REED'S, INC.

Previous wording

During the six months ended June 30, 2025, the Company continued its focus on driving sales growth, improving gross margin, and reducing freight costs. The sales growth initiatives include channel expansion, in-store product placements, new product innovation and improved sales execution. The gross margin enhancement initiatives include product portfolio optimization, equitable supplier negotiations, streamlining co-packer processes, and efficient inventory management. Underpinning these initiatives is a focus on strategically reducing operating costs, particularly delivery and handling expenses.

Current wording

During the nine months ended September 30, 2025, the Company continued its focus on driving sales growth, improving gross margin, and reducing freight costs. The sales growth initiatives include channel expansion, in-store product placements, new product innovation and improved sales execution. The gross margin enhancement initiatives include product portfolio optimization, equitable supplier negotiations, streamlining co-packer processes, and efficient inventory management. Underpinning these initiatives is a focus on strategically reducing operating costs, particularly delivery and handling expenses.

Previous wording

During the six months ended June 30, 2025, the Company began an expansion into new geographic markets in the Asia Pacific region. The Company formed a wholly owned subsidiary Reed’s (Asia) Limited (BVI). Reed’s (Asia) Limited subsequently formed three additional wholly owned subsidiaries, Reed’s (Hong Kong) Limited, Reed’s (Japan) Limited, and Reed’s (Hainan) Limited. These subsidiaries are an early part of the Company’s strategic expansion in the Asia Pacific region. The Company expects continued investment in its Asia Pacific growth initiative. Reed’s (Asia) Limited did not generate sales in the six months ended June 30, 2025.

Current wording

During the nine months ended September 30, 2025, the Company began an expansion into new geographic markets in the Asia Pacific region. The Company formed a wholly owned subsidiary Reed’s (Asia) Limited (BVI). Reed’s (Asia) Limited subsequently formed five additional wholly owned subsidiaries, Reed’s (Hong Kong) Limited, Reed’s (Japan) Limited, Jiangzhi Beverage (Hainan) Co. Limited, Reed’s Beverages (Singapore) PTE Limited, and Shenshen Jiangzi Beverage Co. Limited. These subsidiaries are an early part of the Company’s strategic expansion in the Asia Pacific region. The Company expects continued investment in its Asia Pacific growth initiative. Reed’s (Asia) Limited did not generate sales in the nine months ended September 30, 2025.

Previous wording

Although the U.S. economy continued to grow in the first half of 2025 and throughout 2024, inflation, actions by the Federal Reserve to address inflation, fluctuations in energy prices, and the potential impacts of tariffs and geopolitical events create uncertainty about the future economic environment which will continue to evolve and may impact our business in future periods. We have experienced supply chain challenges, including increased lead times, as well as inflation of raw materials, logistics and labor costs due to availability constraints and high demand. Although we regularly monitor vendors in our supply chain, and use alternative suppliers when necessary and available, supply chain constraints could cause a disruption in our ability to obtain raw materials required to manufacture our products and adversely affect our operations.

Current wording

Although the U.S. economy continued to grow in the first half of 2025 and throughout 2024, inflation, actions by the Federal Reserve to address inflation, fluctuations in energy prices, and the potential impacts of tariffs, trade tensions and geopolitical events create uncertainty about the future economic environment which will continue to evolve and may impact our business in future periods. We have experienced supply chain challenges, including increased lead times, as well as inflation of raw materials, logistics and labor costs due to availability constraints and high demand. Although we regularly monitor vendors in our supply chain, and use alternative suppliers when necessary and available, supply chain constraints could cause a disruption in our ability to obtain raw materials required to manufacture our products and adversely affect our operations.

Previous wording

During the six months ended June 30, 2025, the average cost of shipping and handling was $2.97 per case, as compared to $2.54 per case for the six months ended June 30, 2024. The Company has experienced increases in freight costs and there remains a volatile pricing environment. The Company will continue to monitor pricing and availability in transportation and has implemented plans designed to manage this risk. In the past, the Company has been negatively impacted by supply chain challenges affecting our ability to benefit from strong demand for, and increased sales of our product. Any disruption caused by labor shortages, significant raw material cost inflation, logistics issues, increased freight costs, or port congestion, may adversely impact margins in the future.

Current wording

During the nine months ended September 30, 2025, the average cost of shipping and handling was $2.84 per case, as compared to $2.66 per case for the nine months ended September 30, 2024. The Company has experienced increases in freight costs and there remains a volatile pricing environment. The Company will continue to monitor pricing and availability in transportation and has implemented plans designed to manage this risk. In the past, the Company has been negatively impacted by supply chain challenges affecting our ability to benefit from strong demand for, and increased sales of our product. Any disruption caused by labor shortages, significant raw material cost inflation, logistics issues, increased freight costs, or port congestion, may adversely impact margins in the future.

Previous wording

(B) We define promotional and other allowances as costs deducted from gross billing that are associated with generating those sales. Management utilizes promotional and other allowances as an indicator of and to monitor operating performance of products, salespersons, and customer agreements. We believe that the presentation of promotional and other allowances provides a useful measure of our operating performance. The presentation of promotional and other allowances facilitates an evaluation of their impact on the determination of net sales and the spending levels incurred or correlated with such sales. The expenditures described in this line item are determined in accordance with GAAP and meet GAAP requirements, the disclosure thereof does not conform to GAAP presentation requirements. Additionally, our definition of promotional and other allowances may not be comparable to similar items presented by other companies. Promotional and other allowances primarily include consideration given to the Company’s distributors or retail customers including, but not limited to the following: (i) reimbursements given to the Company’s distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products; (ii) the Company’s agreed share of fees given to distributors and/or directly to retailers for in-store marketing and promotional activities; (iii) the Company’s agreed share of slotting, shelf space allowances and other fees given directly to retailers; (iv) incentives given to the Company’s distributors and/or retailers for achieving or exceeding certain predetermined sales goals; and (v) discounted or free products. Promotional and other allowances constitute a material portion of our marketing activities. The Company’s promotional allowance programs with its numerous distributors and/or retailers are executed through separate agreements in the ordinary course of business. These agreements generally provide for one or more of the arrangements described above and are of varying durations, ranging from one week to one year.

Current wording

(B) We define promotional and other allowances as costs deducted from gross billing that are associated with generating those sales. Management utilizes promotional and other allowances as an indicator of and to monitor operating performance of products, salespersons, and customer agreements. We believe that the presentation of promotional and other allowances provides a useful measure of our operating performance. The presentation of promotional and other allowances facilitates an evaluation of their impact on the determination of net sales and the spending levels incurred or correlated with such sales. The expenditures described in this line item are determined in accordance with GAAP and meet GAAP requirements, however the disclosure thereof does not conform to GAAP presentation requirements. Additionally, our definition of promotional and other allowances may not be comparable to similar items presented by other companies. Promotional and other allowances primarily include consideration given to the Company’s distributors or retail customers including, but not limited to the following: (i) reimbursements given to the Company’s distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products; (ii) the Company’s agreed share of fees given to distributors and/or directly to retailers for in-store marketing and promotional activities; (iii) the Company’s agreed share of slotting, shelf space allowances and other fees given directly to retailers; (iv) incentives given to the Company’s distributors and/or retailers for achieving or exceeding certain predetermined sales goals; and (v) discounted or free products. Promotional and other allowances constitute a material portion of our marketing activities. The Company’s promotional allowance programs with its numerous distributors and/or retailers are executed through separate agreements in the ordinary course of business. These agreements generally provide for one or more of the arrangements described above and are of varying durations, ranging from one week to one year.

Previous wording

The following chart sets forth key statistics for the transition of the Company’s top line activity from the second quarter of 2024 through the second quarter of 2025.

Current wording

The following chart sets forth key statistics for the transition of the Company’s top line activity from the third quarter of 2024 through the third quarter of 2025.

Previous wording

Core brand gross billing decreased by 15% to $11,569 during the three months ended June 30, 2025, compared to $13,584 during the same period last year, driven by Virgil’s volume decline of 19% and Reed’s volume decline of 10%. Price on our core brands increased 1% to $21.01 per case. The decrease in gross billing was a result of lower volumes with recurring national customers.

Current wording

Core brand gross billing increased by 4% to $9,279 during the three months ended September 30, 2025, compared to $8,901 during the same period last year, driven by Reed’s volume increase of 17% offset by Virgil’s volume decline of 18%. The price on our core brands increased 1% to $21.03 per case.

Previous wording

Discounts as a percentage of gross sales were 13% during the six months ended June 30, 2025, compared to 10% in the same period last year. As a result, net sales decreased 9% during the six months ended June 30, 2024, to $19,552, compared to $21,469 in the same period last year driven by lower volumes with recurring national customers and higher promotional and other allowances.

Current wording

Discounts as a percentage of gross sales were 24% during the three months ended September 30, 2025, compared to 24% in the same period last year. Net sales increased 4% during the three months ended September 30, 2025, to $7,033, compared to $6,752 in the same period last year driven by higher volumes with recurring national customers and substantially similar promotional and other allowances.

Previous wording

Cost of goods sold increased $673 during the three months ended June 30, 2025, as compared to the same period last year. As a percentage of net sales, cost of goods sold for the three months ended June 30, 2025, was 92% as compared to 68% for the same period last year. The increase in cost of goods sold was primarily driven by inventory write-offs related to changes in product portfolio optimization made by new management, in an amount of $1.606, incurred in June 2025.

Current wording

Cost of goods sold increased $272 during the three months ended September 30, 2025, as compared to the same period last year. As a percentage of net sales, cost of goods sold for the three months ended September 30, 2025, was 83% as compared to 82% for the same period last year. The increase in cost of goods sold was primarily driven by inventory write-offs related to changes in product portfolio optimization made by new management, in an amount of $114.

Previous wording

The total cost of goods sold per case increased to $15.70 per case in the three months ended June 30, 2025, from $12.34 per case for the same period last year.

Current wording

The total cost of goods sold per case increased to $13.20 per case in the three months ended September 30, 2025, from $12.94 per case for the same period last year.

Previous wording

Delivery and handling expenses consist of delivery costs to customers and warehousing costs incurred for handling our finished goods after production. Delivery and handling expenses increased by $149 in the three months ended June 30, 2025, to $1,572 from $1,423 in the same period last year, primarily driven by transportation costs associated with increased finished goods production. Delivery costs in the three months ended June 30, 2025, were 17% of net sales and $2.83 per case, compared to 12% of net sales and $2.18 per case during the same period last year.

Current wording

Delivery and handling expenses consist of delivery costs to customers and warehousing costs incurred for handling our finished goods after production. Delivery and handling expenses decreased by $179 in the three months ended September 30, 2025, to $1,100 from $1,279 in the same period last year, primarily driven by lower transportation costs. Delivery costs in the three months ended September 30, 2025, were 16% of net sales and $2.50 per case, compared to 19% of net sales and $2.99 per case during the same period last year.

Previous wording

Marketing expenses consist of direct marketing, marketing labor, and marketing support costs. Selling expenses consist of all other selling-related expenses including personnel and contractor support. Total selling and marketing expenses were $1,271 during the three months ended June 30, 2025, compared to $1,097 during the same period last year. As a percentage of net sales, selling and marketing costs were 13% during the three months ended June 30, 2025, as compared to 9% during the same period last year. The increase was primarily driven by higher employee related costs and marketing expenditures.

Current wording

Marketing expenses consist of direct marketing, marketing labor, and marketing support costs. Selling expenses consist of all other selling-related expenses including personnel and contractor support. Total selling and marketing expenses were $1,366 during the three months ended September 30, 2025, compared to $1,283 during the same period last year. The increase was primarily driven by higher employee related costs and marketing expenditures. As a percentage of net sales, selling and marketing costs were 19% during the three months ended September 30, 2025, as compared to 19% during the same period last year.

Previous wording

General and administrative expenses consist primarily of the cost of executive, administrative, and finance personnel, as well as professional fees. General and administrative expenses were $3,757 in the three months ended June 30, 2025, an increase of $1,777 over the same period last year. As a percentage of net sales, general and administrative expenses were 39% during the three months ended June 30, 2025, as compared to 17% during the same period last year. The increase was driven by contract proceedings costs and the Company’s investments in personnel and related services to support growth initiatives.

Current wording

General and administrative expenses consist primarily of the cost of executive, administrative, and finance personnel, as well as professional fees. General and administrative expenses were $2,861 in the three months ended September 30, 2025, an increase of $1,070 over the same period last year. As a percentage of net sales, general and administrative expenses were 41% during the three months ended September 30, 2025, as compared to 27% during the same period last year. The increase was driven by the Company’s investments in personnel and related services to support growth initiatives.

Previous wording

The loss from operations was $5,793 for the three months ended June 30, 2025, as compared to a loss of $669 in the same period last year driven by decreased gross profit and increased operating expenses discussed above.

Current wording

The loss from operations was $4,103 for the three months ended September 30, 2025, as compared to a loss of $3,138 in the same period last year driven by increased operating expenses discussed above.

Previous wording

Interest and other expense for the three months ended June 30, 2025, consisted of $301 of interest expense offset by $46 of other income. During the same period last year, interest and other expense consisted of $1,150 of interest expense and $1,393 of the change in fair value of our SAFE investments.

Current wording

Interest and other expense for the three months ended September 30, 2025, consisted of $274 of interest expense offset by $395 of other income. During the same period last year, interest and other expense consisted of $2,405 of interest expense offset by $1,393 change in the fair value of our SAFE investments.

Previous wording

The following table sets forth key statistics for the six months ended June 30, 2025 and 2024, respectively, in thousands.

Current wording

The following table sets forth key statistics for the nine months ended September 30, 2025 and 2024, respectively, in thousands.

Previous wording

(B) We define promotional and other allowances as costs deducted from gross billing that are associated with generating those sales. Management utilizes promotional and other allowances as an indicator of and to monitor operating performance of products, salespersons, and customer agreements. We believe that the presentation of promotional and other allowances provides a useful measure of our operating performance. The presentation of promotional and other allowances facilitates an evaluation of their impact on the determination of net sales and the spending levels incurred or correlated with such sales. The expenditures described in this line item are determined in accordance with GAAP and meet GAAP requirements, the disclosure thereof does not conform to GAAP presentation requirements. Additionally, our definition of promotional and other allowances may not be comparable to similar items presented by other companies. Promotional and other allowances primarily include consideration given to the Company’s distributors or retail customers including, but not limited to the following: (i) reimbursements given to the Company’s distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products; (ii) the Company’s agreed share of fees given to distributors and/or directly to retailers for in-store marketing and promotional activities; (iii) the Company’s agreed share of slotting, shelf space allowances and other fees given directly to retailers; (iv) incentives given to the Company’s distributors and/or retailers for achieving or exceeding certain predetermined sales goals; and (v) discounted or free products. Promotional and other allowances constitute a material portion of our marketing activities. The Company’s promotional allowance programs with its numerous distributors and/or retailers are executed through separate agreements in the ordinary course of business. These agreements generally provide for one or more of the arrangements described above and are of varying durations, ranging from one week to one year.

Current wording

(B) We define promotional and other allowances as costs deducted from gross billing that are associated with generating those sales. Management utilizes promotional and other allowances as an indicator of and to monitor operating performance of products, salespersons, and customer agreements. We believe that the presentation of promotional and other allowances provides a useful measure of our operating performance. The presentation of promotional and other allowances facilitates an evaluation of their impact on the determination of net sales and the spending levels incurred or correlated with such sales. The expenditures described in this line item are determined in accordance with GAAP and meet GAAP requirements, however the disclosure thereof does not conform to GAAP presentation requirements. Additionally, our definition of promotional and other allowances may not be comparable to similar items presented by other companies. Promotional and other allowances primarily include consideration given to the Company’s distributors or retail customers including, but not limited to the following: (i) reimbursements given to the Company’s distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products; (ii) the Company’s agreed share of fees given to distributors and/or directly to retailers for in-store marketing and promotional activities; (iii) the Company’s agreed share of slotting, shelf space allowances and other fees given directly to retailers; (iv) incentives given to the Company’s distributors and/or retailers for achieving or exceeding certain predetermined sales goals; and (v) discounted or free products. Promotional and other allowances constitute a material portion of our marketing activities. The Company’s promotional allowance programs with its numerous distributors and/or retailers are executed through separate agreements in the ordinary course of business. These agreements generally provide for one or more of the arrangements described above and are of varying durations, ranging from one week to one year.

Previous wording

Core beverage volume for the six months ended June 30, 2025, represents 100% of all beverage volume.

Current wording

Core beverage volume for the nine months ended September 30, 2025, represents 100% of all beverage volume.

Previous wording

Core brand gross billing decreased by 6% to $22,582 during the six months ended June 30, 2025, compared to $23,963 during the same period last year, driven by Reed’s volume decline of 6% and Virgil’s volume decline of 4%. Price on our core brands increased 1% to $21.01 per case. The decrease in gross billing was a result of lower volumes with recurring national customers.

Current wording

Core brand gross billing decreased by 3% to $31,861 during the nine months ended September 30, 2025, compared to $32,862 during the same period last year, driven by Virgil’s volume decline of 10%. Price on our core brands increased 1% to $21.03 per case.

Previous wording

Discounts as a percentage of gross sales were 18% during the three months ended June 30, 2025, compared to 13% in the same period last year. As a result, net sales decreased 20% during the three months ended June 30, 2025, to $9,523, compared to $11,874 in the same period last year driven by lower volumes with recurring national customers and higher promotional and other allowances.

Current wording

Discounts as a percentage of gross sales were 17% during the nine months ended September 30, 2025, compared to 14% in the same period last year. Net sales decreased 6% during the nine months ended September 30, 2025, to $26,585, compared to $28,221 in the same period last year driven by lower volumes with recurring national customers and higher promotional and other allowances.

Previous wording

Cost of goods sold increased $1,118 during the six months ended June 30, 2025, as compared to the same period last year. As a percentage of net sales, cost of goods sold for the six months ended June 30, 2025, was 78% as compared to 66% for the same period last year. The increase in cost of goods sold was primarily driven by inventory write-offs related to changes in product portfolio optimization made by new management, in an amount of $1.661.

Current wording

Cost of goods sold increased $1,390 during the nine months ended September 30, 2025, as compared to the same period last year. As a percentage of net sales, cost of goods sold for the nine months ended September 30, 2025, was 80% as compared to 70% for the same period last year. The increase in cost of goods sold was primarily driven by inventory write-offs related to changes in product portfolio optimization made by new management, in an amount of $1,775.

Previous wording

The total cost of goods per case increased to $14.27 per case in the six months ended June 30, 2025, from $12.36 per case for the same period last year.

Current wording

The total cost of goods per case increased to $13.96 per case in the nine months ended September 30, 2025, from $12.51 per case for the same period last year.

Previous wording

Delivery and handling expenses consist of delivery costs to customers and warehousing costs incurred for handling our finished goods after production. Delivery and handling expenses increased by $274 in the six months ended June 30, 2025, to $3,199 from $2,925 in the same period last year, primarily driven by transportation costs associated with increased finished goods production. Delivery costs in the six months ended June 30, 2025, were 16% of net sales and $2.98 per case, compared to 14% of net sales and $2.54 per case during the same period last year.

Current wording

Delivery and handling expenses consist of delivery costs to customers and warehousing costs incurred for handling our finished goods after production. Delivery and handling expenses increased by $95 in the nine months ended September 30, 2025, to $4,299 from $4,204 in the same period last year, primarily driven by higher transportation costs. Delivery costs in the nine months ended September 30, 2025, were 16% of net sales and $2.84 per case, compared to 15% of net sales and $2.66 per case during the same period last year.

Previous wording

Marketing expenses consist of direct marketing, marketing labor, and marketing support costs. Selling expenses consist of all other selling-related expenses including personnel and contractor support. Total selling and marketing expenses were $2,773 during the six months ended June 30, 2025, compared to $2,190 during the same period last year. As a percentage of net sales, selling and marketing were 14% of net sales during the six months ended June 30, 2025, as compared to 10% of net sales during the same period last year. The increase was primarily driven by higher employee related costs and marketing expenditures.

Current wording

Marketing expenses consist of direct marketing, marketing labor, and marketing support costs. Selling expenses consist of all other selling-related expenses including personnel and contractor support. Total selling and marketing expenses were $4,139 during the nine months ended September 30, 2025, compared to $3,473 during the same period last year. The increase was primarily driven by higher employee related costs and marketing expenditures. As a percentage of net sales, selling and marketing were 16% of net sales during the nine months ended September 30, 2025, as compared to 12% of net sales during the same period last year.

Previous wording

General and administrative expenses consist primarily of the cost of executive, administrative, and finance personnel, as well as professional fees. General and administrative expenses were $5,772 during the six months ended June 30, 2025, an increase of $2,324 over the same period last year. As a percentage of net sales, general and administrative expenses were 30% during th six months ended June 30, 2025, as compared to 16% during the same period last year. The increase was driven by contract proceedings costs and the Company’s investments in personnel and related services to support growth initiatives.

Current wording

General and administrative expenses consist primarily of the cost of executive, administrative, and finance personnel, as well as professional fees. General and administrative expenses were $8,633 during the nine months ended September 30, 2025, an increase of $3,394 over the same period last year. As a percentage of net sales, general and administrative expenses were 32% during the nine months ended September 30, 2025, as compared to 19% during the same period last year. The increase was driven by contract proceedings costs and the Company’s investments in personnel and related services to support growth initiatives.

Previous wording

The loss from operations was $7,535 for the six months ended June 30, 2025, as compared to a loss of $1,319 in the same period last year driven by decreased gross profit and increased operating expenses discussed above.

Current wording

The loss from operations was $11,638 for the nine months ended September 30, 2025, as compared to a loss of $4,457 in the same period last year driven by lower gross profit and higher operating expenses discussed above.

Previous wording

Interest and other expense for the six months ended June 30, 2025, consisted of $590 of interest expense offset by $46 of other income. During the same period last year, interest and other expense consisted of $2,173 of interest expense and $1,393 of the change in fair value of our SAFE investments.

Current wording

Interest and other expense for the nine months ended September 30, 2025, consisted of $864 of interest expense offset by $441 of other income. During the same period last year, interest and other expense consisted of $4,578 of interest expense.

Previous wording

Set forth below is a reconciliation of net loss to Modified EBITDA for the six months ended June 30, 2025 and 2024 (unaudited; in thousands):

Current wording

Set forth below is a reconciliation of net loss to Modified EBITDA for the nine months ended September 30, 2025 and 2024 (unaudited; in thousands):

Previous wording

As reflected in the accompanying financial statements, for the six months ended June 30, 2025, the Company recorded a net loss of $8,079 and used cash in operations of $10,410. Cash used in operations was primarily for working capital as the Company invested $6,728 in inventory to more effectively fulfill customer demand. As of June 30, 2025, we had a cash balance of $2,677 and availability under our Senior Secured Loan of $100. Our Senior Secured Loan, which provides a revolving credit commitment in an aggregate amount of $10,000, is due on November 14, 2025 (see Note 5). The Company is evaluating refinancing alternatives for the Senior Secured Loan, which may include existing or new lenders.

Current wording

As reflected in the financial statements included elsewhere in this Quarterly Report on Form 10-Q, for the nine months ended September 30, 2025, the Company recorded a net loss of $12,061 and used cash in operations of $13,230. Cash used in operations was primarily from our operating losses as well as for working capital, as the Company invested $3,443 in inventory to more effectively fulfill customer demand, and investment in strategic growth initiatives. As of September 30, 2025, we had a cash balance of $4,136 and no remaining availability under our Senior Secured Loan.

Previous wording

On June 4, 2025, the Company completed a private placement (the “Private Placement”) with certain accredited investors (the “Investors”), pursuant to which the Company agreed to issue and sell to the Investors an aggregate of 3,225,807 common shares for total consideration of $3,000. Era Regenerative Medicine Ltd, sole shareholder of D&D Source of Life Holding, Ltd. and the company’s majority stockholder (a related party), served as lead investor, participating in this transaction in the amount of $1,000.

Current wording

On September 15, 2025, the Company completed a private placement with certain accredited investors, pursuant to which the Company issued and sold to the investors an aggregate of 833,330 common shares for total consideration of $5,000 (see Note 7).

Previous wording

As of the issuance date of the financial statements included in this Quarterly Report on Form 10-Q, management expects that the Company’s existing cash of $2,677, cash generated from operations, and access to committed financing will be sufficient to fund the Company’s operating plan, which was approved by the Board of Directors in January 2025, for at least twelve months from the date of issuance of such financial statements; however, if the Company’s management and Board of Directors approve additional growth initiatives and related investment in human resources, working capital, new geographic markets, information technology, and other uses of cash, the Company may require additional funding.

Current wording

Management expects that the Company’s existing cash of $4,136, cash generated from operations, and access to committed financing will be sufficient to fund the Company’s operating plan, which was approved by the Board of Directors in January 2025, for at least twelve months from the date of issuance of the financial statements included elsewhere in this Quarterly Report on Form 10-Q; however, if the Company’s management and Board of Directors approve additional growth initiatives and related investment in human resources, working capital, new geographic markets, information technology, and other uses of cash, the Company may require additional funding.

Previous wording

Net cash used in operating activities totaled $10,410 for the six months ended June 30, 2025, compared to $3,307 for the six months ended June 30, 2024. The increase in net cash used was primarily driven by changes in working capital, particularly an increase in inventory.

Current wording

Net cash used in operating activities totaled $13,230 for the nine months ended September 30, 2025, compared to $2,254 for the nine months ended September 30, 2024. The increase in net cash used in operating activities was primarily driven by operating losses, working capital, and investment in strategic growth initiatives.

Previous wording

Net cash used in investing activities totaled $101 for the six months ended June 30, 2025, compared to $34 for the six months ended June 30, 2024. The increase in net cash used was primarily driven by purchases of property and equipment.

Current wording

Net cash used in investing activities totaled $172 for the nine months ended September 30, 2025, compared to $58 for the nine months ended September 30, 2024. The increase in net cash used in investing activities was primarily driven by purchases of property and equipment.

Previous wording

Net cash provided by financing activities totaled $2,797 for the six months ended June 30, 2025, compared to $3,064 net cash provided by financing activities for the six months ended June 30, 2024. The net cash provided by financing activities in the six months ended June 30, 2025 was primarily driven by proceeds from the sale of common stock in the Private Placement. The net cash provided by financing activities in the six months ended June 30, 2024 was primarily driven by proceeds from the issuance of a SAFE agreement.

Current wording

Net cash provided by financing activities totaled $7,147 for the nine months ended September 30, 2025, compared to $2,015 net cash provided by financing activities for the nine months ended September 30, 2024. The net cash provided by financing activities in the nine months ended September 30, 2025 was primarily driven by proceeds from the sale of common stock in two private placements. The net cash provided by financing activities in the nine months ended September 30, 2024 was primarily driven by proceeds from the issuance of a SAFE agreement.

Previous wording

See Note 2 of the Notes to Condensed Financial Statements for a discussion of recent accounting pronouncements.

Current wording

See Note 2 of the Notes to Condensed Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for a discussion of recent accounting pronouncements.