 30, 2023, the total unrecognized compensation cost related to all unvested stock-based compensation awards was $1,902,420 and is expected to be equalrecognized over the next four years. RSUs generally vest over three years and RSAs generally vest from one to 115%four years.

Restricted Stock Units (RSUs)

The following table summarizes the Company's RSU activity:

Nonvested Restricted Stock Units

 

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

 

Restricted Stock

 

 

Award Date Fair Value

 

 

 

Units

 

 

Per Share

 

Restricted Stock at January 1, 2023

 

 

14,578

 

 

$

48.47

 

Granted

 

 

29,500

 

 

 

15.30

 

Forfeited

 

 

(1,811

)

 

 

77.40

 

Vested

 

 

(3,778

)

 

 

22.30

 

Restricted Stock at September 30, 2023

 

 

38,489

 

 

$

24.26

 

The fair value of RSUs is determined based on the closing market price of the greaterCompany's stock on the grant date.

Restricted Stock Awards (RSAs)

The following table summarizes the Company's RSA activity:

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, 2023

 

 

42,200

 

 

$

27.92

 

 

 

7,500

 

 

$

12.45

 

Granted

 

 

 

 

 

 

 

 

41,786

 

 

 

7.42

 

Forfeited

 

 

 

 

 

 

 

 

 

 

 

 

Vested

 

 

(10,764

)

 

 

28.78

 

 

 

(40,811

)

 

 

7.42

 

Restricted Stock at September 30, 2023

 

 

31,436

 

 

$

27.62

 

 

 

8,475

 

 

$

11.86

 

The fair value of (i)RSAs is determined based on the Market Value or (ii)closing market price of the price atCompany's stock on the grant date.

Stock Based Compensation Expense

The Company has a long-term incentive plan under which the Company issues the additional ordinary shares or equity-linked securities. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the required time period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outsideCompensation Committee of the Trust AccountBoard of Directors has the authority to grant share-based awards to Company employees and non-employees. Stock based compensation costs associated with respect to such warrants. Accordingly,employee RSU and RSA grants are recorded as a separate component of salaries and wages on the warrants may expire worthless.condensed consolidated statements of operations. For the three and nine months ended September 30, 2023, $196,548 and $593,762, respectively, were recorded in salaries and wages. For the three and nine months ended September 30, 2022, $(108,006) and $500,805, respectively, were recorded in salaries and wages. Stock based compensation costs associated with non-employee RSU and RSA grants are recorded as a separate component of selling expenses on the condensed consolidated statements of operations. For the three and nine months ended September 30, 2023, $133,244 and $353,995, respectively, were recorded in selling expenses. For the three and nine months ended September 30, 2022, $205,801 and $308,968, respectively, were recorded in selling expenses. Stock based compensation expense for service-based awards that contain a graded vesting schedule is recognized on a straight-line basis. The Company accounts for forfeitures when they occur.

20


Note 8 —10 - Fair Value Measurements

The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.

The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

Level 1:

Quoted

Observable inputs such as quoted prices (unadjusted), for identical instruments in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.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 our assessment of the assumptionslowest level input that market participants would use in pricingis significant to the asset or liability.fair value measurement.

The following table presents information about the Company’s assets that areliability measured at fair value on a recurring basis at MarchSeptember 30, 2023 and December 31, 20192022 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

Description Level  March 31, 2019 
Assets:        
Marketable securities held in Trust Account  1  $108,413,905 

Description

 

Level

 

 

September 30, 2023

 

 

December 31, 2022

 

Liabilities:

 

 

 

 

 

 

 

 

 

Warrant liability - Private Warrants

 

 

3

 

 

$

790

 

 

$

20,625

 

Private Warrants

The Private Warrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the Company’s consolidated balance sheet. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the condensed consolidated statements of operations.

On September 30, 2023, the Private Warrants were determined to have a fair value of $0.06 per warrant for an aggregate fair value of $790.

The following table presents the change in the fair value of warrant liabilities for the period:

Warrant Fair Values

 

Private

 

Fair value as of December 31, 2022

 

$

20,625

 

Change in fair value

 

 

(19,835

)

Fair value as of September 30, 2023

 

$

790

 

Note 9 —11 - Related Party Transactions

Sale and Leaseback. On May 26, 2021, the Company entered into a Purchase and Sale Agreement with OK Biltong Facility, LLC (“Buyer”), an entity controlled by 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”) of the Company’s manufacturing facility and the surrounding property in Madill, Oklahoma (the “Real Property”) for a total purchase price of $7,500,000.

In connection with the consummation of the Sale and Leaseback Transaction, the Company entered into a lease agreement (the “Lease Agreement”) with Buyer pursuant to which the Company leased back the Real Property from Buyer for an initial term of twelve (12) years unless earlier terminated or extended in accordance with the terms of the Lease Agreement. Under the Lease Agreement, the Company’s financial obligations include base rent of approximately $60,000 per month, which rent will increase on an annual basis at two percent (2%) over the initial term and two-and-a-half percent (2.5%) during any extension term. The Company is also responsible

21


for all monthly expenses related to the leased facility, including insurance premiums, taxes and other expenses, such as utilities. Under the Lease Agreement, the Company has three (3) options to extend the term of the lease by five (5) years for each such option and a one-time right and option to purchase the Real Property at a price that escalates over time and, if Buyer decides to sell the Real Property, the Company has a right of first refusal to purchase the Real Property on the same terms offered to any third party.

The Company determined that the sale and leaseback transaction contained continuing involvement and thus used the financing method consistent with ASC 842. The transfer did not qualify as a sale; hence it is considered a "failed" sale and both parties account for it as a financing transaction. Accordingly, a financing obligation related to the operating lease in the amount of the sale price ($7,500,000) has been booked and the corresponding assets on the balance sheet are maintained. Under the finance method, rental payments are applied as amortization and/or interest expense on the financing obligation as appropriate using an assumed interest rate. The Company is accounting for these as interest only payments because the Company's incremental cost to borrow when applied to the financing obligation is greater than the rental payments under the Lease Agreement. The Company recognized interest expense of $187,265 and $554,450 during the three and nine months ended September 30, 2023, respectively. The Company recognized interest expense of $183,593 and $543,578 during the three and nine months ended September 30, 2022, respectively.

Promissory Notes. On April 19, 2023, the Company issued an aggregate of $1,175,000 in Related Party Notes. The Related Party 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 described below), following the date of the Related Party Notes, from which the Company receives gross proceeds of not less than $3,000,000. The Related Party 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. See Note 6 for further discussion on the Related Party Notes. Each related party lender that purchased Related Party Notes received a warrant (the “Related Party 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 Related Party Notes, for an aggregate of 2,288,664 Related Party Warrants convertible to 152,577 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 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. See Note 8 for further discussion on the Related Party Warrants.

Other. During the three and nine months ended September 30, 2022, the Company purchased approximately $9,620 and $143,420, respectively, in goods from an entity controlled by a member of the Company’s Board of Directors (the "Related Party Manufacturer"). No amounts were purchased during the three and nine months ended September 30, 2023. There were no amounts owed to the Related Party Manufacturer as of September 30, 2023 and December 31, 2022.

Note 12 - Commitments and Contingencies

Litigation

On March 29, 2022, one of the investors in Stryve’s January 2022 private offering sent the Company a letter alleging that the Company has breached “the representations and warranties the Company” made to investors in the definitive agreement. Although Stryve intends to vigorously defend itself against these allegations, Stryve cannot at this time predict whether any litigation will be filed, predict the likely outcome of any future litigation, reasonably determine either the probability of a material adverse result or any estimated range of potential exposure, or reasonably determine how this matter or any future matters might impact the Company's business, its financial condition, or its results of operations, although such impact, including the costs of defense, as well as any judgments or indemnification obligations, among other things, could be materially adverse to us.

The Company has received a letter from a person purporting to be counsel to certain investors in Stryve LLC and the Seller, which letter alleges claims against the Company, Stryve LLC, and the Seller concerning the distribution of Stryve’s equity by the Seller in connection with the Business Combination Agreement by which Stryve acquired Stryve LLC. The Company believes that such allegations are without merit and intends to defend against any claims that may be filed on account of such allegations. Stryve is not able at this time to quantify its exposure for any possible damages arising out of any such claims that may arise from these allegations.

The Company may be a party to routine claims brought against it in the ordinary course of business. After consulting with legal counsel, the Company does not believe that the outcome of any such pending or threatened litigation will have a material adverse effect on its financial condition or results of operations. However, as is inherent in legal proceedings, there is a risk that an unpredictable decision adverse to the Company could be reached. The Company records legal costs associated with loss contingencies as incurred. Settlements are accrued when, and if, they become probable and estimable.

Registration Rights Agreements

22


The Company is a party to various registration rights agreements with certain stockholders where it may be required to register securities for such stockholders in certain circumstances.

Note 13 - Subsequent Events

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements.

23


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

Forward-Looking Statements

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”). We haveThe Company has based these forward-looking statements on ourthe 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. Factors that mightThese risks, uncertainties, assumptions and other important factors, which could cause or contributeactual results to such a discrepancy include, but are not limited to,differ materially from those described in ourthese 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 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 possibility that Stryve may not achieve its financial outlook (vi) Stryve's ability to maintain its listing on the Nasdaq Capital market; (vii) Stryve's ability to 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 (x) other risks and uncertainties described herein and in other filings with the Securities and Exchange Commission (“SEC”) filings. References to “we”, “us”, “our” or the “Company” are to Andina Acquisition Corp. III, except where


Unless
the context otherwise requires, otherwise. all references in this report to “Stryve,” the “Company,” “we,” “us” and “our” herein refer to 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 this reverse stock split, including reclassifying an amount equal to the 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.

Overview

OverviewStryve 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.

WeStryve’s current product portfolio consists primarily of air-dried meat snack products marketed under the Stryve®, Kalahari®, Braaitime®, and Vacadillos® brand names. 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 blank check company formedresult, Stryve’s products are Keto and Paleo diet friendly. Further, based on July 29, 2016 for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar Business Combination with one or more target businesses. We intend to effectuate our initial Business Combination using cash from the proceedsprotein density and sugar content, Stryve believes that its air-dried meat snack products are some of the Initial Public Offeringhealthiest shelf-stable snacks available today.

Stryve distributes its products in major retail channels, primarily in North America, including mass, convenience, grocery, and the sale of the Private Units, our capital stock, debt or a combination of cash, stock and debt.

The issuance of additional ordinary shares or preferred shares:

may significantly reduce the equity interest of our shareholders;
may subordinate the rights of holders of ordinary shares if we issue preferred shares with rights senior to those afforded to our ordinary shares;
will likely cause a change in control if a substantial number of our ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and most likely will also result in the resignation or removal of our present officers and directors; and
may adversely affect prevailing market prices for our securities.

Similarly, if we issue debt securities, it could result in:

default and foreclosure on our assets if our operating revenues after a Business Combination are insufficient to pay our debt obligations;
acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contains covenants that required the maintenance of certain financial ratios or reserves and we breach any such covenant without a waiver or renegotiation of that covenant;
our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and
our inability to obtain additional financing, if necessary, if the debt security contains covenants restricting our ability to obtain additional financing while such security is outstanding.

Results of Operations

We have neither engaged in any operations nor generated any revenues to date. Our only activities through March 31, 2019 were organizational activities and those necessary to prepare for the Initial Public Offering, described below, and, after our Initial Public Offering, identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We generate non-operating income in the form of interest income on marketable securities held in the Trust Account. We are incurring expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance),other retail outlets, as well as directly to consumers through its e-commerce 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 due diligence expenses.Stryve’s products. 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.

For24


New Packaging & Retail Distribution Growth

A key piece of our retail growth strategy is tied to making the product more available and approachable. To accomplish this we completed a strategic redesign of our packaging with retail conversion at the forefront of design considerations. We collaborated with both consumers and retailers as we sought to optimize the packaging for retail conversion. We received a 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 during the second quarter of 2023 and towards the end of the second quarter, our new packaging began to ship to select retailers. Over the last five months, we have seen year-over-year gains in our retail distribution footprint, and price-mix ultimately leading to increased retail sales and market share within measured distribution channels.

We are encouraged by the 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 new packaging continues to roll out over the foreseeable future.

Improving Quality of Revenue

As an extension of the restructuring plans, 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. Key considerations in these rationalization decisions included assessments of strategic alignment, complexity, and profitability. And with respect to assessing the profitability of a particular revenue stream specifically, we evaluated our revenues on a gross margin basis, a net margin basis, and a cash conversion basis. Accordingly, we acknowledge that meaningful portion of net sales in the prior year came from products, customers, and/or channels that have been rationalized. Despite the negative impact to net sales that this rationalization has had, our most valuable revenues are supported by improved trend in the retail consumption of our products.

Optimizing Spend and Reducing Losses

Our third quarter results are a product of the progress we have made on our cost mitigation strategies. We examined every area of spending throughout our business and believe we identified ways to drive efficiencies, eliminate unnecessary expense, and focus on the highest and best use of each dollar. The resulting impact is a 30.7% year-over-year reduction in total operating expenses in the third quarter of 2023, resulting in a 28.5% year-over-year improvement in our Adjusted EBITDA Loss despite lower sales when comparing to the prior year period. We believe that our optimized spending plan has benefited from portfolio-wide price increases taken in 2022 and productivity initiatives throughout our supply chain. While we intend to continue to invest to drive meaningful growth in net sales, we are doing so in a disciplined manner that acknowledges the fundamental changes in direct-to-consumer advertising markets and shopper behavior. 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.

At-The-Market Equity Facility

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 we may offer and sell up to $5.7 million of our Class A common stock from time to time in at-the-market transactions. As of September 30, 2023, $4.7 million remains available under the facility and the following shares were sold:

 

 

Three Months
Ended September 30,

 

 

 

2023

 

 

 

(unaudited)

 

(In thousands, except share and per share information)

 

 

 

Number of common shares sold

 

 

194,949

 

Weighted average sale price per share

 

$

5.37

 

Gross proceeds

 

$

1,048

 

Net proceeds

 

$

1,016

 

April 2023 Financing Transaction

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

25


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 $0.5 million in connection with the discount for the quarter ended September 30, 2023.

Supply Chain Challenges & Increased Cost Environment

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 have continued to have an impact on our financial results in 2023.

We expect many of these inflationary pressures to persist in the near future, including the price of beef, 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 spend throughout the organization.

Investments to Grow Asset Base

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.

Change in Management and Solidifying Strategy

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 first nine months of 2023.

Downstream Inventory Management

We experienced atypical order patterns from our retail and distribution customers in the first half of 2023, 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 2023 year to date net sales 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 2023.

26


Results of Operations –Three Months Ended September 30, 2023 Compared to Three Months Ended September 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 three months ended March 31, 2019, we had net income of $308,767, which consists of interest income on marketable securities held in the Trust Account of $413,855 and an unrealized gain on marketable securities held in our Trust Account of $50, offset by operating costs of $105,138.

ForSeptember 30, 2023 compared to the three months ended March 31, 2018, we had net loss of $1,797, which consists of operating costs of $1,797.September 30, 2022.

 

 

Three Months Ended September 30,

 

 

 

 

2023

 

 

2022

 

 

 

 

(unaudited)

 

 

(unaudited)

(In thousands)

 

 

 

 

% of sales

 

 

 

 

 

% of sales

 

 

SALES, net

 

$

4,180

 

 

 

100.0

%

 

$

6,170

 

 

 

100.0

%

 

COST OF GOODS SOLD (exclusive of depreciation shown separately below)

 

 

3,624

 

 

 

86.7

%

 

 

4,786

 

 

 

77.6

%

 

GROSS PROFIT

 

 

556

 

 

 

13.3

%

 

 

1,384

 

 

 

22.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling expenses

 

 

1,771

 

 

 

42.4

%

 

 

2,641

 

 

 

42.8

%

 

Operations expense

 

 

326

 

 

 

7.8

%

 

 

1,085

 

 

 

17.6

%

 

Salaries and wages

 

 

1,572

 

 

 

37.6

%

 

 

1,940

 

 

 

31.4

%

 

Depreciation and amortization expense

 

 

552

 

 

 

13.2

%

 

 

518

 

 

 

8.4

%

 

Gain loss on disposal of fixed assets

 

 

(11

)

 

 

(0.3

)%

 

 

(50

)

 

 

(0.8

)%

 

Total operating expenses

 

 

4,210

 

 

 

100.7

%

 

 

6,133

 

 

 

99.4

%

 

OPERATING LOSS

 

 

(3,654

)

 

 

(87.4

)%

 

 

(4,748

)

 

 

(77.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER (EXPENSE) INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(1,121

)

 

 

(26.8

)%

 

 

(190

)

 

 

(3.1

)%

 

Change in fair value of Private Warrants

 

 

1

 

 

 

0.0

%

 

 

15

 

 

 

0.2

%

 

Other income (expense)

 

 

2

 

 

 

0.1

%

 

 

(43

)

 

 

(0.7

)%

 

Total other (expense) income

 

 

(1,118

)

 

 

(26.7

)%

 

 

(219

)

 

 

(3.5

)%

 

NET LOSS BEFORE INCOME TAXES

 

$

(4,772

)

 

 

(114.2

)%

 

$

(4,967

)

 

 

(80.5

)%

 

Liquidity and Capital Resources

On January 31, 2019, we consummated the Initial Public Offering of 10,800,000 Units, which includes a partial exerciseNet sales. Net sales decreased by the underwriters of their over-allotment option in the amount of 800,000 Units, at a price of $10.00 per Unit, generating gross proceeds of $108,000,000. Simultaneously with the closing of the Initial Public Offering we consummated the sale of 395,000 Private Units to certain Initial Shareholders and the underwriters at a price of $10.00 per unit, generating gross proceeds of $3,950,000.

Following the Initial Public Offering and the sale of the Private Units, a total of $108,000,000 was placed in the Trust Account and, following the payment of certain transaction expenses, we had approximately $715,000 of cash held outside of the Trust Account and available for working capital purposes. We incurred $3,204,451 in Initial Public Offering related costs, including $2,700,000 of underwriting fees and $504,451 of other costs.

As of March 31, 2019, we had marketable securities held in the Trust Account of $108,413,905 (including approximately $414,000 of interest income, net of unrealized losses) consisting of U.S. Treasury Bills with a maturity of 180 days or less. Interest income on the balance in the Trust Account may be used by us to pay taxes. Through March 31, 2019, we did not withdraw any interest earned on the Trust Account.

For$2.0 million from $6.2 million during the three months ended MarchSeptember 30, 2022 to $4.2 million during the three months ended September 30, 2023, representing a reduction of 32.3% for the comparable periods. The strategic rationalization of revenue was the largest contributor to the year-over-year decline which began in the third quarter of 2022. Further, the prior year period was benefited by a non-normal increase in shipments driven by the catch up of network-wide out of stocks stemming from execution issues the Company experienced in Q2 2022. This dynamic did not exist in the current year period.

Cost of Goods Sold. Cost of goods sold decreased by $1.2 million from $4.8 million in the three months ended September 30, 2022 to $3.6 million in the three months ended September 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 third quarter of 2023 compared to the third quarter of the prior year. That being said, our production scheduling and procurement strategies significantly mitigated the impact these increased beef prices could have had during the quarter.

Gross Profit. Gross profit decreased $0.8 million from $1.4 million in the three months ended September 30, 2022 to $0.6 million in the three months ended September 30, 2023. As a percent of net sales, gross profit was 13.3% in the third quarter of 2023, compared to a 22.4% in the third quarter of 2022. A few primary factors contribute to this performance:

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 lower plant utilization in 2023 which has partially muted the gross margin impact we expected to receive from progress we've made on a unit economic basis.
As we have transitioned to our new packaging we have seen a slower draw down of our legacy packaged product than we had originally expected, particularly for products that have been rationalized, which has led to charges for slow moving and aged inventory as some of this legacy product has had to be written off and or sold through discount channels.

27


Commodity beef prices were higher throughout the three months ended September 30, 2023 as compared to the same period in 2022. We helped mitigate the impact of this through our inventory management and production planning strategies with more of our production occurring before seasonal increases in commodity prices took hold.
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.

Operating Expenses.

Selling expenses. Selling expenses decreased by $0.8 million from $2.6 million in the three months ended September 30, 2022 to $1.8 million in the three months ended September 30, 2023. We decreased our spend with respect to certain marketing efforts including digital media advertising and paid search in the third quarter of 2023 compared to the same period in 2022 in favor of increased focus on strategies to support retail velocities. Further, through 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 expense. Operations expenses decreased by $0.8 million for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022 which was primarily driven by reduced sales volume. Additionally, our overall sales mix in three months ended September 30, 2023 allowed us to utilize more favorable modes of transportation relative to the prior year period which helped contribute to the reduction.
Salaries and wages. Salaries and wages decreased $0.3 million for the three months ended September 30, 2023 compared to the three months ended September 30, 2022, decreasing from $1.9 million to $1.6 million. This decrease is mostly attributable to the restructuring and productivity efforts of the Company.
Depreciation and amortization expense. Depreciation and amortization expense increased $0.1 million from $0.5 million in the three months ended September 30, 2022 to $0.6 million compared to the three months ended September 30, 2023 which stems primarily from the timing of capital expenditures.

Operating Loss. Operating loss decreased by $1.0 million from $4.7 million in the three months ended September 30, 2022 to $3.7 million in the three months ended September 30, 2023 and is primarily attributable to decreased total operating expenses partially offset by lower gross profit.

Interest Expense. Interest expense increased by $0.9 million from $0.2 million in the three months ended September 30, 2022 to $1.1 million in the three months ended September 30, 2023. Interest expense includes non-cash interest of $0.5 million stemming from the 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 the Loan Agreement, $0.1 million related to the PSA, and $0.1 million related to the Notes which were not in place for the entire prior year quarter.

Net Loss Before Income Taxes. Net loss before income taxes decreased $0.2 million from $5.0 million in three months ended September 30, 2022 to $4.8 million in the three months ended September 30, 2023, with the decrease primarily attributable to our restructuring efforts resulting in decreased operating expenses offset by lower gross profit and an increase in interest expense.

28


Results of Operations –Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 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 nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

 

(unaudited)

 

 

(unaudited)

 

(In thousands)

 

 

 

 

% of sales

 

 

 

 

 

% of sales

 

SALES, net

 

$

14,823

 

 

 

100.0

%

 

$

24,537

 

 

 

100.0

%

COST OF GOODS SOLD (exclusive of depreciation shown separately below)

 

 

12,253

 

 

 

82.7

%

 

 

26,454

 

 

 

107.8

%

GROSS PROFIT

 

 

2,570

 

 

 

17.3

%

 

 

(1,917

)

 

 

(7.8

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

Selling expenses

 

 

5,518

 

 

 

37.2

%

 

 

12,873

 

 

 

52.5

%

Operations expense

 

 

1,465

 

 

 

9.9

%

 

 

3,664

 

 

 

14.9

%

Salaries and wages

 

 

5,205

 

 

 

35.1

%

 

 

8,036

 

 

 

32.7

%

Depreciation and amortization expense

 

 

1,656

 

 

 

11.2

%

 

 

1,466

 

 

 

6.0

%

Gain loss on disposal of fixed assets

 

 

(10

)

 

 

(0.1

)%

 

 

(74

)

 

 

(0.3

)%

Total operating expenses

 

 

13,834

 

 

 

93.3

%

 

 

25,964

 

 

 

105.8

%

OPERATING LOSS

 

 

(11,264

)

 

 

(76.0

)%

 

 

(27,881

)

 

 

(113.6

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER (EXPENSE) INCOME

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(2,484

)

 

 

(16.8

)%

 

 

(559

)

 

 

(2.3

)%

Change in fair value of Private Warrants

 

 

20

 

 

 

0.1

%

 

 

100

 

 

 

0.4

%

Other expense

 

 

(5

)

 

 

(0.0

)%

 

 

(259

)

 

 

(1.1

)%

Total other (expense) income

 

 

(2,469

)

 

 

(16.7

)%

 

 

(718

)

 

 

(2.9

)%

NET LOSS BEFORE INCOME TAXES

 

$

(13,733

)

 

 

(92.6

)%

 

$

(28,599

)

 

 

(116.6

)%

Net sales. Net sales decreased by $9.7 million from $24.5 million during the nine months ended September 30, 2022 to $14.8 million during the nine months ended September 30, 2023, representing a reduction of 39.6% for the comparable periods. The primary driver of net sales in the prior year period was a chain-wide limited-time savings event with the one of the nation's largest retailers in the second quarter of 2022. As an extension of our restructuring plans, this program, along with other rationalized revenue, was not repeated during the nine months ended September 30, 2023. The strategic rationalization of revenue was the largest contributor to the year-over-year decline.

Cost of Goods Sold. Cost of goods sold decreased by $14.2 million from $26.5 million in the nine months ended September 30, 2022 to $12.3 million in the nine months ended September 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.

Gross Profit. Gross profit increased $4.5 million from $(1.9) million in the nine months ended September 30, 2022 to $2.6 million in the nine months ended September 30, 2023. As a percent of net sales, gross profit was 17.3% in 2023, compared to a negative 7.8% in 2022. A few primary factors contribute to this performance:

We 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 portfolio-wide price increases in the second half of 2022.
During the second half of 2022 and into the 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 lower plant utilization in 2023 which has partially muted the gross margin impact we expected to receive from progress we've made on a unit economic basis.
We experienced increasing pressure on direct labor wage rates in 2022. These inflationary pressures necessitated increases to our direct labor rates throughout 2022 and resulting in a higher labor rate in 2023 as compared to the prior year period.

29


Operating Expenses.

Selling expenses. Selling expenses decreased by $7.4 million from $12.9 million in the nine months ended September 30, 2022 to $5.5 million in the nine months ended September 30, 2023. We decreased our spend with respect to our marketing efforts including digital media advertising and paid search in 2023 compared to the same period in 2022 in favor of increasing our focus on strategies to support retail velocities. 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. In addition, 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 in 2023.
Operations expense. Operations expenses decreased by $2.2 million for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. In addition to the reduction in volume, our overall sales mix in nine months ended September 30, 2023 allowed us to utilize more favorable modes of transportation relative to the prior year period which helped contribute to the reduction.
Salaries and wages. Salaries and wages decreased $2.8 million for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, decreasing from $8.0 million to $5.2 million. This decrease is mostly attributable to the restructuring and productivity efforts of the Company.
Depreciation and amortization expense. Depreciation and amortization expense increased $0.2 million from $1.5 million in the nine months ended September 30, 2022 to $1.7 million compared to the nine months ended September 30, 2023 which stems primarily from the timing of capital expenditures.

Operating Loss. Operating loss decreased by $16.6 million from $27.9 million in the nine months ended September 30, 2022 to $11.3 million in the nine months ended September 30, 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 $1.9 million from $0.6 million in the nine months ended September 30, 2022 to $2.5 million in the nine months ended September 30, 2023. Interest expense includes non-cash interest of $0.9 million stemming from the accounting treatment of the warrants issued in connection to the debt financing consummated in April 2023. In addition, interest expense increased by $0.2 million related to the Loan Agreement, $0.4 million related to the PSA, and $0.3 million related to the Notes which were not in place in the prior year period.

Net Loss Before Income Taxes. Net loss before income taxes decreased $14.9 million from $28.6 million in nine months ended September 30, 2022 to $13.7 million in the nine months ended September 30, 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.

Non-GAAP Financial Measures

We use non-GAAP financial measures and believe they are useful to investors as 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 measures should be considered along with Net Loss Before Income Taxes, Net Loss and Net Loss per Share, the most closely related GAAP financial measures. Reconciliations between EBITDA, Adjusted EBITDA, Adjusted Earnings per Share, Net Loss Before Income Taxes, Net Loss and 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 Loss before Interest Expense, Income Tax Expense, and Depreciation and Amortization Expense.

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

30


The table below provides a reconciliation of EBITDA and Adjusted EBITDA to Net Loss Before Income Taxes, for the three and nine months ended September 30, 2023 and 2022.

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss before income taxes

 

$

(4,772

)

 

$

(4,967

)

 

$

(13,733

)

 

$

(28,599

)

 

Interest expense

 

 

1,121

 

 

 

190

 

 

 

2,484

 

 

 

559

 

 

Depreciation and amortization expense

 

 

552

 

 

 

518

 

 

 

1,656

 

 

 

1,466

 

 

EBITDA

 

$

(3,099

)

 

$

(4,259

)

 

$

(9,593

)

 

$

(26,574

)

 

Additional Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Severances and One-Time Employee Related Costs

 

 

 

 

 

285

 

 

 

 

 

 

1,631

 

 

One-Time Reserves and Write Downs

 

 

 

 

 

 

 

 

 

 

 

2,562

 

 

Stock Based Compensation Expense

 

 

330

 

 

 

98

 

 

 

948

 

 

 

810

 

 

ATM Facility Setup Fees/Expenses

 

 

93

 

 

 

 

 

 

93

 

 

 

 

 

Legacy Product - Maui Relief Donations & Liquidation Sales

 

 

157

 

 

 

 

 

 

157

 

 

 

 

 

Adjusted EBITDA

 

$

(2,519

)

 

$

(3,876

)

 

$

(8,395

)

 

$

(21,571

)

 

Adjusted EBITDA. The Company improved its negative Adjusted EBITDA by 35.0% when comparing the three months ended September 30, 2023 and 2022 with a $1.4 million improvement year-over-year driven by the Company's rationalized spending. Stryve improved its negative Adjusted EBITDA during the nine months ended September 30, 2023 from $(21.6) million to $(8.4) 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.

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

31


The table below provides a reconciliation of Adjusted Earnings per Share to Basic/Diluted Net Loss per Share, for the three and nine months ended September 30, 2023 and 2022.

 

 

Three Months
Ended September 30,

 

 

Nine Months
Ended September 30,

 

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(In thousands except share and per share information)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(4,779

)

 

$

(4,968

)

 

$

(13,731

)

 

$

(28,636

)

 

Weighted average shares outstanding

 

 

2,237,211

 

 

 

2,066,130

 

 

 

2,143,336

 

 

 

2,037,895

 

 

Basic & Diluted Net Loss per Share

 

$

(2.14

)

 

$

(2.40

)

 

$

(6.41

)

 

$

(14.05

)

 

Additional Adjustments*:

 

 

 

 

 

 

 

 

 

 

 

 

 

Severances and One-Time Employee Related Costs

 

 

 

 

 

0.14

 

 

 

 

 

 

0.80

 

 

One-Time Reserves and Write Downs

 

 

 

 

 

 

 

 

 

 

 

1.26

 

 

Stock Based Compensation Expense

 

 

0.15

 

 

 

0.05

 

 

 

0.44

 

 

 

0.39

 

 

Non-Cash Interest Attributable to Warrants Issued in Connection with Notes **

 

 

0.22

 

 

 

 

 

 

0.41

 

 

 

 

 

ATM Facility Setup Fees/Expenses

 

 

0.04

 

 

 

 

 

 

0.04

 

 

 

 

 

Legacy Product - Maui Relief Donations & Liquidation Sales

 

 

0.07

 

 

 

 

 

 

0.07

 

 

 

 

 

Adjusted Earnings per Share

 

$

(1.66

)

 

$

(2.21

)

 

$

(5.44

)

 

$

(11.60

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* 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 in connection with the discount of $0.5 million and $0.9 million for the three and nine months ended September 30, 2023, respectively.

 

 

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 investors, in addition to bank loans. Our principal uses of cash have been debt service, capital expenditures, working capital, and funding operations. For the nine months ended September 30, 2023, we incurred an operating loss of $11.3 million and used cash in operations of $6.4 million. As of September 30, 2023, the Company has approximately $11.4 million of indebtedness and working capital excluding cash and debt of $3.6 million which compares to the $7.6 million as of December 31, 2019,2022.

During the third quarter of 2022, we secured a term loan in the maximum amount of $6.0 million, with $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 credit with a $8.0 million credit limit subject to accounts receivable and inventory balances. The term loan and asset based line of credit were secured in order to augment our liquidity, as needed, through the execution of management's plan. The Company had drawn $4.0 million of the term loan and $2.9 million (net of repayments) of the asset based line of credit as of September 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

32


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 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 credit facilities and has required us to seek external financing. While we anticipate the 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 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 we may offer and sell up to $5.7 million of our Class A common stock from time to time in at-the-market transactions. The Company sold an aggregate of 194,949 shares were sold under the at-the-market equity facility for gross proceeds of $1.0 million as of September 30, 2023. As of September 30, 2023, $4.7 million remains available under the facility.

Throughout the third quarter of 2023, the Company has strategically managed down its inventory levels, as planned, which has yielded a positive contribution to operating cash flow of approximately $2.0 million.

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, seeking to refinance or extend the term of such debt 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 46.7% reduction in total operating expenses leading to a $14.9 million improvement in our 2023 year to date pre-tax net loss despite lower sales when comparing to the same period in 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. The Company also anticipates further reductions in its inventory levels through the balance of the year which could be a near-term source of liquidity augmenting its existing debt and equity facilities.

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 our condensed consolidated financial statements for the three and nine months ended September 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.

33


Cash Flows. The following tables show summary cash flows information for the nine months ended September 30, 2023 and 2022.

 

 

Nine Months
Ended September 30,

 

 

 

2023

 

 

2022

 

 

 

(unaudited)

 

(In thousands)

 

 

 

 

 

 

Net cash used in operating activities

 

$

(6,397

)

 

$

(25,534

)

Net cash used in investing activities

 

 

(139

)

 

 

(2,281

)

Net cash provided by financing activities

 

 

6,140

 

 

 

29,952

 

Net (decrease) increase in cash and cash equivalents

 

$

(397

)

 

$

2,137

 

Net Cash used in Operating Activities. Net cash used in operating activities was $225,391. Net income of $308,767 was affected by interest earned on marketable securities helddecreased $19.1 million from $25.5 million in the Trust Accountnine months ended September 30, 2022 compared to $6.4 million through the nine months ended September 30, 2023. This decrease is primarily attributable to the decrease in net losses of $413,855,$14.9 million during the nine months ended September 30, 2023, as compared to the prior year period and an unrealized gain on marketable securities heldincrease in our Trust Accountcash flows from inventory of $50 and changes$2.7 million as compared to the prior year period.

Net Cash used in operating assets and liabilities, whichInvesting Activities. Net cash used $120,253 of cash for operating activities.

We intend to use substantially all of the funds heldin investing activities decreased from $2.3 million in the Trust Account, including any amounts representing interest earned on the Trust Account (less taxes payable)nine months ended September 30, 2022, to complete our initial Business Combination. We may withdraw interest from the Trust Account to pay franchise and income taxes. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our initial Business Combination, the remaining proceeds held$0.1 million in the Trust Account will be used as working capital to financenine months ended September 30, 2023, representing a $2.2 million decrease when comparing the operations of the target business or businesses, make other acquisitionssame period year over year. We believe our current manufacturing and pursue our growth strategies.

Following the Initial Public Offering, we entered into a letter agreement with a member of our board of directors that provides for a success fee to be paid to such director upon consummation of a Business Combination with a target business introduced to us by such director in an amount equal to 0.6% of the total consideration paid by us in the transaction, subject to certain minimum and maximum amounts set forth in the agreement.

In addition, we entered into several letter agreements with unaffiliated third parties that provide for a success fee to be paid to each such third party upon consummation of a Business Combination with a target business introduced to us by such third party in amounts ranging from 0.75% to 1% of the total consideration paid by us in the transaction, subject to certain minimum and maximum amounts set forth in the various agreements.

We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.

We do not believe we will need to raise additional funds in orderfulfillment assets are generally sufficient to meet the near-term potential demand for our products and don't foresee the need for significant capital expenditures requiredto facilitate growth in the coming quarters.

Net Cash provided by Financing Activities. Net cash provided by financing activities generated $23.8 million less in cash for operating our business priorthe Company in the nine months ended September 30, 2023, compared to our initial Business Combination. However, if our estimatesthe comparable period a year ago due the January 2022 PIPE transaction. In the nine months ended September 30, 2023, we generated cash from financing activities of $6.1 million primarily driven by the proceeds from the $4.1 million in secured promissory notes, $2.0 million in proceeds from PSA and $1.0 million in proceeds from the at-the-market equity facility.

Debt and credit facilities. The information below represents an overview of the costsCompany’s debt and prior credit facilities.

As of identifyingSeptember 30, 2023 and December 31, 2022, long-term debt consisted of the following:

(In thousands)

 

September 30, 2023

 

 

December 31, 2022

 

 Revenue Loan and Security Agreement, net of debt issuance costs

 

$

3,813

 

 

$

3,889

 

 Broken Stone Agreement

 

 

25

 

 

 

52

 

 Less: current portion

 

 

(318

)

 

 

(245

)

 Total long-term debt, net of current portion

 

$

3,520

 

 

$

3,697

 

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

(In thousands)

 

September 30, 2023

 

 

December 31, 2022

 

 Invoice Purchase and Security Agreement, net of debt issuance costs

 

$

2,754

 

 

$

1,046

 

 Promissory Notes, net of debt discount and debt issuance costs

 

 

3,532

 

 

 

 

 Commercial Premium Finance Agreement

 

 

482

 

 

 

725

 

 Current portion of long-term obligations

 

 

318

 

 

 

245

 

 Total short-term borrowings and current portion of long-term debt

 

$

7,086

 

 

$

2,016

 

34


Future minimum principal payments on debt as of September 30, 2023 are as follows:

2023 (for the remainder of)

 

$

5,213

 

2024

 

 

2,642

 

2025

 

 

589

 

2026

 

 

1,156

 

2027

 

 

1,759

 

Thereafter

 

 

 

 

 

$

11,359

 

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 target business, undertaking in-depth due diligence12% accrued interest rate to help support the working capital and negotiating an initial Business Combinationgrowth 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.

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 less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeemsold through a significantgrowing number of our public shares upon completiontraditional 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 also growing its consumer base through both paid and organic means both online as 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.

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 Business Combination,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 case we may issue additional securitiesincrease 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 incur debt in connection with such Business Combination. If we are unable to complete our initial Business Combination because we do not have sufficient funds available to us, wetraditional retail. The pace of Stryve’s growth rate will be forcedaffected by the repeat usage dynamics of existing and newly acquired customers. The Company utilizes a number of methods to cease operationsdrive repeat behavior including intelligent e-mail and liquidatetext 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 trust account.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.

Off-balance sheet financing arrangementsAbility 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.

35


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 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 March 31, 2019.September 30, 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.

16

Contractual obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term.

Critical Accounting PoliciesEstimates

The preparationOur management’s discussion and analysis of financial condition and results of operations is based on our condensed consolidated financial statements and related disclosureswhich have been prepared in conformityaccordance with accounting principles generally accepted in the United States of America requires management toGAAP. In preparing our financial statements, we make estimates, assumptions, and assumptionsjudgments that affectcan have a significant impact on our reported revenue, results of operations, and comprehensive net income or loss, as well as on the reported amountsvalue of certain assets and liabilities disclosure of contingent assetson our balance sheet during, and liabilities at the dateas 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 statements, and income and expenses during the periods reported. Actualreporting process, actual results could materially differ from those estimates. Weestimates or assumptions.

Our significant accounting policies are 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 identified the followingbeen no changes to our critical accounting policies:

Ordinary shares subject to redemption

We account forpolicies and estimates since our ordinary shares subject to possible conversion in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. Our ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ equity section of our balance sheet.

Net loss per ordinary share

We apply the two-class method in calculating earnings per share. Ordinary shares subject to possible redemption which are not currently redeemable and are not redeemable at fair value, have been excluded from the calculation of basic net loss per ordinary share since such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. Our net income is adjustedAnnual Report on Form 10-K for the portion of income that is attributable to ordinary shares subject to redemption, as these shares only participate in the earnings of the Trust Account and not our income or losses.year ended December 31, 2022.

Recent accounting pronouncements

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements.

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.

FollowingConcentration of credit risk. The balance sheet items that potentially subject the consummationCompany to concentrations of credit risk are primarily cash and accounts receivable. The Company continuously evaluates the Offering,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 net proceedsrisk of loss to be minimal.

As of and for the Offering, including amountsnine months ended September 30, 2023, customer and vendor concentrations in the Trust Account,excess of 10% consolidated sales, purchases accounts receivable, and accounts payable are as follows:

 

 

Sales

 

Purchases

 

Accounts
Receivable

 

Accounts
Payable

Customer A

 

20%

 

 

12%

 

Customer B

 

15%

 

 

 

Customer C

 

11%

 

 

20%

 

Customer D

 

10%

 

 

 

Customer F

 

 

 

15%

 

Vendor A

 

 

39%

 

 

Vendor B

 

 

21%

 

 

Vendor C

 

 

19%

 

 

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 investedused 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 U.S. government treasury bills, notesprevailing

36


market interest rates may affect Stryve’s ability to refinance existing debt or bonds with a maturitysecure 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 invasion of 180 days or less or in certain money market funds that invest solely in US treasuries. Due toUkraine, may have unpredictable effects on the short-term nature of these investments, we believe there will be no associated materialCompany's exposure to interest rate risk.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 loss for the nine months ended September 30, 2023 and the year ended December 31, 2022 and therefore, the risk of this is 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 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 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 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 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

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participationThe Company maintains a system of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended March 31, 2019, as such term is(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this report, our disclosure controls and procedures were effective at a reasonable assurance level and, accordingly, provided reasonable assuranceAct of 1934 (the "Exchange Act") designed to ensure that the information required to be disclosed by usthe 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 SEC’s rules and forms.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.

17

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 September 30, 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 Overover Financial Reporting

There waswere no changechanges 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 most recently completed fiscal quarter covered by this Quarterly Report on Form 10-Qthree months ended September 30, 2023 that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

37


PART II - OTHER INFORMATION

From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of its business. Except 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, 2022.

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

At-The-Market Facility

In July and August 2016, we issuedJune 2023, the Company entered into an aggregate of 2,875,000 ordinary shares to our initial shareholders for an aggregate purchase price of $25,000, or approximately $0.009 per share, in connectionat-the-market equity offering sales agreement with our organization pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended (“Securities Act”). As a result of the underwriters’ election to partially exercise their over-allotment option, 175,000 ordinary shares were forfeited, resulting in an aggregate of 2,700,000 ordinary shares issued and outstanding.

On January 31, 2019, we consummated the Initial Public Offering of 10,800,000 units, including 800,000 units subject to the underwriters’ over-allotment option. Each unit consisted of one ordinary share, one right to receive one-tenth of one ordinary share, and one redeemable warrant, with each warrant entitling the holder to purchase one ordinary share at a price of $11.50 per share. The units were sold at an offering price of $10.00 per unit, generating gross proceeds of $108,000,000. Cowen and Company, LLC and Craig-Hallum Capital Group LLC, acted as joint book-running managersthat 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. The Company sold an aggregate of 194,949 shares under the at-the-market equity facility for gross proceeds of $1.0 million during the three months ended September 30, 2023. As of September 30, 2023, $4.7 million remains available under the facility.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

During the three months ended September 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 offering. The securities sold inCompany that is intended to satisfy the Initial Public Offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-228530) which became effective under Section 8(a)affirmative defense conditions of the Securities Act on January 24, 2019.Rule 10b5-1(c) or non-Rule 10b5-1 trading agreements.

38


Simultaneously with the consummation of the Initial Public Offering, we consummated the Private Placement of 395,000 Private Units at a price of $10.00 per Private Unit, generating total proceeds of $3,950,000, to certain of our initial shareholders and the joint book-running managers of the Initial Public Offering and their respective affiliates. This issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. The Private Units are identical to the units sold in the Initial Public Offering, except that the warrants underlying the Private Units are non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to be held by the initial shareholders or their permitted transferees. The purchasers of the Private Units have agreed (A) to vote the ordinary shares underlying the Private Units in favor of any proposed Business Combination, (B) not to propose, or vote in favor of, an amendment to our amended and restated memorandum and articles of association with respect to our pre-Business Combination activities prior to the consummation of such a Business Combination unless we provide public shareholders with the opportunity to convert their public shares in connection with any such vote, (C) not to convert any ordinary shares underlying the Private Units for cash from the trust account in connection with a shareholder vote to approve a proposed initial Business Combination or a vote to amend the provisions of our amended and restated memorandum and articles of association relating to shareholders’ rights or pre-Business Combination activity, and (D) that the ordinary shares underlying the Private Units shall not participate in any liquidating distribution from the trust account upon winding up if a Business Combination is not consummated. The purchasers of Private Units have also agreed not to transfer, assign or sell any of the Private Units or underlying securities (except to certain permitted transferees) until the completion of our initial Business Combination.

Transaction costs amounted to $3,204,451, consisting of $2,700,000 of underwriting fees and $504,451 of offering costs. In addition, $715,097 of cash was held outside of the trust account established in connection with the Initial Public Offering and was available for working capital purposes.

For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Form 10-Q.

Item 6. Exhibits

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

No.Description of Exhibit
31.1*

Exhibit No.

Document

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**

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).

*Filed herewith.
**Furnished.

SIGNATURES

* Furnished.

39


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.

ANDINA ACQUISITION CORP. III

STRYVE FOODS, INC.

Date: May 14, 2019

By:

/s/ Julio Torres

Date: November 14, 2023

Name: 

By:

Julio Torres

/s/ Christopher Boever

Title:

Name:

Christopher Boever

Title:

Chief Executive Officer and Director

(Principal Executive Officer)

By:

/s/ Mauricio OrellanaR. Alex Hawkins

Name:

Mauricio Orellana

R. Alex Hawkins

Title:

Chief Financial Officer

(Principal Financial and Accounting Officer)

40