What changed in this filing

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Item 1. Financial Statements

2026-08-14 compared with 2026-05-14 · 197 added, 138 removed, 392 unchanged (46% of the section changed)

23 unchanged sentences

Financing agreements

Convertible notes, net of $ 619,000 discount at March 31, 2026

Convertible notes

Total liabilities

Commitments and contingencies

Stockholders’ equity:

Stockholders’ (deficit) equity:

Preferred stock, $ 0.000001 par value, 400,000 shares authorized, none issued or outstanding

1 unchanged sentence

35,000,000 shares authorized;

and 16,104,853 and 15,969,281 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively

and 16,208,160 and 15,969,281 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively

Additional paid in capital

2 unchanged sentences

( 66,315,000 )

Total stockholders’ equity

Total liabilities and stockholders’ equity

Total stockholders’ (deficit) equity

Total liabilities and stockholders’ (deficit) equity

the accompanying notes to the condensed consolidated financial statements

1 unchanged sentence

Consolidated Statements of Operations

the three months ended March 31, 2026 and 2025

For the three months ended March 31,

the three and six months ended June 30, 2026 and 2025

For the three months ended June 30,

For the six months ended June 30,

Cost of revenue

5 unchanged sentences

Loss from operations

( 1,517,000 )

( 1,953,000 )

( 1,606,000 )

Interest expense

1 unchanged sentence

$ ( 880,000 )

$ ( 2,522,000 )

$ ( 1,641,000 )

Per share information - basic and fully diluted:

4 unchanged sentences

Statements of Cash Flows

the three months ended March 31, 2026 and 2025

For the three months ended March 31,

the six months ended June 30, 2026 and 2025

For the six months ended June 30,

$ ( 2,522,000 )

13 unchanged sentences

( 3,051,000 )

( 1,575,000 )

Investing activities

13 unchanged sentences

Net cash provided by financing activities

Net increase in cash

Net (decrease) increase in cash

Cash, beginning of period

4 unchanged sentences

Financed acquisition of long-term assets

Accounts payable arising from acquisition of long-term assets

Issuance of warrants to brokers in convertible debt and warrant offering

5 unchanged sentences

25, 2010 in the State of Delaware.

The Company is engaged in the manufacturing and distribution of frozen beverages and food,

including ready-to-drink and ready-to-blend smoothies, shakes, frappes and ice cream mix, and raw and processed milk.

The Company is engaged in the manufacturing and distribution of frozen beverages and food, including

ready-to-drink and ready-to-blend smoothies, shakes, frappes and ice cream mix, and raw and processed milk.

of Presentation

12 unchanged sentences

of Consolidation

The consolidated financial statements include the financial statements of

the Company and our wholly-owned subsidiaries, Barfresh Inc.

and Barfresh Corporation Inc.

(formerly known as Smoothie, Inc.), and Arps

All inter-company balances and transactions among the companies have been eliminated upon consolidation.

consolidated financial statements include the financial statements of the Company and our wholly-owned subsidiaries, Barfresh Inc., Barfresh

Corporation Inc.

(formerly known as Smoothie, Inc.), and Arps Dairy, Inc.

All inter-company balances and transactions among the companies

have been eliminated upon consolidation.

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

7 unchanged sentences

manufacturers.

comparison of production by source is summarized in the table below:

comparison of production of legacy product lines by source is summarized in the table below:

Schedule of Contract Manufacturers Percentage of Finished Goods

Three months ended March 31,

Three months ended June 30,

For the six months ended June 30,

Owned production facility

4 unchanged sentences

Manufacturer D

Concentration risk, percentage

A gave notice that it would not renew our contract when it concluded in February 2026.

Additionally, in December 2025, Manufacturer

B discontinued manufacturing our products.

Approximately 30% of our revenue in the quarter ended March 31, 2026 was produced in

2025, prior to the discontinuance.

The commencement of production at Arps Dairy is a significant step towards mitigating the impact

of these losses, and the potential adverse effect on our business, financial condition and results of operations.

Concentration

risk, percentage

A gave notice that it would not renew the contract with the Company when it concluded in February 2026.

Additionally, in December

2025, Manufacturer B discontinued manufacturing our products.

The commencement of production at Arps Dairy is a significant step

towards mitigating the impact of these contract losses, and the potential adverse effect on the Company’s business, financial

condition and results of operations.

of Significant Accounting Policies

13 unchanged sentences

losses are recorded as general and administrative expenses on our condensed consolidated statements of operations.

As of March 31, 2026

As of June 30, 2026

and December 31, 2025, there was no allowance for credit losses.

There was no credit loss expense for the three months ended March 31,

2026 and 2025.

Company has been awarded a $ 2,400,000 government grant to fund 50% of equipment purchases for the New Facility.

As of March 31, 2026,

there have been no assets acquired that are eligible for reimbursement under the grant.

The Company expects to early adopt the Financial

Accounting Standards Board’s Accounting Standards Update 2025-10, Government Grants.

Grant proceeds will reduce the value of the

assets acquired and the resulting depreciation expense over the estimated useful lives of the assets acquired.

There was no credit loss expense for the three and six months ended

June 30, 2026 and 2025.

Company has been awarded a $ 2,400,000 government grant (the “USDA Grant”) to fund 50% of equipment purchases for the New

As of June 30, 2026, there have been no assets acquired that are eligible for reimbursement under the grant.

Funding is dependent

on meeting specific criteria in the grant agreement, including completion of all funded phases by December 31, 2026, and may require

repayment if costs are disallowed due to partial completion.

The Company expects to early adopt the Financial Accounting Standards Board’s

Accounting Standards Update 2025-10, Government Grants.

Grant proceeds will reduce the value of the assets acquired and the resulting

depreciation expense over the estimated useful lives of the assets acquired.

Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components

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and outbound freight costs are included in selling, marketing and distribution expense.

For the three months ending March 31, 2026 and

For the three months ending June 30, 2026 and

2025, storage and outbound freight totaled approximately $ 305,000 and $ 276,000 , respectively.

For the six months ended June 30, 2026

and 2025, storage and outbound freight totaled approximately $ 748,000 and $ 667,000 , respectively.

and Development

1 unchanged sentence

The Company incurred approximately

$ 24,000 and $ 19,000 in research and development expense for the three months ended March 31, 2026 and 2025, respectively.

the three months ended March 31, 2026 and 2025, common stock equivalents have not been included in the calculation of net loss per share

as their effect is anti-dilutive as a result of losses incurred.

$ 37,000 and $ 31,000 in research and development expense for the three months ended June 30, 2026 and 2025, respectively.

months ended June 30, 2026 and 2025, research and development expense totaled approximately $ 61,000 and $ 49,000 , respectively.

the three and six months ended June 30, 2026 and 2025, common stock equivalents have not been included in the calculation of net loss

per share as their effect is anti-dilutive as a result of losses incurred.

Pronouncements

18 unchanged sentences

Property and equipment, net of depreciation

expense related to these assets was approximately $ 72,000 and $ 53,000 for the three-months periods ending March 31, 2026 and 2025, respectively.

Depreciation expense in cost of revenue was $ 55,000 and $ 7,000 for the three-month periods ending March 31, 2026 and 2025, respectively.

expense related to these assets was approximately $ 75,000 and $ 54,000 for the three months ended June 30, 2026 and 2025, respectively,

and $ 147,000 and $ 107,000 for the six months ended June 30, 2026 and 2025, respectively.

Depreciation expense in cost of revenue was

$ 62,000 and $ 9,000 for the three months ended June 30, 2026 and 2025, respectively, and $ 117,000 and $ 16,000 for the six months ended

June 30, 2026 and 2025, respectively.

subject to financing leases consist of the following:

6 unchanged sentences

Property and equipment, net of depreciation

expense related to leased assets amounted to $ 5,000 and $ 2,000 for the three-month periods ending March 31, 2026 and 2025, respectively.

expense related to leased assets amounted to $ 8,000 and $ 2,000 for the three-month periods ending June 30, 2026 and 2025, respectively.

Depreciation expense related to leased assets amounted to $ 13,000 and $ 4,000 for the six-month periods ending June 30, 2026 and 2025,

respectively.

August 2024, the Company secured receivables financing of $ 1,500,000 (the “Barfresh Facility”), and amended the facility

3 unchanged sentences

the Credit Facilities, the Company may borrow up to 90% of eligible customer account balances.

Amounts outstanding bear interest at a

rate based on the prime rate plus collateral fees, and are secured by accounts receivable and inventory.

The weighted average rate was

8.2% and 8.7% March 31, 2026 and 2025, respectively.

The Credit Facilities expire on their respective annual anniversaries, and renew

automatically, unless notice is given or received .

of March 31, 2026, there was $ 543,000 drawn under the Credit Facilities, and $ 3,207,000 was available to borrow, subject to available

Unamortized deferred financing discount amounted to $ 16,000 as of March 31, 2026.

Amounts outstanding bear interest at

a rate based on the prime rate plus collateral fees, and are secured by accounts receivable and inventory.

The weighted average rate

was 8.0% and 8.4% as of June 30, 2026 and December 31, 2025, respectively.

The Credit Facilities expire in September and October 2026, and renew automatically, unless notice is given or

of June 30, 2026, there was $ 174,000 drawn under the Credit Facilities, and $ 3,576,000 was available to borrow, subject to available

Unamortized deferred financing discount amounted to $ 7,000 as of June 30, 2026.

Company has entered into financing agreements to purchase equipment and software as a service, with a weighted average imputed or stated

1 unchanged sentence

Amounts due under the agreements are due over a weighted average period of 31 months, with maturities as follows as

of March 31, 2026:

of June 30, 2026:

of Financing Agreements

21 unchanged sentences

on March 5, 2026 and through March 23, 2026, the Company obtained subscriptions for unsecured senior convertible promissory notes in

the aggregate amount of $ 7,528,000 (the “Notes”) from accredited investors, including $ 230,000 ( 3.1 % ) sold to related parties.

Net proceeds amounted to $ 7,374,000 , after

cash issuance costs of $ 154,000 .

The Notes bear interest at 10% per annum for the first 12 months of the 24-month term, regardless

of earlier payment or conversion (the “Minimum Interest”), and are mandatorily convertible as to principal and interest

into shares of the Company’s common stock at any time prior to maturity at the conversion price of $ 2.90 per share (the

“Conversion Price”), if the common stock of the registrant trades at $ 4.35 per share (150% of the Conversion Price) for

20 out of the preceding 30 consecutive trading days.

The holders of the Notes have the option on up to 10 occasions to convert all

or any portion of the principal and interest into shares of the registrant’s common stock at the Conversion Price.

registrant may prepay the Notes at any time prior to maturity, subject to payment of the Minimum Interest, any other accrued but

unpaid interest, and a prepayment penalty of 5% if the amount of the Note principal that is prepaid does not exceed 50% or a

prepayment of 10% if the amount of the Note principal that is prepaid exceeds 50%.

Interest is to be paid quarterly in arrears

beginning April 1, 2026 and can be paid in either cash or shares of the registrant’s common stock at the election of the

If paid in stock, the shares must be registered and valued at a 10% discount to the 10-day volume-weighted average

of the Notes were issued 2,352,500

detachable warrants to purchase common stock (the “Warrants’) at a price of $ 3.20

per share (the “Exercise Price”) for a 4-year term from date of issuance in an amount equal to 100% of their investment

The Company may call the Warrants (the “Call”) if the common stock of the registrant trades at or above $ 4.80

per share (150% of the Exercise Price) for 20 out of the preceding 30 consecutive trading days.

Additionally, 22,655

broker warrants were issued at an exercise price of $ 3.48

per share for a 3-year term, expiring March 10, 2029.

the aggregate amount of $ 7,528,000

(the “Notes”) from accredited investors, including $ 230,000

sold to related parties.

Net proceeds amounted to $ 7,374,000 ,

after cash issuance costs of $ 154,000 .

Notes bear interest at 10% per annum for the first 12 months of the 24-month term, regardless of earlier payment or conversion (the

“Minimum Interest”), and are mandatorily convertible as to principal and interest into shares of the Company’s

common stock at any time prior to maturity at the conversion price of $ 2.90

per share (the “Conversion Price”), if the common stock of the Company trades at $ 4.35

per share (150% of the Conversion Price) for 20 out of the preceding 30 consecutive trading days.

The holders of the Notes have the

option on up to 10 occasions to convert all or any portion of the principal and interest into shares of the Company’s common

stock at the Conversion Price.

The Company may prepay the Notes at any time prior to maturity, subject to payment of the Minimum

Interest, any other accrued but unpaid interest, and a prepayment penalty of 5% if the amount of the Note principal that is prepaid

does not exceed 50% or a prepayment penalty of 10% if the amount of the Note principal that is prepaid exceeds 50%.

Interest is to

be paid quarterly in arrears beginning April 1, 2026 and can be paid in either cash or shares of the Company’s common stock at

the election of the Company.

If paid in stock, the shares must be registered and valued at a 10% discount to the 10-day

volume-weighted average price.

of the Notes were issued 2,352,500 detachable warrants to purchase common stock (the “Warrants’) at a price of $ 3.20 per

share (the “Exercise Price”) for a 4-year term from date of issuance in an amount equal to 100% of their investment amounts.

The Company may call the Warrants (the “Call”) if the common stock of the Company trades at or above $ 4.80 per share (150%

of the Exercise Price) for 20 out of the preceding 30 consecutive trading days.

Additionally, 22,655 broker warrants were issued at an

exercise price of $3.48 per share for a 3-year term, expiring March 10, 2029.

the Company sell any of its securities in a capital-raising transaction at a price lower than the Conversion Price while any Notes are

7 unchanged sentences

The warrants were

valued using the Black-Scholes option pricing model, based on the difference between two options, representing the value of the

warrant excluding the value derived from appreciation of the Company’s common stock in excess of the strike price of the Call,

with the following Level 3 inputs:

valued using the Black-Scholes option pricing model, based on the difference between two options, representing the value of the warrant

excluding the value derived from appreciation of the Company’s common stock in excess of the strike price of the Call, with the

following Level 3 inputs:

of Black-scholes Option Pricing Model

5 unchanged sentences

allocation resulted in a corresponding debt discount of $ 642,000 , inclusive of $ 148,000 in transaction costs, which is being amortized

to interest expense over the term of the note using the effective interest method, resulting in $ 23,000 in interest expense for the three

months ended March 31, 2026.

to interest expense over the term of the note using the effective interest method, resulting in $ 77,000 and $ 100,000 in interest expense

for the three and six months ended June 30, 2026, respectively.

Commitments and Contingencies

Commitments, Construction and Demolition

Company leases headquarters office space under a non-cancelable operating lease which expired on March 31, 2023 and has been extended

Company leased headquarters office space under a non-cancelable operating lease which expired on March 31, 2023 and had been extended

multiple times, most recently through March 31, 2026 .

The Company’s periodic lease cost was approximately $ 20,000 for each of the

three-month periods ending March 31, 2026 and 2025.

The lease was not extended on March 31, 2026, and new commitments for headquarters

facilities are leased on a month-to-month basis.

facilities are leased on a month-to-month basis at a nominal cost.

The Company’s periodic lease cost was none and approximately

$ 20,000 for the three-month periods ending June 30, 2026 and 2025, respectively, and $ 20,000 and $ 40,000 for each of the six-month periods

ending June 30, 2026 and 2025, respectively.

2023, the Arps Dairy sold its manufacturing facility (the “Existing Facility”) and purchased a different facility, executing

2 unchanged sentences

44,000 square feet of production and office space (the “New Facility”).

Arps Dairy continues to operate at the Existing

Facility under a leasing arrangement.

Arps Dairy continues to operate at the Existing Facility

under a leasing arrangement.

The initial lease term was 18 months, and the lease was classified as an operating lease.

2 unchanged sentences

Neither party pays rent for the space that it occupies.

connection with the Acquisition, the lease on the Existing Facility was extended until September 30, 2026 to permit the completion

of the New Facility.

The Company is subject to penalties of $ 1,000

per day if it has not vacated and demolished the Existing Facility by September 30, 2026, subject to limitations if delays are caused by a force majeure event

or construction-related delays that are beyond the Company’s reasonable control.

of March 31, 2026, the New Facility expansion is expected to cost $ 6,700,000 ,

including equipment to efficiently manufacture Barfresh legacy products (the “Construction Obligations”).

The Company has incurred $ 4,840,000 ,

including $ 1,861,000

in Accounts Payable – Construction in Progress of which $ 1,782,000 is

owed to the construction contractor.

In conjunction with the Acquisition, the contractor agreed to forebear from filing a mechanics

lien against the building through December 2, 2025.

Additionally, the agreement with the contractor stipulates that if any portion

of the balance remains outstanding after December 31, 2025, it will accrue interest at 8 %

per annum from day sixty-one until repayment is received, subject to rate adjustment for scope modifications.

connection with the Acquisition, the lease on the Existing Facility was extended until September 30, 2026 to permit the completion of

the New Facility.

The Company is subject to penalties of $ 1,000 per day if it has not vacated and demolished the Existing Facility by

September 30, 2026, subject to limitations if delays are caused by a force majeure event or construction-related delays that are beyond

the Company’s reasonable control.

of June 30, 2026, the New Facility expansion is expected to cost $ 9,700,000 , net of USDA Grant funding.

The Company, including Arps Dairy

prior to the Acquisition, has incurred $ 4,896,000 , including $ 1,818,000 in Accounts Payable – Construction in Progress.

than amounts included in Accounts Payable – Construction in Progress, there are no firm commitments for capital expenditures.

However, the Company would face significant uncertainty about its ability to supply product if it is unable to complete the New

Facility, which would in turn have a material impact on its financial position, operating results, and cash flows.

Expected capital

expenditures for 2026, including settlement of Accounts Payable – Construction in Progress, amount to $ 6,622,000

(the “Construction Obligations”).

The USDA Grant is subject to uncertainty and possible repayment associated with the

requirement to complete all funded phases of the project by December 31, 2026.

This uncertainty could increase the Construction

Obligation to $ 9,062,000 .

The Company expects to finance the Construction Obligations from mortgage and equipment loans, as well as equity financing.

can be no assurance that sources of financing will be available to satisfy the Construction Obligations.

Payable – Construction in Progress is primarily owed to the construction contractor for work performed in the first half of 2025.

In conjunction with the Acquisition, the contractor agreed to forebear from filing a mechanics lien against the building through December

Additionally, the agreement with the contractor stipulates that if any portion of the balance remains outstanding after December

31, 2025, it will accrue interest at 8 % per annum from day sixty-one until repayment is received, subject to rate adjustment for scope

modifications.

Company is liable for the demolition of the Existing Facility, once it has vacated the premises.

2 unchanged sentences

No liability is currently recorded for the demolition as management

believes the grant is sufficient to cover the liability.

believes the grant is sufficient to cover the liability and the demolition will be completed before the grant expires.

Company’s products are produced to its specifications through several contract manufacturers.

33 unchanged sentences

however, the product format has not been accepted by some customers or as a substitute for the bottle product in all use cases.

Additionally, the Company acquired Arps Dairy in the fourth quarter of 2025 and is ramping up production of its products at Arps.

legal matters

5 unchanged sentences

unfavorable outcome to be remote.

Stockholders’ Equity

following are changes in stockholders’ equity for the three months ended March 31, 2025 and 2026:

Stockholders’ (Deficit) Equity

following are changes in stockholders’ (deficit) equity for the six months ended June 30, 2026 and 2025:

Schedule of Changes in Stockholders’ Equity

6 unchanged sentences

Registered issuance of common stock

Balance March 31, 2025

( 1,641,000 )

Balance December 31, 2025

( 1,641,000 )

Balance June 30, 2025

$ ( 65,262,000 )

Balance December 31, 2025

$ ( 66,315,000 )

Issuance of common stock for equity compensation, net of shares repurchased for income tax withholding

Equity-based compensation expense

1 unchanged sentence

Issuance of detachable warrants

Balance March 31, 2026

( 2,522,000 )

Balance June 30, 2026

$ ( 68,837,000 )

association with the issuance of convertible notes (Note 4), 2,375,155 warrants were issued at a weighted average exercise price of $ 3.20

per share and remain outstanding as of March 31, 2026.

The weighted average remaining term of the warrants is 3.9 years as of March 31,

per share and remain outstanding as of June 30, 2026.

The weighted average remaining term of the warrants is 3.7 years as of June 30,

Incentive Plan

of March 31, 2026, the Company has $ 457,000 of total unrecognized share-based compensation expense relative to unvested options, stock

of June 30, 2026, the Company has $ 371,000 of total unrecognized share-based compensation expense relative to unvested options, stock

awards and stock units, which is expected to be recognized over the remaining weighted average period of 2.6 years.

following is a summary of stock option activity for the three months ended March 31, 2026:

following is a summary of stock option activity for the six months ended June 30, 2026:

Schedule of Stock Options Activity

Weighted average

exercise price

term in years

Number of Options

Weighted average exercise price per share

Remaining term in years

Outstanding on December 31, 2025

Outstanding on March 31, 2026

Exercisable, March 31, 2026

Outstanding on June 30, 2026

Exercisable, June 30, 2026

fair value of the options issued was calculated using the Black-Scholes option pricing model, based on the following:

5 unchanged sentences

Weighted average grant date fair value per share

Stock and Performance Share Units

has been no change in restricted stock or performance share units since December 31, 2025.

following is a summary of restricted stock award and restricted stock unit activity for the six months ended June 30, 2026:

Schedule of Restricted Stock Award and Restricted Stock Unit Activity

Weighted average grant date fair value

Unvested at December 31, 2025

Unvested at June 30, 2026

2023 to 2025, the Company issued performance share units (“PSUs”) that represented shares potentially issuable based upon

Company and individual performance in the years of issuance.

following table summarizes the activity for the Company’s unvested PSUs for the six months ended June 30, 2026:

Schedule of Performance Stock Unit Activity

Number of shares

Weighted average grant date fair value

Unvested at December 31, 2025

Unvested June 30, 2026

740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of evidence, it is more than likely

2 unchanged sentences

valuation allowance on all tax assets.

As of March 31, 2026, the estimated effective tax rate for 2026 was zero .

As of June 30, 2026, the estimated effective tax rate for 2026 was zero .

are open statutes of limitations for taxing authorities in federal and state jurisdictions to audit our tax returns from 2019 through

1 unchanged sentence

Our policy is to account for income tax related interest and penalties in income tax expense in the statement of

the three months ending March 31, 2026 and 2025, the Company did not incur any interest and penalties associated with tax positions.

As of March 31, 2026, the Company did not have any significant unrecognized uncertain tax positions.

the three- and six-months ending June 30, 2026 and 2025, the Company did not incur any interest and penalties associated with tax positions.

As of June 30, 2026, the Company did not have any significant unrecognized uncertain tax positions.

Business Combination

6 unchanged sentences

of Unaudited Pro Forma Information Presenting Consolidated Results of Operations

For the three months ended March 31,

For the three months ended June 30,

For the six months ended June 30,

Pro forma revenue

2 unchanged sentences

$ ( 975,000 )

$ ( 2,522,000 )

$ ( 2,198,000 )

Pro forma net loss per share, basic and fully diluted

9 unchanged sentences

of Business Combination Reportable Segment

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Frozen beverages and food

1 unchanged sentence

Frozen beverages and food

$ ( 209,000 )

Raw and processed milk

Gross (loss) profit

Total operating expenses

1 unchanged sentence

( 1,374,000 )

( 2,836,000 )

( 3,012,000 )

Interest expense

1 unchanged sentence

$ ( 880,000 )

the three months ended March 31, 2026, the Company used cash for operations of $ 2,382,000 .

As of March 31, 2026, the Company had $ 1,824,000

cash and net current assets of $ 903,000 , exclusive of disputed co-manufacturer accounts payable (Note 5).

$ ( 2,522,000 )

$ ( 1,641,000 )

the six months ended June 30, 2026, the Company used cash for operations of $ 3,051,000 .

As of June 30, 2026, the Company had $ 324,000

cash and net current assets of $ 777,000 , exclusive of disputed co-manufacturer accounts payable (Note 5) and accounts payable - construction

in progress that the Company anticipates settling with a new mortgage note on unencumbered real estate that it owns.

Company has a history of operating losses and negative cash flow, which are expected to improve with growth.

As described more fully

in Note 5, the dispute and subsequent contract termination with the Manufacturer has resulted in limitations in the Company’s

ability to procure certain products necessary to achieve our growth projections and in elevated legal costs that were incurred before the Company obtained non-recourse litigation financing in 2025.

The Acquisition is

expected to alleviate the supply constraints.

in Note 5, the dispute and subsequent contract termination with the Manufacturer has resulted in limitations in the Company’s ability

to procure certain products necessary to achieve our growth projections and in elevated legal costs that were incurred before the Company

obtained non-recourse litigation financing in 2025.

The Acquisition is expected to alleviate the supply constraints.

However, bring-up

costs and lower than anticipated productivity at the Existing Facility have contributed to further losses in the first half of 2026.

Company increased its receivables-based line of credit in September 2025 to $ 2,500,000 .

6 unchanged sentences

plans to complete construction of the New Facility and pursue long-term real estate and equipment lease financing for the remaining Construction

alleviated, the Company’s financial position at March 31, 2026 and historical results raise substantial doubt about its ability

alleviated, the Company’s financial position at June 30, 2026 and historical results raise substantial doubt about its ability

to continue as a going concern.

As described, the Company has completed steps to improve liquidity.

The actions taken have resulted in

the alleviation of the substantial doubt about the Company’s ability to continue as a going concern.

As described, the Company has completed and anticipates steps to improve liquidity.

If the anticipated financing is unavailable, the Company will be required to pursue other options, including reducing

its operating expenses.

The actions taken

and anticipated alleviate the substantial doubt about the Company’s ability to continue as a going concern.

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