What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-12 compared with 2025-08-13 · 121 added, 106 removed, 197 unchanged (54% of the section changed)

33 unchanged sentences

Concern Uncertainty

of June 30, 2025, we had a cash balance of $641,129, a positive working capital of $662,217, and had incurred recurring losses from

operations resulting in an accumulated deficit of $20,083,595.

of September 30, 2025, we had a cash balance of $812,007, a positive working capital of $2,118,922, and had incurred recurring losses

from operations resulting in an accumulated deficit of $21,656,147.

Although we anticipate that our results of operations will improve

21 unchanged sentences

is secured by the Peru Facility and was owed by the landlord of the Peru Facility to its former tenant, for a purchase price of $1,267,000,

of which payments were made in various installments totaling $355,000 as of December 31, 2024 and $912,000 during the six months ended

June 30, 2025.

of Operations for the Three Months Ended June 30, 2025, and 2024

following table summarizes selected items from the statement of operations for the three months ended June 30, 2025, and 2024, respectively.

of which payments were made in various installments totaling $355,000 as of December 31, 2024 and $912,000 during the nine months ended

September 30, 2025.

of Operations for the Three Months Ended September 30, 2025, and 2024

following table summarizes selected items from the statement of operations for the three months ended September 30, 2025, and 2024, respectively.

Three Months Ended

September 30,

Cost of goods sold

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Salaries and benefits

Shipping and handling

Advertising and promotions

Professional services

Advertising and promotions

Shipping and handling

Total operating expenses

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$ (1,572,552 )

net revenue for the three months ended June 30, 2025, was $3,299,738, compared to $1,362,986 for the three months ended June 30, 2024,

$ (1,270,805 )

net revenue for the three months ended September 30, 2025, was $3,220,027, compared to $2,181,495 for the three months ended September

30, 2024, an increase of $1,038,532, or 48%.

The increase in revenue was primarily due to increased sales to our largest customer during the three

months ended June 30, 2025.

The increase in revenue was primarily due to increased sales to our largest customer during

the three months ended September 30, 2025.

of Goods Sold and Gross Profit

cost of goods sold for the three months ended June 30, 2025, was $2,693,279, compared to $1,214,227 for the three months ended June 30,

cost of goods sold for the three months ended September 30, 2025, was $2,650,477, compared to $1,845,155 for the three months ended September

30, 2024, an increase of $805,322, or 44%.

Cost of goods sold increased primarily due to increased sales during the three months ended

June 30, 2025.

We had gross profit of $606,459, representing gross margins of 18.4%, for the three months ended June 30, 2025, as compared

to a gross profit of $148,759, or 10.9%, for the three months ended June 30, 2024.

September 30, 2025.

We had gross profit of $569,550, representing gross margins of 17.7%, for the three months ended September 30, 2025,

as compared to a gross profit of $336,340, or 15.4%, for the three months ended September 30, 2024.

margin increased primarily due to the transition of manufacturing operations from third-party suppliers to our facility located in Pisco,

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and Administrative

general and administrative expense for the three months ended June 30, 2025, was $784,872, compared to $175,758 for the three months

ended June 30, 2024, an increase of $609,114, or 347%.

The largest components of our general and administrative expenses are plant idle

capacity, rent, travel, and commissions, as shown below.

Three Months Ended June 30,

general and administrative expense for the three months ended September 30, 2025, was $897,512, compared to $316,688 for the three months

ended September 30, 2024, an increase of $580,824, or 183%.

The largest components of our general and administrative expenses are plant

idle capacity, research and development, rent, travel, and commissions, as shown below.

Three Months Ended September 30,

Idle Capacity

Research and development

capacity increased due to the opening of the production facility located in Pisco, Peru.

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Commissions increased due to increased sales.

and wages for the three months ended June 30, 2025, was $436,163, compared to $349,597 for the three months ended June 30, 2024, an increase

of $86,566, or 25%.

This increase was primarily attributable to $28,494 of amortization of stock options issued to employees for services

fees for the three months ended June 30, 2025, was $323,062, compared to $304,376 for the three months ended June 30, 2024, an increase

of $18,686, or 6%.

The modest increase primarily reflects normal fluctuations in legal, consulting, and accounting expenses and does

not represent a significant change in the level of professional services utilized.

and handling for the three months ended June 30, 2025, was $157,807, compared to $88,384 for the three months ended June 30, 2024, an

increase of $69,423 or 79%.

and wages for the three months ended September 30, 2025, was $422,069, compared to $309,433 for the three months ended September 30,

2024, an increase of $112,636, or 36%.

This increase was primarily attributable to $55,206 of amortization of stock options issued to

employees for services performed and $42,238 in salaries and wages relates to the hiring of employees to support production ramp-up at

the Peru facility.

fees for the three months ended September 30, 2025, was $248,640, compared to $369,525 for the three months ended September 30, 2024,

a decrease of $120,885, or 33%.

The decrease is mostly attributable to a decrease in legal fees related to establishing the Company’s

Peru facility in 2024.

and handling for the three months ended September 30, 2025, was $156,961, compared to $118,252 for the three months ended September 30,

2024, an increase of $38,709 or 33%.

This increase was primarily attributable to an increase in sales volumes.

and promotions

and promotions for the three months ended June 30, 2025, was $250,576, compared to $57,059 for the three months ended June 30, 2024,

and promotions for the three months ended September 30, 2025, was $271,872, compared to $125,597 for the three months ended September

30, 2024, an increase of $146,275, or 116%.

Advertising and promotions expenses increased for the three months ended June 30, 2025, mostly due

to increased in-store product demos with one of our largest customers.

Advertising and promotions expenses increased for the three months ended September 30, 2025,

mostly due to increased in-store product demos with one of our largest customers.

Income (Expense)

the three months ended June 30, 2025, other expense was $257,135 on a net basis, consisting of $263,735 of interest expense, as partially

offset by $6,600 of interest income.

For the three months ended June 30, 2024, other expense was $116,139 on a net basis, consisting

of $118,957 of interest expense, as partially offset by $2,818 of interest income.

Other expense increased by $140,996, or 121%, primarily

due to the increase of interest on the Kaufman Convertible Note and Notes Payable with related parties.

loss for the three months ended June 30, 2025, was $1,603,156, compared to $942,554 for the three months ended June 30, 2024, an increase

of $660,602, or 70%.

the three months ended September 30, 2025, other expense was $145,048 on a net basis, consisting of $148,964 of interest expense, as

partially offset by $3,916 of interest income.

For the three months ended September 30, 2024, other expense was $367,650 on a net basis,

consisting of $370,532 of interest expense, as partially offset by $2,882 of interest income.

Other expense decreased by $222,602, or

61%, primarily due to the 2024 $150,462 write-off of deferred financing costs and $89,949 of additional interest expense related to the

modification of warrants.

loss for the three months ended September 30, 2025, was $1,572,552, compared to $1,270,805 for the three months ended September 30, 2024,

an increase of $301,747, or 24%.

The increased net loss was due to scaling up production at our in-house manufacturing facility.

Our objective is

to achieve 100% utilization, which we believe will allow us to leverage fixed costs, improve operating efficiency, and capture additional

gross margin benefits as production volumes grow.

of Operations for the Six Months Ended June 30, 2025, and 2024

following table summarizes selected items from the statement of operations for the six months ended June 30, 2025, and 2024, respectively.

Six Months Ended

objective is to achieve 100% utilization, which we believe will allow us to leverage fixed costs, improve operating efficiency, and capture

additional gross margin benefits as production volumes grow.

of Operations for the Nine Months Ended September 30, 2025, and 2024

following table summarizes selected items from the statement of operations for the nine months ended September 30, 2025, and 2024, respectively.

Nine Months Ended

September 30,

Cost of goods sold

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Professional services

Storage, shipping and handling

Advertising and promotions

Storage, shipping and handling

Total operating expenses

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$ (3,264,326 )

net revenue for the six months ended June 30, 2025, was $6,493,260, compared to $2,830,002 for the six months ended June 30, 2024, an

increase of $3,663,258, or 129%.

The increase in revenue was primarily due to increased sales to our two largest customers during the

six months ended June 30, 2025.

net revenue for the nine months ended September 30, 2025, was $9,713,287, compared to $5,011,497 for the nine months ended September

30, 2024, an increase of $4,701,790, or 94%.

The increase in revenue was primarily due to increased sales to our two largest customers

during the nine months ended September 30, 2025.

of Goods Sold and Gross Profit

cost of goods sold for the six months ended June 30, 2025, was $5,334,286, compared to $2,397,655 for the six months ended June 30, 2024,

cost of goods sold for the nine months ended September 30, 2025, was $7,984,763, compared to $4,242,810 for the nine months ended September

30, 2024, an increase of $3,741,953, or 125%.

Cost of goods sold increased primarily due to increased sales during the six months ended June 30,

As a result of the foregoing, we had gross profit of $1,158,974, representing gross margins of 17.8%, for the six months ended

June 30, 2025, as compared to a gross margin of $432,347, of 15.3%, for the six months ended June 30, 2024.

Cost of goods sold increased primarily due to increased sales during the nine months ended

September 30, 2025.

As a result of the foregoing, we had gross profit of $1,728,524, representing gross margins of 17.8%, for the nine

months ended September 30, 2025, as compared to a gross margin of $768,687, of 15.3%, for the nine months ended September 30, 2024.

margin increased primarily due to the transition of manufacturing operations from third-party suppliers to our facility located in Pisco,

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and Administrative

general and administrative expense for the six months ended June 30, 2025, was $1,307,047, compared to $349,912 for the six months ended

June 30, 2024, an increase of $957,135, or 274%.

The largest components of our general and administrative expenses are plant idle capacity,

rent, travel, and commissions, as shown below.

Six Months Ended June 30,

general and administrative expense for the nine months ended September 30, 2025, was $2,204,559, compared to $666,600 for the nine months

ended September 30, 2024, an increase of $1,537,959, or 231%.

The largest components of our general and administrative expenses are plant

idle capacity, research and development, rent, travel, and commissions, as shown below.

Nine Months Ended September 30,

Idle Capacity

Research & Development

capacity increased due to the opening of the production facility located in Pisco, Peru.

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to increased sales.

and wages for the six months ended June 30, 2025, was $750,405, compared to $947,883 for the six months ended June 30, 2024, a decrease

of $197,478, or 21%.

This decrease was primarily attributable to $394,135 of non-cash, stock-based compensation for the six months ended

June 30, 2024, compared to $81,097 of non-cash, stock-based compensation related to stock options awarded during the current period.

fees for the six months ended June 30, 2025, was $558,096, compared to $695,042 for the six months ended June 30, 2024, a decrease of

$136,946, or 20%.

This decrease was primarily attributable to $290,085 of non-cash, stock-based compensation for the six months ended

June 30, 2024.

and handling for the six months ended June 30, 2025, was $264,352, compared to $192,821 for the six months ended June 30, 2024, an increase

of $71,531 or 37%.

and wages for the nine months ended September 30, 2025, was $1,172,474, compared to $1,257,316 for the nine months ended September 30,

2024, a decrease of $84,842, or 7%.

This decrease was primarily attributable to $408,700 of non-cash, stock-based compensation for the

nine months ended September 30, 2024, compared to $102,289 of non-cash, stock-based compensation related to stock options awarded during

the current period.

This decrease is mostly offset by increases in salaries and wages related to the hiring of employees to support production

ramp-up at the Peru facility.

fees for the nine months ended September 30, 2025, was $806,736, compared to $1,064,567 for the nine months ended September 30, 2024,

a decrease of $257,831, or 24%.

This decrease was primarily attributable to $290,085 of non-cash, stock-based compensation for the nine

months ended September 30, 2024.

and handling for the nine months ended September 30, 2025, was $421,313, compared to $311,073 for the nine months ended September 30,

2024, an increase of $110,240 or 35%.

This increase was primarily attributable to an increase in sales volumes.

and promotions

and promotions for the six months ended June 30, 2025, was $307,635, compared to $98,204 for the six months ended June 30, 2024, an increase

of $209,431, or 213%.

Advertising and promotions expenses increased for the six months ended June 30, 2025, compared to the corresponding

period in 2024, mostly due to increased in-store product demos with one of our largest customers.

and promotions for the nine months ended September 30, 2025, was $579,507, compared to $223,801 for the nine months ended September 30,

2024, an increase of $355,706, or 159%.

Advertising and promotions expenses increased for the nine months ended September 30, 2025, compared

to the corresponding period in 2024, mostly due to increased in-store product demos with one of our largest customers.

Income (Expense)

the six months ended June 30, 2025, other expense was $492,977 on a net basis, consisting of $504,713 of interest expense, as partially

the nine months ended September 30, 2025, other expense was $638,025 on a net basis, consisting of $653,677 of interest expense, as partially

offset by $15,652 of interest income.

For the six months ended June 30, 2024, other expense was $142,006 on a net basis, consisting of

$147,701 of interest expense, as partially offset by $5,695 of interest income.

For the nine months ended September 30, 2024, other expense was $509,656 on a net basis, consisting

of $518,233 of interest expense, as partially offset by $8,577 of interest income.

Other expense increased by $128,369, or 25%, primarily

due to interest on the Kaufman Convertible Note and notes payable with related parties.

loss for the six months ended June 30, 2025, was $2,521,538, compared to $1,993,521 for the six months ended June 30, 2024, an increase

of $528,017, or 26%.

loss for the nine months ended September 30, 2025, was $4,094,090, compared to $3,264,326 for the nine months ended September 30, 2024,

an increase of $829,764, or 25%.

The increased net loss was due to scaling up production at our in-house manufacturing facility.

Our objective is

to achieve 100% utilization, which we believe will allow us to leverage fixed costs, improve operating efficiency, and capture additional

gross margin benefits as production volumes grow.

objective is to achieve 100% utilization, which we believe will allow us to leverage fixed costs, improve operating efficiency, and capture

additional gross margin benefits as production volumes grow.

and Capital Resources

following table summarizes our total current assets, liabilities and working capital as of June 30, 2025 and December 31, 2024.

following table summarizes our total current assets, liabilities and working capital as of September 30, 2025 and December 31, 2024.

September 30,

Current Assets

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$ (3,897,382 )

of June 30, 2025, we had working capital of $662,217.

We have incurred net losses since our inception and we anticipate net losses and

negative operating cash flows for the near future, and we may not be profitable or realize growth in the value of our assets.

our primary sources of capital have been cash generated from the sales of our products, common stock sales, and debt and equity financing.

As of June 30, 2025, we had cash of $641,129, total liabilities of $9,608,777, and an accumulated deficit of $20,083,595.

As of December

31, 2024, we had cash of $2,329,452, total liabilities of $10,514,292, and an accumulated deficit of $17,562,057.

of the Six Months Ended June 30, 2025, and the Six Months Ended June 30, 2024

of September 30, 2025, we had positive working capital of $2,118,922.

We have incurred net losses since our inception and we anticipate

net losses and negative operating cash flows for the near future, and we may not be profitable or realize growth in the value of our

To date, our primary sources of capital have been cash generated from the sales of our products, common stock sales, and debt

and equity financing.

As of September 30, 2025, we had cash of $812,007, total liabilities of $9,544,563, and an accumulated deficit

of $21,656,147.

As of December 31, 2024, we had cash of $2,329,452, total liabilities of $10,514,292, and an accumulated deficit of $17,562,057.

of the Nine Months Ended September 30, 2025, and the Nine Months Ended September 30, 2024

following table sets forth the primary sources and uses of cash for the periods presented below:

Six Months Ended

Nine Months Ended

September 30,

Net cash used in operating activities

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Cash Used in Operating Activities

cash used in operating activities was $3,942,856 for the six months ended June 30, 2025, compared to $1,357,463 for the six months ended

June 30, 2024, an increase of $2,610,442, or 190%.

The increase was primarily due to a $1,440,275 increase in accounts receivable due

to increased sales volumes and a $548,367 increase in prepaid inventory to secure raw materials.

cash used in operating activities was $5,064,017 for the nine months ended

September 30, 2025, compared to $3,259,049 for the nine months ended September 30, 2024, an increase of $1,804,968, or 55%.

was primarily due to a $1,065,942 increase in accounts receivable due to increased sales volumes and a $573,303 increase in prepaid inventory

to secure raw materials.

Cash Used in Investing Activities

cash used in investing activities was $491,332 for the six months ended June 30, 2025, compared to $566,431 for the six months ended

June 30, 2024, a decrease of $75,099, or 13%.

This decrease was primarily attributable to $491,332 of equipment purchases, compared to

$576,331 of equipment purchases, as partially offset by $9,900 of advances received on notes receivable, in the comparative period.

cash used in investing activities was $573,991 for the nine months ended September 30, 2025, compared to $2,095,691 for the nine

months ended September 30, 2024, a decrease of $1,521,700, or 73%.

This decrease was primarily attributable to less equipment

purchases and capital expenditures for the build out of the Peru facility.

Cash Provided by Financing Activities

cash provided by financing activities was $2,717,102 for the six months ended June 30, 2025, compared to $2,202,108 for the six months

ended June 30, 2024, an increase of $514,994, or 23%.

Our increased cash provided by financing activities was primarily from $2,423,058

proceeds from the sale of common stock and $1,173,157 from the exercise of warrants, offset by $847,917 of principal repayments on notes

cash provided by financing activities was $4,093,929 for the nine months

ended September 30, 2025, compared to $5,767,938 for the nine months ended September 30, 2024, an decrease of $1,674,009, or 29%.

Our decreased

cash provided by financing activities was primarily due to principal repayments on notes payable to related parties offset by proceeds

from the sale of common stock and exercise of warrants.

of Exchange Rate Changes on Cash

the six months ended June 30, 2025, the effect of exchange rate changes on cash and cash equivalents primarily reflects the translation

the nine months ended September 30, 2025, the effect of exchange rate changes on cash and cash equivalents primarily reflects the translation

impact from fluctuations in the value of the Peruvian sol relative to the U.S.

1 unchanged sentence

depreciation against the U.S.

dollar, resulting in a gain on foreign currency translation of $28,763 compared to $58 in the comparative

dollar, resulting in a gain on foreign currency translation of $26,634 compared to a loss of $1,794 in

the comparative period.

ACCOUNTING POLICIES AND ESTIMATES

46 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis