SMFL Smart for Life Inc

Smart for Life, Inc. (Nasdaq: SMFL) (“Smart for Life” or the “Company”), a leader in the Health & Wellness sector marketing and manufacturing nutritional supplements and foods, announced today that it has successfully completed a comprehensive restructuring of the Company.

The comprehensive program included recapitalization of the Company with equity and debt financings, the sale of certain non-performing assets, the sale and leaseback of the Company’s 18,000 sq. ft. Doral manufacturing facility, the sale of 51% of Ceautamed Worldwide, LLC, a subsidiary, for $3.4 million and the successful liquidation of the Company’s senior debt facility with Diamond Creek Capital. In addition, the Company converted substantial debt obligations to equity materially improving the Company’s balance sheet resulting in an approximate 6-fold positive enhancement of the Company’s Net Shareholders’ Equity to an expected $6 million. The debt conversions also eliminated significant ongoing interest expense incurred by the Company.

“Working closely with Darren Minton, our CEO, and Alan Bergman, our CFO, we have been successful in overhauling operations and reducing or eliminating material debt obligations,” said A.J. Cervantes, Jr., the Company’s Founder and Chairman. “While our operations are substantially reduced with a corresponding decrease in revenues, we are in a much stronger position today. This sets the stage for the next chapter of Smart for Life, marked by a heightened commitment to substantially expanding the Company's pipeline of potential acquisitions.”

Darren Minton, the Company’s Chief Executive Officer noted, “We effectively addressed a broad spectrum of challenges facing the Company, successfully eliminating and converting significant amounts debt to equity as part of our recapitalization initiatives. This has notably strengthened our balance sheet, yielding an expected net shareholder's equity of $6 million. Additionally, we've reduced losses across all fronts, significantly enhancing the financial viability of Smart for Life. These actions position us favorably for the next phase of M&A activity.”

Purely Optimal Acquisition

On April 8, the Company announced the execution of the definitive agreement for the acquisition of Purely Optimal, a premier eCommerce nutraceuticals company with operations in North America. The acquisition is not only expected to extend the Company’s offerings to include Purely Optimal’s product line, which includes dozens of high-quality supplements, but will enable it to achieve additional economies of scale through existing operations. Purely Optimal is currently generating estimated revenue in excess of $8 million and over $1 million of Adjusted EBITDA for the trailing twelve months.

The corporate video featuring Smart for Life’s CEO, Darren Minton, can be found at: https://smartforlifecorp.com/2024/04/08/video-ceo-of-smart-for-life-darren-minton-announces-purely-optimal-acquisition/.

Accelerated Acquisition Pipeline Development

As part of the Company’s restructuring and business development initiatives, the Company added two prominent nutraceutical executives to the Company’s Board of Directors and as advisors. As part of their prospective activities, they will communicate to the industry at large the Company’s increased business development and buy-side initiatives.

On April 18, the Company announced the election of Heather Granato to the Company’s Board of Directors. Ms. Granato, a prominent industry executive, brings decades of nutraceutical industry experience, a career in journalistic outreach, content creation and marketing initiatives to Smart for Life and the Board.

On March 11, the Company announced the election of Loren Brown to the Company’s Board of Directors as well as an advisor to the Company. Mr. Brown is a prominent 20-year industry veteran specializing in regulatory compliance, product development, and testing solutions for dietary supplements, supporting clients in commercializing health and wellness products in the human and animal markets.

“The enormous value of the addition of both Heather and Loren to the Smart for Life team cannot be overstated,” commented Mr. Minton. “Their impressive credentials impart enormous credibility and the significant depth and reach of their contacts and relationships in the industry has already started to play a major role in business development as well as future acquisition opportunities. I have no doubt they will be tremendous assets to Smart for Life.”

Annual 10-K Report

On April 17, 2024, the Company received an additional notification letter from Nasdaq indicating that the Company is now delinquent in filing its Form 10-K for the year ended December 31, 2023, which serves as an additional basis for the delisting of the Company’s securities from The Nasdaq Capital Market. The letter stated that the hearings panel will consider this matter in rendering a determination regarding the Company’s continued listing on Nasdaq. In that regard, the letter stated that the Company should present its views with respect to this additional deficiency to the hearings panel no later than April 24, 2024.

At the hearing, which was held on March 12, 2024, the Company presented its plan for regaining compliance with the Equity Rule and presented its views with respect to the additional deficiency relating to the annual meeting, and requested a further extension so that it may complete the execution of its plan. Although the Company believes its plan will be sufficient to enable it to regain compliance, no assurance can be provided that Nasdaq will ultimately accept the Company’s plan or that the Company will ultimately regain compliance with the Equity Rule.

Notably, we filed a Form 8-K on March 7, 2024, disclosing that as a result of our restructuring plan, including recapitalization with equity and debt financings, the sale of certain non-performing assets and the liquidation of our senior debt facility, we had stockholder’s equity of over $2.5 million. In addition, through further improvements to the balance sheet, we have an estimated stockholders’ equity of at least $6 million as of the date hereof.

The Company management anticipates filing the annual 10-K report upon completion of the Company’s audit.

About Smart for Life, Inc.

Smart for Life, Inc. (Nasdaq: SMFL) is engaged in the development, marketing, manufacturing, acquisition, operation and sale of a broad spectrum of nutritional and related products with an emphasis on Health & Wellness. Structured as a publicly held holding company, the Company is executing a Buy-and-Build strategy with serial accretive acquisitions creating a vertically integrated company. To drive growth and earnings, Smart for Life is developing proprietary products as well as acquiring other profitable companies, encompassing brands, manufacturing and distribution channels. The Company recently concluded the execution of a restructuring plan including recapitalization of the Company with equity and debt financings, the sale of certain non-performing assets, the sale and leaseback of the Company’s 18,000 sq. ft. Doral manufacturing facility and the successful liquidation of the Company’s senior debt facility. In addition, the Company converted substantial debt obligations to equity materially improving the Company’s balance sheet. The Company has signed a definitive agreement for the acquisition of Purely Optimal Nutrition, which is expected to add additional revenue and EBITDA. For more information about Smart for Life, please visit: www.smartforlifecorp.com.

Forward-Looking Statements

This press release may contain information about our views of future expectations, plans and prospects that constitute forward-looking statements. All forward-looking statements are based on management’s beliefs, assumptions and expectations of Smart for Life’s future economic performance, taking into account the information currently available to it. These statements are not statements of historical fact. Although Smart for Life believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Smart for Life does not undertake any duty to update any statements contained herein (including any forward-looking statements), except as required by law. No assurances can be made that Smart for Life will successfully acquire its acquisition targets. Forward-looking statements are subject to a number of factors, risks and uncertainties, some of which are not currently known to us, that may cause Smart for Life’s actual results, performance or financial condition to be materially different from the expectations of future results, performance or financial position. Actual results may differ materially from the expectations discussed in forward-looking statements. Factors that could cause actual results to differ materially from expectations include general industry considerations, regulatory changes, changes in local or national economic conditions and other risks set forth in “Risk Factors” included in our filings with the Securities and Exchange Commission.

Disclaimer

The information provided in this press release is intended for general knowledge only and is not a substitute for professional medical advice or treatment for specific medical conditions. Always seek the advice of your physician or other qualified health care provider with any questions you may have regarding a medical condition. This information is not intended to diagnose, treat, cure or prevent any disease.

Investor Relations Contact

Crescendo Communications, LLCTel: (212) 671-1021SMFL@crescendo-ir.com