Executive Summary

Q1 revenue fell 46% YoY to $2.40M on cash constraints impacting production and affiliate marketing, but gross margin held ~flat at 34.4% (34.1% LY); net loss improved to $4.28M from $16.57M a year ago, aided by lower non-cash/financing charges .
Management launched new products (proprietary high-protein ice cream bars; Greens First children’s multivitamins) and reiterated “buy-and-build” M&A focus; post-quarter, SMFL raised ~$2.5M gross via two registered direct offerings and converted/delevered portions of debt to equity, aiming to stabilize liquidity .
CEO: “Although our revenues decreased in Q1 2023, due to cash constraints and fulfillment delays… we have significantly reduced our losses and improved our cash flow” and expect sales to “rapidly increase” as funding and POs are executed .
Guidance was qualitative: incremental working capital from Q2 funding anticipated to materially impact revenue in 2H23 given a high fixed-cost base; no numeric ranges were provided .
No Wall Street consensus estimates (S&P Global) available for SMFL; no earnings call transcript was found for Q1 2023, limiting beat/miss and Q&A analysis (attempted retrieval; unavailable).

What Went Well and What Went Wrong

What Went Well

Cost discipline and loss reduction: Net loss improved to $4.28M from $16.57M YoY; G&A down 36% YoY to $1.10M; operating loss narrowed vs prior year .
Product pipeline and vertical integration: Launch of proprietary high-protein ice cream bars and Greens First children’s chewable multivitamins; continued plan to migrate acquired brands’ manufacturing to Miami facility to improve margins .
Post-quarter liquidity actions: ~$0.90M and ~$1.59M gross proceeds from two registered direct offerings in May; debt/compensation conversions to Series B Preferred to bolster equity and address Nasdaq equity compliance .

Quotes

CEO: “We are confident that as we execute on the growing sales pipeline and purchase orders, our sales should rapidly increase” .
CFO: “Reduced general and administrative expenses by $626,648, or 36.39% to $1.1 million for Q1 2023… strengthened our balance sheet recently by raising $900,000 in equity financing” .
Chairman: Goal to reach $100M annualized revenues next 12 months (subject to financing), with a $300M revenue objective by Q4 2026 .

What Went Wrong

Sharp revenue decline: Total revenue down 46% YoY to $2.40M; products -42% and advertising -61%, driven by cash constraints limiting raw material purchases and affiliate activity .
Liquidity pressure: Cash balance $86K; working capital deficit ~$15.0M; high-cost debt stack and cash advance obligations required subsequent financings and conversions .
Operating deleverage: Despite stable gross margin %, lower volumes left operating expenses at 149% of revenue; advertising gross margin worsened (costs at 78% of segment revenue) .

Financial Results

Summary P&L and Margins (chronological: oldest → newest)

Metric	Q1 2022	Q2 2022	Q3 2022	Q1 2023
Revenue ($M)	$4.455	$4.3	$5.4	$2.405
Gross Profit ($M)	$1.518	$1.8	$2.6	$0.828
Gross Margin %	34.07%	41.6%	49.1%	34.42%
Net Loss ($M)	$(16.574)	$(3.385)	$(1.948) attributable to common	$(4.284)
Diluted EPS ($)	$(41.06)	—	—	$(5.43)
EBITDA ($M)	$(3.394)	$(1.971)	$(1.001) (EBITDA, derived from table header; Adj EBITDA below)	$(2.048)
Adjusted EBITDA ($M)	$(1.811)	—	$(0.924)	$(1.876)

Notes: “—” = not disclosed in source for that period.

Q1 2023 Segment Detail

Segment	Revenue ($)	Cost of Revenues ($)
Products (Nutraceuticals)	2,059,712	1,307,444
Advertising (Affiliate)	344,855	269,394
Total	2,404,567	1,576,838

Q1 2023 KPIs and Balance/Liquidity Markers

KPI	Q1 2023
Cash and Equivalents	$86,194
Working Capital (Deficit)	$(15.0)M (approx.)
Total Debt (gross)	$22.41M
Debt, net of issuance costs	$21.67M

Comparisons

YoY (Q1’23 vs Q1’22): Revenue -46%, gross margin ~flat (34.4% vs 34.1%), net loss improved by ~$12.3M, EPS improved by ~$35.6/share (reverse split reflected) .
Sequential (vs Q3’22): Revenue down from $5.4M to $2.4M (seasonality and cash constraints); net loss worsened vs Q3’22 ($1.95M) to $4.28M in Q1’23 .
Versus estimates: No S&P Global consensus available; unable to assess beat/miss (see Estimates Context).

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue trajectory	2H 2023	None	Additional working capital from Q2 funding “may have a material impact on revenue” in Q3–Q4 2023; high fixed-cost base implies incremental operating leverage	Qualitative positive
Strategic plan	12 months / LT	Prior statements of M&A-led growth	Target to be at ≥$100M annualized revenue in 12 months (subject to financing) and $300M by Q4’26 (aspirational)	Reiterated long-term targets

No numerical revenue/EPS/margin ranges were issued for Q2 or FY 2023 in the Q1 press release .

Earnings Call Themes & Trends

No Q1 2023 earnings call transcript was found (attempted retrieval; unavailable). Themes below reflect multi-quarter management disclosures from press releases.

Topic	Previous Mentions (Q2–Q3 2022)	Current Period (Q1 2023)	Trend
M&A / Buy-and-Build	Acquired Ceautamed (Greens First), integrating and migrating contract mfg to Miami; LOI for large eCommerce nutraceuticals target; pro-forma revenue commentary	Pipeline “robust”; in negotiation with four transactions (~$75M revenue potential) subject to financing; reiterates $100M/12 months goal	Continued emphasis; contingent on financing
Vertical integration & manufacturing	Expected operating efficiencies from migrating acquired volume to Miami facility	Reaffirms Miami mfg as lever for profitability; sees immediate profitability for facility if target’s ~$5M contract mfg spend is internalized	Integration thesis intact
Liquidity & capital structure	High-cost financing and IPO-related charges weighed on 2022 results	Q1 revenue impacted by cash constraints; post-quarter equity raises and note/comp conversions to equity; seeking improved equity position for Nasdaq	Active repair actions
Product innovation	Building portfolio (Sports Illustrated Nutrition; Greens First)	New proprietary high-protein ice cream bars; Greens First children’s multivitamins	Incremental launches
Macro / supply chain	Not a central focus in disclosures	Production delays tied to financing, not supply chain pricing; freight down YoY	Financing is binding constraint
Operating costs	YOY declines in professional/IPO-related expenses by Q3’22	G&A down 36%; headcount and stock comp lower	Opex reductions continue

Management Commentary

CEO Darren Minton (Q1 PR): “Although our revenues decreased in Q1 2023, due to cash constraints and fulfillment delays, we are confident that as we execute on the growing sales pipeline and purchase orders, our sales should rapidly increase… we have significantly reduced our losses and improved our cash flow” .
Chairman A.J. Cervantes Jr.: “Subject to obtaining necessary financing… goal is to be at a minimum of $100 million in annualized revenues in the next twelve months… objective is $300 million in revenues by the fourth quarter of 2026” .
CFO Alan Bergman: “Reduced general and administrative expenses by $626,648, or 36.39%… raised $900,000 in equity financing… executing ‘Buy and Build’ strategy” .

Q&A Highlights

No earnings call transcript located for Q1 2023; Q&A highlights and tonal read-through are not available (attempted retrieval; none found).

Estimates Context

Wall Street consensus (S&P Global) for revenue/EPS was not available for SMFL for Q1 2023; therefore, beat/miss vs consensus cannot be assessed (attempted to fetch; unavailable).
Implication: In absence of coverage, investor focus likely shifts to liquidity actions, order execution recovery, and the cadence of M&A/funding milestones disclosed in filings and 8-Ks .

Key Takeaways for Investors

Liquidity is the gating factor: Q1 revenue shortfall was financing-driven, not demand/pricing; subsequent equity raises and debt-to-equity conversions were critical steps to restore working capital and maintain listing compliance .
Operating leverage potential: With a high fixed-cost base, management asserts incremental working capital in 2H23 could materially lift revenue and margins as volumes return; execution on POs is the near-term catalyst .
Integration synergies: Migrating third-party manufacturing to the Miami facility and consolidating acquired brands remain key to margin expansion and facility utilization improvement .
Product pipeline supports organic growth: New proprietary functional foods and Greens First line extensions augment volume opportunities alongside B2B channels .
Debt profile still elevated: ~$21.7M net debt at Q1-end underscores the need for continued balance sheet repair; watch for further conversions, refinancings, or asset-light financing to reduce cash interest burden .
M&A remains strategy, but financing-dependent: Management’s $100M/12-month target is aspirational and contingent on capital availability and timely deal closing/integration .
Monitoring list: 2H23 revenue inflection, gross margin trajectory as Miami utilization rises, additional equity/debt actions, and any updates on the prospective eCommerce nutraceuticals acquisition and other pipeline deals .

Additional Context – Post-Quarter Liquidity Actions and Conversions

Registered direct offerings: ~$0.90M gross on May 5, 2023 (94,600 shares + 186,001 pre-funded warrant; investor warrant 280,601 @ $3.08) and ~$1.59M gross on May 19, 2023 (206,600 shares + 378,892 pre-funded; investor warrant 584,892 @ $2.59) .
Debt and compensation conversions: Series B Preferred issuances to convert portions of seller notes (Nexus/Ceautamed), director fees, and executive deferred compensation; company cited Nasdaq equity compliance benefits .
Warrant inducement program (May 29, 2023): Lowered exercise price to $1.30 for 3.51M existing warrants; issued new 5.5-year warrants (200% coverage) at $2.17; expected ~$4.5M gross proceeds from exercises, net ~$4.1M .

All of the above data points come from company filings and press releases; no Wall Street consensus estimates were available for comparison.

Sources:
- Q1 2023 Form 10-Q: revenues, margins, segment detail, EPS, cash/working capital, debt **[1851860_0001213900-23-042008_f10q0323_smartforlife.htm:2]** **[1851860_0001213900-23-042008_f10q0323_smartforlife.htm:3]** **[1851860_0001213900-23-042008_f10q0323_smartforlife.htm:18]** **[1851860_0001213900-23-042008_f10q0323_smartforlife.htm:36]** **[1851860_0001213900-23-042008_f10q0323_smartforlife.htm:39]**
- Q1 2023 8-K/Press Release: revenue, gross profit, net loss, EBITDA/Adj EBITDA, guidance narrative, product launches and strategy **[1851860_0001213900-23-042043_ea178556ex99-1_smartfor.htm:0]** **[1851860_0001213900-23-042043_ea178556ex99-1_smartfor.htm:1]**
- Q2 2022 8-K/Press Release: revenue, gross profit, margin, net loss **[1851860_0001213900-22-048154_ea164437ex99-1_smartforlife.htm:1]** **[1851860_0001213900-22-048154_ea164437ex99-1_smartforlife.htm:0]**
- Q3 2022 8-K/Press Release: revenue, gross profit, margin, net loss, Adj EBITDA **[1851860_0001213900-22-071650_ea168364ex99-1_smartfor.htm:1]** **[1851860_0001213900-22-071650_ea168364ex99-1_smartfor.htm:2]**
- Post-quarter financings, conversions, and warrant inducement: 8-Ks dated May 5, May 23, May 30, 2023 **[1851860_0001213900-23-036655_ea177998-8k_smartfor.htm:1]** **[1851860_0001213900-23-042397_ea179030-8k_smartfor.htm:1]** **[1851860_0001213900-23-043695_ea179431-8k_smartfor.htm:1]** **[1851860_0001213900-23-043695_ea179431-8k_smartfor.htm:4]** **[1851860_0001213900-23-043695_ea179431-8k_smartfor.htm:8]**

SMART FOR LIFE, INC. (SMFL)·Q1 2023 Earnings Summary