What changed in this filing

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Item 1. Financial Statements

2026-08-13 compared with 2026-05-14 · 556 added, 415 removed, 618 unchanged (61% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

receivable, net

on inventory purchases

expenses and other current assets

Current assets:

and equipment, net

receivable, net of current portion

and Stockholders’ Equity

notes payable, related party, net of discounts

notes payable, current portion

payable, related party

payable, current portion

lease liability, current portion

Accounts receivable, net

Advances on inventory purchases

Prepaid expenses and other current assets

Total current assets

Property and equipment, net

Right-of-use assets

Other receivable, net of current portion

Liabilities and Stockholders’ Equity

Current liabilities:

notes payable, net of current portion

lease liability, net of current portion

Stockholders’

stock, $ 0.001 par

value, 8,000,000 shares

issued and outstanding

stock, $ 0.001 par

value, 80,000,000 shares

14,582,416 and

13,385,459 shares

issued and outstanding at March 31, 2026 and December 31, 2025, respectively

paid-in capital

other comprehensive income (loss)

Accounts payable

Accrued expenses

Convertible note payable, related party, current portion net of discounts

Equipment note payable, current portion

Note payable, related parties

Finance lease liability, current portion

Total current liabilities

Convertible note payable, related party, net of current portion and discounts

Equipment note payable, net of current portion

Finance lease liability, net of current portion

Total liabilities

Stockholders’ equity:

Preferred stock, $ 0.001 par value, 8,000,000 shares authorized;

no shares issued and outstanding

Common stock, $ 0.001 par value, 80,000,000 shares authorized;

15,316,030 and 13,385,459 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively

Additional paid-in capital

Accumulated other comprehensive income (loss)

Accumulated deficit

( 28,199,049 )

( 23,686,729 )

Stockholders’ Equity

Liabilities and Stockholders’ Equity

Total stockholders’ equity

Total liabilities and stockholders’ equity

accompanying notes to financial statements.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

the Three Months Ended

of goods sold

and administrative

and handling to customers

and promotions

For the Three Months Ended

For the Six Months Ended

Cost of goods sold

Operating expenses:

General and administrative

Salaries and wages

Professional fees

Shipping and handling to customers

Advertising and promotions

Total operating expenses

Operating loss

( 2,565,312 )

income (expense):

( 1,308,644 )

( 4,184,442 )

( 1,953,815 )

Other income (expense):

Interest income

Interest expense

Total other income (expense)

$ ( 2,720,036 )

$ ( 1,603,156 )

comprehensive income (loss):

(loss) on foreign currency translation

other comprehensive loss

$ ( 4,512,320 )

$ ( 2,521,538 )

average common shares outstanding - basic and diluted

loss per common share - basic and diluted

Other comprehensive income (loss):

Gain (loss) on foreign currency translation

Net other comprehensive loss

$ ( 2,720,205 )

$ ( 1,582,602 )

$ ( 4,568,734 )

$ ( 2,492,775 )

Weighted average common shares outstanding - basic and diluted

Net loss per common share - basic and diluted

accompanying notes to financial statements.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

the Three Months Ended March 31, 2026

Other Comprehensive

For the Three Months Ended June 30, 2026

Preferred Stock

Comprehensive

Stockholders’

December 31, 2025

Balance, March 31, 2026

$ ( 25,479,013 )

of common stock under ATM program, net of issuance costs

of common stock in connection with debt conversion

of common stock upon exercise of warrants

compensation expense

currency translation adjustment

Issuance of common stock upon exercise of warrant related to convertible debt

Issuance of common stock upon exercise of warrants

Stock-based compensation expense

Foreign currency translation adjustment

( 2,720,036 )

March 31, 2026

Balance, June 30, 2026

$ ( 28,199,049 )

For the Three Months Ended March 31, 2025

Other Comprehensive

For the Three Months Ended June 30, 2025

Preferred Stock

Comprehensive

Stockholders’

December 31, 2024

Balance, March 31, 2025

$ ( 18,480,439 )

Issuance of common stock upon

exercise of warrant related to

convertible debt

Issuance of common stock upon exercise of warrants

Stock-based compensation expense

Fair value adjustment related

to warrant modification

Foreign currency translation adjustment

( 1,603,156 )

of common stock under ATM program, net of issuance costs

of common stock upon exercise of warrants

compensation expense

currency translation adjustment

March 31, 2025

( 1,603,156 )

Balance, June 30, 2025

$ ( 20,083,595 )

accompanying notes to financial statements.

For the Six Months Ended June 30, 2026

Preferred Stock

Comprehensive

Stockholders’

Balance, December 31, 2025

$ ( 23,686,729 )

Issuance of common stock under ATM program, net of issuance costs

Issuance of common stock in connection with debt conversion

Issuance of common stock upon exercise of warrant related to convertible debt

Issuance of common stock upon exercise of warrants

Stock-based compensation expense

Foreign currency translation adjustment

( 4,512,320 )

Balance, June 30, 2026

$ ( 28,199,049 )

For the Six Months Ended June 30, 2025

Preferred Stock

Comprehensive

Stockholders’

Balance, December 31, 2024

$ ( 17,562,057 )

Issuance of common stock under ATM program, net of issuance costs

Issuance of common stock upon

exercise of warrant related to

convertible debt

Issuance of common stock upon exercise of warrants

Fair value adjustment related

to warrant modification

Stock-based compensation expense

Foreign currency translation adjustment

( 2,521,538 )

Balance, June 30, 2025

$ ( 20,083,595 )

accompanying notes to financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

the Three Months Ended

flows from operating activities

For the Six Months Ended

Cash flows from operating activities

$ ( 4,512,320 )

$ ( 2,521,538 )

to reconcile net loss to net cash used in operating activities:

of finance lease right-of-use asset

on disposal of property and equipment

in allowance for doubtful accounts

of debt discounts

compensation expense

(increase) in assets:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation expense

Amortization of finance lease right-of-use asset

Change in allowance for doubtful accounts

Provision for prepaid inventory

Amortization of debt discounts

Fair value adjustment related to warrant modification

Stock-based compensation expense

Decrease (increase) in assets:

Accounts receivable

( 1,322,292 )

on inventory purchases

( 1,440,275 )

expenses and other current assets

long-term asset and receivable

(decrease) in liabilities:

cash used in operating activities

Advances on inventory purchases

Prepaid expenses and other current assets

( 1,044,154 )

Other long-term asset and receivable

Increase (decrease) in liabilities:

Accounts payable

Accrued expenses

Net cash used in operating activities

( 4,884,193 )

flows from investing activities

of property and equipment

cash used in investing activities

flows from financing activities

of equipment notes payable

received on notes payable, related party

Increase in finance lease obligations

from sale of common stock pursuant to ATM program

from exercise of warrants

cash provided by financing activities

of exchange rate changes on cash

increase (decrease) in cash

- beginning of period

- ending of period

investing and financing transactions:

of convertible debt into common stock

( 3,963,245 )

Cash flows from investing activities

Purchase of property and equipment

Net cash used in investing activities

Cash flows from financing activities

Repayment of equipment notes payable

Proceeds received on notes payable, related party

Repayment on notes payable, related parties

Principal payments on finance lease obligations

Proceeds from sale of common stock pursuant to ATM program

Proceeds from exercise of warrants

Net cash provided by financing activities

Effect of exchange rate changes on cash

Net decrease in cash

( 1,688,323 )

Cash - beginning of period

Cash - ending of period

Supplemental disclosures:

Interest paid

Income taxes paid

Non-cash investing and financing transactions:

Conversion of convertible debt into common stock

accompanying notes to financial statements.

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Peru (“Peru Facility”).

April 2024, we formed BranchOut Food Sucursal Peru, our Peruvian wholly-owned subsidiary, to operate our Peru Facility, which commenced operations in December 2024.

Our products are produced using our advanced dehydration platform licensed exclusively

from EnWave Corporation (“EnWave”) to create our private label, branded, and bulk wholesale products.

We use proprietary

GentleDry™ Technology optimized to preserve taste, texture, color, and nutrients.

Our GentleDry™ Technology is protected

by over 17 patents.

Prior to operating our production facility, we relied on contract manufacturers.

April 2024, we formed BranchOut Food Sucursal Peru, our Peruvian wholly-owned subsidiary, to operate our Peru Facility, which commenced

operations in December 2024.

Our products are produced using our advanced dehydration platform licensed exclusively from EnWave Corporation

(“EnWave”) to create our private label, branded, and bulk wholesale products.

We use proprietary GentleDry™ Technology

optimized to preserve taste, texture, color, and nutrients.

Our GentleDry™ Technology is protected by over 17 patents.

operating our production facility, we relied on contract manufacturers.

2 - Basis of Presentation and Summary of Significant Accounting Policies

of Accounting

accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles

generally accepted in the United States of America (“GAAP”) for interim financial reporting and pursuant to

the rules and regulations of the U.S.

accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally

accepted in the United States of America (“GAAP”) for interim financial reporting and pursuant to the rules and regulations

Securities and Exchange Commission (“SEC”).

Accordingly, they do not include all the

information and notes required by GAAP for complete financial statements.

the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments,

consisting only of normal recurring adjustments, considered necessary to present fairly the Company’s financial position as of

March 31, 2026, the results of operations for the three months ended March 31, 2026 and 2025, and cash flows for the three months

ended March 31, 2026 and 2025.

The results of operations for the three months ended March 31, 2026 are not necessarily indicative of

the results to be expected for the full year ended December 31, 2026 or any other interim period.

condensed consolidated balance sheet as of December 31, 2025 has been derived from the audited consolidated financial statements as

of that date.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s

audited consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for

the year ended December 31, 2025.

The Company’s significant accounting policies are described in Note 2 to the audited consolidated financial

statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

There have been no material

changes to the Company’s significant accounting policies during the three months ended March 31, 2026.

Certain amounts presented in these condensed consolidated financial

statements and accompanying notes have been rounded to the nearest thousand or million, as applicable.

Accordingly, they do not include all the information and notes required

by GAAP for complete financial statements.

the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting

only of normal recurring adjustments, considered necessary to present fairly the Company’s financial position as of June 30, 2026,

the results of operations and changes in stockholder’s equity for the three and six months ended June 30, 2026 and 2025, and cash

flows for the six months ended June 30, 2026 and 2025.

results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results to be expected for

the full year ended December 31, 2026 or any other interim period.

condensed consolidated balance sheet as of December 31, 2025 has been derived from the audited consolidated financial statements as of

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited

consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended

December 31, 2025.

Company’s significant accounting policies are described in Note 2 to the audited consolidated financial statements included in

the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

There have been no material changes to the Company’s

significant accounting policies during the six months ended June 30, 2026.

amounts presented in these condensed consolidated financial statements and accompanying notes have been rounded to the nearest thousand

or million, as applicable.

of Consolidation

accompanying condensed consolidated financial statements include the accounts of the following entities, all of which were under

common control and ownership at March 31, 2026:

Food Sucursal Peru (2)

accompanying consolidated financial statements include the accounts of the following entities, all of which were under common control

and ownership at June 30, 2026:

Name of Entity

BranchOut Food Inc.

BranchOut Food Sucursal Peru (2)

company in the form of a corporation.

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condensed consolidated financial statements herein contain the operations of the wholly-owned subsidiaries listed above.

Company’s headquarters are located in Bend, Oregon.

shown in the accompanying condensed consolidated financial statements, as of March 31, 2026, the Company has incurred recurring losses

from operations resulting in an accumulated deficit of $ 25.5 million, with negative working capital of $ 1.1 million, which may not be

sufficient to sustain operations.

These factors raise substantial doubt about the Company’s ability to continue as a going concern.

Management is actively pursuing new customers and continues to expand the Company’s product mix to increase revenues.

the Company is currently seeking additional sources of capital to fund short-term operations.

Management believes these factors will

contribute toward achieving profitability.

The Company’s

headquarters are located in Bend, Oregon.

shown in the accompanying condensed consolidated financial statements, as of June 30, 2026, the Company has incurred recurring

losses from operations resulting in an accumulated deficit of $ 28.2

million, with working capital of approximately $ 241,000 ,

which may not be sufficient to sustain operations.

These factors raise substantial doubt about the Company’s ability to

continue as a going concern.

Management is actively pursuing new customers and continues to expand the Company’s product mix

to increase revenues.

In addition, the Company is currently seeking additional sources of capital to fund short-term operations.

Management believes these factors will contribute toward achieving profitability.

accompanying condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable

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within the condensed consolidated statements of operations and condensed consolidated statements of cash flows.

preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that may affect the

reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements

and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from these estimates.

ASC 280, Segment Reporting, operating segments are defined as components of an enterprise where discrete financial information is available

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in fair value measurements, ASC 820 establishes a three-tier fair value hierarchy that distinguishes between the following:

1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets

or liabilities in active markets.

2 inputs to the valuation methodology include quoted prices for similar assets and liabilities

in active markets, and inputs that are observable for the asset or liability, either directly

or indirectly, for substantially the full term of the financial instrument.

1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that

are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

3 inputs to valuation methodology are unobservable and significant to the fair measurement.

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are stated at cost plus accrued interest, which approximates market value.

There were no cash equivalents on hand on March 31, 2026 or

December 31, 2025.

There were no cash equivalents on hand as of June 30, 2026

or December 31, 2025.

in Excess of FDIC Insured Limits

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The Company had $ 0 and $ 250,014

$ 250,014 in excess of FDIC insured limits on March 31, 2026 and December 31, 2025, respectively, and has not experienced any losses in

such accounts.

in excess of FDIC insured limits on June 30, 2026 and December 31, 2025, respectively, and has not experienced any losses in such accounts.

and Development

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new, innovative offerings to market that align with evolving consumer needs.

and development costs include salaries, building costs, utilities, administrative expenses and other corporate costs.

For the three months

ending March 31, 2026, our research and development expenses totaled $ 16,638 , compared to $ 7,742 for the same period in 2025.

and Equipment

4 unchanged sentences

Schedule of Estimated Useful Lives

and machinery

Office equipment

Furniture and fixtures

Equipment and machinery

Leasehold improvements

Construction in progress

in progress consists of costs incurred on machinery, equipment, and facility improvements that have not yet been placed into service.

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during the period using the treasury stock or if-converted methods, as applicable.

the three months ended March 31, 2026 and 2025, the inclusion of potentially dilutive securities would have been anti-dilutive due to

the Company’s net loss;

the six months ended June 30, 2026 and 2025, the inclusion of potentially dilutive securities would have been anti-dilutive due to the

Company’s net loss;

therefore, diluted net loss per share is the same as basic net loss per share.

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terms are generally established in contracts or purchase orders with customers.

such as slotting fees, sales discounts, and allowances for the three months ended March 31, 2026 and 2025 were accounted for as a direct reduction of revenue as follows:

the Three Months Ended

such as slotting fees, sales discounts, and allowances for the three and six months ended June 30, 2026 and 2025 were accounted for as

a direct reduction of revenue as follows:

For the Three Months Ended

For the Six Months Ended

slotting, discounts, and allowances

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in which it is identified.

consisted of the following as of March 31, 2026 and December 31, 2025:

consisted of the following as of June 30, 2026 and December 31, 2025:

Raw materials

Work in progress

Finished goods

Total inventory

As of June 30, 2026 and December 31, 2025, the Company had advances on inventory purchases of $ 50,121 and $ 0 , respectively.

5 – Accounts Receivable, Net

receivable are stated at their estimated net realizable value.

The Company evaluates the collectability of trade receivables on an ongoing

basis and establishes an allowance for doubtful accounts as needed based on historical collection experience, customer-specific factors,

and current economic conditions.

Management believes the allowance for doubtful accounts is adequate to cover expected credit losses.

The allowance for doubtful accounts was $ 0 and $ 25,586 as of March 31, 2026 and December 31, 2025, respectively.

During the three months

ended March 31, 2026, the Company wrote off previously reserved receivables, resulting in a zero-allowance balance at period end.

Company has certain customers whose revenue or accounts receivable balances individually represent 10 % or more of total net revenue or

total accounts receivable, respectively.

For the three months ended March 31, 2026, three customers accounted for approximately 97.2 %

of net revenue and 99.6 % of accounts receivable.

For the three months ended March 31, 2025, two customers accounted for approximately

92 % of net revenue and 88 % of accounts receivable.

receivable are stated at their estimated net realizable value, net of an allowance for expected credit losses.

The Company evaluates

the collectability of trade receivables on an ongoing basis and estimates expected credit losses based on historical collection experience,

customer-specific considerations, current economic conditions, and reasonable and supportable forecasts.

As of June 30, 2026 and December

31, 2025 the allowance for expected credit losses was $ 0 and $ 25,586 , respectively.

During the six months ended June 30, 2026, the Company

wrote off previously reserved receivables.

Based on the Company’s evaluation of its outstanding accounts receivables as of June

30, 2026, management concluded that no allowance for expected credit losses was required.

Company has customers whose net revenue or accounts receivable balances individually represent 10 % or more of consolidated net revenue

or accounts receivable, respectively.

For the three and six months ended June 30, 2026, four customers accounted for 95.9 % and 96.6 %,

respectively, of consolidated net revenue.

For the three and six months ended June 30, 2025, three customers accounted for 99.1 % and

97.1 %, respectively, of consolidated net revenue.

As of June 30, 2026 and December 31, 2025, three customers accounted for approximately

88 % and 97 % of gross accounts receivable, respectively.

6 – Prepaid Expenses and Other Current Assets

expenses and other current assets consisted of the following as of March 31, 2026 and December 31, 2025:

expenses and other current assets consisted of the following as of June 30, 2026 and December 31, 2025:

of Prepaid Expenses and Other Current Assets

insurance costs

advertising and trade show fees

professional fees and license fees

payments to vendors

Miscellaneous

prepaid expenses

tax receivable

Miscellaneous

prepaid expenses and other current assets

Prepaid insurance costs

Prepaid advertising and trade show fees

Prepaid professional fees and license fees

Prepaid taxes

Advance payments to vendors

Miscellaneous prepaid expenses

VAT tax receivable

Miscellaneous receivable

Total prepaid expenses and other current assets

payments to vendors represent payments made to suppliers for inventory, equipment, or services to be received in future periods.

3 unchanged sentences

7 – Property and Equipment, Net

and equipment as of March 31, 2026 and December 31, 2025 consisted of the following:

and equipment as of June 30, 2026 and December 31, 2025 consisted of the following:

of Property and Equipment Net

and equipment

furniture, fixtures and equipment

Leasehold improvements

Machinery and equipment

Office furniture, fixtures and equipment

Construction in progress

Property and equipment, gross

accumulated depreciation

1 unchanged sentence

( 1,140,823 )

property and equipment, net

of property and equipment was $ 160,036 and $ 152,355 for the three months ended March 31, 2026, and 2025, respectively.

Total property and equipment, net

the three and six months ended June 30, 2026, depreciation of property and equipment was $ 200,815 and $ 360,851 , respectively.

three and six months ended June 30, 2025, depreciation of property and equipment was $ 153,205 and $ 305,560 , respectively.

Company leases a manufacturing facility located in Pisco, Peru, which is accounted for as a finance lease (see Note 11).

2 unchanged sentences

During 2024, the landlord of this facility

entered bankruptcy proceedings.

entered bankruptcy proceedings, which remain ongoing.

To protect its long-term strategic interests, the Company purchased the first mortgage position on the

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The first mortgage position is included on the balance sheet in other assets of

$ 1,267,000 as of March 31, 2026 and December 31, 2025.

The Company capitalizes leasehold improvements related to the buildout of the

facility, which expanded the Company’s production capacity.

$ 1,267,000 as of June 30, 2026 and December 31, 2025.

The Company capitalizes leasehold improvements related to the buildout of the facility,

which expanded the Company’s production capacity.

8 – Other Assets and Other Receivable

Company has other assets of $ 1,267,000 as of March 31, 2026, and December 31, 2025, consisting of the first mortgage position on the

production facility it leases in Pisco, Peru, which the Company acquired to protect its long-term strategic interests.

See Note 7, Property

and Equipment for additional information.

Company has other assets of $ 1,267,000 as of June 30, 2026, and December 31, 2025, consisting of the first mortgage position on the production

facility it leases in Pisco, Peru, which the Company acquired to protect its long-term strategic interests.

See Note 7, Property and

Equipment for additional information.

Company’s Peruvian operations are subject to an 18 % value-added tax (“VAT”) or (“Impuesto General a las Ventas”

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an expense of the Company when recoverable and is recorded as an asset until applied or refunded.

of March 31, 2026, the Company’s Peruvian operations had paid more IGV on purchases than it had collected on sales, resulting in

a net IGV receivable of $ 1.56 million, of which $ 0.77 million is classified in Prepaids and Other Current Assets (see Note 6).

of June 30, 2026, the Company’s Peruvian operations had paid more IGV on purchases than it had collected on sales, resulting in

a net IGV receivable of approximately $ 1.8 million, of which $ 1.2 million is classified in Prepaids and Other Current Assets (see Note

9 – Notes Receivable

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losses and wrote off the note receivable as of December 31, 2025.

the net carrying value of the note receivable was $ 0 as of March 31, 2026 and December 31, 2025.

the net carrying value of the note receivable was $ 0 as of June 30, 2026 and December 31, 2025.

Company continues to hold a second lien on the EnWave REV™ 10 machines that previously collateralized the note receivable and is

in discussions to recover the equipment and terminate the MDA.

The Company currently expects to receive the equipment during the second

quarter of 2026.

The Company expects to recover the equipment in connection with the termination

Any recovery of collateral will be recognized when realized.

10 – Accrued Expenses

expenses consisted of the following as of March 31, 2026 and December 31, 2025, respectively:

expenses consisted of the following as of June 30, 2026 and December 31, 2025, respectively:

of Accrued Expenses

payroll and taxes

miscellaneous

EnWave royalties

accrued expenses

Accrued payroll and taxes

Accrued interest

Accrued chargebacks

Accrued miscellaneous

Accrued EnWave royalties

Total accrued expenses

Company has financed production equipment with an acquisition cost of approximately $ 168,141 under finance lease with a five-year term

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Facility Lease

May 10, 2024, the Company entered into a ten-year lease for the 50,000

square-foot manufacturing facility in Pisco, Peru (the “Peru Facility”), which commenced operations in December of 2024.

lease of the Peru Facility requires monthly lease payments of $ 8,000

in the first two years of the lease, $ 20,000

in the third year of the lease, $ 22,000

in the fourth year of the lease, $ 24,000

in the fourth year of the lease, and $ 25,000

The lease also has a 10 -year

renewal option, and a buy-out option under which the Company may purchase the Peru Facility for $ 1,865,456 .

May 10, 2024, the Company entered into a ten-year lease for the 50,000 square-foot manufacturing facility in Pisco, Peru (the “Peru

Facility”), which commenced operations in December of 2024.

The lease of the Peru Facility requires monthly lease payments of $ 8,000

in the first two years of the lease, $ 20,000 in the third year of the lease, $ 22,000 in the fourth year of the lease, $ 24,000 in the

fourth year of the lease, and $ 25,000 thereafter.

The lease also has a 10 -year renewal option, and a buy-out option under which the Company

may purchase the Peru Facility for $ 1,865,456 .

connection with the lease of the Peru Facility, the Company purchased a first position mortgage receivable in the amount of $ 1,267,000 ,

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a specialized nature with limited alternative use to the lessor without substantial modification.

components of lease costs were as follows for the three months ended March 31, 2026 and 2025:

components of lease costs were as follows for the three and six months ended June 30, 2026 and 2025:

of Components of Lease Costs

the Three Months Ended

of right-of-use asset

on lease liability

inventory cost

For the Three Months Ended

For the Six Months Ended

Finance lease cost:

balance sheet information of March 31, 2026 and December 31, 2025 related to leases was as follows:

Amortization of right-of-use asset

Interest on lease liability

Capitalized inventory cost

Total finance lease cost

balance sheet information of June 30, 2026 and December 31, 2025 related to leases was as follows:

Schedule of Supplemental Information Related to Leases

portion of finance lease liability

finance lease liability

Weighted average

remaining lease term:

Weighted average

discount rate:

cash flow information related to finance leases consisted of an increase in finance lease liabilities of $ 2,416 and $ 2,398 for the three

months ended March 31, 2026 and 2025, respectively.

future minimum lease payments due under finance leases as of March 31, 2026, are as follows:

Finance lease:

Finance lease assets

Current portion of finance lease liability

Noncurrent finance lease liability

Total finance lease liability

Weighted average remaining lease term:

Finance lease

Weighted average discount rate:

Finance lease

the six months ended June 30, 2026 and 2025, supplemental cash flow information related to finance leases consisted of principal payments

on finance lease obligations of $ 19,253 and non-cash additions to finance lease liabilities of $ 4,802 , respectively.

future minimum lease payments due under finance leases as of June 30, 2026, are as follows:

of Future Minimum Finance Lease Payments

(for the three months remaining)

minimum lease payments

effects of discounting

liability recognized

current portion

finance lease liability

Minimum Lease

2026 (for the six months remaining)

Total minimum lease payments

Less effects of discounting

Lease liability recognized

Less current portion

Long-term finance lease liability

Convertible Note Payable, Related Party

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of principal outstanding under the Convertible Note prior to September 30, 2026.

January 28, 2026, Kaufman Kapital converted $ 500,000 of outstanding principal under the Convertible Note into 659,457 shares of the Company’s

common stock.

May 7, 2026, Kaufman Kapital exercised in full the $ 1.50 Warrant to purchase 500,000 shares of the Company’s common stock at an

exercise price of $ 1.50 per share, resulting in cash proceeds to the Company of $ 750,000 .

In connection with the warrant exercise, the

Convertible Note was amended to extend the maturity date from December 31, 2026 to December 31, 2027 and reduce the interest rate from

Company’s obligations under the Convertible Note are secured by a lien granted to Kaufman Kapital on substantially all of the Company’s

6 unchanged sentences

interest method.

As of March 31, 2026, a total of $ 25,103 of unamortized debt discounts are expected to be expensed over the remaining

As of June 30, 2026, a total of $ 16,735 of unamortized debt discounts are expected to be expensed over the remaining

life of the loan.

January 28, 2026, Kaufman Kapital converted $ 500,000 of outstanding principal under the Convertible Note into 659,457 shares of the Company’s

common stock.

the three months ended March 31, 2026, the Company recognized $ 116,519 of interest expense on convertible notes payable, related parties

consisting of $ 102,312 of stated interest expense, $ 11,104 of amortized debt discounts and $ 3,102 of amortized debt discounts due to

the three months ended March 31, 2025, the Company recognized $ 117,022 of interest expense on convertible notes payable, related parties,

consisting of $ 100,603 of stated interest expense, $ 12,833 of amortized debt discounts and $ 3,586 of amortized debt discounts due to

Company recognized interest expense on the convertible note payable for the three and six months ended June 30, 2026 and 2025 as follows:

Schedule of Interest Expense on Convertible Note payable

For the Three Months Ended

For the Six Months Ended

Stated interest

Amortized debt discount

Amortized debt discount due to warrants

Amortized debt discount

Total convertible note interest expense

Senior Secured Promissory Notes, Related Party

August 29, 2024, the Company borrowed $ 1,200,000 from Kaufman Kapital pursuant to a Senior Secured Promissory Note (the “2024

Secured Note”) that, as amended, matured on December 31, 2025 .

The loan under the 2024 Secured Note bore interest at a rate of 15 %

The Company’s obligations under the 2024 Secured Note were secured by a lien on substantially all of the Company’s assets pursuant to the Security Agreement.

In addition, the 2024 Secured Note included affirmative and negative covenants, events of defaults and other terms and conditions, customary in transaction of this

The Company repaid the full $ 1,200,000 principal

balance during the year ended December 31, 2025, and no amounts

were outstanding as of December 31, 2025.

January 28, 2026, the Company borrowed $ 1,500,000

from Kaufman Kapital pursuant to a Senior Secured Promissory Note (the “2026 Secured Note”) that matures on January 28,

2027 and bears interest at 8 %

per annum on the outstanding principal balance, with accrued interest payable at maturity or upon earlier repayment.

The note may be

prepaid at any time without penalty and is secured by substantially all of the Company’s assets pursuant to the existing

Security Agreement dated July 23, 2024, as amended.

The 2026 Secured Note agreement includes customary affirmative and negative

covenants and events of default.

to March 31, 2026, on April 17, 2026, the Company borrowed an additional $ 750,000

from Kaufman Kapital on the same terms provided for under the 2026 Secured Note, which was amended and restated in connection with

this borrowing, to reflect aggregate principal balance of $ 2,250,000 .

Company recognized $ 20,667 and $ 44,384 of interest expense on Kaufman Senior Secured Promissory Note payable, related parties for the

three months ended March 31, 2026 and March 31, 2025, respectively.

August 29, 2024, the Company borrowed $ 1,200,000 from Kaufman Kapital pursuant to a Senior Secured Promissory Note (the “2024 Secured

Note”) that, as amended, matured on December 31, 2025 .

The loan under the 2024 Secured Note bore interest at a rate of 15 % per

The Company’s obligations under the 2024 Secured Note were secured by a lien on substantially all of the Company’s

assets pursuant to the Security Agreement.

In addition, the 2024 Secured Note included affirmative and negative covenants, events of

defaults and other terms and conditions, customary in transaction of this nature.

The Company repaid the full $ 1,200,000 principal balance

during the year ended December 31, 2025, and no amounts were outstanding as of December 31, 2025.

January 28, 2026, the Company borrowed $ 1,500,000 from Kaufman Kapital pursuant to a Senior Secured Promissory Note (the “2026

Secured Note”) that matures on January 28, 2027 and bears interest at 8 % per annum on the outstanding principal balance, with accrued

interest payable at maturity or upon earlier repayment.

The note may be prepaid at any time without penalty and is secured by substantially

all of the Company’s assets pursuant to the existing Security Agreement dated July 23, 2024, as amended.

The 2026 Secured Note

agreement includes customary affirmative and negative covenants and events of default.

April 17, 2026 and May 15, 2026, the Company borrowed an additional $ 750,000 on each date from Kaufman Kapital under the same terms as

the 2026 Secured Note.

In connection with these borrowings, the 2026 Secured Note was amended and restated to increase the aggregate

principal balance to $ 3,000,000 .

On June 30, 2026, the Company again amended and restated the 2026 Secured Note increasing the principal

amount available thereof to $ 4,000,000 .

The additional $ 1,000,000 was funded on July 1, 2026 and, accordingly, only $ 3,000,000 was outstanding

under the 2026 Secured Note as of June 30, 2026.

Company recognized $ 50,500 and $ 71,167 of interest expense on 2026 Secured Note payable, related parties for the three and six months

ended June 30, 2026.

Vision Senior Notes and Warrants, Related Party

3 unchanged sentences

and no amounts were outstanding as of December 31, 2025.

For the three months ended March 31, 2025 the Company recognized $ 57,698 of

interest expense on Eagle Vision Senior Notes.

Certain warrants issued in connection with these financings remain outstanding as of March

payable to related parties, consists of the following as of March 31, 2026 and December 31, 2025:

Schedule of Notes Payable Related Parties

Kaufman Convertible Note Payable, related party

note payable, related party, net of discounts

For the three and six months ended June 30, 2025 the Company recognized $ 95,495

and $ 197,577 of interest expense on Eagle Vision Senior Notes.

Certain warrants issued in connection with these financings remain outstanding

as of June 30, 2026.

payable to related parties, consists of the following as of June 30, 2026 and December 31, 2025:

of Notes Payable Related Parties

Total Kaufman Convertible Note Payable, related party

Convertible note payable, related party, net of discounts

current maturities

note payable, related party, less current maturities

Kaufman Senior Secured Promissory Note, related party

note payable, related party

Convertible note payable, related party, net of discounts less current maturities

Total Kaufman Senior Secured Promissory Note, related party

current maturities

payable, related party, less current maturities

Note payable, related party, less current maturities

Equipment Promissory Note

11 unchanged sentences

two other manufacturers) to manufacture Dragon Fruit products using EnWave’s technology under the License Agreement.

to the Purchase Agreement, the Company purchased from EnWave a refurbished 120kW REV vacuum microwave for a purchase price of $ 1,500,000 .

to the September 16, 2025 Amendment, the Company purchased from EnWave a refurbished 120kW REV vacuum microwave for a purchase price of $ 1,500,000 .

The purchase price is payable in 24 equal monthly installments, commencing April 1, 2026, pursuant to a secured promissory note (the

9 unchanged sentences

Under the EIDL Note, the Company is required to pay interest payments of $ 169 every month beginning May 17, 2021;

the SBA extended the repayment date to November 17, 2022.

however, the SBA extended

the repayment date to November 17, 2022.

All remaining principal and accrued interest is due and payable on May 17, 2050.

The EIDL Note may be repaid at any time without penalty.

The EIDL Note

may be repaid at any time without penalty.

Company has notes payable (in addition to the Senior Secured Note and the Convertible Note payable to Kaufman Kapital described above),

consisting of the following as of March 31, 2026, and December 31, 2025:

Schedule of Notes Payable

Equipment Loan

notes payable

consisting of the following as of June 30, 2026, and December 31, 2025:

of Notes Payable

EnWave Equipment Loan

SBA EIDL Loan

Total notes payable

current maturities

payable, less current maturities

Company recognized $ 323 and $ 5,008 of interest expense on these notes payable for the three months ended March 31, 2026, and 2025, respectively.

Company recognized aggregate interest expense for the three months ended March 31, 2026, and 2025 respectively, as follows:

Notes payable, less current maturities

the three and six months ended June 30, 2026, the Company recognized interest expense of $ 29,254 and $ 29,597 , respectively, on these

notes payable.

For the corresponding periods in 2025, interest expense was $ 4,964 and $ 9,972 , respectively.

schedule of principal maturities of debt as of June 30, 2026 are as follows:

Schedule of Maturities of Debt

Year Ending December 31,

2026 (remaining six months)

2030 and thereafter

2031 and thereafter

current portion

Long-term debt

Company recognized aggregate interest expense for the three and six months ended June 30, 2026, and 2025 respectively, as follows:

Schedule of Recognized Interest Expense

on convertible note payable, related party

of debt discounts on related party convertible note

of debt discounts on related party convertible note, warrants

of debt discounts on related party convertible notes

on notes payable

on note payable, related party

on notes payable

on finance lease

on first credit position financing

interest expense

For the Three Months Ended

For the Six Months Ended

Interest on convertible note payable, related party

Amortization of debt discounts on related party convertible note

Amortization of debt discounts on related party convertible note, warrants

Amortization of debt discounts on related party convertible note

Interest on notes payable

Interest on note payable, related party

Interest on note payable

Interest on finance lease

Interest on credit card

Fair value adjustment related to warrant modification

Interest on first credit position financing

Total interest expense

13 – Changes in Stockholders’ Equity

Company is authorized to issue 8,000,000

shares of preferred stock, par value $ 0.001 per share.

March 31, 2026, no shares of preferred stock were issued or outstanding.

Company is authorized to issues 80,000,000

shares of common stock, par value $ 0.001 per share.

As of March 31, 2026, a total of 14,582,416

Company is authorized to issue 8,000,000 shares of preferred stock, par value $ 0.001 per share.

As of June 30, 2026, no shares of preferred

stock were issued or outstanding.

Company is authorized to issues 80,000,000 shares of common stock, par value $ 0.001 per share.

As of June 30, 2026, a total of 15,316,030

shares of common stock were issued and outstanding.

Holder of common stock are entitled to one vote per share.

Holders of common stock are entitled to one vote per share.

January 27, 2026, the Company entered into an At-The-Market Issuance Sales Agreement with Alexander Capital, L.P., pursuant to which

the Company could offer and sell shares of its common stock for aggregate gross proceeds of up to $ 1,500,000 .

During the three months

ended March 31, 2026, the Company sold 500,000 shares of common stock under the agreement for aggregate gross proceeds of $ 1,499,873 .

During the three and six

months ended June 30, 2026, the Company sold 500,000 shares of common stock under the agreement for aggregate gross proceeds of $ 1,499,873 .

Net proceeds, after commissions and offering expenses, were approximately $ 1,429,044 .

February 24, 2026, warrants were exercised to purchase 37,500 shares of the Company’s common stock at an exercise price of $ 1.00

per share, resulting in aggregate cash proceeds of $ 37,500 .

the six months ended June 30, 2026, certain warrants were exercised to purchase an aggregate of 271,115 shares of the Company’s

common stock at an exercise price of $ 1.00 per share, resulting in cash proceeds of $ 271,114 .

Additionally,

on May 7, 2026, Kaufman Kapital exercised a warrant to purchase 500,000 shares of the Company’s common stock at an exercise price

of 1.50 per share, resulting in aggregate cash proceeds of $ 750,000 .

of Convertible Note Principal into Common Stock

January 28, 2026, Kaufman Kapital converted $ 500,000 of outstanding principal under the Convertible Note into 659,457

shares of the Company’s common stock.

January 28, 2026, Kaufman Kapital converted $ 500,000 of outstanding principal under the Convertible Note into 659,457 shares of the Company’s

common stock.

The conversion was accounted for as a non-cash financing activity.

1 unchanged sentence

currency translation adjustments, primarily related to the Company’s foreign operations in Peru, decreased accumulated other comprehensive

income by $ 56,245 during the three months ended March 31, 2026.

income by $ 56,414 during the six months ended June 30, 2026.

14 – Common Stock Options

9 unchanged sentences

for such year will be of a lesser number of shares of common stock than would otherwise occur.

As of March 31, 2026, the annual increases

As of June 30, 2026, the annual increases

to the plan resulted in 2,963,000 shares reserved for issuance under the 2022 Plan, of which options to purchase 2,773,470 shares of

common stock were outstanding.

February 10, 2026, the Compensation Committee of the Board of Directors approved grants of stock options to certain directors,

employees and consultants under the 2022 Plan covering an aggregate of 1,390,000

shares of common stock, consisting of 100,000

shares subject to director awards and 1,290,000

shares subject to employee/consultant awards.

February 10, 2026, the Compensation Committee of the Board of Directors approved grants of stock options to certain directors, employees

and consultants under the 2022 Plan covering an aggregate of 1,390,000 shares of common stock, consisting of 100,000 shares subject to

director awards and 1,290,000 shares subject to employee/consultant awards.

All options were granted with an exercise price of $ 2.96

per share, equal to the closing market price of the Company’s common stock on the grant date, and have a contractual term of

The director awards vest in

equal monthly installments over a six-month period.

The employee and consultant awards vest in one or more of the following

manners, depending on the individual award agreement:

(i) ratably over thirty-six months of continued service, (ii) upon the

Company achieving at least $ 30.0

million of net revenue over the preceding twelve months while achieving positive EBITDA, (iii) upon the Company achieving $ 40.0

million of net revenue over the preceding twelve months while achieving positive EBITDA, or (iv) immediately on the grant

The Company determined that the service-based and immediately vested

tranches had a grant date of February 10, 2026 and recognized grant-date fair value for those awards (or portions thereof) using the Black-Scholes

option-pricing model.

per share, equal to the closing market price of the Company’s common stock on the grant date and have a contractual term of ten

director awards vest in equal monthly installments over a six-month period.

The employee and consultant awards vest in one or more of

the following manners, depending on the individual award agreement:

(i) ratably over thirty-six months of continued service, (ii) upon

the Company achieving at least $ 30.0 million of net revenue over the preceding twelve months while achieving positive EBITDA, (iii) upon

the Company achieving $ 40.0 million of net revenue over the preceding twelve months while achieving positive EBITDA, or (iv) immediately

on the grant date.

Company determined that the service-based and immediately vested tranches had a grant date of February 10, 2026 and recognized grant-date

fair value for those awards (or portions thereof) using the Black-Scholes option-pricing model.

Key assumptions included:

4 unchanged sentences

performance-based tranches tied to revenue and EBITDA milestones were determined not to have a grant date for accounting purposes as

of March 31, 2026 because the applicable performance conditions and measurement requirements had not yet been satisfied.

of June 30, 2026 because the applicable performance conditions and measurement requirements had not yet been satisfied.

those tranches were not included in the grant-date fair value of awards granted during the quarter and no stock-based compensation expense

was recognized for such tranches during the three months ended March 31, 2026.

the three months ended March 31, 2026, the Company recognized stock-based compensation expense related to the February 10, 2026 grants

for vested and service-based tranches only.

Unrecognized compensation cost related to unvested service-based awards will be recognized

over the remaining requisite service periods.

was recognized for such tranches during the six months ended June 30, 2026.

the six months ended June 30, 2026, the Company recognized stock-based compensation expense related to the February 10, 2026 grants for

vested and service-based tranches only.

Unrecognized compensation cost related to unvested service-based awards will be recognized over

the remaining requisite service periods.

volatility was estimated using a blended approach that incorporates the Company’s historical stock price volatility since the announcement

2 unchanged sentences

Company accounts for forfeitures as they occur and, accordingly, expects substantially all outstanding options to vest.

of March 31, 2026, options to purchase 940,097 shares of common stock were vested and exercisable, with a weighted-average exercise price

of $ 2.44 and a remaining contractual life of 7.9 years on a weighted-average basis.

Information for total options outstanding under 2022 Plan as of March

31, 2026 is presented below:

of June 30, 2026, options to purchase 1,109,428 shares of common stock were vested and exercisable, with a weighted-average exercise

price of $ 2.48 and a remaining contractual life of 8 years on a weighted-average basis.

for total options outstanding under 2022 Plan as of June 30, 2026 is presented below:

of Stock Option Activity

at December 31, 2025

at March 31, 2026

compensation expense was $ 242,812 and $ 4,024 for the three months ended March 31, 2026, and 2025, respectively.

of March 31, 2026, total unrecognized compensation cost related to unvested stock options was $ 2.03 million, which is expected to be

recognized over the remaining weighted-average vesting period of 2.5 years.

As of March 31, 2026, the weighted-average remaining contractual

life of outstanding options was 9.1 years.

Outstanding at December 31, 2025

Outstanding at June 30, 2026

Company recognized stock-based compensation expense of $ 272,932 and $ 77,073 for the three months ended June 30, 2026 and 2025, respectively,

and $ 515,744 and $ 81,097 for the six months ended June 30, 2026 and 2025, respectively.

of June 30, 2026, total unrecognized compensation cost related to unvested stock options was $ 1.8 million, which is expected to be recognized

over the remaining weighted-average vesting period of 2.3 years.

As of June 30, 2026, the weighted-average remaining contractual life

of outstanding options was 8.8 years.

15 – Common Stock Warrants

warrants as of March 31, 2026 primarily relate to financing transactions completed during 2024 and 2025.

February 24, 2026, holders exercised warrants to purchase 37,500 shares of the Company’s common stock at an exercise price of $ 1.00

per share, resulting in cash proceeds of $ 37,500 .

aggregate intrinsic value of warrants exercised during the three months ended March 31, 2026 was $ 141,000 .

Information for total warrants outstanding

as of March 31, 2026 is presented below:

warrants as of June 30, 2026 primarily relate to financing transactions completed during 2024 and 2025.

the six months ended June 30, 2026, certain warrants were exercised to purchase an aggregate of 271,115 shares of the Company’s

common stock at an exercise price of $ 1.00 per share resulting in cash proceeds of $ 271,114 .

addition, on May 7, 2026, Kaufman Kapital exercised in full a warrant to purchase 500,000 shares of the Company’s common stock

at an exercise price of $ 1.50 per share, resulting in cash proceeds to the Company of $ 750,000 .

aggregate intrinsic value of warrants exercised during the six months ended June 30, 2026 was $ 1.9 million.

for total warrants outstanding as of June 30, 2026 is presented below:

of Warrant Activity

Weighted-Average

Exercise Price

Weighted-Average

at December 31, 2025

at March 31, 2026

Exercisable at March

remaining contractual term of outstanding warrants ranged from 0.8 to 8.4 years as of March 31, 2026.

Outstanding at December 31, 2025

Outstanding at June 30, 2026

Exercisable at June 30, 2026

remaining contractual term of outstanding warrants ranged from 0.9 to 8.1 years as of June 30, 2026.

16 – Fair Value of Financial Instruments

16 unchanged sentences

3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or

following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of March

following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of June

30, 2026 and December 31, 2025:

Schedule of Valuation of Financial Instruments at Fair Value on a Recurring Basis

Value Measurements at March 31, 2026

Fair Value Measurements at June 30, 2026

Right-of-use-asset

note payable, related party net of $ 25,103 of discounts

payable, related part y

assets and liabilities

Convertible note payable, related party net of $ 16,735 of discounts

Notes payable

Note payable, related party

Lease liabilities

Total liabilities

Total assets and liabilities

$ ( 4,359,818 )

$ ( 3,278,951 )

Value Measurements at December 31, 2025

Fair Value Measurements at December 31, 2025

Right-of-use-asset

note payable, related party net of $ 39,309 of discounts

payable, related party

assets and liabilities

Convertible note payable, related party net of $ 39,309 of discounts

Notes payable

Lease liabilities

Total liabilities

Total assets and liabilities

$ ( 1,534,500 )

$ ( 3,679,463 )

were no transfers of financial assets or liabilities between Level 1, Level 2 and Level 3 inputs for the three months ended March 31,

2026, or the three months December 31, 2025.

Company had no transfers between Level 1, Level 2, and Level 3 fair value measurements during the six months ended June 30, 2026 and

the year ended December 31, 2025.

17 – Segment Reporting

46 unchanged sentences

following table presents revenue, significant expenses, and segment EBITDA for the Company’s reportable segments, together with

a reconciliation to consolidated net loss before income taxes for the three months ended March 31, 2026 and 2025:

a reconciliation to consolidated net loss before income taxes for the three and six months ended June 30, 2026 and 2025:

of Segment Reporting

the Three Months Ended

For the Three Months Ended

For the Six Months Ended

operations segment sales

American operations segment cost of goods sold

Latin American operations segment cost of goods sold

operations segment cost of goods sold

operations segment expenses:

and administrative

General and administrative

Salaries and wages

Professional fees

operating expenses

operations segment EBITDA

American operations segment cost of goods sold

American operations segment expenses:

and administrative

Latin American operating expenses

Latin American operations segment cost of goods sold

Latin American operations segment expenses:

General and administrative

Salaries and wages

Professional fees

Total Latin American operating expenses

Operating expenses

American operations segment EBITDA

Latin American operations segment EBITDA

$ ( 4,681,952 )

2 unchanged sentences

$ ( 4,355,616 )

Reconciliation

of net earnings before income tax expense:

Consolidated EBITDA

$ ( 2,013,595 )

2 unchanged sentences

$ ( 1,472,794 )

and amortization expense

compensation expense

net loss before income tax expense

Reconciliation of net earnings before income tax expense:

Consolidated EBITDA

$ ( 2,013,595 )

$ ( 1,031,077 )

$ ( 3,181,912 )

$ ( 1,472,794 )

$ ( 2,013,595 )

$ ( 1,031,077 )

$ ( 3,181,912 )

$ ( 1,472,794 )

Depreciation and amortization expense

Interest income

Interest expense

Stock compensation expense

Consolidated net loss before income tax expense

$ ( 2,720,036 )

$ ( 1,603,156 )

$ ( 4,512,320 )

$ ( 2,521,538 )

18 – Related Party Transactions

3 unchanged sentences

further described in Note 12.

As of March 31, 2026, the outstanding principal balance of the Convertible Note was $ 2,900,000 .

During the year ended December 31, 2025, Kaufman Kapital exercised warrants to purchase shares of the Company’s common stock.

As of March 31, 2026, certain warrants issued in connection with the SPA remain outstanding.

As of June 30, 2026, the outstanding principal balance of the Convertible Note issued under the SPA was

$ 2,900,000 .

All warrants issued in connection with the SPA had been exercised as of June 30, 2026.

August 29, 2024, the Company borrowed $ 1,200,000 from Kaufman Kapital LLC pursuant to a senior secured promissory note.

1 unchanged sentence

the full principal balance during the year ended December 31, 2025, and no amounts were outstanding as of December 31, 2025.

January 28, 2026, the Company borrowd an additional $ 1,500,000

from Kaufman Kapital pursuant to a Senior Secured Promissory Note, as further described in Note

January 28, 2026, the Company borrowed an additional $ 1,500,000 from Kaufman Kapital pursuant to a Senior Secured Promissory Note, as

further described in Note 12.

On June 30, 2026, the Senior Secured Promissory Note was amended and restated to increase the principal

amount under the note to $ 4,000,000 .

As of June 30, 2026, the outstanding principal balance was $ 3,000,000 .

The remaining $ 1,000,000

was funded on July 1, 2026.

Vision Fund LP, an investor in the Company, is affiliated with the Company’s Chief Financial Officer, John Dalfonsi.

various dates from January 9, 2024 through May 22, 2024, the Company issued an aggregate of $ 1,675,000

of senior secured notes and warrants to purchase an aggregate of 518,750

shares of the Company’s common stock to a group of investors led by Eagle Vision Fund LP.

The Company repaid the full

principal balance of these notes as of December 31, 2025.

As of March 31, 2026, warrants to purchase an aggregate of 118,750

shares of the Company’s common stock issued to the purchases of the senior secured notes remained outstanding.

various dates from January 9, 2024 through May 22, 2024, the Company issued an aggregate of $ 1,675,000 of senior secured notes and warrants

to purchase an aggregate of 518,750 shares of the Company’s common stock to a group of investors led by Eagle Vision Fund LP.

Company repaid the full principal balance of these notes as of December 31, 2025.

As of June 30, 2026, warrants to purchase an aggregate

of 50,000 shares of the Company’s common stock issued to the purchases of the senior secured notes remained outstanding.

Company engages its Chief Financial Officer under a consulting arrangement.

During the three months ended March 31, 2026, the Company

paid $ 95,000 for services under this arrangement.

As of March 31, 2026, $ 42,500 was recorded as prepaid expenses for services to be rendered

During the six months ended June 30, 2026, the Company paid

$ 112,500 for services under this arrangement.

As of June 30, 2026, $ 42,500 was recorded as prepaid expenses for services to be rendered

in future periods.

8 unchanged sentences

Company is the subject of a lawsuit commenced by its former Chief Financial Officer alleging wrongful termination.

Based on information

currently available and on the advice of legal counsel, the Company is engaged in settlement discussions related to this matter.

no agreement has been finalized, the Company believes that a resolution of the matter may result in a payment.

At this time, the Company

is unable to determine that a loss is both probable and reasonably estimable and, accordingly, no liability has been recorded in the

accompanying condensed consolidated financial statements.

The ultimate outcome of this matter remains uncertain.

The parties have

entered into a settlement agreement involving the payment of cash and the issuance of a warrant to the plaintiff.

Upon payment of

the settlement amount, the matter will be fully resolved.

The Company recognized an accrual for the settlement amount as of June 30,

2026, which is included in accrued liabilities in the accompanying condensed consolidated balance sheet.

The related settlement

expense has been recognized in general and administrative expenses for the six months ended June 30, 2026.

than as set forth above, there are no legal matters pending against the Company.

26 unchanged sentences

The Company recognized

$ 62,500 and $ 40,585 of royalty expenses for the three months ended March 31, 2026 and March 31, 2025.

addition to the initial EnWave Equipment we purchased, the Company agreed to purchase additional equipment from EnWave overtime.

additional equipment purchase schedule, as amended, required the Company to purchase a “Second EnWave Machine”, which was

purchased in full on December 12, 2024.

The Company is also required to execute an Equipment Purchase Agreement for a 120kW, or greater

rated power, EnWave Equipment (the “Third EnWave Machine”) on or before December 31, 2025, and satisfy the payment obligations

required with respect to the Third EnWave Machine by the License Agreement.

$ 125,000 and $ 85,081 of royalty expenses for the three and six months ended June 30, 2026, and 2025.

addition to the initial EnWave Equipment we purchased, the Company agreed to purchase additional equipment from EnWave over time.

The additional equipment purchase schedule, as amended, required the Company to purchase a “Second EnWave Machine”,

which was purchased in full on December 12, 2024.

The Company is also required to execute an Equipment Purchase Agreement for a

120kW, or greater rated power, EnWave Equipment (the “Third EnWave Machine”) on or before December 31, 2025, and satisfy

the payment obligations required with respect to the Third EnWave Machine by the License Agreement.

September 16, 2025 the Company entered into a Purchase Agreement for the Third EnWave Machine, a refurbished 120kW REV vacuum microwave

11 unchanged sentences

20 - Income Taxes

Company incurred net operating losses for the three months ended March 31, 2026 and 2025.

Accordingly, no provision for income taxes

has been recorded for the interim periods presented.

Company incurred net operating losses for the six months ended June 30, 2026 and 2025.

Accordingly, no provision for income taxes has

been recorded for the interim periods presented.

Company’s effective tax rate differs from the U.S.

1 unchanged sentence

against its deferred tax assets.

As a result, the Company’s effective tax rate was 0 % for the three months ended March 31, 2026

As a result, the Company’s effective tax rate was 0 % for the six months ended June 30, 2026 and

continues to evaluate the realizability of its deferred tax assets and has determined that it is more likely than not that such assets

will not be realized.

Accordingly, a full valuation allowance has been maintained as of March 31, 2026.

Accordingly, a full valuation allowance has been maintained as of June 30, 2026.

have been no material changes to the Company’s deferred tax assets, valuation allowance, or uncertain tax positions since December

5 unchanged sentences

no reportable event, except as follows:

April 2026 warrants were exercised to purchase an aggregate of 233,614 shares of the Company’s common stock at an exercise price

of $ 1.00 per share for aggregate cash proceeds of $ 233,614 .

On May 7, 2026, Kaufman Kapital exercised in full a warrant to purchase

500,000 shares of the Company’s common stock at an exercise price of $ 1.50 per share, resulting in cash proceeds to the Company

of $ 750,000 .

In connection with the warrant exercise, the Convertible Note was amended to extend the maturity date from December 31, 2026

to December 31, 2027 and reduce the interest rate from 12 % to 8 %, effective May 7, 2026.

Debt Financing

April 17, 2026, the Company borrowed an additional $ 750,000

from Kaufman Kapital LLC under the same terms as the 2026 Secured

See Note 12 – Debt for additional information.

Refund – Gain Contingency

to June 30, 2026, the Company received approximately $ 370,000 of additional refunds from U.S.

Customs and Border Protection related to

tariffs previously paid under the International Emergency Economic Powers Act.

Combined with approximately $ 32,000 received on or before

June 30, 2026, the Company has now received substantially all of the tariff refunds to which it was entitled.

These refunds relate to

tariffs previously disclosed as a gain contingency in the Company’s Annual Report on Form 10-K for the year ended December 31,

The refunds received subsequent to June 30, 2026 will be recognized in the Company’s financial statements in the period received.

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 1. Financial Statements