UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10−Q

(Mark One)

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

For the quarterly period ended: ~~March~~June 3130, 2024

☐ 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: 001-41290

SMART FOR LIFE, INC. (Exact name of registrant as specified in its charter)

(Exact name of registrant as specified in its charter)

Nevada		81-5360128
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

990 Biscayne Blvd., Suite 505, Miami, FL		33132
(Address of principal executive offices)		(Zip Code)

(786) 749-1221

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		SMFL		N/A⁽¹⁾

(1)

On March 21, 2025, the Nasdaq Stock Market LLC (“Nasdaq”) filed a Form 25 with the U.S. Securities and Exchange Commission to complete the delisting of the Company’s common stock from The Nasdaq Capital Market, which became effective on March 31, 2025. The deregistration of the common stock under Section 12(b) of the Act will be effective 90 days, or such shorter period as the U.S. Securities and Exchange Commission may determine, after filing of the Form 25. The common stock is currently quoted on the OTC Pink Market maintained by the OTC Markets Group, Inc. under the symbol “SMFL.”

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the 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 ☒		Smaller reporting company ☒
			Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 923, 2025, there were 7,090,728 shares of the registrant’s common stock issued and outstanding.

Smart for Life, Inc.

Quarterly Report on Form 10-Q

Period Ended ~~March~~June 3130, 2024

TABLE OF CONTENTS

PART I
FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3129
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3937
Item 4.	Controls and Procedures	3937
PART II
OTHER INFORMATION
Item 1.	Legal Proceedings	4038
Item 1A.	Risk Factors	4038
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4038
Item 3.	Defaults Upon Senior Securities	4038
Item 4.	Mine Safety Disclosures	4038
Item 5.	Other Information	4038
Item 6.	Exhibits	4139

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

SMART FOR LIFE, INC.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

		Page
Condensed Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023		2
Condensed Consolidated Balance Sheets as of June 30, 2024 (unaudited) and December 31, 2023		2
Condensed Consolidated Statements of Operations for the Three Months ended March 31, 2024 and 2023 (unaudited)		3
Condensed Consolidated Statements of Operations for the Three and Six Months ended June 30, 2024 and 2023 (unaudited)		3
Condensed Consolidated Statement of Changes in Stockholders’ Equity (deficit) for the Three Months ended March 31, 2024 and 2023 (unaudited)		4
Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficit) for the Three and Six Months ended June 30, 2024 and 2023 (unaudited)		4
Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2024 and 2023 (unaudited)		5
Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 2024 and 2023 (unaudited)		6
Notes to Unaudited Condensed Consolidated Financial Statements		67

SMART FOR LIFE, INC. ~~CONDENSED CONSOLIDATED BALANCE SHEETS MARCH 31, 2024 AND DECEMBER 31, 2023~~

CONDENSED CONSOLIDATED BALANCE SHEETS

JUNE 30, 2024 AND DECEMBER 31, 2023

(UNAUDITED)

	March 31, 2024			December 31, 2023
	June 30, 2024			December 31, 2023
	(unaudited)
	(Unaudited)
ASSETS
Current assets:
Cash	$	2131,~~331~~703		$	154,666
Accounts receivable, net		76,761			128,304
Inventory		1964,~~187,773~~359			1,424,989
Related party receivable, net		~~491~~750,~~440~~791			325,942
Prepaid expenses and other current assets		5657,392			152,752
Current assets of discontinued operations		~~18,095~~—			145,057
Total current assets		1,~~851~~881,~~792~~006			2,331,710
Property and equipment, net		~~217~~176,~~355~~346			264,937
Intangible assets, net		76,~~277~~995,~~311~~194			7,135,748
Goodwill		3,045,000			3,045,000
Deposits and other assets		66,291			98,945
Operating lease right-of-use assets		1,~~181~~129,~~068~~940			2,164,862
Assets of discontinued operations		—			4,618,025
Total other assets		11,~~787~~412,~~025~~771			17,327,517
Total assets	$	13,~~638~~293,~~817~~777		$	19,659,227
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	4,~~566~~031,~~806~~369		$	4,078,434
Accrued expenses		3,~~232~~188,~~364~~612			4,093,419
Accrued expenses, related parties		~~343~~394,~~706~~651			264,141
Contract liabilities		~~500~~460,820			500,820
Preferred stock dividends payable		—			450,562
Operating lease liability, current		~~210~~219,~~894~~906			1,104,443
Debt, current, net of unamortized debt discounts		4,017,903			10,702,731
Debt, current, net of debt discounts		3,273,276			10,702,731
Debt, current – related party		29,547			—
Current liabilities of discontinued operations		—			861,358
Total current liabilities		1211,~~872~~598,~~493~~181			22,055,908
Long-term liabilities:
Operating lease liability, noncurrent		1979,~~038,387~~828			1,152,900
Debt, noncurrent, net of unamortized debt discounts		3,057,595			2,190,615
Debt, noncurrent, net of debt issuance cost		1,797,603			2,190,615
Debt, noncurrent – related party		220,543			—
Liabilities of discontinued operations, noncurrent		—			647,258
Total long-term liabilities		42,~~095~~997,~~982~~974			3,990,773
Total liabilities		1614,~~968~~596,~~475~~155			26,046,681
Commitments and contingencies
Stockholders’ Deficit
Stockholders’ Deficit:
Series B Preferred Stock, $0.0001 par value, 5,000,000 shares authorized, 19,512 and 26,239 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively		2			3
Series B Preferred Stock, $0.0001 par value, 5,000,000 shares authorized, 19,512 and 26,239 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		2			3
Series C Preferred Stock, $0.0001 par value, 5,000,000 shares authorized, 19,820 and 0 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively		2			—
Series C Preferred Stock, $0.0001 par value, 5,000,000 shares authorized, 9,731 and 0 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		1			—
Common Stock, $.0001 par value, 7,936,508 shares authorized, 1,023,029 and 373,526 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively		102			37
Common Stock, $0.0001 par value, 7,936,508 shares authorized, 2,464,600 and 373,526 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		246			37
Additional paid in capital		6771,~~234~~472,~~566~~725			61,280,662
Accumulated deficit		(7072,~~564~~775,~~330~~351	)		(67,668,156	)
Total stockholders’ deficit		(31,~~329~~302,~~658~~378	)		(6,387,454	)
Total liabilities and stockholders’ deficit	$	13,~~638~~293,~~817~~777		$	19,659,227

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

SMART FOR LIFE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED ~~MARCH~~JUNE 3130, 2024 AND 2023

(UNAUDITED)

	March 31, 2024			March 31, 2023
	Three Months Ended June 30,						Six Months Ended June 30,
Revenues
	2024			2023			2024			2023
Products	$	478,792		$	1,260,986
Revenues:
Advertising		115			344,855
Products	$	877,799		$	1,324,364		$	1,356,592		$	2,585,351
Total revenues		478,907			1,605,841
Advertising		—			10,616			115			355,471
Cost of revenues
Total revenues		877,799			1,334,980			1,356,707			2,940,822
Products		271,247			968,684
Cost of revenues:
Advertising		—			269,394
Products		471,715			1,012,458			742,963			1,981,142
Total cost of revenues		271,247			1,238,078
Advertising		—			9,121			—			278,515
Gross profit		207,660			367,763
Total cost of revenues		471,715			1,021,579			742,963			2,259,657
Operating expenses
Gross profit		406,084			313,401			613,744			681,165
General and administrative		642,346			994,844
Operating expenses:
Compensation - administrative		375,715			1,334,690
General and administrative		319,736			1,410,904			962,083			2,405,748
Professional services		858,352			303,996
Compensation – administrative		514,684			1,285,447			890,398			2,620,137
Consulting fees – related parties		—			27,547
Professional services		285,289			916,302			1,143,641			1,220,298
Depreciation and amortization expense		323,126			435,795
Consulting fees – related parties		—			—			—			27,547
Total operating expenses		2,199,539			3,096,872
Impairment of intangible assets		—			466,737			—			466,737
Operating loss		(1,991,879	)		(2,729,109	)
Depreciation and amortization expense		323,126			(38,610	)		646,253			397,185
Other income (expenses)
Total operating expenses		1,442,835			4,040,780			3,642,375			7,137,652
Other income (expense)		(23,088	)		23,152
Operating loss		(1,036,751	)		(3,727,379	)		(3,028,631	)		(6,456,487	)
Gain on sale of subsidiary		16,462			—
Other income (expense):
Interest expense		(987,254	)		(1,363,045	)
Other income (expense)		(38,675	)		281,700			(61,762	)		304,852
Total other expenses		(993,880	)		(1,339,893	)
Gain on debt extinguishment		92,396			189,705			92,396			189,705
Loss before income taxes		(2,985,759	)		(4,069,002	)
Loss on sale of subsidiaries		(148,954	)		—			(132,491	)		—
Income tax expense		—			—
Interest expense		(1,078,886	)		(560,581	)		(2,066,140	)		(1,923,626	)
Income (loss) from discontinued operations		89,585			(215,314	)
Total other income (expense)		(1,174,119	)		(89,176	)		(2,167,997	)		(1,429,069	)
Net loss	$	(2,896,174	)	$	(4,284,316	)
Loss from continuing operations	$	(2,210,870	)	$	(3,816,555	)	$	(5,196,628	)	$	(7,885,556	)
Series A preferred stock dividends		—			—
Income (loss) from discontinued operations	$	(152	)	$	(403,441	)	$	89,433		$	(618,755	)
Net loss attributable to common shareholders		(2,896,174	)		(4,284,316	)
Net loss	$	(2,211,021	)	$	(4,219,996	)	$	(5,107,195	)	$	(8,504,311	)
Loss per share basic and diluted	$	(11.13	)	$	(54.55	)
Loss per share, basic and diluted	$	(2.48	)	$	(122.71	)	$	(4.73	)	$	(360.70	)
Weighted average shares outstanding		268,348			78,536
Weighted average shares outstanding, basic and diluted		891,200			34,391			1,079,313			23,577

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

SMART FOR LIFE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE THREE AND SIX MONTHS ENDED ~~MARCH~~JUNE 3130, 2024 AND 2023

(UNAUDITED)

For the Three and Six Months Ended ~~March~~June 3130, 2024

	Preferred Stock						Common Stock				Additional Paid-In			Accumulated
	Shares			Amount			Shares		Amount		Capital			Deficit			Total
Balance, January 1, 2024		26,239		$	3			373,526	$	37	$	61,280,662		$	(67,668,156	)	$	(6,387,454	)
Exercise of warrants		—			—			3,572		—		38,000			—			38,000
Stock-based compensation		—			—			—		—		27,613			—			27,613
Conversion of series B preferred stock to common stock		(6,727	)		(1	)		10,678		1		—			—			—
Conversion of series C preferred stock to common stock		(16,688	)		(2	)		238,399		24		(22	)		—			—
Common stock issued for services		—			—			9,377		1		91,249			—			91,250
Common stock issued for conversion of notes payable		—			—			285,305		29		1,695,833			—			1,695,862
Series C preferred stock issued for conversion of notes payable		36,507			4			—		—		3,650,677			—			3,650,681
Conversion of Series A dividends to common stock		—			—			102,172		10		450,554			—			450,564
Net loss		—			—			—		—		—			(2,896,174	)		(2,896,174	)
Balance, March 31, 2024		39,331		$	4			1,023,029	$	102	$	67,234,566		$	(70,564,330	)	$	(3,329,658	)
Exercise of warrants		—			—			183,370		18		569,885			—			569,903
Conversion of Series C preferred stock to common stock		(10,088	)		(1	)		144,120		14		(13	)		—			—
Common stock issued for conversion of notes payable		—			—			1,069,759		107		3,499,004			—			3,499,111
Warrant exercise for debt settlement		—			—			44,322		4		142,536			—			142,540
Stock-based compensation		—			—			—		—		26,747			—			26,747
Net loss		—			—			—		—		—			(2,211,021	)		(2,211,021	)
Balance, June 30, 2024		29,243		$	3			2,464,600	$	245	$	71,472,725		$	(72,775,351	)	$	(1,302,378	)

For the Three Months Ended March 31, 2023

	Preferred Stock				Common Stock				Additional Paid-In		Accumulated
	Shares		Amount		Shares		Amount		Capital		Deficit			Total
Balance, January 1, 2023		1,000	$	—		77,614	$	8	$	42,630,425	$	(44,992,414	)	$	(2,361,981	)
Exercise of warrants		—		—		978		—		119		—			119
Stock based compensation		—		—		—		—		52,473		—			52,473
Net loss		—		—		—		—		—		(4,284,316	)		(4,284,316	)
Balance, March 31, 2023		1,000	$	—		78,592	$	8	$	42,683,017	$	(49,276,730	)	$	(6,593,713	)

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

SMART FOR LIFE, INC. CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH~~CHANGES ~~FLOW~~IN STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE THREE AND SIX MONTHS ENDED ~~MARCH~~JUNE 3130, 2024 AND 2023

(UNAUDITED)

	March 31, 2024			March 31, 2023
Cash flows from operating activities:
Net loss	$	(2,896,174	)	$	(4,284,316	)
Adjustments to reconcile net loss to net cash used in operating activities:
Gain on sale of subsidiaries		(16,462	)		—
Debt issuance cost		144,595			616,194
Depreciation and amortization expense		323,126			435,795
Stock-based compensation		27,613			52,473
Stock issued for services		91,244			—
Non-cash finance fees		42,635			—
Non-cash operating lease costs, net		(24,268	)		5,768
Changes in operating assets and liabilities:
Accounts receivable, net		51,543			287,818
Inventory		237,216			529,993
Prepaid expenses and other current assets		86,104			(11,242	)
Deposits and other assets		32,654			(4,425	)
Accounts payable		488,373			737,888
Accrued expenses		332,362			682,956
Accrued expenses, related parties		79,565			179,243
Contract liabilities		—			107,898
Discontinued operations		459,737			163,103
Net cash used in operating activities		(540,135	)		(500,854	)
Cash flows from financing activities:
Receipts from related parties		629,041			102,694
Payments to related parties		(544,540	)		—
Proceeds from exercise of warrants		290,000			119
Proceeds from debt		163,500			1,394,000
Repayments on debt		(131,201	)		(929,765	)
Repayments on debt of discontinued operations		—			(96,859	)
Net cash provided by financing activities		406,800			470,189
Net (decrease) in cash		(133,335	)		(30,665	)
Cash, beginning of period		154,666			60,790
Cash, end of period	$	21,331		$	30,125
Supplemental disclosure of cash flow information:
Interest paid	$	13,611		$	111,437
Non-cash investing and financing activities:
Stock issued for exercise of warrants	$	37,998		$	—
Non-cash debt issuance	$	1,155,633		$	—
Conversion of interest to notes payable	$	563,034		$	—

For the Three and Six Months Ended June 30, 2023

	Preferred Stock					Common Stock				Additional Paid-In		Accumulated
	Shares			Amount		Shares		Amount		Capital		Deficit			Total
Balance, January 1, 2023		1,000		$	—		77,614	$	8	$	42,630,425	$	(44,992,415	)	$	(2,361,984	)
Exercise of warrants		—			—		978		—		119		—			119
Stock based compensation		—			—		—		—		52,473		—			52,473
Net loss		—			—		—		—		—		(4,284,315	)		(4,284,316	)
Balance, March 31, 2023		1,000		$	—		78,592		8	$	42,683,017	$	(49,276,730	)	$	(6,593,707	)
Conversion of notes and interest to series B preferred stock		29,398			3		—		—		6,462,688		—			6,462,691
Conversion of series A preferred stock		(1,000	)		—		477		—		—		—			—
Stock based compensation		—			—		—		—		27,735		—			27,735
Stock issued as compensation for license agreement and note amendments		—			—		160		—		99,199		—			99,199
Conversion of board fees to series B preferred stock		135			—		—		—		30,000		—			30,000
Conversion of accrued compensation to series B preferred stock		5,285			1		—		—		1,178,310		—			1,178,311
Exercise of warrants		—			—		41,839		4		5,425,017		—			5,425,021
Shares issued for cash, net		—			—		13,738		1		2,151,309		—			2,151,310
Net loss		—			—		—		—		—		(4,219,996	)		(4,219,996	)
Balance, June 30, 2023		34,818		$	4		134,806	$	13	$	58,057,275	$	(53,496,726	)	$	4,560,564

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

SMART FOR LIFE, INC. ~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2024 AND 2023~~

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(UNAUDITED)

	Six Months Ended June 30,
	2024			2023
Cash flows from operating activities:
Net loss	$	(5,107,195	)	$	(8,504,311	)
Adjustments to reconcile net loss to net cash used in operating activities:
Debt issuance cost		220,135			1,021,292
Loss on sales of subsidiaries		132,491			—
Depreciation and amortization expense		646,254			397,185
Gain on extinguishment of debt		(81,144	)		(189,705	)
Impairment on intangible assets		—			466,737
Stock-based compensation		54,360			80,208
Non-cash conversion of payables to debt		1,115,852			—
Non-cash finance fees		559,694			—
Non-cash expenses paid with debt		99,179			—
Non-cash financing expenses – stock issued for services		91,250			99,200
Non-cash operating lease costs, net		(22,687	)		11,535
Provision for bad debt		—			91,320
Changes in operating assets and liabilities:
Accounts receivable, net		51,543			49,953
Inventory		460,630			625,755
Prepaid expenses and other current assets		95,360			(39,700	)
Deposits and other assets		32,654			(158,974	)
Accounts payable		(47,066	)		(371,498	)
Accrued expenses		(270,962	)		957,616
Accrued expenses, related parties		130,510			297,324
Contract liabilities		(40,000	)		(9,312	)
Discontinued operations		467,570			24,462
Net cash used in operating activities		(1,411,573	)		(5,150,913	)

Cash flows from investing activities:
Additions to property and equipment		—			(3,450	)
Net cash used in investing activities		—			(3,450	)

Cash flows from financing activities:
Receipts from related parties		1,245,453			89,000
Payments to related parties		(1,420,304	)		—
Proceeds from issuance of common stock, net		—			2,151,310
Proceeds from exercise of warrants		1,781,500			5,425,140
Proceeds from debt		163,500			2,053,071
Repayments on debt		(231,244	)		(4,309,934	)
Repayment of debt of discontinued operations		(250,295	)		—
Net cash provided by financing activities		1,288,610			5,408,587

Net increase (decrease) in cash		(122,963	)		254,224
Cash, beginning of period		154,666			60,790
Cash, end of period	$	31,703		$	315,014

Supplemental disclosure of cash flow information:
Interest paid	$	17,096		$	242,605

Non-cash investing and financing activities:
Debt issued in connection with acquisition	$	—		$	65,129
Stock issued for exercise of warrants	$	607,903		$	—
Warrant exercise for debt settlement		142,540			—
Non-cash original issue debt discount		26,113			—
Conversion of notes payable to equity		142,779			—
Conversion of interest to equity		512,335			—
Conversion of interest to notes payable	$	121,510		$	—

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

SMART FOR LIFE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(UNAUDITED)

Note 1 — Description of Business

Smart for Life, Inc., formerly Bonne Santé Group, Inc. (“SMFL”), is a Nevada corporation which was originally formed in the State of Delaware on February 7, 2017 and converted to a Nevada corporation on April 10, 2023. Structured as a global holding company, it is engaged in the development, marketing, manufacturing, acquisition, operation and sale of a broad spectrum of nutraceutical and related products with an emphasis on health and wellness.

On March 8, 2018, SMFL acquired 51% of Millenium Natural Manufacturing Corp. and Millenium Natural Health Products, Inc. On October 8, 2019, SMFL entered into an agreement to acquire the remaining 49% of these companies, subject to certain conditions which were subsequently met. On September 30, 2020, the name of Millenium Natural Manufacturing Corp. was changed to Bonne Sante Natural Manufacturing, Inc. (“BSNM”), and on November 24, 2020, Millenium Natural Health Products Inc. was merged into BSNM. Based in Doral, Florida, BSNM operates a 22,000 square-foot FDA-certified manufacturing facility. It manufactures nutritional products for a significant number of customers. On March 6, 2024, the Company entered into a sale and leaseback agreement relating to BSNM as more fully described under Note 2.

On July 1, 2021, SMFL acquired Doctors Scientific Organica, LLC d/b/a Smart for Life, Oyster Management Services, Ltd., Lawee Enterprises, L.L.C. and U.S. Medical Care Holdings, L.L.C. On August 27, 2021, SMFL transferred all of the equity interests of Oyster Management Services, Ltd., Lawee Enterprises, L.L.C. and U.S. Medical Care Holdings, L.L.C. to Doctors Scientific Organica, LLC. On May 19, 2022, SMFL acquired Lavi Enterprises, LLC. On the same date, SMFL transferred all of the equity interests of Lavi Enterprises, LLC to Doctors Scientific Organica, LLC. On December 13, 2022, Oyster Management Services, Ltd. was converted to a limited liability company known as Oyster Management Services, L.L.C. As a result of the foregoing, Oyster Management Services, L.L.C., Lawee Enterprises, L.L.C., U.S. Medical Care Holdings, L.L.C. and Lavi Enterprises, LLC are now wholly owned subsidiaries of Doctors Scientific Organica, LLC (collectively, “DSO”). Based in Riviera Beach, Florida, DSO operates a 30,000 square-foot FDA-certified manufacturing facility. DSO manufactures and sells weight management foods and related products. Additionally, DSO provides manufacturing services for other customers.

On August 24, 2021, Smart for Life Canada Inc. (“DSO Canada”) was established as a wholly owned subsidiary of Doctors Scientific Organica, LLC in Canada. SMFL Canada sells retail products through a retail store location in Montreal Canada and the same location also acts as distribution center for international direct to consumer and big box customers. On January 8, 2024, the retail store location was closed.

On November 8, 2021, SMFL acquired 100% of Nexus Offers, Inc. (“Nexus”). Nexus is a network platform in the affiliate marketing space. Affiliate marketing is an advertising model in which a product vendor compensates third-party digital marketers to generate traffic or leads for the product vendor’s products and services. The third-party digital marketers are referred to as affiliates, and the commission fee incentivizes them to find ways to promote the products being sold by the product vendor. Based in Miami, Florida, Nexus operates virtually.

On December 6, 2021, SMFL acquired 100% of GSP Nutrition Inc. (“GSP”). GSP is a sports nutrition company that offers nutritional supplements for athletes and active lifestyle consumers. Based in Miami, Florida, GSP operates virtually.

On July 29, 2022, SMFL acquired Ceautamed Worldwide, LLC and its wholly-owned subsidiaries Wellness Watchers Global, LLC and Greens First Female LLC (collectively, “Ceautamed”). Ceautamed is based in Boca Raton, Florida and owns the Greens First line of branded products which have been specifically marketed to the healthcare provider sector. On January 29, 2024, the Company entered into an asset purchase agreement pursuant to which the Company agreed to sell nearly all of the assets of Ceautamed for a 49% ownership interest in a new limited liability company, First Health FL LLC, or First Health. The agreement included an option for the 51% owner to purchase the remaining 49% for $1.00 at an unspecified future date. On October 1, 2024, such owner elected to exercise the option, effective as of October 2, 2024, paid to the Company the option price of $1.00, and the Company delivered the remaining 49% interest in First Health to such owner.

On August 15, 2022, SMFL entered into a joint venture with a seller of Ceautamed to form Smart Acquisition Group, LLC. This subsidiary was 50% owned by the Company and 50% owned by Stuart Benson, the former owner and principal of Ceautamed. This company was formed to expand M&A growth initiatives through the identification, negotiation, financing and acquisition of companies by SMFL. On September 22, 2023, we dissolved this subsidiary.

SMART FOR LIFE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2024 AND 2023 (UNAUDITED)

Note 2 — Summary of Significant Accounting Policies

Principles of Consolidation

The condensed consolidated financial ~~statements~~ statements reflect the consolidated operations of SMFL, and its wholly owned subsidiaries DSO, DSO Canada, Nexus, GSP and BSNM (collectively, the “Company”) , and are prepared in the United States Dollars in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Ceautamed has been deemed to be a discontinued operation. Intercompany balances and transactions have been eliminated in consolidation.

Reclassifications

Certain prior period amounts have been reclassified to conform with the current year presentation.

Reclassifications - Discontinued Operations to Continued Operations

The 2023 financials have been reclassified from reporting BSNM as discontinued operations to continued operations due to a change in the plan of the sale / leaseback of BSNM. In December 2023, with the board’s approval, the Company planned to sell BSNM. The Company had a buyer, who signed an offer letter, but was unable to work out the economics of the deal and therefore had not closed the transaction. Following this, in October 2024, management and the board revised its decision to sell BSNM and continue operating the business line. Also in October 2024, the Company started moving most of the equipment and much of the usable inventory to its Riviera Beach facility. The Company also surrendered the BSNM facility in November 2024 back to the landlord. As a result, the classification of BSNM has been revised in accordance with Accounting Standards Codification (“ASC”) 360-10, Property, Plant, and Equipment. The results of BSNM have been reclassified from discontinued operations to continuing operations for all periods presented to ensure comparability of the financial statements. The impact of the reclassification on previously reported amounts is summarized below:

1. Reclassification of $505,643 of operating income, $834,487 in cost of goods sold, $1,167,481 in expenses and $58,808 in other expense from discontinued operations to continuing operations.

2. Adjustment to depreciation and amortization expenses, as BSNM is no longer classified as held for sale.

3. Reclassification of $1,401,300 in assets and $3,062,749 in liability balances to reflect continuing operations.

The comparative financial statements for the years ended December 31, 2023 and 2024, have been adjusted accordingly.

Ceautamed has been deemed to be a discontinued operation (see Note 3).

These reclassifications did not impact previously reported net income, earnings per share, or the Company’s consolidated financial position.

Basis of Presentation

The Company’s fiscal year end is December 31. The Company uses the accrual method of accounting. The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements. The balance sheet as of December 31, 2023 ~~balance sheet~~ has been ~~derived~~ derived from audited consolidated financial statements.

The accompanying unaudited condensed consolidated financial statements for the three and six months ended ~~March~~June 3130, 2024 and 2023 have been prepared in accordance with GAAP for interim ~~financial~~ financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). ~~Certain information and note disclosures normally included in the Company’s annual financial statements have been condensed or omitted.~~ Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements.

~~SMART~~The ~~FOR~~unaudited ~~LIFE,~~financial ~~INC.~~information included in ~~NOTES~~this TOreport ~~CONDENSED~~includes ~~CONSOLIDATED~~all ~~FINANCIAL~~adjustments ~~STATEMENTS~~(consisting ~~THREE~~of ~~MONTHS~~normal ~~ENDED~~recurring ~~MARCH~~adjustments) 31which are, ~~2024~~in ~~AND~~the ~~2023~~opinion of management, necessary to ~~(UNAUDITED)~~reflect a fair statement of the results for the interim periods. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results of the full fiscal year.

The condensed consolidated financial statements included in this report should be read in conjunction with the financial statements and notes thereto included in the Company’s financial statements for the fiscal year ended December 31, 2023.

The unaudited financial information included in this report includes all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary to reflect a fair statement of the results for the interim periods. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results of the full fiscal year.

On April 24, 2023, the Company effected a 1-for-50 reverse stock split of its outstanding common stock. The impact of this transaction is reflected within all common stock, options, and warrant information retrospectively in these condensed consolidated financial statements.

On August 2, 2023, the Company effected a 1-for-3 reverse stock split of its authorized and outstanding common stock. The impact of this transaction is reflected within all common stock, options, and warrant information retrospectively in these consolidated financial statements. As a result of the reverse stock split, the Company’s authorized common stock decreased to 166,666,667 shares.

On October 27, 2023, the Company effected a 1-for-3 reverse stock split of its authorized and outstanding common stock. The impact of this transaction is reflected within all common stock, options, and warrant information retrospectively in these consolidated financial statements. As a result of the reverse stock split, the Company’s authorized common stock decreased to 55,555,556 shares.

On April 22, 2024, the Company effected a 1-for-7 reverse stock split of its authorized and outstanding common stock. The impact of this transaction is reflected within all common stock, options, and warrant information retrospectively in these consolidated financial statements. As a result of the reverse stock split, the Company’s authorized common stock decreased to 7,936,508 shares.

Liquidity, Capital Resources and Going Concern

The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has sustained recurring losses and has a deficiency in working capital of approximately $119.07 million at ~~March~~June 3130, 2024, which raises substantial doubt about its ability to to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might result from ~~the~~ the outcome of this uncertainty.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. These estimates include, among other items, assessing the collectability of receivables, the realization of deferred taxes, useful lives and recoverability of tangible and intangible assets, assumptions used in the valuation of options, the computation of revenue based on the proportional delivery of services, and accruals for commitments and contingencies. Some of these estimates can be subjective and complex and, consequently, actual results could differ materially from those estimates.

Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three (3) months or less to be cash equivalents. At ~~March~~June 3130, 2024 and December 31, 2023, there were no cash equivalents.

SMART FOR LIFE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2024 AND 2023 (UNAUDITED)

Accounts Receivable and Allowance for Doubtful Accounts

The Company’s accounts receivable consists primarily of receivables from customers. The balance is presented net of an allowance for expected credit losses. The Company monitors the financial condition of its customers and records the allowance for expected credit losses on receivables when it believes customers are unable to make their required payments based on factors such as delinquencies and aging trends. The allowance for expected credit loss is the Company’s best estimate of the amount of probable credit losses related to existing accounts receivable. Accounts receivable are presented net of an allowance for expected credit losses of $22,686 and $22,~~868~~686 at ~~March~~June 3130, 2024 and December 31, 2023, respectively.

Inventory

Inventory consists of raw materials, packaging materials, and finished goods and is valued at the lower of cost (first-in, first-out) (replacement cost or net realizable value). An allowance for inventory obsolescence is provided for slow moving or obsolete inventory to write down historical cost to net realizable value. The Company primarily performs its manufacturing for functional foods and nutraceuticals in the form of bars, cookies, powders, tablets and capsules.

The allowance for obsolescence is an estimate established through charges to cost of goods sold. Management’s judgment in determining the adequacy of the allowance is based upon several factors which include, but are not limited to, analysis of slow-moving inventory, analysis of the selling price of inventory, the predetermined shelf life of the product, and management’s judgment with respect to current economic conditions. Given the nature of the inventory, it is reasonably possible the Company’s estimate of the allowance for obsolescence will change in the near term.

Property and Equipment

Property and equipment are recorded at cost. Expenditures for major betterments and additions are charged to the asset accounts, while replacements, maintenance and repairs which do not improve or extend the lives of the respective assets are charged to expense as incurred. The Company provides for depreciation and amortization over the estimated useful lives of various assets using the straight-line method ranging from 3-7 years.

Goodwill

The Company allocates goodwill to reporting units based on the reporting unit expected to benefit from the business combination. The Company evaluates its reporting units on an annual basis and, if necessary, reassign goodwill using a relative fair value allocation approach. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on December 31 and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.

No goodwill impairments were recognized during the three and six months ended ~~March~~June 3130, 2024 and 2023.

Intangible Assets

Intangible assets consist of customer contracts, developed technology, non-compete agreements, license agreements, and intellectual property acquired in the acquisitions of BSNM, DSO, Nexus, GSP, and Ceautamed. The Company amortizes intangible assets with finite lives on a straight-line basis over their estimated useful lives which ranges from 3 to 15 years.

Long-Lived Assets

The Company assesses potential impairments to its long-lived assets when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recovered. An impairment loss is recognized when the undiscounted cash flows expected to be generated by an asset (or group of assets) is less than its carrying amount. Any required impairment loss is measured as the amount by which the asset’s carrying value exceeds its fair value and is recorded as a reduction in the carrying value of the related asset and a charge to operating results.

SMART FOR LIFE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2024 AND 2023 (UNAUDITED)

Lease Right-of-Use Assets and Liabilities

The Company records a right-of-use asset and lease liability on the condensed consolidated balance ~~sheet~~sheets for all leases with terms longer than 12 months. Leases are classified either as finance or operating with the classification affecting the pattern of expense recognition.

Related Parties

The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions (see Note 13).

Debt Issuance Costs

In accordance with ASC 835-30, “Other ~~Presentation~~ Presentation Matters”,” the Company has reported debt issuance cost as a deduction from the carrying amount of debt and amortizes ~~these~~ these costs using the effective interest method over the term of the debt as interest expense.

Fair Value Measurement

Under ASC Topic 820, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., an exit price). ASC Topic 820 establishes a hierarchy for inputs to valuation techniques used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that reflect assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. There are three levels to the hierarchy based on the reliability of inputs, as follows:

	Level 1 -	Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

	Level 2 -	Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets and liabilities in markets that are not active.

	Level 3 -	Unobservable inputs for the asset or liability. The degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3.

The Company’s cash and cash equivalents are measured using Level 1 inputs and include cash on hand, deposits in banks, certificates of deposit and money market funds. Due to their short-term nature, the carrying amounts reported in the consolidated balance sheets approximate the fair value of cash and cash equivalents.

The Company has certain assets that are measured at fair value on a non-recurring basis including those described in Note 6, and are adjusted to fair value only when the carrying values are more than the fair values. The categorization of the framework used to price the assets is considered a Level 3 measurement due to the subjective nature of the unobservable inputs used to determine the fair value.

Certain nonfinancial assets and liabilities are measured at fair value on a non-recurring basis and are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. The estimated fair value of financial instruments is determined using the best available market information and appropriate valuation methodologies. Considerable judgment is necessary, however, in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented are not necessarily indicative of the amounts that the Company could realize in a current market exchange, or the value that ultimately will be realized upon maturity or disposition. In the evaluation of the estimated value of such assets, data for determining the value of the estimates are utilized based on the relevant facts and circumstances. The use of different market assumptions may have a material effect on the estimated fair value amounts.

SMART FOR LIFE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2024 AND 2023 (UNAUDITED)

Revenue Recognition

The Company evaluates and recognizes ~~revenue~~ revenues by:

●

identifying the contract(s) with the customer,

●

identifying the performance obligations in the contract,

●

determining the transaction price,

●

allocating the transaction price to performance obligations in the contract; and

●

recognizing revenue as each performance obligation is satisfied through the transfer of a promised good or service to a customer (i.e., “transfer of control”).

Products (BSNM, DSO, GSP, and Ceautamed)

The Company generates product revenues by ~~manufacturing~~ manufacturing and packaging of nutraceutical products as a contract manufacturer for customers. The majority of the Company’s revenue is recognized when it satisfies a single performance obligation by transferring control of its products to a customer. Control is generally transferred when the Company’s products are either shipped or delivered based on the terms contained within the underlying contracts or agreements. The Company’s general payment terms are short-term in duration. For the three months ended ~~March~~June 3130, 2024, revenue was made up of contract manufacturing of $0 and ~~2023~~$794,240, and online marketing of $478,792 and $530,124, respectively. For the six months ended June 30, 2024, revenue was made up of contract manufacturing of $0 and $~~441~~1,~~749~~279,009, online ~~marketplace~~marketing of $~~498~~1,~~792~~354,092 and $~~759~~1,~~013~~298,088, wholesale of $0 and $338,~~578~~254, and direct ~~sales~~ marketing of $02,500 and $260,~~646,~~ respectively,. The Company does not have significant financing components or payment terms. The Company records deferred revenues for prepaid amounts from customers due to no performance obligations being met at such time. The Company had unsatisfied ~~performance~~ performance obligations of $~~496~~456,762 and $496,762 at ~~March~~June 3130, 2024 and December 31, 2023, respectively.

Distribution expenses to transport the Company’s products, where applicable, and warehousing expense after manufacture are accounted for within operating expenses.

Advertising /Marketing (Nexus)

Nexus generates advertising revenue when sales of listed products are sold by product vendors through its network as a result of the marketing efforts of digital marketers. The products on the network come from several different customers, which pay Nexus a specific amount per sale, the amount of which is dictated by the customer. The revenue is recognized upon the sale of a product by the customer, net of fraudulent traffic or disputed transactions. A portion of the specific amount received by Nexus for that sale is paid out to the digital marketer as a commission, which is recorded in cost of sales.

Nexus’ general payment terms are short-term in duration. Nexus does not have significant financing components or payment terms. Nexus had unsatisfied performance obligations of $4,~~057 and~~058 ~~$4,057~~ at ~~March~~June 3130, 2024 and December 31, 2023~~, respectively~~.

Freight

~~For~~Freight costs for the ~~three~~six months ended ~~March~~June 3130, 2024 and 2023, ~~freight~~were ~~costs amounted to~~ $6373,~~946~~705 and $6089,~~135~~167, respectively,. ~~and~~Freight ~~have~~costs ~~been~~for ~~recorded~~the inthree ~~cost~~months ofended ~~goods~~June ~~sold~~30, in2024 ~~the~~and ~~accompanying~~2023 ~~unaudited condensed~~were ~~consolidated~~$41,732 ~~statements~~and $30,693, ~~of operations~~respectively.

Advertising

Advertising costs are expensed as incurred. Advertising costs for the ~~three~~six months ended ~~March~~June 3130, 2024 and 2023 were $71177,~~033~~595 and $~~281~~851,~~392~~794, respectively. Advertising costs for the three months ended June 30, 2024 and 2023 were $106,562 and $225,702, respectively.

SMART FOR LIFE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2024 AND 2023 (UNAUDITED)

Paycheck Protection Program

The Company records Paycheck Protection Program (“PPP”) loan proceeds in accordance with ASC 470, “Debt”.” Debt is extinguished when either the debtor pays the creditor or the debtor is legally released from being the primary obligor, either judicially or by the creditor.

Stock-based Compensation

The Company recognizes expense for stock options and warrants granted over the vesting period based on the fair value of the award at the grant date and valued using a Black-Scholes option pricing model to determine the fair market value of the stock options and warrants. Forfeitures are reduced from ~~warrants~~options and warrants outstanding and the Company calculates the amount of tax benefit available by tracking each stock option award on an employee-by-employee basis and on a grant-by-grant basis. The Company then compares the recorded expense to the tax deduction received for each stock option and warrant grant. The Company’s policy is to recognize forfeitures as they occur.

Income Taxes

The Company accounts for income taxes under the provisions of ASC 740, “Income Taxes”. The Company records a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated. At ~~March~~June 3130, 2024 and December 31, 2023, the Company had no liabilities for uncertain tax positions. The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. The Company’s tax years subject to examination by tax authorities generally remain open for three (3) years from the date of filing.

The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. Due to the continued losses, the Company has recorded a full valuation allowance at the end of March 31, 2024 and December 31, 2023.12

Employee Retention Credits

In accordance with the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), the Company filed for Employee Retention Credits for applicable periods in 2020 and 2021. As amounts to be refunded are subject to IRS calculations, and the timing for processing of the credits are unknown, the Company recognizes as other income amounts refunded upon the receipt of the payment. During the ~~three~~six months ended ~~March~~June 3130, 2024 and 2023, the ~~Company~~ Company received $0 and $586,556, respectively.

Recent Accounting Standards Adopted

On August 5, 2020, the Financial Accounting Standards Board (“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),” which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in GAAP. This ASU is effective for fiscal years beginning after December 31, 2023. The adoption of this guidance did not materially impact the financial statements.

SMART FOR LIFE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2024 AND 2023 (UNAUDITED)

Recent Accounting Standards Not Yet Effective

In December 2023, the FASB issued ASU No. 2023-09, “Improvements to Income Tax Disclosures”. The ASU is intended to improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation, as well as income taxes paid disaggregated by jurisdiction. The ASU is effective for annual periods beginning after December 15, 2024 and should be applied on a prospective basis, but retrospective application is permitted. We are currently assessing the impact that this ASU will have on the Company’s financial statements.

In March 2024, the FASB issued ASU 2024-02, “Codification Improvements – Amendments to Remove References to the Concept Statements”. The ASU is part of the Board’s standing project to make “Codification updates for technical corrections such as conforming amendments, clarifications to guidance, simplifications to wording or the structure of guidance, and other minor improvements.” We are currently assessing the impact that this ASU will have on the Company’s financial statements.

In November 2024, the FASB issued ASU No. 2024-03, “Disaggregation of Income Statement Expenses”. The ASU is intended to improve financial reporting by requiring disaggregated disclosure of certain costs and expenses. The ASU is effective for fiscal years beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The ASU may be applied on either a prospective or retrospective basis. We are currently assessing the impact that this ASU will have on the Company’s financial statements.

The Company has reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a material impact on the Company’s financial statements.

Note 3 — Discontinued Operations

ASC 360, “Property, Plant, and Equipment” requires that a long-lived asset (disposal group) to be sold shall be classified as held for sale in the period in which a set of criteria have been met, including criteria that the sale of the asset (disposal group) is probable, and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. On January 29, 2024, the Company contributed nearly all of the assets of Ceautamed into First Health for a 49% ownership of First Health.

SMART FOR LIFE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2024 AND 2023 (UNAUDITED)

For comparability purposes, certain prior period line items relating to the assets held for sale have been reclassified and presented as discontinued operations for all periods presented in the accompanying consolidated statements of operations, consolidated statements of cash flows, and the consolidated balance sheets.

In accordance with ASC 205-20-S99, “Allocation of Interest to Discontinued Operations,” the Company elected to not allocate consolidated interest expense to discontinued operations where the debt is not directly attributable to or related to discontinued operations.

The following information presents the major classes of line item of assets and liabilities included as part of discontinued operations in the consolidated balance sheets as of ~~March~~June 3130, ~~2024~~ 2024 and December 31, 2023:

	March 31, 2024		December 31, 2023
	June 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash	$	~~18,095~~—	$	29,872
Accounts receivable, net		—		18,688
Inventory		—		89,997
Prepaid expenses and other current assets		—		6,500
Total current assets		~~18,095~~—		145,057
Property and equipment, net		—		4,188
Intangible assets, net		—		3,765,962
Operating lease right-of-use assets		—		702,818
Total other assets		—		4,472,968
Total assets	$	~~18,095~~—	$	4,618,025
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	—	$	528,129
Accrued expenses		—		109,623
Contract liabilities		—		99,408
Lease liability, current		—		72,431
Debt, current, net of debt discounts		—		51,767
Total current liabilities		—		861,358
Long-term liabilities:
Lease liability, noncurrent		—		647,258
Total long-term liabilities		—		647,258
Total liabilities	$	—	$	1,508,616

~~SMART~~The ~~FOR~~following ~~LIFE,~~information ~~INC.~~presents the major classes ~~NOTES~~of TOline ~~CONDENSED~~items ~~CONSOLIDATED~~constituting ~~FINANCIAL~~the ~~STATEMENTS~~after-tax ~~THREE~~loss ~~MONTHS~~from ~~ENDED~~discontinued ~~MARCH~~operations 31in the consolidated statements of operations for the six months ended June 30, 2024 ~~AND~~and 2023 ~~(UNAUDITED)~~:

The following information presents the major classes of line items constituting the after-tax loss from discontinued operations in the consolidated statements of operations for the three months ended March 31, 2024 and 2023:

	June 30, 2024			June 30, 2023
Revenues
Products	$	158,612		$	991,492
Cost of revenues
Products		18,989			562,872
Gross profit		139,624			428,620
Operating expenses
General and administrative		28,542			93,596
Compensation		18,205			125,286
Professional services		—			(4,000	)
Depreciation and amortization expense		—			546,203
Total operating expenses		46,747			761,085
Operating profit (loss)		92,877			(332,465	)
Other income (expense)
Other income (expense)		—			8,826
Gain on extinguishment of debt		—			67,332
Interest expense		(3,444	)		(147,133	)
Total other income (expense)		(3,444	)		(70,976	)
Net income (loss) from discontinued operations		89,433			(403,441	)
Income tax expense		—			—
Net income (loss)	$	89,433		$	(403,441	)

	March 31, 2024			March 31, 2023
Revenues
Products	$	158,612		$	953,179
Cost of revenues
Products		18,988			493,214
Gross profit		139,624			459,965
Operating expenses
General and administrative		28,390			100,363
Compensation		18,205			137,684
Depreciation and amortization expense		—			255,415
Total operating expenses		46,595			493,462
Operating profit (loss)		93,029			(33,497	)
Other income (expense)
Interest expense		(3,444	)		(181,817	)
Total other income (expense)		(3,444	)		(181,817	)
Income (loss) from discontinued operations		89,585			(215,314	)
Income tax expense		—			—
Net income (loss) from discontinued operations	$	89,585		$	(215,314	)

Note 4 — Inventory

Inventory consisted of the following:

	March 31, 2024		December 31, 2023
	June 30, 2024		December 31, 2023
Raw materials	$	~~400~~270,~~614~~800	$	386,860
Packaging materials		~~750~~659,~~030~~430		755,059
Finished goods		3734,129		283,070
		1,187,773		1,424,989
		964,359		1,424,989
Less: allowance for obsolescence		—		—
	$	1964,~~187,773~~359	$	1,424,989

Note 5 — Property and Equipment

Property and equipment consisted of the following:

	Estimated Useful Lives (in Years)	~~March 31, 2024~~	June 30, 2024			~~December 31, 2023~~	December 31, 2023
Furniture and fixtures	7	$	~~4,461~~$	4,461		$	~~9,135~~$	9,135
Equipment – manufacturing	5		~~1,338,218~~	1,338,218			~~1,338,218~~	1,338,218
Building and equipment	5		~~3,840~~	3,840			~~3,840~~	3,840
Leasehold improvements	3		~~75,061~~	75,061			~~90,100~~	90,100
			~~1,421,580~~	1,421,580			~~1,441,293~~	1,441,293
Less: accumulated depreciation and amortization			~~(1,204,225~~	)(1,245,234	)		~~(1,176,356~~	)(1,176,356	)
Property and equipment, net		$	~~217,355~~$	176,346		$	~~264,937~~$	264,937

Depreciation and amortization expense for the three months ended March 31, 2024 and 2023 totaled $41,009 and $80,331, respectively, which is included in depreciation and amortization expense.

~~SMART~~Depreciation ~~FOR~~and ~~LIFE,~~amortization ~~INC.~~expense for the ~~NOTES~~six TOmonths ~~CONDENSED~~ended ~~CONSOLIDATED~~June ~~FINANCIAL~~30, ~~STATEMENTS~~2024 and 2023 totaled $82,019 and $126,581, respectively, which is included in depreciation and amortization ~~THREE~~expense. ~~MONTHS~~Depreciation ~~ENDED~~and ~~MARCH~~amortization 31expense for the three months ended June 30, 2024 ~~AND~~and 2023 totaled $41,009 and $46,250, respectively, ~~(UNAUDITED)~~which is included in depreciation and amortization expense.

Note 6 — Intangible Assets

Intangible assets consisted of the following:

	Estimated Useful Lives (in Years)	~~March 31, 2024~~	June 30, 2024			~~December 31, 2023~~	December 31, 2023
Goodwill		$	~~3,045,000~~$	3,045,000		$	~~3,045,000~~$	3,045,000
Customer contracts	7-10	$	~~5,483,263~~$	5,805,749		$	~~5,483,263~~$	5,483,263
Developed technology	15		~~1,660,000~~	1,660,000			~~1,660,000~~	1,660,000
Non-compete agreements	3		~~840,000~~	840,000			~~840,000~~	840,000
Patents	5-10		~~230,000~~	230,000			~~230,000~~	230,000
Tradename	10-15		~~2,010,000~~	2,010,000			~~2,010,000~~	2,010,000
Total intangible assets			~~10,223,263~~	10,545,749			~~10,223,263~~	10,223,263
Less: amortization			~~(2,945,952~~	)(3,550,555	)		~~(3,087,515~~	)(3,087,515	)
Intangibles, net		$	~~7,277,311~~$	6,995,194		$	~~7,135,748~~$	7,135,748

Amortization for the ~~three~~six months ended ~~March~~June 30, 312024 and 2023 was $564,234 and $270,604, respectively, which is included in depreciation and amortization expense. Amortization of the three months ended June 30, 2024 and 2023 ~~was~~totaled $282,117 and $~~355~~(84,~~464~~860), respectively, which is included in depreciation and amortization expense.

The future amortization is as follows:

Years Ending December 31:
2024 (remainder of year)	$	~~846~~564,~~350~~233
2025		1,015,571
2026		858,466
2027		858,466
2028		724,350
Thereafter		2,974,108
Total	$	76,~~277~~995,~~311~~194

Note 7 — Leases

Leases Involving Real Estate

Leases of distribution and manufacturing facilities, customer support centers and the Company’s corporate headquarters have lease terms that generally range from 5 to 7 years.

Rental payments on these leases typically provide for fixed minimum payments that increase over the lease term at predetermined amounts. Certain leases of real estate provide for rental increases based on the consumer price index, which are included in the Company’s measurement of lease payments based on the rate or index in effect at lease commencement and are therefore included in the measurement of the lease liabilities.

SMART FOR LIFE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2024 AND 2023 (UNAUDITED)

Leases Involving Equipment

Equipment leases have lease terms that generally range from less than 4 years to 5 years. Rental payments on these leases typically provide for fixed minimum payments that increase over the lease term at predetermined amounts, are included in the measurement of lease payments, and are included in the measurement of lease liabilities. Certain of the leases involving equipment have purchase options. When those options are reasonably certain of being exercised, the Company reflects such purchase options when measuring the lease term and lease payments for those leases.

Financial Information

The following provides information about the Company’s right of use assets and lease liabilities ~~for its operating~~ as of ~~March~~June 3130, 2024 and December 31, 2023:

	Balance Sheet Classification	~~March~~June 3130, 2024		December 31, 2023
Right of use assets operating leases	Operating leases right-of-use asset	$	1,~~181~~129,~~068~~940	$	2,164,862
Lease liabilities
Current
Operating leases	Operating lease liabilities, current portion		~~210~~219,~~894~~906		~~401~~1,~~577~~104,443
Noncurrent
Operating leases	Operating lease liabilities, non-current portion		1979,~~038,387~~828		1,~~855~~152,~~766~~900
Total lease liabilities		$	1,~~249~~199,~~281~~734	$	2,257,343

The components of the Company’s lease ~~cost~~costs for the ~~three~~six months ended ~~March~~June 3130, 2024 and 2023 are as follows:

		Income Statement Classification		~~March~~June 3130, 2024				~~March~~June 3130, ~~2023~~2024
Rent expense		General and administration		$	88176,~~114~~229			$	~~123~~263,~~043~~431

Supplemental cash flow information related to Company’s leases for the ~~three~~six months ended ~~March~~June 3130, 2024:

		Operating Leases
Cash paid for amounts included in the measurement of lease liabilities		$	86173,~~534~~067

Weighted average remaining lease term and weighted average discount rate for the Company’s leases as of ~~March~~June 3130, 2024:

	Operating Leases
Weighted average remaining term (in years)		4.3317
Weighted average discount rate		12.00	%

Annual maturity analysis of the Company’s lease liabilities as of June 30, 2024:

		Operating Leases
2024	$	173,932
2025		357,409
2026		368,132
2027		379,176
2028		259,718
Thereafter		—
Total payments		1,538,367
Less: interest		(338,633	)
Present value of lease liability		1,199,734
Less: Current portion of lease liabilities		(219,906	)
Noncurrent portion of lease liabilities	$	979,828

SMART FOR LIFE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2024 AND 2023 (UNAUDITED)

Annual maturity analysis of the Company’s lease liabilities as of March 31, 2024:

	Operating Leases
2024	$	260,466
2025		357,409
2026		368,132
2027		379,176
2028		259,718
2029		—
Thereafter		—
Total payments		1,624,901
Less: interest		375,620
Present value of lease liability		1,249,281
Less: Current portion of lease liabilities		(210,894	)
Noncurrent portion of lease liabilities	$	1,038,387

Note 8 — Debt

Original Issue Discount Subordinated Debentures

In June 2022, the Company commenced offerings of original issue discount subordinated debentures. As of ~~March~~June 3130, 2024, the Company has completed multiple closings and issued debentures in the aggregate principal amount of $5,277,241, of which $189,613 was issued with issuances costs of $26,113, and $12,~~543~~086,~~272~~977 of principal and $~~295~~472,~~678~~178 of interest was converted into shares of the Company’s stock for the ~~three~~six months ended ~~March~~June 3130, 2024. The debentures contain an original issue discount of 15%, or an aggregate original issue discount of $726,706. As a result, the total purchase price was $4,550,535. The debentures bear interest at a rate of 17.5% per annum and are due from January 2024 through January 2025. The outstanding principal amount and all accrued interest is due and payable on the earlier of (i) the completion of the Company’s next equity financing in which it receives gross proceeds in excess of $20 million, (ii) twenty-four months after the date of issuance or (iii) within 30 days ~~after~~ after election of repayment from the holder so long as the election is after the 6-month anniversary of the debenture. The Company may ~~voluntarily~~ voluntarily prepay the debentures in whole or in part without premium or penalty. The debentures contain customary events of default for a loan of this type. The debentures are unsecured and are subordinated in right of payment to the prior payment in full of all senior ~~indebtedness~~ indebtedness and are pari passu in right of payment to any other unsecured indebtedness incurred by the Company in favor of any third party. The outstanding principal balance of the debentures was $32,~~061~~518,~~817~~110 and $4,415,476, the unamortized debt issuance cost was $2317,~~935~~ 334 and $84,774, and accrued interest was $~~838~~778,~~712~~810 and $1,053,260 atas ~~March~~of 31June 30, 2024 and December 31, 2023, respectively.

On February 21, 2024, the Company received a judgement on an original issue discount subordinated debenture, dated August 26, 2022, ~~was~~whereby ~~received and~~ the outstanding amount of the debenture was amended to to $399,306, inclusive of legal fees. ~~(see~~On ~~Note~~May 1430, 2024, the Company entered into a memorandum of understanding with the holder and the parties executed a conversion agreement to convert a portion of the outstanding balance of the debenture totaling $256,765 into 79,840 shares of common stock and the outstanding balance of $142,540 to be exchanged for ~~updated~~prepaid ~~information)~~warrants exercisable for 44,322 warrant shares. As of June 30, 2024, the outstanding principal balance of the debenture was $0 and accrued interest was $0.

SMART FOR LIFE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2024 AND 2023 (UNAUDITED)

Original Issue Discount Secured Subordinated Note

On July 29, 2022, the Company entered into a securities purchase agreement with an accredited investor, pursuant to which it sold an original issue discount secured subordinated note in the principal amount of $2,272,727 to such investor. The note contains an original issue discount of 12%, or $272,727. As a result, the total purchase price was $2,000,000, the proceeds of which were used to fund the acquisition of Ceautamed. The note shall bear interest at the rate of 16% per annum and matures on July 29, 2027. The outstanding principal and all accrued interest shall be amortized on a 60-month straight-line basis. The Company may prepay the principal and all accrued and unpaid interest on the note without penalty, in whole or in part; provided however, in no event before January 15, 2023, unless with the explicit prior written approval of the holder. The note contains customary events of default for a loan of this type. The note is guaranteed by BSNM, DSO, Nexus, GSP and Ceautamed and is secured by a security interest in all of the assets of the Company and such guarantors; provided that such security interest is subordinate to the rights of the lenders under any senior indebtedness (as defined in the note). On January 26, 2024, the note was modified increasing the principal amount to $2,800,452 inclusive of interest and finance fees, and the interest changed to 13%. For the ~~three~~six months ended ~~March~~ 31June 30, 2024, $~~500~~1,~~000~~600,598 ~~of principal~~ was converted into shares of common stock. AsThe ~~of March 31, 2024, the~~ outstanding principal balance of the note was $1,199,854 and $2,~~300~~182,~~452~~853, the unamortized debt issuance cost was $~~123~~54,~~565~~625 and $172,807 and accrued interest was $5366,~~257~~666 and $494,700 as of June 30, 2024 and December 31, 2023, respectively.

Acquisition Notes – Related Parties

On July 1, 2021, the Company issued a 6% secured subordinated promissory note in the principal amount of $3,000,000 to a related party, Sasson E. Moulavi (“Dr. Moulavi”), in connection with the acquisition of DSO. This note accrued interest at 6% per annum and the outstanding principal and interest was amortized on a straight-line basis and was payable quarterly in accordance with the amortization schedule, with all amounts due and payable on July 1, 2024. On November 29, 2022, the Company entered into a letter agreement with Sasson E. Moulavi to amend the terms of the note. Pursuant to the letter agreement, the parties agreed to amend and restate the note to amend the amortization schedule, with the first payment deferred until February 15, 2023 and all amounts due and payable on August 15, 2024. In exchange for the agreement of Dr. Moulavi to enter into the letter agreement, the Company agreed to (i) issue to Dr. Moulavi 100,000 shares of common stock under the Company’s 2022 Equity Incentive Plan and (ii) pay to Dr. Moulavi a fee of $50,000 in cash, which shall be paid upon completion of the Company’s anticipated debt financing and is included in debt balance. On February 6, 2024, $123,930 of principal was converted into 121,500 shares of common stock. On February 21, 2024, $100,400 of principal was converted into 125,500 shares of common stock. On February 28, 2024, $126,028 of principal was converted into 128,600 shares of common stock. On February 29, 2024, the outstanding balance and accrued interest of $1,038,592 and $167,667, respectively, was converted into 12,063 shares of series C preferred stock and 53,659 shares of common stock. AsThe ~~of March 31, 2024, the~~ outstanding principal balance of this note was $0 and $1,388,950 and accrued interest was $0 and $37,697 as of June 30, 2024 and December 31, 2023, respectively.

On November 8, 2021, the Company issued a 5% secured subordinated promissory note in the principal amount of $1,900,000 to related parties, Justin Francisco and Steven Rubert, in connection with the acquisition of Nexus. This note accrued interest at 5% per annum and the outstanding principal and interest was amortized on a straight-line basis and was payable quarterly in accordance with the amortization schedule attached to the note, with all amounts due and payable on November 8, 2024. During the year ended December 31, 2023, the outstanding balance including accrued interest was converted into series B preferred stock. As of ~~March~~June 3130, 2024, the outstanding principal balance of this note was $0 and accrued interest was $0.

On July 29, 2022, the Company issued secured ~~subordinated~~ subordinated convertible promissory notes in the aggregate principal amount of $2,150,000 in connection with the acquisition of Ceautamed, which are partially with a related party. The notes bore interest at the rate of 5% per annum with all principal and accrued interest being due and payable in one lump sum on July 29, 2025; provided that upon an event of default (as defined in the notes), such interest rate shall increase to 10%. On January 29, 2024, ~~this~~the ~~note~~notes ~~was~~were forgiven as part of the transaction in which the assets of Ceautamed were contributed into First Health. AsThe ~~of March 31, 2024, the~~ outstanding principal balance of these notes was $0 and accrued interest was $0 as of June 30, 2024 and December 31, 2023.

On July 29, 2022, the Company issued secured subordinated promissory notes in the aggregate principal amount of $2,150,000 in connection with the acquisition of Ceautamed, which are partially with a related party. The notes shall bear interest at the rate of 5% per annum and mature on July 29, 2025; provided that upon an event of default (as defined in the notes), such interest rate shall increase to 10%. The outstanding principal and all accrued interest shall be amortized on a five-year straight-line basis and payable quarterly in accordance with the amortization schedule to the notes. The Company may redeem all or any portion of the notes at any time without premium or penalty. The notes contain customary covenants and events of default for loans of this type, including upon any default under the senior indebtedness (as defined in the notes). The notes are guaranteed by Ceautamed and are secured by a security interest in all of the assets of such guarantors; provided that such security interest is subordinate to the rights of the lenders under any such senior indebtedness. On January 29, 2024, $1,097,997 of this note was forgiven as part of the transaction in which the assets of Ceautamed were contributed into First Health. Also on January 29, 2024, the remaining balance of $1,094,496 was modified to $351,293. The outstanding principal balance of these notes was $51,193 and $2,189,493 and accrued interest was $1,287 and $237,430 as of June 30, 2024 and December 31, 2023, respectively.

~~SMART~~On ~~FOR~~July ~~LIFE~~29, ~~INC~~2022, the Company issued secured subordinated promissory notes in the aggregate principal amount of $1,300,000 in connection with the acquisition of Ceautamed, which are partially with a related party. The notes bore interest at the rate of 5% per annum with all principal and accrued interest being due and payable in one lump sum ninety (90) days from the date of the note; provided that upon an event of default (as defined ~~NOTES~~in TOthe ~~CONDENSED~~notes), ~~CONSOLIDATED~~such ~~FINANCIAL~~interest ~~STATEMENTS~~rate shall increase to 10%. On November 28, 2022, the Company entered into letter agreements with the ~~THREE~~holders ~~MONTHS~~of ~~ENDED~~most ~~MARCH~~of 31the notes to amend the terms of these notes. Pursuant to letter agreements, ~~2024~~the ~~AND~~parties agreed to extend the maturity date to June 1, 2023 and agreed to a seven month payment schedule, with the first payment due December 1, 2022. The parties also agreed to increase the default interest rate from 10% to 15%. The Company also agreed that if an event of default (~~UNAUDITED~~as defined in the notes) has occurred and is continuing, then the Company shall not create any senior indebtedness (as defined in the notes) without the consent of the holders of a majority of the principal amount of the notes. In exchange for the agreement of the holders to enter into the letter agreements, the Company agreed to pay certain amendment fees as more particularly described in the letter agreements. The Company is in the process of negotiating a similar extension of one remaining note in the principal amount of $100,000. The Company may redeem all or any portion of the notes at any time without premium or penalty. The notes contain customary covenants and events of default for loans of this type, including upon any default under the senior indebtedness (as defined in the notes). The notes are guaranteed by Ceautamed and are secured by a security interest in all of the assets of such guarantors; provided that such security interest is subordinate to the rights of the lenders under any such senior indebtedness. On January 29, 2024, $1,210,000 of this note was forgiven as part of the transaction in which the assets of Ceautamed were contributed into First Health. The outstanding principal balance of this note was $90,000 and $90,000 and accrued interest was $8,775 and 6,500 as of June 30, 2024 and December 31, 2023, respectively.

On July 29, 2022, the Company issued secured subordinated promissory notes in the aggregate principal amount of $2,150,000 in connection with the acquisition of Ceautamed, which are partially with a related party. The notes bear interest at the rate of 5% per annum and mature on July 29, 2025; provided that upon an event of default (as defined in the notes), such interest rate shall increase to 10%. The outstanding principal and all accrued interest shall be amortized on a five-year straight-line basis and payable quarterly in accordance with the amortization schedule to the notes. The Company may redeem all or any portion of the notes at any time without premium or penalty. The notes contain customary covenants and events of default for loans of this type, including upon any default under the senior indebtedness (as defined in the notes). The notes are guaranteed by Ceautamed and are secured by a security interest in all of the assets of such guarantors; provided that such security interest is subordinate to the rights of the lenders under any such senior indebtedness. On January 29, 2024, $1,097,997 of this note was forgiven as part of the transaction in which the assets of Ceautamed were contributed into First Health. Also on January 29, 2024, the remaining balance of $1,094,496 was modified to $351,293. As of March 31, 2024, the outstanding principal balance of these notes was $52,493 and accrued interest was $656.

On July 29, 2022, the Company issued secured subordinated promissory notes in the aggregate principal amount of $1,300,000 in connection with the acquisition of Ceautamed, which are partially with a related party. The notes bore interest at the rate of 5% per annum with all principal and accrued interest being due and payable in one lump sum ninety (90) days from the date of the note; provided that upon an event of default (as defined in the notes), such interest rate shall increase to 10%. On November 28, 2022, the Company entered into letter agreements with the holders of most of the notes to amend the terms of these notes. Pursuant to letter agreements, the parties agreed to extend the maturity date to June 1, 2023 and agreed to a seven month payment schedule, with the first payment due December 1, 2022. The parties also agreed to increase the default interest rate from 10% to 15%. The Company also agreed that if an event of default (as defined in the notes) has occurred and is continuing, then the Company shall not create any senior indebtedness (as defined in the notes) without the consent of the holders of a majority of the principal amount of the notes. In exchange for the agreement of the holders to enter into the letter agreements, the Company agreed to pay certain amendment fees as more particularly described in the letter agreements. The Company is in the process of negotiating a similar extension of one remaining note in the principal amount of $100,000. The Company may redeem all or any portion of the notes at any time without premium or penalty. The notes contain customary covenants and events of default for loans of this type, including upon any default under the senior indebtedness (as defined in the notes). The notes are guaranteed by Ceautamed and are secured by a security interest in all of the assets of such guarantors; provided that such security interest is subordinate to the rights of the lenders under any such senior indebtedness. On January 29, 2024, $1,210,000 of this note was forgiven as part of the transaction in which the assets of Ceautamed were contributed into First Health. As of March 31, 2024, the outstanding principal balance of this note was $90,000 and accrued interest was $7,638.

Other Promissory Notes and Cash Advances

Promissory Notes

On July 1, 2021, the Company entered into a loan agreement with Diamond Creek Capital, LLC for a term loan in the principal amount of up to $3,000,000. The loan bore interest at a rate of 15.0% per annum, provided that upon an event of default, such rate would increase by 5%. The loan was due and payable on the earlier of July 1, 2022 or upon completion of the Company’s initial public offering (the “IPO”). The Company repaid $1,325,000 of the principal balance and $27,604 of the interest from the proceeds of the IPO. In connection with such repayment, the lender agreed that the remaining loan was due and payable on July 1, 2023. On April 20, 2023, the Company entered into an amendment to the loan agreement, which provided that the Company would make a payment towards the reduction of principal in the amount of $250,000 within two business days of certain events, which did not occur. On January 29, 2024, this note was fully paid as part of the transaction in which the assets of Ceautamed were contributed into First Health. AsThe ~~of March 31,2024, the~~ outstanding principal balance of this note was $0 and $542,163 and accrued ~~interest~~ interest was $0 and $0 as of June 30, 2024 and December 31, 2023, respectively.

In 2018, the Company entered into an amended ~~note~~ note agreement and convertible promissory note for $200,000 with a third party. The outstanding amount was $100,000 and $100,000 and ~~accrued~~ accrued interest was $~~161~~167,351 and $149,351 atas ~~March~~of 31June 30, 2024 and December 31, 2023, respectively. The amended loan agreement and convertible promissory note (convertible at fair value of shares) was in default atas ~~March~~of 31June 30, 2024.

On October 12, 2022, the Company issued promissory notes in the principal amount of $258,000 to third parties. These promissory notes bear interest of 15% to 20% and are payable on December 2022 and January 2023. During the year ended December 31, 2023, the Company made various principal and interest payments on the notes. On May 26, 2023, only the remaining principal balance of $105,000 was converted into 471 shares of the Company’s series B preferred stock, the accrued interest was not converted. The outstanding principal balance was $0 and accrued interest was $11,999 as of June 30, 2024 and December 31, 2023.

~~SMART~~On ~~FOR~~November ~~LIFE~~2, ~~INC~~2022, the Company issued a promissory note to a board member in the principal amount of $50,000. This note bears interest at a rate of 12% and is due on demand. During the ~~NOTES~~year TOended ~~CONDENSED~~December ~~CONSOLIDATED~~31, ~~FINANCIAL~~2023, ~~STATEMENTS~~the principal balance was paid in full, however the accrued interest was not paid. The outstanding amount ~~THREE~~was ~~MONTHS~~$0 ~~ENDED~~and ~~MARCH~~accrued 31interest was $2,387 as of June 30, 2024 ~~AND~~and December 31, 2023 ~~(UNAUDITED)~~.

On October 12, 2022, the Company issued promissory notes in the principal amount of $258,000 to third parties. These promissory notes bear interest of 15% to 20% and are payable on December 2022 and January 2023. During the year ended December 31, 2023, the Company made various principal and interest payments on the notes. On May 26, 2023, only the remaining principal balance of $105,000 was converted into 471 shares of the Company’s series B preferred stock, the accrued interest was not converted. As of March 31,2024, the outstanding principal balance was $0 and accrued interest was $11,999.

On November 2, 2022, the Company issued a promissory note to a board member in the principal amount of $50,000. This note bears interest at a rate of 12% and is due on demand. During the year ended December 31, 2023, the principal balance was paid in full, however the accrued interest was not paid. At March 31,2024, the outstanding amount was $0 and accrued interest was $2,387.

On December 6, 2022, the Company issued a promissory note to a board member in the principal amount of $30,000. This note bore interest at a rate of 12% and was due on demand. The remaining principal balance of $30,000 as of May 26, 2023 was converted into 135 shares of the Company’s series B preferred stock which resulted in the note being fully paid.

On December 21, 2022, the Company issued a promissory note to a board member in the principal amount of $100,000. This note bore interest at a rate of 12% and was due on demand. The remaining principal balance of $100,000 as of May 26, 2023 was converted into 449 shares of the Company’s series B preferred stock which resulted in the note being fully paid.

On February 8, 2023, the Company issued a promissory note to a board member in the principal amount of $50,000. This note bore interest at a rate of 12% and was due on demand. The remaining principal balance as of May 26, 2023 was converted into 225 shares of the Company’s series B preferred stock which resulted in the note being fully paid.

On February 14, 2023, the Company issued a promissory note to a third party in the principal amount of $50,000. This note bore interest at a rate of 12% and was due on demand. During the year ended December 31, 2023, the Company made various principal and interest payments on the note. The remaining principal balance of $20,000 as of May 26, 2023 was converted into 90 shares of the Company’s series B preferred stock which resulted in the note being fully paid.

On February 19, 2023, the Company issued a promissory note to a third party in the principal amount of $50,000. This note bore interest at a rate of 12% and was due on August 26, 2023. The remaining principal balance as of May 26, 2023 was converted into 225 shares of the Company’s series B preferred stock which resulted in the note being fully paid.

On March 7, 2023, the Company issued a promissory note to a board member in the principal amount of $137,000. This note bears interest at a rate of 12% and is due on demand. During the year ended December 31, 2023, the Company made various principal and interest payments on the notes. On May 26, 2023, $50,000 of principal and $1,137 of interest was converted into 230 shares of the Company’s series B preferred stock. The outstanding amount was $51,294 and $51,294 and accrued interest was $89,~~065~~278 and $5,312 atas ~~March~~of 31June 30, 2024 and December 31, 2023, respectively.

On April 13, 2023, the Company issued a promissory note to a third party in the principal amount of $59,000. This note bore interest at a rate of 12% and was due on demand. The remaining principal balance as of May 26, 2023, was converted into 265 shares of the Company’s series B preferred stock which resulted in the note being fully paid.

On April 21, 2023, the Company issued a ~~promissory~~ promissory note to a board member in the principal amount of $53,000. This note bears interest at a rate of 12% and is due on demand. The outstanding amount was $30,000 and $30,000 and accrued interest was $1,600 and $800 atas ~~March~~of 31June 30, 2024 and December 31, 2023, respectively.

On June 22, 2023, the Company issued an ~~original~~ original issue discount promissory note to a board member in the principal amount of $118,000. This note bears interest at a rate of 17.5% and is due on demand. ~~For the three months ended March 31, 2024, $61,600 of the principal was paid.~~ The outstanding amount was $56,400 and $118,000, an unamortized discount was $0 and $80,~~400,~~ and accrued interest was $1315,~~296~~756 and $10,862 atas ~~March~~of 31June 30, 2024 and December 31, 2023, respectively.

On July 12, 2023, the Company issued a ~~promissory~~ promissory note to a third party in the principal amount of $25,000. This note bears interest at a rate of 12% and is due on demand. The outstanding amount was $25,000 and $25,000 and accrued interest was $2,~~162~~910 and $1,414 atas ~~March~~of 31June 30, 2024 and December 31, 2023, respectively.

21On August 10, 2023, the Company issued a promissory note to a board member in the principal amount of $50,000. This note bears interest at a rate of 12% and is due on demand. The outstanding amount was $50,000 and $50,000 and accrued interest was $5,342 and $2,351 as of June 30, 2024 and December 31, 2023, respectively.

~~SMART~~On ~~FOR~~August ~~LIFE~~15, ~~INC.~~2023, the Company issued a ~~NOTES~~promissory TOnote ~~CONDENSED~~to ~~CONSOLIDATED~~a ~~FINANCIAL~~board ~~STATEMENTS~~member in the principal amount of $30,000. This note bears interest at a rate of 12% and is due on ~~THREE~~demand. ~~MONTHS~~The ~~ENDED~~outstanding ~~MARCH~~amount 31was $30,000 and $30,000 and accrued interest was $3,156 and $1,361 as of June 30, 2024 ~~AND~~and ~~2023~~December ~~(UNAUDITED)~~31, 2023, respectively.

On August 10, 2023, the Company issued a promissory note to a board member in the principal amount of $50,000. This note bears interest at a rate of 12% and is due on demand. The outstanding amount was $50,000 and $50,000 and accrued interest was $3,847 and $2,351 at March 31, 2024 and December 31, 2023, respectively.

On August 15, 2023, the Company issued a promissory note to a board member in the principal amount of $30,000. This note bears interest at a rate of 12% and is due on demand. The outstanding amount was $30,000 and $30,000 and accrued interest was $2,259 and $1,361 at March 31, 2024 and December 31, 2023, respectively.

On August 24, 2023, the Company issued a promissory note to a third party in the principal amount of $60,000. This note bears interest at a rate of 12% and is due on demand. On May 25, 2023, the principal of $60,000 and interest of $6,451 were converted into 346 shares of the Company’s series B preferred stock which resulted in the note being fully paid.

On September 7, 2023, the Company issued a ~~promissory~~ promissory note to a board member in the principal amount of $35,000. This note bears interest at a rate of 12% and is due on demand. The outstanding amount was $35,000 and $35,000 and accrued interest was $23,~~370~~418 and $1,323 atas ~~March~~of 31June 30, 2024 and December 31, 2023, respectively.

On September 14, 2023, the Company issued a promissory note to a third party in the principal amount of $100,000. This note bears interest at a rate of 12% and is due on demand. On February 29, 2024, the principal of $100,000 and accrued interest of $5,523 were converted into 1,055 shares of the Company’s series C preferred stock. ~~which~~The ~~resulted~~outstanding inamount ~~the~~was ~~note~~$0 ~~being~~and ~~fully~~$100,000 ~~paid~~and accrued interest was $0 and $3,551 as of June 30, 2024 and December 31, 2023, respectively.

On September 29, 2023, the Company issued a ~~promissory~~ promissory note to a board member in the principal amount of $35,000. This note bears interest at a rate of 12% and is due on demand. The outstanding amount was $35,000 and $35,000 and accrued interest was $23,~~117~~164 and $1,070 atas ~~March~~of 31June 30, 2024 and December 31, 2023, respectively.

On October 4, 2023, the Company issued a promissory note to a board member in the principal amount of $15,000. This note bears interest at a rate of 12% and is due on demand. The outstanding amount was $15,000 and $15,000 and accrued interest was $883 and $434 at March 31, 2024 and December 31, 2023, respectively.21

On October 114, 2023, the Company issued a ~~promissory~~ promissory note to a ~~third~~board ~~party~~member in the principal amount of $2415,000. This note bears interest at a rate of 12% and is due on demand. OnThe ~~February 29,~~outstanding ~~2024,~~amount ~~the~~was ~~principal~~$15,000 ofand $2415,000 and accrued interest ofwas $61,~~157~~332 ~~was~~and ~~converted~~$434 ~~into~~as ~~302 shares~~ of ~~the~~June ~~Company’s~~30, ~~series~~2024 Cand ~~preferred~~December 31, ~~stock~~2023, ~~which resulted in the note being fully paid~~respectively.

On ~~November~~October 1411, 2023, the Company issued a promissory note to a ~~board~~third ~~member~~party in the principal amount of $3024,000. This note bears interest at a rate of 12% and is due on demand. ~~The~~On ~~outstanding~~February ~~amount~~29, ~~was~~2024, the principal of $3024,000 and accrued interest of $306,157 was converted into 302 shares of the Company’s series C preferred stock. The outstanding amount was $0 and $24,000 and accrued interest was $~~1,361~~0 and $~~464~~639 atas ~~March~~of 31June 30, 2024 and December 31, 2023, respectively.

On November 3014, 2023, the Company issued a ~~promissory~~ promissory note to a board member in the principal amount of $1530,000. This note bears interest at a rate of 12% and is due on demand. The outstanding amount was $1530,000 and $1530,000 and accrued interest was $~~602~~2,259 and $~~153~~464 atas ~~March~~of 31June 30, 2024 and December 31, 2023, respectively.

~~Promissory~~On ~~Note~~November –30, ~~Related~~2023, ~~Party~~the Company issued a promissory note to a board member in the principal amount of $15,000. This note bears interest at a rate of 12% and is due on demand. The outstanding amount was $15,000 and $15,000 and accrued interest was $1,050 and $153 as of June 30, 2024 and December 31, 2023, respectively.

OnPromissory ~~March~~Note 5,- ~~2024,~~Related the Company issued a promissory note to a related party in the principal amount of $250,000. This note bears interest at a rate of 12% and is due on March 5, 2029. At March 31,2024, the outstanding amount was $250,000 and accrued interest was $2,137.Party

On March 5, 2024, the Company issued a promissory note to a related party in the principal amount of $250,000. This note bears interest at a rate of 12% and is due on March 5, 2029. At June 30, 2024, the outstanding amount was $250,000 and accrued interest was $9,616.

Cash Advances

In July 2022, the Company entered into a cash advance agreement for $650,000 with a required repayment amount of $897,750, which requires weekly payments of approximately $40,806. The outstanding amount was $97,846 and $147,500 atas ~~March~~of 31June 30, 2024 and December 31, 2023, respectively.

In August 2022, the Company entered into a cash advance agreement for $100,000 with a required repayment amount of $146,260, which requires weekly payments of approximately $6,200. The outstanding amount was $2,020 and $4,360 as of June 30, 2024 and December 31, 2023, respectively.

In September 2022, the Company entered into a cash advance agreement for $243,750 with a required repayment amount of $372,500, which requires weekly payments of approximately $15,000. The outstanding amount was $12,584 as of June 30, 2024 and December 31, 2023.

In November 2022, the Company entered into cash advance agreements for $592,236 with a required repayment amount of $994,460, which requires weekly payments of approximately $52,422. The outstanding amount was $0 and $83,037 and unamortized debt issuance cost of $0 and $0 as of June 30, 2024 and December 31, 2023, respectively.

In December 2022, the Company entered into cash advance agreements for $293,000 with a required repayment amount of $439,207, which requires weekly payments of approximately $39,905. The outstanding balance was $8,271 and unamortized debt issuance cost was $0 as of June 30, 2024 and December 31, 2023.

In June 2023, the Company refinanced the January 2023 agreements with balances of $284,029 and entered into cash advance agreements and received an additional $107,071 with a required repayment amount of $604,035, which requires weekly payments of approximately $48,625. The outstanding amount was $0 and $497,158 and unamortized debt issuance cost was $0 and $0 as of June 30, 2024 and December 31, 2023, respectively.

In July 2023, the Company entered into cash advance agreements for $74,950 with a required repayment amount of $74,950, which requires weekly payments of approximately $7,495. The outstanding amount was $7,974 and $30,974 as of June 30, 2024 and December 31, 2023, respectively.

In August 2023, the Company refinanced an agreement from June 2023, and as a result, the Company received an additional $48,030. The outstanding amount was $0 and $48,030 and unamortized debt issuance cost was $0 and $0 as of June 30, 2024 and December 31, 2023, respectively.

In November 2023, the Company entered into cash advance agreements for $49,476 with a required repayment amount of $49,476. The outstanding amount was $49,476 as of June 30, 2024 and December 31, 2023.

SMART FOR LIFE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2024 AND 2023 (UNAUDITED)

In August 2022, the Company entered into a cash advance agreement for $100,000 with a required repayment amount of $146,260, which requires weekly payments of approximately $6,200. The outstanding amount was $2,020 and $4,360 at March 31, 2024 and December 31, 2023, respectively.

In November 2022, the Company entered into cash advance agreements for $592,236 with a required repayment amount of $994,460, which requires weekly payments of approximately $52,422. The outstanding amount was $83,037 and unamortized debt issuance cost was $0 at March 31, 2024 and December 31, 2023.

In December 2022, the Company entered into cash advance agreements for $293,000 with a required repayment amount of $439,207, which requires weekly payments of approximately $39,905. The outstanding amount was $8,271 and unamortized debt issuance cost was $0 at March 31, 2024 and December 31, 2023.

In June 2023, the Company refinanced the January 2023 agreements with balances of $284,029 and entered into cash advance agreements and received an additional $107,071 with a required repayment amount of $604,035, which requires weekly payments of approximately $48,625. The outstanding amount was $0 and $497,158 and unamortized debt issuance cost was $0 and $0 at March 31, 2024 and December 31, 2023, respectively.

In July 2023, the Company entered into cash advance agreements for $74,950 with a required repayment amount of $74,950, which requires weekly payments of approximately $7,495. The outstanding amount was $7,974 and $30,974 at March 31, 2024 and December 31, 2023, respectively.

In August 2023, the Company refinanced an agreement from June 2023 as a result the Company received an additional $48,030. The outstanding amount was $0 and $48,030, and unamortized debt issuance cost was $0 and $0 at March 31, 2024 and December 31, 2023, respectively.

In November 2023, the Company entered into cash advance agreements for $49,476 with a required repayment amount of $49,476. The outstanding amount was $49,476 at March 31,2024 and December 31, 2023.

Equipment Financing Loan

In May 2022, the Company entered into an equipment financing loan for $146,765 used for the purchase of equipment within BSNM’s operations. The loan bears interest at 10.18% and matures on April 1, 2027. The outstanding amount was $106,016 and $108,249 at ~~March~~June 3130, 2024 and December 31, 2023, respectively.

In August 2022, the Company entered into an equipment financing loan for $35,050 used for the purchase of equipment within BSNM’s operations. The loan bears interest at 10.18% and matures on August 1, 2027. The outstanding amount was $27,214 and $27,831 at ~~March~~June 3130, 2024 and December 31, 2023, respectively.

In July 2022, the Company entered into an equipment financing loan for $8,463 used for the purchase of equipment within Ceautamed’s operations. The outstanding amount was $0 and $4,360 at ~~March~~June 3130, 2024 and December 31, 2023, respectively, and is included within the liabilities of discontinued operations.

Revolving Lines of Credit

In August 2022, Ceautamed entered into a revolving line of credit with a bank, which permits borrowings up to $50,000 and bears interest at 45.09% with no expiration date. In 2023, the Company borrowed an additional $43,000. The outstanding principal balance of these lines of credit was $0 and $47,407 at ~~March~~June 3130, 2024 and December 31, 2023, respectively, and is included within discontinued operations.

23In September 2022, DSO entered into a revolving line of credit with a bank, which permits borrowings up to $70,000 and bears interest at 9.49% with no expiration date. The outstanding principal balance of this line of credit was $0 and $16,471 at June 30, 2024 and December 31, 2023, respectively.

~~SMART~~In ~~FOR~~September ~~LIFE~~2023, ~~INC.~~DSO entered into a merchant ~~NOTES~~loan TOagreement ~~CONDENSED~~for ~~CONSOLIDATED~~$113,000. ~~FINANCIAL~~Repayment ~~STATEMENTS~~amounts are 17% of the daily account credits processed through the provider until the loan amount ~~THREE~~is ~~MONTHS~~paid ~~ENDED~~in ~~MARCH~~full. 31The outstanding principal balance was $2,219 and $103,648 at June 30, 2024 ~~AND~~and December 31, 2023 ~~(UNAUDITED)~~, respectively.

In September 2022, DSO entered into a revolving line of credit with a bank, which permits borrowings up to $70,000 and bears interest at 9.49% with no expiration date. The outstanding principal balance of this line of credit was $0 and $16,471 at March 31, 2024 and December 31, 2023, respectively.

In September 2023, DSO entered into a merchant loan agreement for $113,000. Repayment amounts are 17% of the daily account credits processed through the provider until the loan amount is paid in full. The outstanding principal balance was $103,648 at March 31, 2024 and December 31, 2023.

EIDL Loan

In June 2020, pursuant to the economic injury disaster loan program under the under the provisions of the CARES Act, the Company entered into a promissory note with the U.S. Small ~~Business~~ Business Administration with a principal amount of $300,000. This loan matures in 30 years and bears interest at a rate of 3.75%. The loans are secured by all of the Company’s assets. The outstanding principal balance of this loan was $300,000 and $300,000 and accrued ~~interest~~ interest was $4245,~~500~~344 and $33,953 at ~~March~~June 3130, 2024 and December 31, 2023, respectively.

PPP Loans

In February 2021, the Company received an additional $261,164 in PPP loans under the CARES Act. This loan bears interest at a rate of 1% per annum and matures in April 2025. The outstanding balance of this loan was $197,457 and $197,457 and accrued interest was $1011,~~930~~430 and $8,429 at ~~March~~June 3130, 2024 and December 31, 2023, respectively.

Total Debt

Debt is comprised of the following components as of ~~March~~June 3130, 2024:

Original issue discount subordinated debentures	$	32,~~061~~518,~~817~~110
Original issue discount secured subordinated note		21,~~300~~199,~~452~~854
Acquisition notes – related party		~~142~~141,~~493~~193
Promissory notes and cash advances		~~733~~650,~~902~~865
Promissory notes – related party		250,000
Promissory note – related party		250,000
Revolving lines of credit		~~103~~2,~~648~~219
Equipment financing loan		133,~~229~~230
EIDL loan		300,000
PPP loans		197,457
		7,222,998
		5,392,928
Debt issuance costs		(~~147~~71,~~500~~959	)
Debt, net		75,~~075~~320,~~498~~969
Debt, current		43,~~055~~325,~~321~~866
Debt issuance costs, current		(3723,~~418~~043	)
Current portion of debt, net		43,~~017~~302,~~903~~823
Debt, non-current		32,~~167~~067,~~677~~062
Debt issuance costs, non-current		(~~110~~48,~~082~~916	)
Non-current portion of debt, net	$	32,~~057~~018,~~595~~146

The Company was not in compliance with all debt covenants as of June 30, 2024, but waivers of non-compliance were obtained for all such debt, except as disclosed in Note 8.

The future contractual maturities of the debt are as follows:

For the Year Ended December 31:
2024 (remainder of year)	$	43,~~049~~309,~~947~~546
2025		82139,~~751~~431
2026		~~458~~459,~~324~~275
2027		165,114
2028		181,851
Thereafter		21,~~137~~065,~~511~~752
Total	$	75,~~075~~320,~~498~~969

SMART FOR LIFE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2024 AND 2023 (UNAUDITED)

Note 9 — Concentrations of Credit Risks

Credit Risks

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and accounts receivable. The Company maintains bank accounts with several financial institutions. Concentrations of credit risk with respect to accounts receivable are limited to the dispersion of customers across different industries and geographic regions.

Cash

The Company places its cash with high credit quality financial institutions. At ~~March~~June 3130, 2024 and December 31, 2023, the Company had no cash balances in excess of the Federal Deposit Insurance Corporation coverage of $250,000 per institution. The Company has not experienced any losses in such accounts.

Major Customers

For the ~~three~~six months ended ~~March~~June 3130, 2024, ~~the~~and 2023, the Company had two significant customers representing an aggregate of 9995% and 41% of revenues and one that ~~accounted~~makes ~~for~~up 100% ~~of the accounts receivable balance. For the three months ended March 31, 2023, the Company had two significant customers representing an aggregate of 46% of revenues~~ and ~~one that accounted for 26~~71% of the accounts receivable balance~~. The~~, ~~Company’s officers are closely monitoring the relationships with all customers~~respectively.

For the three months ended June 30, 2024 and 2023, the Company had three and two significant customers representing an aggregate of 99% and 41% of revenues and one that makes up 100% and 71% of the accounts receivable balance, respectively. The Company’s officers are closely monitoring the relationships with all customers.

Major Vendors

For the ~~three~~six months ended ~~March~~June 3130, 2024, ~~the~~and 2023, the Company had ~~three~~four and one major supplier representing an aggregate ~~of 77~~85% ofand ~~purchases. For the three months ended March 31, 2023, the Company had one major supplier representing 22~~12% of purchases., ~~The Company’s officers are closely monitoring the relationships with all significant suppliers~~respectively.

For the three months ended June 30, 2024 and 2023, the Company had four and one major supplier representing 89% and 13% of purchases, respectively. The Company’s officers are closely monitoring the relationships with all significant suppliers.

Note 10 — Income Taxes

The Company has evaluated the positive and negative evidence in assessing the realizability of its deferred tax assets. This assessment included the evaluation of scheduled reversals of deferred tax liabilities, estimates of projected future taxable income and tax planning strategies to determine which deferred tax assets are more likely than not to be realized in the future. ~~The Company has a 100% valuation allowance associated with the deferred tax asset.~~

The Company records a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated. Interest and penalties related to income tax matters, if any, would be recognized as a component of income tax expense. At ~~March~~June 3130, 2024 and December 2023, the Company had no liabilities for uncertain tax positions. The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. Currently, the tax years subsequent to 2018 are open and subject to examination by the taxing authorities.

At ~~March~~June 3130, 2024, the Company had net operating loss carry forwards for federal income tax purposes of approximately $1920.71 million, which will be available to offset future taxable income.

SMART FOR LIFE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2024 AND 2023 (UNAUDITED)

Note 11 — Stockholders’ Equity

Preferred Stock

During the three and six months ended ~~March~~June 3130, 2024, and 6,727 shares of series B preferred stock were converted into 0 and 10,678 shares of common stock, respectively.

OnDuring ~~March~~the 1,three ~~2024,~~and ~~the~~six ~~Company~~months ~~filed~~ended aJune ~~certificate~~30, of2024, ~~designation with~~ the ~~Nevada~~Company ~~Secretary~~issued of0 ~~State~~and to36,507 ~~create~~shares ~~a new series~~ of ~~preferred stock designated as~~ series C preferred stock. ~~Pursuant to~~and ~~the certificate of designation~~10,088 ~~the~~and ~~Company designated 200~~26,~~000~~776 shares of ~~its preferred stock as~~ series C preferred stock. ~~Following~~were issubsequently aconverted ~~summary~~into of144,120 ~~the~~and ~~material~~382,519 ~~terms~~shares of ~~the~~common ~~series C preferred~~ stock:, respectively.

● Dividend Rights. Holders of series C preferred stock are entitled to receive dividends in the same form as dividends paid on shares of the common stock only when and if such dividends are paid on shares of common stock. No other dividends shall be paid on shares of series C preferred stock.

● Liquidation Rights. Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of series C preferred stock shall be entitled to receive out of the assets of the Company the same amount that a holder of common stock would receive if the series C preferred stock were fully converted (disregarding for such purposes any conversion limitations) to common stock, which amounts shall be paid prior to all holders of common stock and pari passu with all holders of series B preferred stock.

● Voting Rights. The series C preferred stock shall vote together with the common stock on an as-converted basis.

● Conversion Rights. Each share of series C preferred stock is convertible, at any time and from time to time at the option of the holder thereof, into that number of shares of common stock determined by dividing the stated value of such share of series C preferred stock ($100) by the conversion price. The conversion price is $7.00 (subject to adjustments for stock dividends, stock splits, recapitalizations and certain fundamental transactions). Notwithstanding the foregoing, the Company shall not effect any conversion, and a holder shall not have the right to convert, any portion of the series C preferred stock to the extent that, after giving effect to the conversion, such holder (together with such holder’s affiliates) would beneficially own in excess of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares issuable upon the conversion. This limitation may be waived (up to a maximum of 9.99%) by the holder and in its sole discretion, upon not less than sixty-one (61) days’ prior notice to the Company.

● No Redemption. The series C preferred stock is not redeemable.

During the three months ended March 31, 2024, the Company issued 36,507 shares of series C preferred stock and 16,688 shares of series C preferred stock were subsequently converted into 238,399 shares of common stock.

There were no preferred stock transactions during the three months ended March 31, 2023.

Common Stock

During the three and six months ended ~~March~~June 3130, 2024, the Company issued (i) 3183,~~572~~370 and 186,942 shares of common stock upon the exercise of warrants; (ii) 0 and 10,678 shares of common stock upon the conversion of 0 and 6,727 shares of series B preferred stock; (iii) ~~238~~144,~~399~~120 and 382,519 shares of common stock upon the conversion of 3610,~~507~~088 and 26,776 shares of series C preferred stock; (iv) 0 and 9,377 shares of common stock for services rendered; (v) 1,069,759 ~~285~~and 1,~~305~~355,064 shares of common stock upon the conversion of debt and interest; ~~and~~ (vi) 0 and 102,172 shares of common stock upon the conversion of series A preferred stock dividends, and (vii) issued 44,322 and 44,322 shares of common stock upon the cashless exercise of warrants, respectively.

During the three and six months ended ~~March~~June 3130, 2023, the Company issued ~~978~~(i) 36,953 and 36,953 shares of common stock upon exercise of warrants; (ii) 477 and 477 shares of common stock upon the conversion of 1,000 and 1,000 shares of Series A preferred stock; (iii) 80 and 80 shares of common stock as compensation for amending the license agreement for Sports Illustrated Nutrition; (iv) 80 and 80 shares of common stock as compensation for the amendment of a note payable; (v) 13,738 and 13,738 shares of common stock as part of a securities purchase agreement, and (vi) 5,864 and 978 shares of common stock upon the cashless exercise of warrants, respectively.

2625

SMART FOR LIFE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2024 AND 2023 (UNAUDITED)

Stock Options and Warrants

In September 2020, the Company adopted its 2020 Incentive Plan (the “2020 Plan”) under which the Company is authorized to issue awards for up to 635 shares of common stock to directors, officers, employees, and consultants who provide services to the Company. Awards that may be granted include incentive stock options, non-qualified stock options and awards of restricted stock. At ~~March~~June 3130, 2024, there were no shares of common stock available for issuance under the 2020 Plan. The Company did not issue any stock options under the 2020 Plan during the ~~three~~six months ended ~~March 31,~~June 30, 2024 or 2023.

In January 2022, the Company adopted its 2022 Equity Inventive Plan, as amended (the “2022 Plan”), under which the Company is authorized to issue awards for up to 47,620 shares of common stock to directors, officers, employees, and consultants who provide services to the Company. Awards that may be granted include incentive stock options, non-qualified stock options, stock appreciation rights, restricted awards, performance share awards and performance compensation awards. At ~~March~~June 3130, 2024, there were 11,432 shares of common stock available for issuance under the 2022 Plan. The Company did not issue any stock options under the 2022 Plan during the ~~three~~six months ended ~~March~~June 3130, 2024 or 2023.

The Company recognized $2754,~~613~~360 and $5280,~~473~~208 of compensation expense related to the vesting of options based on the service period during the six months ended June 30, 2024 and 2023, respectively. The compensation expense recognized for the three months ended ~~March~~June 3130, 2024 and 2023 was $26,747 and $27,735, respectively.

~~The~~On May 30, 2024, the Company ~~did~~entered ~~not~~into warrant solicitation inducement letters (the “Inducement Letters”) with the holders (the “Exercising Holders”) of warrants for the purchase of an aggregate of 183,370 shares of common stock at an exercise price of $10.64 issued on December 4, 2023 (the “Existing Warrants”), pursuant to which the Exercising Holders agreed to exercise the Existing Warrants for cash at a reduced exercise price of $4.25 per share, or for gross proceeds of $779,322.50 in the aggregate. In consideration for the immediate exercise of the Existing Warrants for cash, the Company agreed to issue ~~any~~to the Exercising Holders new warrants ~~during~~for the purchase of an aggregate of 550,110 shares of common stock (the ~~three~~“New ~~months~~Warrants”). ~~ended~~On ~~March~~June 313, 2024, the closing of this transaction was completed, and the Company issued the New Warrants. The New Warrants are exercisable for a period of eighteen months at an initial exercise price of $4.25 per share and may be exercised on a cashless basis if at the time of exercise there is no effective registration statement registering, or ~~2023~~the prospectus contained therein is not available for the resale of, the shares issuable upon exercise of the New Warrants. H.C. Wainwright & Co., LLC acted as warrant inducement agent and financial advisor in connection with the transaction and received a cash fee equal to 7.5% of the gross proceeds, a management fee equal to 1% of the gross proceeds and reimbursement of certain expenses. After these fees, the Company received net proceeds of approximately $458,473. In addition, the Company issued to certain designees of H.C. Wainwright & Co., LLC warrants to purchase 13,753 shares of common stock at an exercise price of $5.3125 per share, which such warrants will have the same terms of the New Warrants (other than the exercise price).

~~During~~On ~~the~~June ~~three~~3, ~~months~~2024, ~~ended~~the ~~March~~Company ~~31,~~issued ~~2024,~~a pre-funded warrant ~~holders~~for ~~exercised~~the anpurchase ~~aggregate~~ of 344,~~572~~322 ~~shares~~in exchange for ~~proceeds~~the conversion of debt in the amount of $38142,~~000~~541. The warrant was immediately exercised in full on June 3, 3034.

~~During~~In addition to the warrant exercises described above, during the three and six months ended ~~March~~June 3130, ~~2023~~2024, warrant holders exercised an aggregate of ~~978~~43,201 ~~shares~~and on46,773 ashares, ~~cashless basis~~respectively.

~~The~~In ~~following~~the isthree aand ~~summary~~six ofmonths ~~options~~ended ~~and~~June ~~warrants granted~~30, ~~exercised~~2023, warrant ~~forfeited~~holders ~~and~~exercised ~~outstanding~~an ~~during~~aggregate ~~the~~of ~~three~~41,839 ~~months~~and ~~ended~~70,961 ~~March 31~~shares, ~~2024 and 2023:~~respectively.

	2024-Stock Options				2024-Warrants
	Number of Options		Weighted Average Exercise Price		Number of Warrants			Weighted Average Exercise Price
Outstanding at January 1, 2024		43,259	$	32.73		217,313		$	812.73
Granted		—		—		—			—
Exercised		—		—		(3,572	)		(10.64	)
Forfeited		—		—		—			—
Outstanding at March 31, 2024		43,259	$	32.73		213,741		$	799.76
Exercisable at March 31, 2024		21,205				213,741

	2023-Stock Options				2023-Warrants
	Number of Options		Weighted Average Exercise Price		Number of Warrants		Weighted Average Exercise Price
Outstanding at January 1, 2023		876	$	1,984.50		71,513	$	0.3150
Granted		—		—		—		—
Exercised		—		—		978		0.3150
Forfeited		29		1,984.50		—		—
Outstanding at March 31, 2023		847	$	1,984.50		70,535	$	0.3150
Exercisable at March 31, 2023		847				70,535

The following is a summary of options and warrants granted, exercised, forfeited and outstanding during the six months ended June 30, 2024 and 2023:

	2024-Stock Options				2024-Warrants
	Number of Options		Weighted Average Exercise Price		Number of Warrants			Weighted Average Exercise Price
Outstanding at January 1, 2024		43,259	$	32.73		217,313		$	812.73
Granted		—		—		608,185			4.13
Exercised		—		—		(231,264	)		(3.98	)
Forfeited		—		—		—			—
Outstanding at June 30, 2024		43,259	$	32.73		594,234		$	812.88
Exercisable at June 30, 2024		21,205				594,234

SMART FOR LIFE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2024 AND 2023 (UNAUDITED)

	2023-Stock Options						2023-Warrants
	Number of Options			Weighted Average Exercise Price			Number of Warrants			Weighted Average Exercise Price
Outstanding at January 1, 2023		876		$	1,984.50			71,513		$	1,984.50
Granted		—			—			157,196			1,984.50
Exercised		—			—			(70,961	)		(1,984.50	)
Forfeited		(59	)		(1,984.50	)		—			—
Outstanding at June 30, 2023		817		$	—			157,748		$	1,984.50
Exercisable at June 30, 2023		817						157,748

~~Valuation~~The ~~Assumptions~~fair ~~for~~value ~~Stock~~of ~~Options~~ each option and ~~Warrants~~warrant in 2024 was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

The fair value of each option and warrant was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Risk-free interest rate	4.27 – 4.30	%
Expected volatility	53	%
Expected life (years)	10
Dividend yield	0	%

The expected life represents the weighted average period of time that options granted are expected to be outstanding giving consideration to vesting schedules and the Company’s historical exercise patterns. The risk-free rate is based on the U.S. Treasury yield constant maturity in effect at the time of grant for periods corresponding with the expected life of the option.

Net Loss Per Share

Basic and diluted net loss per share of common stock for the ~~three~~six months ended ~~March~~June 3130, 2024, and 2023 was determined by dividing net loss by the weighted average shares of common ~~stock~~ stock outstanding during the period. The Company’s potentially dilutive shares, consisting of ~~213~~594,~~741~~234 warrants and 43,259 stock options, have not been included in the computation of dilutive net loss per share for the periods as the result would be antidilutive.

Note 12 — Commitments and Contingencies

Legal Matters

From time to time, the Company may become subject to threatened and/or asserted claims arising in the ordinary course of business. Management is not aware of any matters, either individually or in the aggregate, that are reasonably likely to have a material adverse effect on the Company’s financial condition, results of operations or liquidity.

Note 13 — Related Party Transactions

The Company entered into debt with related parties which are reflected in Note 8.

The Company is party to a management services agreement with Trilogy Capital Group, LLC (“Trilogy”), a company controlled by the Company’s Executive Chairman. For the ~~three~~six months ended ~~March~~June 3130, 2024 and 2023, the Company paid Trilogy $0 and $27,547, respectively, for services rendered under a consulting agreement which are reflected in the statements of operations as consulting fees – related parties.

Note 14 — Subsequent Events

In accordance with ASC 855~~-10~~, Subsequent Events, the Company has reviewed its operations subsequent to ~~March~~June 3130, 2024 to the date these condensed consolidated financial statements were issued, and has determined that, except as set forth below, it does not have any material subsequent events to disclose in these financial statements.

SEC Order

On September 9, 2024, the SEC issued an order against the Company which found that the Company entered into two separation agreements with former employees that each contained language violating Rule 21F-17(a) of the Securities Exchange Act of 1934, as amended. The order imposes a civil money penalty against the Company for the two noted violations in the total amount of $19,500, to be paid in four installments over the course of 360 days from the date of the order and according to the schedule set forth in the order. The first three installments are each in the amount of $5,000. The last installment is in the principal amount of $4,500 and must also contain an amount for interest accrued. The SEC Division of Enforcement may, at any time following the entry of this order, petition the SEC to: (1) reopen this matter to consider whether the Company provided accurate and complete financial information at the time representations in its Form 10-Q for the quarter ended September 30, 2023 were made; and (2) seek an order directing payment of the maximum civil penalty allowable under the law.

SMART FOR LIFE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2024 AND 2023 (UNAUDITED)

Completion of Ceautamed Disposition

As noted above, on October 1, 2024, the 51% owner of First Health elected to exercise the option to purchase the remaining 49% interest in First Health from the Company, effective as of October 2, 2024, paid to the Company the option price of $1.00, and the Company delivered the remaining 49% interest in First Health to such owner.

Securities Purchase Agreement

On April 3, 2024, the Company entered into a securities purchase agreement with Purely Optimal Nutrition Inc. (“Purely Optimal”) and Tan Enterprises, Inc., Availiant Holdings Corporation, Dannel Tan, Jason Kwan and Timur Kim (the “Sellers”), pursuant to which the Company agreed to acquire all of the issued and outstanding membership interests of Purely Optimal, a health supplement brand, from the Sellers for an aggregate purchase price of $11,965,966.10 (the “Purchase Price”), consisting of (i) $7,859,579.66 in cash and (ii) $4,106,386.44 payable as 18,414 newly issued shares of series D convertible preferred stock, a new series of preferred stock, subject to certain adjustments described below.

The Purchase Price is based upon a six (6) times multiple of an estimated EBITDA of $1,467,073.35 for the twelve-month period ending on November 30, 2023 (the “Reconstructed EBITDA”). The Purchase Price will be adjusted upwards or downwards based upon the difference between (i) six (6) times the Reconstructed EBITDA and the Purchase Price and (ii) the Estimated Inventory Payment (as defined in the securities purchase agreement) and the actual amount of Inventory (as defined in the securities purchase agreement) on the closing date. In addition, the cash portion of the Purchase Price will be decreased by the amount of any outstanding indebtedness of Purely Optimal for borrowed money existing as of the closing date and any unpaid transaction expenses.

The securities purchase agreement contains customary representations, warranties and covenants, including a covenant that the Sellers will not compete with the business of Purely Optimal for a period of two (2) years following closing. The securities purchase agreement also contains mutual indemnification for breaches of representations or warranties and failure to perform covenants or obligations contained in the securities purchase agreement. In the case of the indemnification provided by the Sellers with respect to breaches of certain non-fundamental representations and warranties, the Sellers will only become liable for indemnified losses if the amount exceeds ten percent (10%) of the Purchase Price, whereupon the Sellers will be liable for all losses relating back to the first dollar, provided that the liability of the Sellers for breaches of certain non-fundamental representations and warranties shall not exceed thirty five (35%) of the Purchase Price and each Seller’s aggregate liability for the breach of fundamental representations shall be limited to the Purchase Price.

The closing of the securities purchase agreement is subject to customary closing conditions, including, without limitation, the completion of accounting and legal due diligence investigations; the receipt of all authorizations, consents and approvals of all governmental authorities and third parties; the release of any liens against any of the assets of Purely Optimal; the Company obtaining the requisite acquisition financing; and delivery of all documents required for the transfer of the equity interests of Purely Optimal to the Company.

Warrant Solicitation

On May 30, 2024, the Company entered into warrant solicitation inducement letters (the “Inducement Letters”) with the holders (the “Exercising Holders”) of warrants for the purchase of an aggregate of 183,370 shares of common stock at an exercise price of $10.64 issued on December 4, 2023 (the “Existing Warrants”), pursuant to which the Exercising Holders agreed to exercise the Existing Warrants for cash at a reduced exercise price of $4.25 per share, or for gross proceeds of $779,322.50 in the aggregate. In consideration for the immediate exercise of the Existing Warrants for cash, the Company agreed to issue to the Exercising Holders new warrants for the purchase of an aggregate of 550,110 shares of common stock (the “New Warrants”).

SMART FOR LIFE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2024 AND 2023 (UNAUDITED)

On June 3, 2024, the closing of this transaction was completed, and the Company issued the New Warrants. The New Warrants are exercisable for a period of eighteen months at an initial exercise price of $4.25 per share and may be exercised on a cashless basis if at the time of exercise there is no effective registration statement registering, or the prospectus contained therein is not available for the resale of, the shares issuable upon exercise of the New Warrants. The exercise price will be subject to customary adjustments in the event of stock splits, stock dividends, stock combinations and similar recapitalization transactions. The New Warrants also contain a beneficial ownership limitation which provides that the Company shall not effect any exercise, and a holder shall not have the right to exercise, any portion of a New Warrant to the extent that, after giving effect to the exercise, such holder (together with such holder’s affiliates) would beneficially own in excess of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares issuable upon the exercise. This limitation may be waived (up to a maximum of 9.99%) by a holder in its sole discretion upon not less than sixty-one (61) days’ prior notice to the Company.

H.C. Wainwright & Co., LLC acted as warrant inducement agent and financial advisor in connection with the transaction and received a cash fee equal to 7.5% of the gross proceeds, a management fee equal to 1% of the gross proceeds and reimbursement of certain expenses. After these fees, the Company received net proceeds of approximately $458,473. In addition, the Company issued to certain designees of H.C. Wainwright & Co., LLC warrants to purchase 13,753 shares of common stock at an exercise price of $5.3125 per share, which such warrants will have the same terms of the New Warrants (other than the exercise price).

Additional Equity Transactions

OnSubsequent to June 330, 2024, ~~the~~an ~~Company~~aggregate ~~issued~~of 441,~~322 shares~~527 shares of ~~common~~series B preferred stock ~~upon~~were ~~the~~exchanged ~~cashless~~for ~~exercise~~debt, which was immediately converted into an aggregate of ~~warrants~~258,125 shares of common stock.

Subsequent to ~~March~~June 3130, 2024, holders returned an aggregate of 10 105,~~088~~670 shares of common stock in exchange for the return of an aggregate of 7,396.1777 shares of series C preferred stock. All but 977.98 of those shares of series C preferred stock were then converted into debt and then immediately converted back into an aggregate of ~~144~~381,~~120~~934 shares of common stock.

Subsequent to ~~March~~June 3130, 2024, the Company issued an aggregate of 1 4,~~527~~146,106 shares of ~~series~~common ~~B preferred~~ stock ~~were~~upon ~~exchanged~~the ~~for~~conversion ~~debt, which was immediately converted into an aggregate~~ of ~~258,125~~other ~~shares of common stock~~debt.

Subsequent to ~~March~~June 3130, 2024, ~~holders returned~~ an aggregate of ~~105~~54,~~670~~ 367 shares of common stock inwere ~~exchange~~cancelled ~~for~~by the ~~return~~holders ~~of an aggregate of 7,396~~thereof.77 shares of series C preferred stock. All but 977.98 of those shares of series C preferred stock were then converted into debt and then immediately converted back into an aggregate of 381,934 shares of common stock.

~~Subsequent to March 31, 2024, the Company issued an aggregate of 5,215,865 shares of common stock upon the conversion of other debt.~~28

Subsequent to March 31, 2024, an aggregate of 160,037 shares of common stock were cancelled by the holders thereof.

Memorandum of Understanding

On May 30, 2024, the Company entered into a Memorandum of Understanding with the holder of an original issue discount subordinated debenture related to a judgement in February 2024. The parties executed a conversion agreement to convert a portion of the outstanding balance of the debenture totaling $256,765.44 into 79,840 shares of common stock and the outstanding balance of $142,540.51 to be exchanged for prepaid warrants exercisable for 44,322 warrant shares.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis summarizes the significant factors affecting our operating results, financial condition, liquidity and cash flows as of and for the periods presented below. The following discussion and analysis should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this report. The discussion contains forward-looking statements that are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this report.

Use of Terms

Except as otherwise indicated by the context and for the purposes of this report only, references in this report to “we,” “us,” “our” and “our company” are to Smart for Life, Inc., a Nevada corporation, and its consolidated subsidiaries.

Special Note Regarding Forward Looking Statements

This report contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to us. All statements other than statements of historical facts are forward-looking statements. These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors 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 these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

●

our goals and strategies;

●

our future business development, financial condition and results of operations;

●

expected changes in our revenue, costs or expenditures;

●

growth of and competition trends in our industry;

●

our expectations regarding demand for, and market acceptance of, our products;

●

our expectations regarding our relationships with investors, institutional funding partners and other parties with which we collaborate;

●

fluctuations in general economic and business conditions in the markets in which we operate; and

●

relevant government policies and regulations relating to our industry.

In some cases, you can identify forward-looking statements by terms such as “may,” “could,” “will,” “should,” “would,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “project” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Item 1A “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2023, or the Form 10-K, ~~and~~or elsewhere in this report. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

The forward-looking statements made in this report relate only to events or information as of the date on which the statements are made in this report. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

Overview

We are engaged in the development, marketing, manufacturing, acquisition, operation and sale of a broad spectrum of nutritional and related products with an emphasis on health and wellness. Structured as a global holding company, we are executing a buy-and-build strategy with serial accretive acquisitions creating a vertically integrated company. To drive growth and earnings, we are developing proprietary products as well as acquiring other profitable companies, encompassing brands, manufacturing, and distribution channels.

We also operate a network platform in the affiliate marketing space. Affiliate marketing is an advertising model in which a product vendor compensates third-party digital marketers to generate traffic or leads for the product vendor’s products and services. The third-party digital marketers are referred to as affiliates, and the commission fee incentivizes them to find ways to promote the products being sold by the product vendor.

On March 8, 2018, we acquired 51% of Millenium Natural Manufacturing Corp. and Millenium Natural Health Products Inc. and on October 9, 2019, we acquired the remaining 49% of these companies. On September 30, 2020, we changed the name of Millenium Natural Manufacturing Corp. to Bonne Sante Natural Manufacturing, Inc., or BSNM, and on November 24, 2020, we merged Millenium Natural Health Products Inc. into BSNM to better reflect our vertical integration. In November 2024 we relocated the operations of BSNM from Doral, Florida to Riviera Beach, Florida. It manufactures nutritional products for a significant number of customers.

On July 1, 2021, we acquired Doctors Scientific Organica, LLC d/b/a Smart for Life, Oyster Management Services, Ltd., Lawee Enterprises, L.L.C. and U.S. Medical Care Holdings, L.L.C. On August 27, 2021, we transferred all of the equity interests of Oyster Management Services, Ltd., Lawee Enterprises, L.L.C. and U.S. Medical Care Holdings, L.L.C. to Doctors Scientific Organica, LLC. On May 19, 2022, we acquired Lavi Enterprises, LLC. On the same date, we transferred all of the equity interests of Lavi Enterprises, LLC to Doctors Scientific Organica, LLC. On December 13, 2022, Oyster Management Services, Ltd. was converted to a limited liability company known as Oyster Management Services, L.L.C. As a result of the foregoing, Oyster Management Services, L.L.C., Lawee Enterprises, L.L.C., U.S. Medical Care Holdings, L.L.C. and Lavi Enterprises, LLC are now wholly owned subsidiaries of Doctors Scientific Organica, LLC. In this report, we collectively refer to Doctors Scientific Organica, LLC and its consolidated subsidiaries as DSO. Based in Riviera Beach, Florida, DSO operates a 30,000 square-foot FDA-certified manufacturing facility. DSO manufactures and sells weight management foods and related products. Additionally, DSO provides manufacturing services for other customers.

On November 8, 2021, we acquired 100% of Nexus Offers, Inc., or Nexus. Nexus operates a cost per action/cost per acquisition network. This network consists of hundreds of digital marketers who stand ready to market products introduced to the Nexus network. The cost per action/cost per acquisition model is where digital marketers are paid for an action (e.g., a product sale or lead generation) that is taken as a direct result of their marketing efforts. Through the digital marketer’s method of marketing, the digital marketer sends traffic to one of the product vendor’s offers listed on the network.

On December 6, 2021, we acquired 100% of GSP Nutrition Inc., or GSP. GSP is a sports nutrition company that offers nutritional supplements for athletes and active lifestyle consumers.

Recent Developments

Securities Purchase Agreement

On April 3, 2024, we entered into a securities purchase agreement with Purely Optimal Nutrition Inc., or Purely Optimal, and Tan Enterprises, Inc., Availiant Holdings Corporation, Dannel Tan, Jason Kwan and Timur Kim, or the Sellers, pursuant to which we agreed to acquire all of the issued and outstanding membership interests of Purely Optimal, a health supplement brand, from the Sellers for an aggregate purchase price of $11,965,966.10, or the Purchase Price, consisting of (i) $7,859,579.66 in cash and (ii) $4,106,386.44 payable as 18,414 newly issued shares of series D convertible preferred stock, a new series of preferred stock, subject to certain adjustments described below.

The Purchase Price is based upon a six (6) times multiple of an estimated EBITDA of $1,467,073.35 for the twelve-month period ending on November 30, 2023, or the Reconstructed EBITDA. The Purchase Price will be adjusted upwards or downwards based upon the difference between (i) six (6) times the Reconstructed EBITDA and the Purchase Price and (ii) the Estimated Inventory Payment (as defined in the securities purchase agreement) and the actual amount of Inventory (as defined in the securities purchase agreement) on the closing date. In addition, the cash portion of the Purchase Price will be decreased by the amount of any outstanding indebtedness of Purely Optimal for borrowed money existing as of the closing date and any unpaid transaction expenses.

The closing of the securities purchase agreement is subject to customary closing conditions, including, without limitation, the completion of accounting and legal due diligence investigations; the receipt of all authorizations, consents and approvals of all governmental authorities and third parties; the release of any liens against any of the assets of Purely Optimal; our obtaining the requisite acquisition financing; and delivery of all documents required for the transfer of the equity interests of Purely Optimal to us.

Warrant Solicitation

On May 30, 2024, we entered into warrant solicitation inducement letters with the holders of warrants for the purchase of an aggregate of 183,370 shares of common stock at an exercise price of $10.64 issued on December 4, 2023, or the Existing Warrants, pursuant to which the holders agreed to exercise the Existing Warrants for cash at a reduced exercise price of $4.25 per share, or for gross proceeds of $779,322.50 in the aggregate. In consideration for the immediate exercise of the Existing Warrants for cash, we agreed to issue to the holders new warrants for the purchase of an aggregate of 550,110 shares of common stock, or the New Warrants.

On June 3, 2024, the closing of this transaction was completed, and we issued the New Warrants. The New Warrants are exercisable for a period of eighteen months at an initial exercise price of $4.25 per share and may be exercised on a cashless basis if at the time of exercise there is no effective registration statement registering, or the prospectus contained therein is not available for the resale of, the shares issuable upon exercise of the New Warrants. The exercise price will be subject to customary adjustments in the event of stock splits, stock dividends, stock combinations and similar recapitalization transactions. The New Warrants also contain a beneficial ownership limitation which provides that we shall not effect any exercise, and a holder shall not have the right to exercise, any portion of a New Warrant to the extent that, after giving effect to the exercise, such holder (together with such holder’s affiliates) would beneficially own in excess of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares issuable upon the exercise. This limitation may be waived (up to a maximum of 9.99%) by a holder in its sole discretion upon not less than sixty-one (61) days’ prior notice to us.

Principal Factors Affecting Our Financial Performance

Our operating results are primarily affected by the following factors:

●

our ability to acquire new customers or retain existing customers;

●

our ability to offer competitive product pricing;

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our ability to broaden product offerings;

●

industry demand and competition; and

●

market conditions and our market position.

Emerging Growth Company

We qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As a result, we will be permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:

●

have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

●

comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);

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submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay” and “say-on-frequency;” and

●

disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of our initial public offering, (ii) the last day of the first fiscal year in which our total annual gross revenues are $1.235 billion or more, (iii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iv) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.

Discontinued Operations

On July 29, 2022, we acquired 100% of Ceautamed Worldwide, LLC and its wholly-owned subsidiaries Wellness Watchers Global, LLC and Greens First Female LLC (which we collectively refer to as Ceautamed), which owns the Greens First line of branded products which have been specifically marketed to the healthcare provider sector. On January 29, 2024, we entered into an asset purchase agreement pursuant to which we agreed to sell nearly all of the assets of Ceautamed and its subsidiaries for a 49% ownership interest in a new limited liability company, First Health FL LLC, or First Health. The agreement allows for the 51% owner to purchase the remaining 49% for $1 at an unspecified future date. On October 1, 2024, such owner elected to exercise the option, effective as of October 2, 2024, paid us the option price of $1.00, and we delivered the remaining 49% interest in First Health to such owner. As a result, the financial results and balances of Ceautamed have been classified as discontinued operations within this report and the accompanying unaudited condensed consolidated financial statements.

Results of Operations

Comparison of Three Months Ended ~~March~~June 3130, 2024 and 2023

The following table sets forth key components of our results of operations during the three months ended ~~March~~June 3130, 2024 and 2023, both in dollars and as a percentage of our revenues.

	March 31, 2024						March 31, 2023
	June 30, 2024						June 30, 2023
	Amount			% of Revenues			Amount			% of Revenues
Revenues
Products	$	~~478~~877,~~792~~799			99100.9800	%	$	1,~~260~~324,~~986~~364			7899.5220	%
Advertising		~~115~~—			~~0.02~~—	%		~~344~~10,~~855~~616			210.4880	%
Total revenues		~~478~~877,~~907~~799			100.00	%		1,~~605~~334,~~841~~980			100.00	%
Cost of revenues
Products		~~271~~471,~~247~~715			5653.6474	%		~~968~~1,~~684~~012,458			6075.3284	%
Advertising		—			—			~~269~~9,~~394~~121			160.7868	%
Total cost of revenues		~~271~~471,~~247~~715			5653.6474	%		1,~~238~~021,~~078~~579			7776.1052	%
Gross profit		~~207~~406,~~660~~084			4346.3626	%		~~367~~313,~~763~~401			2223.9048	%
Operating expenses
General and administrative		~~642~~319,~~346~~736			~~134~~36.1342	%		~~994~~1,~~844~~410,904			61105.9569	%
Compensation - administrative		~~375~~514,~~715~~684			7858.4563	%		1,~~334~~285,~~690~~447			8396.1129	%
Professional services		~~858~~285,~~352~~289			~~179~~32.2350	%		~~303~~916,~~996~~302			1868.9364	%
Consulting fees - related parties		—			—			27,547			1.72	%
Impairment on intangible assets		—			—			466,737			34.96	%
Depreciation and amortization expense		323,126			6736.4781	%		~~435~~(38,~~795~~610	)		27(2.1489	)%
Total operating expenses		21,~~199~~442,~~539~~835			~~459~~164.2837	%		34,~~096~~040,~~872~~780			~~192~~302.8568	%
Operating loss from continuing operations		(1,991,879	)		(415.92	)%		(2,729,109	)		(169.95	)%
Operating loss		(1,036,751	)		(118.11	)%		(3,727,379	)		(279.21	)%
Other income (expense)
Other income (expense)		(2338,~~088~~675	)		(4.8241	)%		23281,~~152~~700			121.4410	%
Gain on sale of subsidiary		16,462			3.44	%		—			—
Gain on debt extinguishment		92,396			10.53	%		189,705			14.21	%
Interest expense		(987,254	)		(206.15	)%		(1,363,045	)		(84.88	)%
Loss on sale of subsidiary		(148,954	)		(16.97	)%		—			—
Total other income (expenses)		(993,880	)		(207.53	)%		(1,339,893	)		(83.44	)%
Interest expense		(1,078,886	)		(122.91	)%		(560,581	)		(41.99	)%
Net loss from continuing operations		(2,985,759	)		(623.45	)%		(4,069,002	)		(253.39	)%
Total other income (expenses)		(1,174,119	)		(133.76	)%		(89,176	)		(6.68	)%
Income (loss) from discontinued operations		89,585			18.71	%		(215,314	)		(13.41	)%
Loss from continuing operations		(2,210,870	)		(251.87	)%		(3,816,555	)		(285.89	)%
Net loss	$	(2,896,174	)		(604.75	)%	$	(4,284,316	)		(266.80	)%
Loss from discontinued operations		(152	)		(0.02	)%		(403,441	)		(30.22	)%
Net loss	$	(2,211,022	)		(251.88	)%	$	(4,219,996	)		(316.11	)%

~~Revenues. Our total revenues decreased by $1,126,934, or 70.18%, to $478,907 for the three months ended March~~ 31~~, 2024 from $1,605,841 for the three months ended March 31, 2023.~~

~~Our nutraceutical business generates revenue from the sales of nutritional and related products~~Revenues. ~~Revenues~~Our ~~from~~total ~~our~~revenues ~~nutraceutical business (products)~~ decreased by $~~782~~457,~~194~~181, or 6234.0325%, to $~~478~~877,~~792~~799 for the three months ended ~~March~~June 3130, 2024 from $1,~~260~~334,~~986~~980 for the three months ended ~~March~~June 3130, 2023. This decrease was primarily due to our cash constraints and our inability to pay for raw materials used in the production of both branded and contract manufacturing products. The decreased revenues were the result of a decrease in the volume of products sold and not due to pricing changes.

Our ~~digital~~nutraceutical ~~marketing~~ business generates ~~revenues~~revenue from ~~when~~the sales of ~~listed~~nutritional ~~products~~and ~~are~~related ~~sold by product vendors through our network as a result of the marketing efforts of digital marketers~~products. Revenues from our ~~digital~~nutraceutical ~~marketing~~ business (~~advertising~~products) decreased by $~~344~~446,~~740~~565, or 9933.9772%, to $~~115~~877,799 for the three months ended ~~March 31~~June 30, 2024 from $~~344~~1,~~855~~324,364 for the three months ended ~~March~~June 3130, 2023. ~~The~~This decrease inwas ~~revenue~~primarily due isto ~~attributable~~our tocash constraints and our ~~repurposing~~inability ofto pay for raw materials used in the ~~subsidiary~~production of both branded and contract manufacturing ~~from~~products. ~~affiliate~~The ~~network~~decreased ~~management~~revenues towere ~~focusing~~the onresult of a decrease in the ~~advertising~~volume of ~~our~~products ~~other~~sold ~~subsidiaries~~and not due to pricing changes.

35Our digital marketing business generates revenues when sales of listed products are sold by product vendors through our network as a result of the marketing efforts of digital marketers. We did not generate any revenues from our digital marketing business (advertising) for the three months ended June 30, 2024, as compared to $10,616 for the three months ended June 30, 2023. The decrease in revenue is attributable to our repurposing of the subsidiary from affiliate network management to focusing on the advertising of our other subsidiaries.

Cost of revenues. Our total cost of revenues decreased by $~~966~~549,~~831~~864, or 7853.0982%, to $~~271~~471,~~247~~715 for the three months ended ~~March~~June 3130, 2024 from $1,~~238~~021,~~078~~579 for the three months ended ~~March~~June 3130, 2023. Such decrease is directly related to the decrease in revenues.

Cost of revenues for our nutraceutical business consist of ingredients, packaging materials, freight, and labor associated with the production of various products. Cost of revenues for our nutraceutical business (products) decreased by $~~697~~540,~~437~~743, or 7253.0041%, to $~~271~~471,~~247~~715 for the three months ended ~~March~~June 3130, 2024 from $~~968~~1,~~684~~012,458 for the three months ended ~~March~~June 3130, 2023. As a percentage of product revenues, cost of revenues for product sales were 5653.6574% and 76.8245% for the three months ended ~~March~~June 3130, 2024, and 2023, respectively. The ~~decrease~~decreased ~~in cost~~ percentage is due to ~~the~~decreased ~~increased~~product ~~focus~~offerings ~~on our~~allowing ~~branded~~for ~~products~~a ~~from~~concentration ~~contract~~of ~~manufacturing~~ingredients ~~products~~used in production.

Cost of revenues for our digital marketing business consist of commissions and bonuses paid to digital marketers. Cost of revenues from our digital marketing business (advertising) ~~decreased by~~was $~~269,394, or 100.00%, to $~~0 for the three months ended ~~March~~June 3130, 2024, ~~from~~as compared to $269,394 for the three months ended March 31, 2023. As a percentage of advertising revenues, cost of revenues for advertising sales was 0.00% and 7885.1292% for the three months ended ~~March~~June 3130, 2024 and 2023, respectively. Such decrease is directly related to the decrease in revenues.

Gross profit. As a result of the foregoing, our gross profit ~~decreased~~increased by $~~160~~92,~~103~~683, or 4329.5357%, to $~~207~~406,~~660~~084 for the three months ended ~~March~~June 3130, 2024 from $~~367~~313,~~763~~401 for ~~the~~ the three months ended ~~March~~June 3130, 2023. As a percentage of revenues, our gross profit was 4346.3626% and 2223.9048% for the three months ended ~~March~~ 31June 30, 2024 and 2023, respectively.

General and administrative expenses. Our general and administrative expenses consist primarily of advertising expenses, bad debts, rent expense, insurance and other expenses incurred in connection with general operations. Our general and administrative expenses decreased by $~~352~~1,~~498~~091,168, or 3577.4334%, to $~~642~~319,~~346~~ 736 for the three months ended ~~March~~June 3130, 2024 from $~~994~~1,~~844~~410,904 for the three months ended ~~March~~June 3130, 2023. As a percentage of revenues, our general and administrative expenses were ~~134~~36.1342% and 61105.9569% for the three months ended ~~March 31~~June 30, 2024 and 2023, respectively. ~~Such~~The decrease was primarily due to decreased ~~rates~~advertising ~~for~~costs, ~~D&O~~royalty ~~insurance~~fees and ~~reduced~~insurance ~~advertising~~rates in 2024.

Compensation - administrative. Our compensation expenses include both cash and non-cash items, including salaries plus related payroll taxes. Our compensation expenses decreased by $958,975, or 71.85%, to $375,715 for the three months ended March 31, 2024 from $1,334,690 for the three months ended March 31, 2023. As a percentage of revenues, our compensation expenses were 78.45% and 83.11% for the three months ended March 31, 2024 and 2023, respectively. Such decrease was primarily due to reduced stock compensation expense and a reduction of headcount.32

~~Professional~~Compensation ~~services~~- administrative. Our ~~professional~~compensation ~~services~~ expenses ~~consist~~include ~~primarily~~both ofcash ~~investor~~and ~~relations,~~non-cash ~~consulting~~items, ~~advisory,~~including ~~legal~~salaries ~~and~~plus ~~audit~~related ~~expenses~~payroll ~~incurred in connection with general operations~~taxes. Our ~~professional~~compensation ~~services~~ expenses decreased ~~increased~~ by $~~554~~770,~~356~~763, or ~~182~~59.3696%, to $~~858~~514,~~352~~684 for the three months ended ~~March~~ 31June 30, 2024 from $~~303~~1,~~996~~285,447 ~~for~~June ~~the three months ended March 31~~30, 2023. As a percentage of revenues, our ~~professional~~compensation ~~services~~ expenses were ~~179~~58.2363% and 1896.9329% for the three months ended ~~March~~June 3130, 2024 and 2023, respectively. Such ~~increase~~decrease was primarily due to ~~increased fees~~a ~~associated~~reduction ~~with~~of ~~Nasdaq compliance matters~~headcount.

~~Consulting~~Professional ~~fees~~services. Our professional –services ~~related~~expenses ~~parties.~~ consist primarily of investor relations, consulting, advisory, legal and audit expenses incurred in connection ~~For~~with general operations. Our professional services expenses decreased by $631,013, or 68.87%, to $285,289 for the three months ended ~~March 31~~June 30, 2024 ~~and~~from ~~2023~~$916,302 wefor ~~paid~~the ~~Trilogy~~three ~~Capital~~months ~~Group,~~ended ~~LLC~~June 30, 2023. As a ~~company~~percentage ~~controlled~~of byrevenues, our ~~Executive~~professional ~~Chairman,~~services expenses were $032.50% and ~~$27~~68.64% for the three months ended June 30 2024 and 2023,~~547,~~ respectively. The decrease was primarily due to decreased legal fees, investor ~~for~~relations ~~services~~efforts, ~~rendered~~and ~~under~~audit afees, ~~consulting~~all ~~agreement~~due to the cash constraints of the company.

~~Depreciation~~Impairment ~~and~~of ~~amortization~~intangible assets. ~~Depreciation~~ ~~and~~Due ~~amortization~~to ~~was~~a ~~$323,126,~~significant ordecrease ~~67.47%~~in ofadvertising revenues, ~~for~~we ~~the~~performed ~~three~~an ~~months~~impairment ~~ended~~analysis ~~March~~on ~~31,~~the ~~2024,~~affiliate asrelationships ~~compared~~associated towith our ~~$435,795,~~Nexus orsubsidiary ~~27.14%~~and recognized an impairment of ~~revenues~~ $466,737 ~~for~~during the three months ended ~~March~~June 3130, 2023. ~~The~~No ~~decrease in amortization is associated with the~~ impairment ofwas ~~intangible assets~~recognized ~~during~~in the ~~year~~three ~~end~~months ~~December~~ended 31June 30, ~~2023~~2024.

Depreciation and amortization. Depreciation and amortization was $323,126, or 36.81% of revenues, for the three months ended June 30, 2024, as compared to $(38,610), or (2.89)% of revenues, for the three months ended June 30, 2024. The increase in amortization is associated with intangible assets resulting from acquisitions and the impairment of the intangible assets.

Total other ~~income (~~expense). We had $~~993~~1,~~880~~ 174,119 in total other expense, net, for the three months ended ~~March~~June 3130, 2024, as compared to total other expense, net, of $189,~~339,893~~ 176 for the three months ended ~~March~~June 3130, 2023. Total other expense, net, for the three months ended ~~March~~June 3130, 2024 consisted of interest expense of $~~987~~1,~~254~~078,886, loss on sale of subsidiary of $148,954, and other expense of $2338,~~088~~675, offset by a gain on ~~our~~extinguishment ~~disposition~~ of ~~Ceautamed~~debt of $1692,~~462.~~396, ~~The~~while other expense, net, for the three months ended ~~March~~June 3130, 2023 consisted of interest expense of $1560,~~363~~581,~~045,~~ offset by ~~other~~a ~~income~~gain on extinguishment of debt of $23189,~~152~~705 and $281,700 of other income from employee retention credits received.

~~Income~~Loss ~~(loss)~~ from discontinued operations. We had $~~89,585~~152 in ~~net~~loss ~~income~~ from discontinued operations for the three months ended ~~March~~June 3130, 2024, as compared to a$403,441 ~~loss~~for in the three ~~months~~ months ended ~~March~~June 3130, 2023 ~~of $215,314~~.

Net loss. As a result of the cumulative effect of the factors described above, we had a net loss of $2,~~896~~211,~~174~~021 for the three months ended ~~March~~June 3130, 2024, as compared to $4,~~284~~219,~~316~~996 for the three months ended ~~March~~June 3130, 2023~~, a decrease of $1,388,142, or 32~~.~~40%.~~

Comparison of Six Months Ended June 30, 2024 and 2023

The following table sets forth key components of our results of operations during the six months ended June 30, 2024 and 2023, both in dollars and as a percentage of our revenues.

	June 30, 2024						June 30, 2023
	Amount			% of Revenues			Amount			% of Revenues
Revenues
Products	$	1,356,592			99.99	%	$	2,585,351			87.91	%
Advertising		115			0.01	%		355,471			12.09	%
Total revenues		1,356,707			100.00	%		2,940,822			100.00	%
Cost of revenues
Products		742,963			54.76	%		1,981,142			67.37	%
Advertising		—			—			278,515			9.47	%
Total cost of revenues		742,963			54.76	%		2,259,657			76.84	%
Gross profit		613,744			45.24	%		681,165			23.16	%
Operating expenses
General and administrative		962,083			70.91	%		2,405,748			81.81	%
Compensation - administrative		890,398			65.63	%		2,620,137			89.10	%
Professional services		1,143,641			84.30	%		1,220,298			41.50	%
Consulting fees - related parties		—			—			27,547			0.94	%
Impairment on intangible assets		—			—			466,737			15.87	%
Depreciation and amortization expense		646,253			47.63	%		397,185			13.51	%
Total operating expenses		3,642,375			268.47	%		7,137,652			242.71	%
Operating loss		(3,028,631	)		(223.23	)%		(6,456,487	)		(219.55	)%
Other income (expense)
Other income (expense)		(61,762	)		(4.55	)%		304,852			10.37	%
Gain on debt extinguishment		92,396			6.81	%		189,705			6.45	%
Loss on sale of subsidiaries		(132,491	)		(9.77	)%		—			—
Interest expense		(2,066,140	)		(152.29	)%		(1,923,626	)		(65.41	)%
Total other income (expenses)		(2,167,997	)		(159.80	)%		(1,429,069	)		(48.59	)%
Loss from continuing operations		(5,196,628	)		(383.03	)%		(7,885,556	)		(268.14	)%
Income (loss) from discontinued operations		89,433			6.59	%		(618,755	)		(21.04	)%
Net loss	$	(5,107,195	)		(376.44	)%	$	(8,504,311	)		(289.18	)%

Revenues. Our total revenues decreased by $1,584,115, or 53.87%, to $1,356,707 for the six months ended June 30, 2024 from $2,940,822 for the six months ended June 30, 2023.

Revenues from our nutraceutical business (products) decreased by $1,228,759, or 47.53%, to $1,356,592 for the six months ended June 30, 2024 from $2,585,351 for the six months ended June 30, 2023. This decrease was primarily due to our cash constraints and our inability to pay for raw materials used in the production of both branded and contract manufacturing products. The decreased revenues were the result of a decrease in the volume of products sold and not due to pricing changes.

Revenues from our digital marketing business (advertising) decreased by $355,356, or 99.97%, to $115 for the six months ended June 30, 2024 from $355,471 for the six months ended June 30, 2023. The decrease in revenue is attributable to our repurposing of the subsidiary from affiliate network management to focusing on the advertising of our other subsidiaries.

Cost of revenues. Our total cost of revenues decreased by $1,516,694, or 67.12%, to $742,963 for the six months ended June 30, 2024 from $2,259,657 for the six months ended June 30, 2023. Such decrease is directly related to the decrease in revenues.

Cost of revenues for our nutraceutical business (products) decreased by $1,238,179, or 62.50%, to $742,963 for the six months ended June 30, 2024 from $1,981,142 for the six months ended June 30, 2023. As a percentage of product revenues, cost of revenues for product sales were 54.77% and 76.63% for the six months ended June 30, 2024 and 2023, respectively. The decreased percentage is due to decreased product offerings allowing for a concentration of ingredients used in production.

Cost of revenues from our digital marketing business (advertising) was $0 for the six months ended June 30, 2024, as compared to $278,515 for the six months ended June 30, 2023. As a percentage of advertising revenues, cost of revenues for advertising sales was 0% and 78.35% for the six months ended June 30, 2024 and 2023, respectively. Such decrease is directly related to the decrease in revenues.

Gross profit. As a result of the foregoing, our gross profit decreased by $67,421, or 9.90%, to $613,744 for the six months ended June 30, 2024 from $681,165 for the six months ended June 30, 2023. As a percentage of revenues, our gross profit was 45.24% and 23.16% for the six months ended June 30, 2024 and 2023, respectively.

General and administrative expenses. Our general and administrative expenses decreased by $1,443,665, or 60.01%, to $962,083 for the six months ended June 30, 2024 from $2,405,748 for the six months ended June 30, 2023. As a percentage of revenues, our general and administrative expenses were 70.91% and 81.81% for the six months ended June 30, 2024 and 2023, respectively. Such decrease was primarily due to decreased advertising costs, royalty fees and insurance rates in 2024.

Compensation - administrative. Our compensation expenses decreased by $1,729,739, or 66.02%, to $890,398 for the six months ended June 30, 2024 from $2,620,137 for the six months ended June 30, 2023. As a percentage of revenues, our compensation expenses were 65.63% and 89.10% for the six months ended June 30, 2024 and 2023, respectively. Such decrease was primarily due to reduced headcount.

Professional services. Our professional services expenses decreased by $76,657, or 6.28%, to $1,143,641 for the six months ended June 30, 2024 from $1,220,298 for the six months ended June 30, 2023. As a percentage of revenues, our professional services expenses were 84.30% and 41.50% for the six months ended June 30 2024 and 2023, respectively. Such percentage increase was primarily due legal fees and Nasdaq compliance consulting fees incurred.

Consulting fees - related parties. For the six months ended June 30, 2024 and 2023, we paid Trilogy Capital Group, LLC, a company controlled by our Executive Chairman, $0 and $27,547, respectively, for services rendered under a consulting agreement.

Impairment of intangible assets. Due to a significant decrease in advertising revenues, we performed an impairment analysis on the affiliate relationships associated with our Nexus subsidiary and recognized an impairment of $466,737 during the six months ended June 30, 2023. No impairment was recognized in the six months ended June 30, 2024.

Depreciation and amortization. Depreciation and amortization was $646,253, or 47.63% of revenues, for the six months ended June 30, 2024, as compared to $397,185 or 13.51% of revenues, for the six months ended June 30, 2023. The increase in amortization is associated with intangible assets resulting from acquisitions.

Total other expense. We had $2,167,997 in total other expense, net, for the six months ended June 30, 2024, as compared to total other expense, net, of $1,429,069 for the six months ended June 30, 2023. Total other expense, net, for the six months ended June 30, 2024 consisted of interest expense of $2,066,140, a loss on the sale of subsidiary of $132,491, and other expense of $61,762, offset by a gain on extinguishment of debt of $92,396, while other expense, net, for the six months ended June 30, 2023 consisted of interest expense of $1,923,626, offset by a gain on extinguishment of debt of $189,705 and the receipt of employee retention credits of $304,852.

Income (loss) from discontinued operations. We had $89,433 in net income from discontinued operations for the six months ended June 30, 2024, as compared to a loss of $618,755 for the six months ended June 30, 2023.

Net loss. As a result of the cumulative effect of the factors described above, we had a net loss of $5,107,195 for the six months ended June 30, 2024, as compared to $8,504,311 for the six months ended June 30, 2023.

Liquidity and Capital Resources

As of ~~March~~June 3130, 2024, we had cash of $2131,~~331~~703. To To date, we have financed our operations primarily through revenue generated from operations, bank borrowings and sales of our securities. Since our inception in 2017, we have experienced losses and as a result have continued to use cash in our operations. We have been dependent upon financing activities as we implement our acquisition strategy.

Our unaudited condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. We have suffered recurring losses from operations and have a working capital deficiency of $119.07 million at June 30, 2024. These conditions raise substantial doubt about our ability to continue as a going concern. The unaudited ~~condensed~~ condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Management believes that ~~current~~currently available resources will not be sufficient to fund our planned expenditures over the next 12 months from the date hereof. Accordingly, we will be dependent upon the raising of additional capital through placement of common stock and/or debt financing in order to implement our business plan. There is no assurance that we will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on our financial condition.

Summary of Cash Flow

The following table provides detailed information about our net cash flow for the ~~three~~six months ended ~~March~~June 3130, 2024 and 2023.

	Three Months Ended March 31,
	Six Months Ended June 30,
	2024			2023
Net cash used in operating activities	$	(~~540~~1,~~135~~411,573	)	$	(~~500~~5,~~854~~150,913	)
Net cash used in investing activities		—			—(3,450	)
Net cash provided by financing activities		~~406~~1,~~800~~288,610			~~470~~5,~~189~~408,587
Net change in cash		(~~133~~122,~~335~~963	)		~~(30~~254,~~665~~224	)
Cash and cash equivalents at beginning of period		154,666			60,790
Cash and cash equivalents at end of period	$	2131,~~331~~703		$	30315,~~125~~014

Our net cash used in operating activities was $~~540~~1,~~135~~411,573 for the ~~three~~six months ended ~~March~~June 3130, 2024, as compared to $~~500~~5,~~854~~150,913 for the ~~three~~six months ended ~~March~~June 3130, 2023. For the ~~three~~six months ended ~~March~~June 3130, 2024, our net loss of $25,~~896~~107,~~172~~195, offset ~~adjusted~~by ~~for~~non-cash ~~discontinued~~financing ~~operations~~of ~~net~~payable ~~activity~~ of $~~459~~1,~~737~~115,852, ~~offset~~depreciation byand anamortization ~~increase in accounts payable~~ of $~~488~~646,~~373~~254, annon-cash ~~increase~~finance infees ~~accrued expenses~~ of $~~332~~559,~~362~~694, ~~depreciation~~discontinued operations ~~and amortization~~ of $~~256~~467,~~063~~570, and a decrease in inventory of $~~237~~460,~~216~~630 were the primary drivers for cash used in operations. For the ~~three~~six months ended ~~March~~June 3130, 2023, our net loss of $48,~~284~~504,~~315~~311, ~~adjusted for discontinued operations net activity of $163,103,~~ offset by andebt ~~increase~~issuance incosts ~~accounts payable~~ of $~~737~~1,~~887~~021,292, an increase in accrued expenses of $~~682~~957,~~956~~616, ~~non-cash~~a ~~debt~~decrease ~~issuance~~in ~~costs~~inventory of $~~616~~625,~~194~~755, aan ~~decrease~~impairment inof ~~inventory~~intangible assets of $~~529~~466,~~993~~737, and depreciation and amortization expense of $~~435~~397,~~795,~~185 were the primary drivers for cash used in operations.

3735

We had no investing activities for the ~~three~~six months ended June 30, 2024, as compared to net cash used in investing activities of $3,450 for the six months ended ~~March~~June 3130, 2024, orwhich ~~2023~~consisted entirely of additions to property and equipment.

Our net cash provided by financing activities was $~~406~~1,~~800~~288,610 for the ~~three~~six months ended ~~March~~June 3130, 2024, as compared to $~~470~~5,~~189~~408,587 for the ~~three~~six months ended ~~March~~June 3130, 2023. Net cash provided by financing activities for the ~~three~~six months ended ~~March 31~~June 30, 2024 consisted of proceeds from ~~related~~the ~~parties~~exercise of warrants of $~~629~~1,~~041~~781,500, ~~proceeds~~receipts from ~~exercise~~ ofrelated ~~warrants~~parties of $~~290~~1,~~000~~245,453, and proceeds from debt of $163,500, offset by repayments to related parties of $~~544~~1,~~540~~420,304, ~~and~~repayment ~~repayments~~of debt of ~~debt~~discontinued operations of $~~131~~250,~~201,~~295 ~~while~~and ~~net~~repayment of debt of $231,244. Net cash provided by financing activities for the ~~three~~six months ended ~~March~~June 3130, 2023 consisted of ~~net~~ proceeds from the ~~issuance~~exercise of ~~debt~~warrants of $15,~~394~~425,~~000~~140, proceeds ~~receipts~~ from ~~related~~the ~~parties~~issuance of common stock of $~~102~~2,~~694~~151,310, ~~and~~ proceeds from ~~exercise~~debt ofissuance ~~warrants~~ of $~~119~~2,053,071, ~~offset by~~and ~~repayments~~receipts offrom ~~debt~~related parties of $~~929~~89,~~765~~000, ~~and~~offset ~~debt~~by ~~payments~~payment ~~for~~of ~~discontinued~~fees ~~operations~~from issuance of common stock of $964,~~859~~309,934.

Outstanding Debt

The following table shows aggregate figures for our total debt outstanding at ~~March~~June 3130, 2024. For a complete description of the terms of our outstanding debt, please see Note 8 to our unaudited condensed consolidated financial statements above.

Original issue discount subordinated debentures	$	32,~~061~~518,~~817~~110
Original issue discount secured subordinated note		21,~~300~~199,~~452~~854
Acquisition notes		142,493
Acquisition notes – related party		141,193
Promissory notes and cash advances		~~983~~650,~~902~~865
Revolving lines of credit		103,648
Promissory note – related party		250,000
Equipment financing loan		133,229
Revolving lines of credit		2,219
Equipment financing loan		133,230
EIDL loan		300,000
PPP loans		197,457
		7,222,998
		5,392,928
Debt issuance costs		(~~147~~71,~~500~~959	)
Debt, net		75,~~075~~320,~~498~~969
Debt, current		43,~~017~~325,~~903~~866
Debt issuance costs, current		(3723,~~417~~043	)
Current portion of debt, net		3,~~980~~302,~~486~~823
Debt, non-current		32,~~057~~067,~~595~~062
Debt issuance costs, non-current		(~~110~~48,~~082~~916	)
Non-current portion of debt, net	$	2,~~947~~018,~~513~~146

Contractual Obligations

Our principal commitments consist mostly of obligations under the loans described above and pricing/margin structures for products established with our clients. We do not have any purchase obligations with any suppliers.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies

The preparation of our unaudited condensed consolidated financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On a regular basis, we evaluate these estimates. These estimates are based on management’s historical industry experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

For a description of the accounting policies that, in management’s opinion, involve the most significant application of judgment or involve complex estimation and which could, if different judgment or estimates were made, materially affect our reported financial position, results of operations, or cash flows, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” in the Form 10-K.

3836

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15(e) of the Exchange Act, our management has carried out an evaluation, with the participation and under the supervision of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as of ~~March~~June 3130, 2024. Based upon, and as of the date of this evaluation, our chief executive officer and chief financial officer determined that, because of the material weaknesses described in Item 9A “Controls and Procedures” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which we are still in the process of remediating as of ~~March~~June 3130, 2024, our disclosure controls and procedures were not effective. Investors are directed to Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, for the description of these weaknesses.

Remediation of Material Weaknesses in Internal Control Over Financial Reporting

As disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, our management has identified the steps necessary to address the material weaknesses, and in the ~~first~~second quarter of 2024, we continued to implement these remedial procedures.

As part of our plan to remediate this material weakness, we are performing a full review of our internal control procedures. We have implemented, and plan to continue to implement, new controls and new processes. We have hired and plan to continue to hire additional qualified personnel and establish more robust processes to support our internal control over financial reporting, including clearly defined roles and responsibilities. We anticipate time being required to complete the implementation and to assess and ensure the sustainability of these controls. The material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control Over Financial Reporting

Other than in connection with the implementation of the remedial measures described above, there were no changes in our internal control over financial reporting or in any other factors that could significantly affect these controls during the three months ended ~~March~~June 3130, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3937

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these, or other matters, may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

ITEM 1A. RISK FACTORS.

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

We have not sold any equity securities during the three months ended ~~March~~June 3130, 2024 that were not previously disclosed in a current report on Form 8-K that was filed during the quarter.

We did not repurchase any shares of our common stock during the three months ended ~~March~~June 3130, 2024.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

4038

ITEM 6. EXHIBITS.

Exhibit No.		Description
2.1		Plan of Conversion, dated January 12, 2023 (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on April 13, 2023)
2.2		Certificate of Conversion as filed with the Secretary of State of the State of Delaware on April 10, 2023 (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K filed on April 13, 2023)
2.3		Articles of Conversion as filed with the Secretary of State of the State of Nevada on April 10, 2023 (incorporated by reference to Exhibit 2.3 to the Current Report on Form 8-K filed on April 13, 2023)
3.1		Articles of Incorporation of Smart for Life, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on April 13, 2023)
3.2		Certificate of Amendment to Articles of Incorporation of Smart for Life, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on April 28, 2023)
3.3		Certificate of Change to Articles of Incorporation of Smart for Life, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on August 8, 2023)
3.4		Certificate of Change to Articles of Incorporation of Smart for Life, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on November 2, 2023)
3.5		Certificate of Change to Articles of Incorporation of Smart for Life, Inc. (incorporated by reference to Exhibit 3.5 to the Annual Report on Form 10-K filed on September 20, 2024)
3.6		Certificate of Designation of Series B Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on May 30, 2023)
3.7		Certificate of Designation of Series C Preferred Stock (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on March 7, 2024)
3.8		Bylaws of Smart for Life, Inc. (incorporated by reference to Exhibit 3.3 to the Current Report on Form 8-K filed on April 13, 2023)
4.1		Form of Common Stock Purchase Warrant issued on June 3, 2024 (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on June 7, 2024)
4.2		Form of Placement Agent Common Stock Purchase Warrant issued on June 3, 2024 (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on June 7, 2024)
4.3		Form of Placement Agent Common Stock Purchase Warrant issued on December 4, 2023 (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on December 6, 2023)
4.4		Placement Agent Common Stock Purchase Warrant issued by Smart for Life, Inc. to Charles Worthman on May 31, 2023 (incorporated by reference to Exhibit 4.6 to the Registration Statement on Form S-1 filed on June 5, 2023)
4.5		Placement Agent Common Stock Purchase Warrant issued by Smart for Life, Inc. to Craig Schwabe on May 31, 2023 (incorporated by reference to Exhibit 4.7 to the Registration Statement on Form S-1 filed on June 5, 2023)
4.6		Placement Agent Common Stock Purchase Warrant issued by Smart for Life, Inc. to Michael Vasinkevich on May 31, 2023 (incorporated by reference to Exhibit 4.8 to the Registration Statement on Form S-1 filed on June 5, 2023)
4.7		Placement Agent Common Stock Purchase Warrant issued by Smart for Life, Inc. to Noam Rubinstein on May 31, 2023 (incorporated by reference to Exhibit 4.9 to the Registration Statement on Form S-1 filed on June 5, 2023)
4.8		Form of Placement Agent Common Stock Purchase Warrant issued on May 19, 2023 (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K filed on May 23, 2023)
4.9		Placement Agent Common Stock Purchase Warrant issued by Smart for Life, Inc. to H.C. Wainwright & Co., LLC on May 5, 2023 (incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-3 filed on May 5, 2023)
4.10		Common Stock Purchase Warrant issued by Smart for Life, Inc. to Dawson James Securities, Inc. on December 8, 2022 (incorporated by reference to Exhibit 4.21 to the Current Report on Form 8-K filed on December 9, 2022)

4139

4.11		Common Stock Purchase Warrant issued by Smart for Life, Inc. to Dawson James Securities, Inc. on December 8, 2022 (incorporated by reference to Exhibit 4.22 to the Current Report on Form 8-K filed on December 9, 2022)
4.12		Common Stock Purchase Warrant issued by Smart for Life, Inc. to Robert D. Keyser, Jr. on December 8, 2022 (incorporated by reference to Exhibit 4.23 to the Current Report on Form 8-K filed on December 9, 2022)
4.13		Common Stock Purchase Warrant issued by Smart for Life, Inc. to James Hopkins on December 8, 2022 (incorporated by reference to Exhibit 4.24 to the Current Report on Form 8-K filed on December 9, 2022)
4.14		Warrant Agent Agreement, dated February 16, 2022, between Smart for Life, Inc. and VStock Transfer, LLC and Forms of Warrants (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on February 23, 2022)
4.15		Warrant issued by Smart for Life, Inc. to Joseph Xiras on January 13, 2022 (incorporated by reference to Exhibit 4.21 to Amendment No. 2 to Registration Statement on Form S-1/A filed on January 21, 2022)
4.16		Warrant issued by Smart for Life, Inc. to Leonite Fund I, LP on January 13, 2022 (incorporated by reference to Exhibit 4.22 to Amendment No. 2 to Registration Statement on Form S-1/A filed on January 21, 2022)
4.17		Warrant issued by Smart for Life, Inc. to Laurie Rosenthal on January 7, 2022 (incorporated by reference to Exhibit 4.20 to Amendment No. 2 to Registration Statement on Form S-1/A filed on January 21, 2022)
4.18		Warrant issued by Smart for Life, Inc. to Robert Rein on January 3, 2022 (incorporated by reference to Exhibit 4.19 to Amendment No. 2 to Registration Statement on Form S-1/A filed on January 21, 2022)
4.19		Warrant issued by Smart for Life, Inc. to Thomas L Calkins II and Diane M Calkins JTIC on December 27, 2021 (incorporated by reference to Exhibit 4.18 to Amendment No. 2 to Registration Statement on Form S-1/A filed on January 21, 2022)
4.20		Warrant issued by Smart for Life, Inc. to Ryan Hazel on December 23, 2021 (incorporated by reference to Exhibit 4.17 to Amendment No. 2 to Registration Statement on Form S-1/A filed on January 21, 2022)
4.21		Amended and Restated Warrant issued by Smart for Life, Inc. to Dawson James Securities, Inc. on February 1, 2022 (incorporated by reference to Exhibit 4.25 to Amendment No. 3 to Registration Statement on Form S-1/A filed on February 2, 2022)
4.22		Warrant issued by Smart for Life, Inc. to Dawson James Securities, Inc. on July 1, 2021 (incorporated by reference to Exhibit 4.23 to Amendment No. 3 to Registration Statement on Form S-1/A filed on February 2, 2022)
4.23		Warrant issued by Smart for Life, Inc. to Dawson James Securities, Inc. on July 1, 2021 (incorporated by reference to Exhibit 4.24 to Amendment No. 3 to Registration Statement on Form S-1/A filed on February 2, 2022)
4.24		Common Stock Purchase Warrant issued by Smart for Life, Inc. to Peah Capital, LLC on December 18, 2020 (incorporated by reference to Exhibit 4.14 to the Registration Statement on Form S-1 filed on December 16, 2021)
4.25		Amendment No 1 to Common Stock Purchase Warrant, dated June 30, 2021, between Smart for Life, Inc. and Peah Capital, LLC (incorporated by reference to Exhibit 4.15 to the Registration Statement on Form S-1 filed on December 16, 2021)
10.1		Asset Purchase Agreement, dated January 29, 2024, among Smart for Life, Inc., First Health FL LLC, Ceautamed Worldwide, LLC, Wellness Watchers Global, LLC and Greens First Female, LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on February 2, 2024)
10.2		Bill of Sale and Assignment and Assumption Agreement, dated January 29, 2024, among First Health FL LLC, Ceautamed Worldwide, LLC, Wellness Watchers Global, LLC and Greens First Female, LLC (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on February 2, 2024)
10.3		Assignment of Intellectual Property, dated as of January 29, 2024, among First Health FL LLC, Ceautamed Worldwide LLC, Wellness Watchers, LLC and Greens First Female, LLC (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on February 2, 2024)
10.4		Limited Liability Company Agreement, dated as of January 29, 2024, among Smart for Life, Inc., Joseph X. Xiras, Stuart Benson and Ryan Benson (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed on February 2, 2024)
10.5		Loan Agreement, dated March 5, 2024, among Smart for Life, Inc., Doctors Scientific Organica, LLC, Oyster Management Services Ltd., Lavi Enterprises, LLC and Abbsi LLC (incorporated by reference to Exhibit 10.13 to the Annual Report on Form 10-K filed on September 20, 2024)

10.1		Securities Purchase Agreement, dated April 3, 2024, among Smart for Life, Inc., Purely Optimal Nutrition Inc., Tan Enterprises, Inc., Avaliant Holdings Corporation, Dannel Tan, Jason Kwan, and Timur Kim (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on April 9, 2024)
10.2		Independent Director Agreement, dated April 18, 2024, between Smart for Life, Inc. and Heather Granato (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on April 24, 2024)
10.3		Indemnification Agreement, dated April 18, 2024, between Smart for Life, Inc. and Heather Granato (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on April 24, 2024)
10.4		Form of Inducement Letter, dated May 30, 2024 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on May 31, 2024)
31.1*		Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certifications of Principal Financial and Accounting Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certifications of Principal Executive Officer and Principal Financial and Accounting Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label 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)

10.6		Secured Promissory Note issued by Smart for Life, Inc., Doctors Scientific Organica, LLC, Oyster Management Services Ltd. and Lavi Enterprises, LLC to Abbsi LLC on March 5, 2024 (incorporated by reference to Exhibit 10.14 to the Annual Report on Form 10-K filed on September 20, 2024)
10.7		Amendment No. 2 to Original Issue Discount Secured Subordinated Note issued by Smart for Life, Inc. to Joseph X. Xiras on January 26, 2024 (incorporated by reference to Exhibit 10.8 to the Current Report on Form 8-K filed on February 2, 2024)
10.8		Agreement, dated January 29, 2024, among D&D Hayes, LLC, Ceautamed Worldwide, LLC, Wellness Watchers Global, LLC, Greens First Female, LLC, First Group Acquisition Company, LLC and First Health FL LLC (incorporated by reference to Exhibit 10.11 to the Current Report on Form 8-K filed on February 2, 2024)
10.9		Agreement, dated January 29, 2024, among Smart for Life, Inc., D&D Hayes, LLC, Ceautamed Worldwide, LLC, Wellness Watchers Global, LLC, Greens First Female, LLC, First Group Acquisition Company, LLC and First Health FL LLC (incorporated by reference to Exhibit 10.12 to the Current Report on Form 8-K filed on February 2, 2024)
10.10		Independent Director Agreement, dated March 8, 2024, between Smart for Life, Inc. and Loren Brown (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on March 14, 2024)
31.1*		Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certifications of Principal Financial and Accounting Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certifications of Principal Executive Officer and Principal Financial and Accounting Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label 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

4340

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 9, 2025	SMART FOR LIFE, INC.
Date: May 23, 2025	SMART FOR LIFE, INC.
	/s/ Darren C. Minton
	Name:	Darren C. Minton
	Name: Darren C. Minton
	Title:	Chief Executive Officer and Chief Financial Officer
	Title: Chief Executive Officer
	(Principal Executive Officer and Principal Financial and Accounting Officer)	~~(Principal Executive Officer and Principal Financial and Accounting Officer)~~

4441

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