RGF 2022 Annual Report

Gross Profit Gross profit increased $3.0 million to $13.2 million for the year ended December 31, 2022, compared to $10.3 million for the prior year period. This increase is due to the increase in sales during 2022. Gross profit as a percentage of sales decreased approximately 2.9% due to the impact of increased manufacturing and raw material costs. Operating Expenses Selling and Distribution Expense The following table sets forth our selling and distribution expense for the periods indicated (dollar amounts in thousands): YearEnded December 31, 2022 2021 $ change % Change Sellinganddistribution.......................... $20,607 $14,965 $5,642 37.7% Percentageofnetsales .......................... 14.6% 17.8% -3.2% Selling and distribution expense increased $5.6 million, or 37.7%, for the year ended December 31, 2022, as compared to the prior year period. Selling and distribution expense increased primarily due to the increase in sales volume. Selling and distribution expense decreased as a percentage of net sales due to gaining economies of scale with regards to our operations and as well as a reduction of distribution costs, as shipping costs continue to normalize. Marketing Expense The following table sets forth our marketing expense for the periods indicated (dollar amounts in thousands): YearEnded December 31, 2022 2021 $ change %Change Marketing .................................... $6,020 $20,649 ($14,628) -70.8% Percentageofnetsales .......................... 4.3% 24.6% -20.3% Marketing expense decreased $14.6 million, or 70.8%, during the year ended December 31, 2022, as compared to the prior year period. Marketing expense decreased primarily due to equity compensation expense recognized at the time of our IPO for approximately $15.8 million. Excluding the impact of equity compensation expense, marketing expense increased approximately $1.2 million primarily due to advertising and promotional costs we incurred to increase household awareness of our brand as well as support our sales growth. Excluding the effects of equity compensation expense, marketing expense decreased 1.5% as a percentage of sales primarily due to our ability to leverage our previous efforts in penetrating new markets. Administrative Expense The following table sets forth our administrative expense for the periods indicated (dollar amounts in thousands): YearEnded December 31, 2022 2021 $ change % Change Administrative ................................ $25,011 $27,792 ($2,781) -10.0% Percentageofnetsales .......................... 17.7% 33.1% -15.4% 43

RkJQdWJsaXNoZXIy MTc1MzI0Mw==