cash savings, if any, in U.S. federal, state and local income tax that the Company actually realizes or is deemed to realize as a result of an increase in the tax basis of the net assets of the Company resulting from any redemptions or exchanges of interests in RGF, and certain other tax benefits related to payments made under the TRA. As a result of the Company’s net loss position, there were no amounts due under the TRA as of December 31, 2022. During 2022, the spouse of the Company’s CFO provided certain finance related consulting services to the Company. Expenses related to these services recognized during the year totaled to approximately $133,000, and amounts paid for these serves totaled to approximately $128,000. NOTE 12. COMMITMENTS AND CONTINGENCIES Purchase Commitments The Company has entered into various contracts, in the normal course of business, obligating it to purchase minimum quantities of ingredients used in its production and distribution processes, including cheese, chicken, and other ingredients that are inputs into its finished products. The Company entered into these contracts from time to time to ensure a sufficient supply of raw ingredients. None of these commitments are for durations greater than a year. Accordingly, as of December 31, 2022, the Company had no outstanding long-term commitments. Legal Matters The Company is party to certain claims, litigation, audits, and investigations in the ordinary course of business. The Company records an accrual for a loss contingency when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. As of December 31, 2022 and 2021, the Company’s management has concluded that it was not necessary to accrue amounts related to any pending litigation. NOTE 13. RISKS OF UNCERTAINTIES AND CONCENTRATION OF CREDIT RISK Significant Risks and Uncertainties The Company is subject to those risks common to brands within the frozen food category within the health and wellness industry. Various factors could negatively impact its business, including the Company’s need to increase its net sales from existing customers and acquire new customers in order to execute its growth strategy; ability to introduce or market new or successfully improve existing products; ability to compete successfully within its highly competitive market; dependence on key personnel, suppliers, and co-manufacturers; customer concentration risk, or the loss of a single significant customer; compliance with government regulations; and indebtedness, including the financial restrictions and operating covenants included in the agreements governing such indebtedness, as well as a possibility of being unable to obtain additional financing at terms satisfactory to the Company when needed. Further, changes in any of the following areas could have a significant negative effect on the Company’s financial position, results of operations, and cash flows: rates of revenue growth; its ability to manage inventory or pricing; engagement and usage of its products; effectiveness of its investment of resources to pursue strategies; competition in its market; the stability of food prices; impact of interest rate changes on demand and its costs; and addition or loss of significant customers. During the year ended December 31, 2022, the Company had two customers which each individually comprised greater than 10% of net sales. These customers represented 51% and 18% of net sales, respectively. During the year ended December 31, 2021, the Company had two customers which each individually comprised greater than 10% of net sales. These customers represented 51% and 21% of net sales, respectively. 72
RkJQdWJsaXNoZXIy MTc1MzI0Mw==