The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the unaudited condensed
consolidated financial statements and related notes included elsewhere in this
Quarterly Report on Form 10-Q and our audited financial statements and related
notes included in our Annual Report on Form 10-K for the year ended December 31,
2020, which was filed with the Securities and Exchange Commission (the "SEC") on
April 16, 2021. This discussion and analysis and other parts of this Quarterly
Report contain forward-looking statements based upon current beliefs, plans and
expectations that involve risks, uncertainties and assumptions. Any statements
contained herein that are not statements of historical fact, including
statements regarding guidance, industry prospects or future results of
operations or financial position made in this report are forward-looking. We
often use words such as anticipates, believes, estimates, expects, intends,
predicts, hopes, should, plans, will and similar expressions to identify
forward-looking statements. These statements are based on management's current
expectations and accordingly are subject to uncertainty and changes in
circumstances. Actual results may vary materially from the expectations
contained herein due to various important factors, including (but not limited
to): the impact of the COVID pandemic; the efficacy and distribution of COVID-19
vaccines; consumer preferences, spending and debt levels; the general economic
and credit environment; interest rates; variations in consumer purchasing
activities; competitive pressures on sales; the loss of a significant customer
or material reduction of business with a significant customer; pricing and gross
sales margins; the associated fees or estimated cost savings from contract
renegotiations; and our ability to establish and maintain acceptable commercial
terms with contract manufacturers. We undertake no obligation to publicly update
or revise any forward-looking statements except as required by law.



Overview



We are an integrated formulator, marketer, distributor and retailer of branded
nutritional supplements and other natural products sold to and through domestic
health and natural food stores, mass market retailers, specialty retailers,
on-line retailers and websites. Internationally, we market and distribute
branded nutritional supplements and other natural products to and through health
and natural product distributors and retailers.



Our products include vitamins, minerals, specialty supplements and sports
nutrition products primarily under the Twinlab®, Reserveage and ResVitale ®
brands. We also formulate, market and sell diet and energy products under the
Metabolife® brand and a full line of herbal teas under the Alvita® brand. To
accommodate consumer preferences, our products come in various formulations and
delivery forms, including capsules, tablets, softgels, chewables, liquids,
sprays, powders and whole herbs. These products are sold primarily through
health and natural food stores and on-line retailers, supermarkets, and
mass-market retailers.



We distribute one of the broadest branded product lines in the industry with
approximately 260 stock keeping units, or SKUs. We believe that as a result of
our emphasis on innovation, quality, loyalty, education and customer service,
our brands are widely recognized in health and natural food stores and among
their customers. In most periods since our formation, we have generated losses
from operations.


We also perform services between private label distributors and contract manufacturers under the NutraScience Labs brand name. NSL facilitates the production of new supplements to market and reformulate existing products to include scientifically backed ingredients. We provide our customers with numerous production services, including manufacturing, testing, label and packaging design, order fulfillment, and regulatory compliance.





NSL facilitates the contract manufacture of a variety of high-quality vitamin
and supplement products, including but not limited to, immune support
supplements, cognitive support products, prebiotics and probiotics, supplements
for weight management, and sports nutrition supplements. Our role in the
production of these products is to help our customers manufacture or reformulate
dietary supplements for sale and distribution. We do this by working with
contract manufacturers to build scientifically backed formulas for resale to our
end customers. We also simplify the production process by providing quality
control checks, storing inventory on site, labeling and designing finished
products, and drop shipping finished products ready for sale to our end
customers. We do not market these private label products, but rather sell the
products to the customer, who is then responsible for the marketing,
distribution, and sale to retailers or to their end customers.



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Going Concern Uncertainty



The accompanying condensed consolidated financial statements have been prepared
on a going concern basis, which assumes continuity of operations and realization
of assets and liabilities in the ordinary course of business. In most periods
since our formation, we have generated losses from operations. At June 30, 2021,
we had an accumulated deficit of $331.8 million. Historical losses are primarily
attributable to lower than planned sales resulting from low fill rates on demand
due to limitations of our working capital, delayed product introductions and
postponed marketing activities, merger-related and other restructuring costs,
interest and refinancing charges associated with our debt refinancing, and
impairment of goodwill and intangible assets. Losses have been funded primarily
through issuance of common stock and third-party or related party debt.



Because of our history of operating losses and increase in debt over time, we
have a working capital deficiency of $114.2 million at June 30, 2021. We also
have $100.4 million of debt, net of discount, which could be due within the next
12 months. These continuing conditions, among others, raise substantial doubt
about our ability to continue as a going concern.



Management has addressed operating issues through the following actions:
focusing on growing the core business and brands; continuing emphasis on major
customers and key products; reducing manufacturing and operating costs and
continuing to negotiate lower prices from major suppliers. We believe that we
may need additional capital to execute our business plan. If additional funding
is required, there can be no assurance that sources of funding will be available
when needed on acceptable terms or at all.



The condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.





Results of Operations


Comparison of the Three and Six Month Periods Ended June 30, 2021 and 2020

The following table summarizes our financial results for the three and six month periods ended June 30, 2021 and 2020:







                       Three Months Ended                                         Six Months Ended
                            June 30,               Increase           %               June 30,              Increase           %
                        2021          2020        (Decrease)       Change  

2020 2019 (Decrease) Change Net sales

$   18,109     $ 12,212     $      5,897            48 %   $ 37,570     $ 28,641     $      8,929            31 %
Cost of sales            13,273        9,388            3,885            41 %     25,615       20,653            4,962            24 %
Gross profit              4,836        2,824            2,012            71 %     11,955        7,988            3,967            50 %
Operating costs
and expenses:
Selling expenses            737          341              396           116 %      1,626          624            1,002           161 %
General and
administrative
expenses                  1,312        2,728           (1,416 )         -52 %      4,971        9,586           (4,615 )         -48 %
Income (loss) from
operations                2,787         (245 )          3,032          1238 %      5,358       (2,222 )          7,580           341 %

Other income
(expense):
Interest expense,
net                      (2,241 )     (2,148 )             93             4 %     (4,410 )     (4,306 )            104             2 %
Gain (loss) on
change in
derivative
liabilities                   -          886              886          -100 %          -         (143 )           (143 )        -100 %
Other income                536          145             (391 )         270 %        517          145             (372 )         257 %
Total other
expense                  (1,705 )     (1,117 )            588            53 %     (3,893 )     (4,304 )            411            10 %

Income (loss)
before income
taxes                     1,082       (1,362 )          2,444           179 %      1,465       (6,526 )          7,991           122 %

Provision for
income taxes                  -            -                                           -            -

Total net income
(loss)               $    1,082     $ (1,362 )   $      2,444           179 %   $  1,465     $ (6,526 )   $      7,991           122 %




Net Sales


The increase in our net sales by 48% and 31% for the three month and six month periods ended June 30, 2021 compared to the same period in 2020 is due to a recovery from the negative impacts of the COVID-19 pandemic upon 2020 sales figures.





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Gross Profit


Our overall gross profit increase of 71% and 50% for the three month and six month periods ended June 30, 2021 compared to the same period in 2020 was primarily due to a focus on SKUs with higher margins.





Selling Expenses



Our selling expenses increased by 116% and 161% for the three month and six
month periods ended June 30, 2021 compared to the same period in 2020 primarily
due to increased advertising and marketing campaigns, as well as the redesign of
our consumer websites.


General and Administrative Expenses





Our general and administrative expenses decreased by 52% and 48% for the three
month and six month periods ended June 30, 2021 compared to the same period in
2020 due to the Company's rightsizing initiatives and recognition of bad debt in
2020 due to the bankruptcy of the Company's largest customer.



Interest Expense, Net


Our interest expense increased by $93 and $106, or 4% and 2%, for the three month and six month periods ended June 30, 2021 compared to the same period in the prior year. The increases were primarily due to increased debt via the addition of two PPP loans (See Other Debt in Note 5).

Gain (Loss) on Change in Derivative Liabilities





We have recorded the estimated fair value of the warrants as of the date of
issuance. Due to the variable terms of the warrant agreements, changes in the
estimated fair value of the warrants from the date of issuance to each balance
sheet reporting date are recorded as derivative liabilities with a corresponding
charge to our condensed consolidated statements of operations. As of June 30,
2021, none of the warrants that resulted in the recording of the related
derivative liabilities is outstanding.



Liquidity and Capital Resources





At June 30, 2021, we had an accumulated deficit of $331.8 million primarily
because of our history of operating losses and our recording of derivative
liabilities and loss on stock purchase guarantee. We have a working capital
deficiency of $114.2 million at June 30, 2021. Losses have been funded primarily
through the issuance of common stock and warrants, borrowings from our
stockholders and third-party debt and proceeds from the exercise of warrants. As
of June 30, 2021, we had cash of $1,294. On an ongoing basis, we also seek to
improve operating cash through trade receivables and payables management as well
as inventory stocking levels. We used net cash in operating activities of $2,668
for the six months ended June 30, 2021. During the six months ended June 30,
2021, we incurred net borrowings from our senior credit facility of $2,329.



Our total liabilities increased by $8.2 million to $145.3 million at June 30,
2021 from $137.1 million at December 31, 2020. This increase in our total
liabilities was primarily due to the increase of $4.0 million in notes payable
and $3.2 million in accrued interest.



Cash Flows from Operating, Investing and Financing Activities





Net cash used in operating activities was $2.7 million for the six months ended
June 30, 2021 as a result of our net income of $1.5 million, a provision for
recovery of accounts receivable of $625 in doubtful accounts receivable, other
non-cash expenses totaling $593 net and a decrease in net operating assets and
liabilities of $4,103. By comparison, for the six months ended June 30, 2020,
net cash used in operating activities was $2.7 million as a result of our net
loss of $6.5 million, a recovery for losses of accounts receivable of $230 in
doubtful accounts receivable, a non-cash loss on change in derivative
liabilities of $143, other non-cash expenses totaling $1,965 net, and an
increase in net operating assets and liabilities of $1,954.



Net cash provided by financing activities was $3,672 for the six months ended
June 30, 2021, consisting of net borrowings of $2,329 under our revolving credit
facility, and proceeds from the issuance of debt of $1,344.



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Ongoing Funding Requirements


As set forth above, we obtained additional debt financing in the year ended December 31, 2020 to support operations. It is possible that we may need additional funding to enable us to fund our operating expenses and capital expenditure requirements.





In response to COVID-19 and to protect our liquidity and cash position, we have
taken a number of steps. In August of 2020, we obtained deferment letters from
each of Great Harbor Capital, LLC, Little Harbor, LLC, and Golisano Holdings,
LLC, pursuant to which each lender agreed to defer all payments due under
outstanding notes held by each lender through October 22, 2021 and agreed to
refrain from declaring a default and/or exercising any remedies under the
outstanding notes.  On May 7, 2020, TCC received the proceeds of a loan from
Fifth Third Bank, National Association in the amount of $1.7 million obtained
under the Paycheck Protection Program under the Coronavirus Aid, Relief, and
Economic Security Act (the "CARES Act"), which was enacted March 27, 2020 (the
"PPP Loan"). The PPP Loan, evidenced by a promissory note dated May 5, 2020 (the
"PPP Note"), has a two-year term and bears interest at a rate of 1.0% per annum,
with the monthly principal and interest payments due beginning December 1, 2020;
however, the Company has applied for debt forgiveness for this loan. On January
25, 2021, TCC applied for another PPP Loan with Fifth Third bank in the amount
of $1.3 million (the "Second PPP Loan").  The Second PPP Loan, evidenced by a
promissory note dated February 5, 2021 (the "Second PPP Note"), has a two-year
term and bears interest at a rate of 1.0% per annum, with expected monthly
principal and interest payments due to begin September 1, 2021.



TCC may prepay 20% or less of the principal balances of the notes at any time
without notice. TCC used the proceeds of the PPP Loans for payroll, office rent,
and utilities which allows the Company to seek forgiveness of these loans. While
we intend to pursue the forgiveness of the PPP loan and Second PPP loan received
in accordance with the requirements and limitations under the CARES Act, no
assurance can be provided that forgiveness of any portion of the PPP Loan will
be obtained.



Until such time, if ever, as we can generate substantial product revenues, we
intend to finance our cash needs through a combination of equity offerings, debt
financings, collaborations, strategic alliances and licensing arrangements.
There can be no assurance that any of those sources of funding will be available
when needed on acceptable terms or at all. To the extent that we raise
additional capital through the sale of equity or convertible debt securities,
the ownership interests of existing stockholders will be diluted, and the terms
of these securities may include liquidation or other preferences that adversely
affect the rights of existing stockholders. Debt financing, if available, may
involve agreements that include covenants limiting or restricting our ability to
take specific actions, such as incurring additional debt, making capital
expenditures or declaring dividends. If we raise funds through collaborations,
strategic alliances or licensing arrangements with third parties, we may have to
relinquish valuable rights to our technologies, future revenue streams, research
programs or product candidates or to grant licenses on terms that may not be
favorable to us. If we are unable to raise additional funds through equity or
debt financings or relationships with third parties when needed or on acceptable
terms, we may be required to delay, limit, reduce or terminate our product
development or future commercialization efforts; abandon our business strategy
of growth through acquisitions; or grant rights to develop and market product
candidates that we would otherwise prefer to develop and market ourselves.



Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under applicable SEC rules.

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