BranchOut Food Inc.
For the period ended Mar 31, 2026. Filed May 14, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 14, 2026
BOF$1.68-2.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-12.
0001493152-25-021655
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-14.
0001493152-26-023046
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 81 previous paragraphs and 85 current paragraphs.
25 unchanged; 8 reworded; 51 added; 46 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 8 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (51)
Current report
Business Overview
Current report
BranchOut Food Inc. (collectively with its subsidiary, “BranchOut,” the “Company,” “we,” “us” or “our”), is a growth-stage consumer packaged foods company focused on developing, manufacturing, marketing, and distributing clean-label, plant-based dried fruit and vegetable snacks for retail and foodservice markets through BranchOut-branded products, private-label offerings, and ingredient sales. The Company operates a 50,000 square foot manufacturing facility in Pisco, Peru, (“Peru Facility”) where it produces finished goods using proprietary GentleDry™ technology licensed from EnWave Corporation.
Current report
Our operating model is manufacturing-led and dependent on agricultural sourcing, production scale, and retail distribution. We continue to scale manufacturing operations at our Peru Facility while supporting existing customer programs and pursuing new product opportunities.
Current report
Including expansion of a new production area intended to support high-protein dehydrated cheese products in an allergen-free environment. We believe additional capacity may support future revenue growth, improved production flexibility and margin enhancement, although no assurance can be given regarding timing or results.
Current report
Organizational Realignment and Manufacturing Transition
Current report
Beginning in 2024, we initiated an operational transition from reliance on third-party manufacturers to in-house production through the development and ramp-up of the Peru Facility. As of December 31, 2025, the principal build-out and start-up phase of this transition was substantially complete.
Current report
Products
Current report
We develop, manufacture and market dehydrated fruit and vegetable products using licensed GentleDry™ technology at the Peru Facility. Our products are sold through three primary channels: BranchOut branded retail snack products, private-label products for major retailers, and fruit and vegetable ingredient products sold to food manufacturers.
Current report
Our BranchOut branded products consist primarily of shelf-stable fruit and vegetable snacks designed to preserve the natural flavor, color and texture of the underlying produce. These products are distributed through grocery, club, online and direct-to-consumer channels.
Current report
We also manufacture private-label dehydrated snack products for major North American retailers, which are sold under customer brands through their existing retail distribution channels. In addition, we produce dehydrated fruit and vegetable ingredients, including pieces, powders and inclusions, for use in cereals, snack bars, baked goods, salads, ready-to-eat meals and other packaged food applications.
Current report
We continue to develop additional fruit and vegetable snack products and ingredient formats for both branded and private label customers. Product development efforts are focused on expanding our snack portfolio, supporting private label programs for large retailers, and developing new ingredient applications for food manufacturers. From time to time, we engage with potential commercial partners and institutional customers to develop products tailored to specific applications.
Current report
Operating Strategy and Key Performance Drivers
Current report
BranchOut is focused on executing a growth-stage strategy that balances product innovation, distribution expansion, and disciplined manufacturing scale-up. As a manufacturing-led business, our strategy emphasizes aligning customer growth and product development with production capacity, supply-chain execution, and cost control.
Current report
Key elements of our strategy include:
Current report
Management believes that executing a manufacturing-led growth strategy allows us to compete effectively by pairing differentiated products with scalable operations, while managing the complexity and execution demands inherent in expanding within the consumer-packaged foods industry.
Current report
Gross margin performance may be affected by sales mix, throughput levels, manufacturing efficiencies, uptime, yields, agricultural raw materials, packaging, labor and freight costs, as well as sourcing timing and spot market purchases when necessary.
Current report
Operating Model and Margin Considerations
Current report
Our operating results are closely tied to production volume, facility utilization, sales mix and input costs. We are focused on scaling production and optimizing manufacturing performance, while expanding our product portfolio to align with evolving customer demand and support growth across our core sales channels.
Current report
Gross margin performance continues to reflect underlying improvements in production volumes, throughput and manufacturing efficiencies, including gains in uptime, yields and production flow. However, on a quarter-over-quarter basis, gross margin declined due to increased downtime at the plant, lower production levels during January and February, and an unfavorable sales mix driven by a higher proportion of lower-margin bulk ingredient sales.
Current report
Gross margin is also influenced by sales mix across our branded, private-label and ingredient channels, as well as variability in agricultural raw materials, packaging, labor and freight costs. The timing of raw material sourcing and reliance on spot market purchases, when necessary, may also affect margins.
Current report
Our operating results for the current period continue to reflect the ongoing scale-up of internal manufacturing operations. Production levels have remained below normalized capacity during the scale-up phase. As a result, a portion of fixed manufacturing costs has not been fully absorbed into inventory and has been recognized as idle capacity expense within operating expenses. As production volumes and utilization increase, we expect improved fixed-cost absorption and greater operating leverage.
Current report
Operating expenses primarily reflect costs associated with supporting our Peru Facility, growth initiatives, distribution expansion and public company requirements. We continue to operate at a net loss and with negative working capital. Future operating performance will depend on revenue growth, production scale, cost management, working capital efficiency and continued access to capital.
Current report
Adjusted Gross Margin (Non-GAAP)
Current report
In addition to gross margin calculated in accordance with U.S. generally accepted accounting principles (“GAAP”), we use adjusted gross margin, a non-GAAP supplemental measure to evaluate underlying manufacturing performance. Non-GAAP adjusted gross margin excludes depreciation included in cost of goods sold and certain air freight costs incurred during the three months ended March 31, 2026 and 2025. As of March 31, 2026 gross profit (GAAP) was $0.40 million versus adjusted gross profit (non-GAAP) of $0.54 million, and gross margin was 15.4% compared to adjusted gross margin of 20.8%. As of March 31, 2025 gross profit (GAAP) was $0.53 million versus adjusted gross profit (non-GAAP) of $0.84 million, and gross margin was 16.7% compared to adjusted gross margin of 26.7%.
Current report
Adjusted gross margin was higher than reported gross margin, reflecting the impact of depreciation and air freight costs incurred to support customer-required timelines, primarily related to new product introductions. These air freight costs were driven by specific timing and fulfillment requirements and are not expected to recur at similar levels.
Current report
We believe adjusted gross margin provides additional visibility into the underlying unit economics of our manufacturing model during this scale-up phase. As the plant gains operating experience and throughput increases, we expect reported gross margin to improve as additional products achieve manufacturing efficiency. Currently, a limited number of products are produced at or near optimal manufacturing efficiency, while other products remain in earlier stages of production and optimization. New product introductions also begin at lower efficiency levels as they transition from development into scaled production and improve over time.
Current report
A reconciliation of gross profit (GAAP) to adjusted gross profit (non-GAAP), and the related gross margin measures, for the three months ended March 31, 2026 and 2025, is presented below:
Current report
Our net revenue for the three months ended March 31, 2026 was $2.6 million, compared to $3.2 million for the three months ended March 31, 2025, a decrease of $0.56 million, or 18%. The decrease in revenue was primarily due to planned maintenance at the Peru Facility and the timing of a major customer order scheduled for delivery in the second quarter. Production levels recovered by the end of the quarter, resulting in the highest monthly kilogram output to date for the month of March 2026. Inventory increased from $2.4 million at December 31, 2025 to $4.0 million at March 31, 2026, or 69%, reflecting production in advance of the scheduled second quarter shipment.
Current report
Our results may fluctuate period to period due to the timing and size of customer orders, as well as the seasonal nature of raw material harvest cycles.
Current report
Cost of goods sold for the three months ended March 31, 2026 was $2.2 million, compared to $2.6 million for the three months ended March 31, 2025, a decrease of $0.4 million, or 16%. The decrease in cost of goods sold was primarily due to lower sales volumes during the period.
Current report
Gross profit for the three months ended March 31, 2026 was $0.4 million, or 15.4% of net revenue, compared to $0.5 million, or 16.7% of net revenue, for the three months ended March 31, 2025. The decrease in gross profit and gross margin was primarily due to lower sales volumes and a less favorable product mix, including a higher proportion of lower-margin bulk ingredient sales, compared to the prior year period. Current margins continue to reflect early-stage production inefficiencies.
Current report
General and Administrative Expense
Current report
General and administrative expense for the three months ended March 31, 2026 was $0.86 million, compared to $0.39 million for the three months March 31, 2025, an increase of $0.47 million, or 123%. The increase was primarily related to idle capacity expense increased during the three months ended March 31, 2026 due to unallocated fixed overhead resulting from operating the Peru Facility below normal utilization levels. The facility began operations in December 2024, and idle capacity was not measured as of March 31, 2025. As production volumes increase, a greater portion of these fixed costs are expected to be absorbed into inventory.
Current report
Research and development expense increased due to continued product development activities. Sales commissions decreased consistently with lower sales volumes.Travel expense remained relatively consistent, reflecting ongoing travel between the United States and Peru to support operations.
Current report
Royalties increased primarily due to higher production volumes on EnWave equipment.
Current report
Salaries and wages for the three months ended March 31, 2026 were $0.66 million, compared to $0.31 million for the prior year period, an increase of $0.35 million, or 112%. The increase was primarily due to $0.24 million of stock-based compensation expense, as well as annual wage increases.
Current report
Professional fees for the three months ended March 31, 2026 were $0.26 million, compared to $0.24 million for the three months ended March 31, 2025, an increase of $0.02 million, or 11%. The increase was primarily attributable to higher compensation for the Chief Financial Officer under a consulting agreement.
Current report
Shipping and handling expense for the three months ended March 31, 2026 was $0.15 million, compared to $0.11 million for the three months ended March 31, 2025, an increase of $0.04 million, or 46%. The increase was primarily due to higher shipping rates for deliveries to customers.
Current report
Advertising and promotions expense for the three months ended March 31, 2026 was $0.08 million, compared to $0.13 million for the three months ended March 31, 2025, a decrease of $0.05 million, or 42%. The decrease was primarily due to the timing of product demonstration programs in line with lower branded product sales during the quarter.
Current report
Net loss for the three months ended March 31, 2026 was $1.8 million, compared to $0.9 million for the three months ended March 31, 2025, an increase of $0.9 million, or 95%. The increase in net loss was primarily due to lower sales and reduced gross margin in the current quarter, reflecting lower production in January and February due to planned facility maintenance and an unfavorable sales mix. In addition, the Company incurred higher idle capacity costs as it continued the build-out and ramp-up of the Peru Facility, with production remaining below normalized levels. Operating expenses increased due to higher personnel costs associated with increased headcount at the Peru Facility and higher stock-based compensation expense. Operating results remain sensitive to production volumes, capacity utilization and sales mix.
Showing the first 40 of 51 passages. Open the source sections for the rest.
Removed paragraphs (46)
Previous report
Overview
Previous report
BranchOut Food Inc., is reimagining how the world eats fruits and vegetables. We are engaged in the development, marketing, sale and distribution of plant-based, dehydrated fruit and vegetable snacks and powders manufactured in a 50,000 square foot production facility that we lease in Pisco, Peru (the “Peru Facility”). At the Peru Facility, utilizing proprietary GentleDry™ Technology, we are able to turn fresh fruits and vegetables into clean, crunchy snacks and industrial ingredients within just 10 days.
Previous report
GentleDry™ Technology is an advanced dehydration platform licensed to us exclusively by EnWave Corporation for certain fruits and vegetables. This technology allows us to develop differentiated fruit and vegetable products using optimized GentleDry™ settings that preserve taste, texture, color, and nutrients.
Previous report
We believe GentleDry™ is superior to traditional freeze-dry processing because it retains:
Previous report
Additionally, our process speed is faster, making us more energy efficient; our food doesn’t oxidize, preserving the flavor and color; and our technology is protected by more than 17 patents.
Previous report
Our Products
Previous report
We plan to continue to grow revenues strategically by penetrating the multi-billion dollar grocery, industrial ingredient and online markets. Our current product line includes:
Previous report
We are currently developing many additional products for all sales channels.
Previous report
Going Concern Uncertainty
Previous report
As of September 30, 2025, we had a cash balance of $812,007, a positive working capital of $2,118,922, and had incurred recurring losses from operations resulting in an accumulated deficit of $21,656,147. Although we anticipate that our results of operations will improve substantially as a result of the recent launch of our new facility in Peru, there can be no assurance in that regard. If we continue to generate substantial operating losses, we will not have sufficient funds to sustain our operations for the next twelve months and we will need to raise additional cash to fund our operations. These factors raise substantial doubt about our ability to continue as a going concern.
Previous report
Peru Facility Lease
Previous report
On May 10, 2024, we entered into a ten-year lease for the 50,000 square-foot 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 plans to exercise the buy-out option and purchase the Peru Facility for $1,865,456.
Previous report
In connection with the lease of the Peru Facility, we purchased a first position mortgage receivable in the amount of $1,267,000, which is secured by the Peru Facility and was owed by the landlord of the Peru Facility to its former tenant, for a purchase price of $1,267,000, of which payments were made in various installments totaling $355,000 as of December 31, 2024 and $912,000 during the nine months ended September 30, 2025.
Previous report
Our net revenue for the three months ended September 30, 2025, was $3,220,027, compared to $2,181,495 for the three months ended September 30, 2024, an increase of $1,038,532, or 48%. The increase in revenue was primarily due to increased sales to our largest customer during the three months ended September 30, 2025.
Previous report
Our cost of goods sold for the three months ended September 30, 2025, was $2,650,477, compared to $1,845,155 for the three months ended September 30, 2024, an increase of $805,322, or 44%. Cost of goods sold increased primarily due to increased sales during the three months ended September 30, 2025. We had gross profit of $569,550, representing gross margins of 17.7%, for the three months ended September 30, 2025, as compared to a gross profit of $336,340, or 15.4%, for the three months ended September 30, 2024.
Previous report
Gross margin increased primarily due to the transition of manufacturing operations from third-party suppliers to our facility located in Pisco, Peru. This insourcing initiative created greater control over production processes, improved product quality, reduced contract manufacturing costs, and improved overall efficiency shortening the production cycle and allowing for faster order fulfillment. As production continues to scale, we expect further margin expansion from manufacturing existing products more efficiently and from our enhanced ability to bring new products to market more quickly.
Previous report
General and Administrative
Previous report
Idle capacity increased due to the opening of the production facility located in Pisco, Peru. In December 2024 operations commenced at the facility. As our factory scales, idle capacity will decrease. Commissions increased due to increased sales.
Previous report
Salaries and wages for the three months ended September 30, 2025, was $422,069, compared to $309,433 for the three months ended September 30, 2024, an increase of $112,636, or 36%. This increase was primarily attributable to $55,206 of amortization of stock options issued to employees for services performed and $42,238 in salaries and wages relates to the hiring of employees to support production ramp-up at the Peru facility.
Previous report
Professional fees for the three months ended September 30, 2025, was $248,640, compared to $369,525 for the three months ended September 30, 2024, a decrease of $120,885, or 33%. The decrease is mostly attributable to a decrease in legal fees related to establishing the Company’s Peru facility in 2024.
Previous report
Shipping and handling for the three months ended September 30, 2025, was $156,961, compared to $118,252 for the three months ended September 30, 2024, an increase of $38,709 or 33%. This increase was primarily attributable to an increase in sales volumes.
Previous report
Advertising and promotions for the three months ended September 30, 2025, was $271,872, compared to $125,597 for the three months ended September 30, 2024, an increase of $146,275, or 116%. Advertising and promotions expenses increased for the three months ended September 30, 2025, mostly due to increased in-store product demos with one of our largest customers.
Previous report
Net loss for the three months ended September 30, 2025, was $1,572,552, compared to $1,270,805 for the three months ended September 30, 2024, an increase of $301,747, or 24%. The increased net loss was due to scaling up production at our in-house manufacturing facility. Our objective is to achieve 100% utilization, which we believe will allow us to leverage fixed costs, improve operating efficiency, and capture additional gross margin benefits as production volumes grow.
Previous report
Results of Operations for the Nine Months Ended September 30, 2025, and 2024
Previous report
Net Revenue
Previous report
Our net revenue for the nine months ended September 30, 2025, was $9,713,287, compared to $5,011,497 for the nine months ended September 30, 2024, an increase of $4,701,790, or 94%. The increase in revenue was primarily due to increased sales to our two largest customers during the nine months ended September 30, 2025.
Previous report
Our cost of goods sold for the nine months ended September 30, 2025, was $7,984,763, compared to $4,242,810 for the nine months ended September 30, 2024, an increase of $3,741,953, or 125%. Cost of goods sold increased primarily due to increased sales during the nine months ended September 30, 2025. As a result of the foregoing, we had gross profit of $1,728,524, representing gross margins of 17.8%, for the nine months ended September 30, 2025, as compared to a gross margin of $768,687, of 15.3%, for the nine months ended September 30, 2024.
Previous report
Gross margin increased primarily due to the transition of manufacturing operations from third-party suppliers to our facility located in Pisco, Peru. This insourcing initiative created greater control over production processes, improved product quality, reduced contract manufacturing costs, and improved overall efficiency shortening the production cycle and allowing for faster order fulfillment. As production continues to scale, we expect further margin expansion from manufacturing existing products more efficiently and from our enhanced ability to bring new products to market more quickly.
Previous report
General and Administrative
Previous report
Our general and administrative expense for the nine months ended September 30, 2025, was $2,204,559, compared to $666,600 for the nine months ended September 30, 2024, an increase of $1,537,959, or 231%. The largest components of our general and administrative expenses are plant idle capacity, research and development, rent, travel, and commissions, as shown below.
Previous report
Idle capacity increased due to the opening of the production facility located in Pisco, Peru. In December 2024 operations commenced at the facility. As our factory scales, idle capacity will decrease. Rent increase is related to the Pisco, Peru production facility. Travel increased due to the opening of the facility in Peru and sales initiatives to expand production distribution. Commissions increased due to increased sales.
Previous report
Salaries and Wages
Previous report
Salaries and wages for the nine months ended September 30, 2025, was $1,172,474, compared to $1,257,316 for the nine months ended September 30, 2024, a decrease of $84,842, or 7%. This decrease was primarily attributable to $408,700 of non-cash, stock-based compensation for the nine months ended September 30, 2024, compared to $102,289 of non-cash, stock-based compensation related to stock options awarded during the current period. This decrease is mostly offset by increases in salaries and wages related to the hiring of employees to support production ramp-up at the Peru facility.
Previous report
Professional Fees
Previous report
Professional fees for the nine months ended September 30, 2025, was $806,736, compared to $1,064,567 for the nine months ended September 30, 2024, a decrease of $257,831, or 24%. This decrease was primarily attributable to $290,085 of non-cash, stock-based compensation for the nine months ended September 30, 2024.
Previous report
Shipping and handling
Previous report
Shipping and handling for the nine months ended September 30, 2025, was $421,313, compared to $311,073 for the nine months ended September 30, 2024, an increase of $110,240 or 35%. This increase was primarily attributable to an increase in sales volumes.
Previous report
Advertising and promotions
Previous report
Advertising and promotions for the nine months ended September 30, 2025, was $579,507, compared to $223,801 for the nine months ended September 30, 2024, an increase of $355,706, or 159%. Advertising and promotions expenses increased for the nine months ended September 30, 2025, compared to the corresponding period in 2024, mostly due to increased in-store product demos with one of our largest customers.
Previous report
Other Income (Expense)
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Previous wording
You should read the following discussion of our financial condition and results of operations in conjunction with the condensed financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024. In addition to historical condensed financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.
Current wording
You should read the following discussion of our financial condition and results of operations in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.
Previous wording
Our general and administrative expense for the three months ended September 30, 2025, was $897,512, compared to $316,688 for the three months ended September 30, 2024, an increase of $580,824, or 183%. The largest components of our general and administrative expenses are plant idle capacity, research and development, rent, travel, and commissions, as shown below.
Current wording
The largest components of our general and administrative expenses are plant idle capacity, research and development, travel, sales commissions, and royalties as shown below.
Previous wording
In the three months ended September 30, 2025, other expense was $145,048 on a net basis, consisting of $148,964 of interest expense, as partially offset by $3,916 of interest income. For the three months ended September 30, 2024, other expense was $367,650 on a net basis, consisting of $370,532 of interest expense, as partially offset by $2,882 of interest income. Other expense decreased by $222,602, or 61%, primarily due to the 2024 $150,462 write-off of deferred financing costs and $89,949 of additional interest expense related to the modification of warrants.
Current wording
For the three months ended March 31, 2026, other expense was $173,154, consisting of $174,903 of interest expense, partially offset by $1,749 of interest income. For the three months ended March 31, 2025, other expense was $273,211, consisting of $278,347 of interest expense, partially offset by $5,136 of interest income. Other expense decreased by $100,057, or 37%, primarily due to lower interest expense following the repayment of certain debt financing during 2025.
Previous wording
As of September 30, 2025, we had positive working capital of $2,118,922. We have incurred net losses since our inception and we anticipate net losses and negative operating cash flows for the near future, and we may not be profitable or realize growth in the value of our assets. To date, our primary sources of capital have been cash generated from the sales of our products, common stock sales, and debt and equity financing. As of September 30, 2025, we had cash of $812,007, total liabilities of $9,544,563, and an accumulated deficit of $21,656,147. As of December 31, 2024, we had cash of $2,329,452, total liabilities of $10,514,292, and an accumulated deficit of $17,562,057.
Current wording
To date, our primary sources of capital have been cash generated from the sales of our products, common stock sales, and debt and equity financings. As of March 31, 2026, we had cash of $0.9 million, total liabilities of $11.2 million, and an accumulated deficit of $25.5 million, compared to cash of $0.6 million, total liabilities of $8.9 million, and an accumulated deficit of $23.7 million as of March 31, 2025.
Previous wording
The condensed consolidated financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. The condensed consolidated financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. Our ability to scale production and distribution capabilities and further increase the value of our brands is largely dependent on our success in raising additional capital.
Current wording
The accompanying condensed consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty, including adjustments to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
Previous wording
Comparison of the Nine Months Ended September 30, 2025, and the Nine Months Ended September 30, 2024
Current wording
Comparison of the Three Months Ended March 31, 2026, and the Three Months Ended March 31, 2025
Previous wording
For the nine months ended September 30, 2025, the effect of exchange rate changes on cash and cash equivalents primarily reflects the translation impact from fluctuations in the value of the Peruvian sol relative to the U.S. dollar. During the period, the sol experienced modest depreciation against the U.S. dollar, resulting in a gain on foreign currency translation of $26,634 compared to a loss of $1,794 in the comparative period.
Current wording
For the three months ended March 31, 2026, the effect of exchange rate changes on cash and cash equivalents was a $56,245 decrease in cash, compared to an $8,209 increase in the prior-year period. The change primarily reflects fluctuations in the value of the Peruvian sol relative to the U.S. dollar on cash balances held by the Company’s Peru subsidiary.
Previous wording
Our financial results are affected by the selection and application of accounting policies and methods. As of April 1, 2025, we changed our manufacturing cost allocation methodology from kilograms produced, to machine hours used in production, to improve costing as we scale product mix and invest in research and development. The change resulted in an immaterial impact to the valuation of inventory and resulting costs of goods sold from our Annual Report on Form 10-K for the year ended December 31, 2024.
Current wording
Our financial results are affected by the selection and application of accounting policies and methods. In the three-month period ended March 31, 2026 there were no material changes in the Company’s critical accounting policies and estimates from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2025.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
We have incurred net losses since our inception and we anticipate net losses and negative operating cash flows for the near future, and we may not be profitable or realize growth in the value of our assets. These conditions raise substantial doubt about our ability to continue as a going concern within one year after the date the condensed consolidated financial statements are issued.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
The following table summarizes selected items from the statement of operations for the nine months ended September 30, 2025, and 2024, respectively.
Previous report — wording carried elsewhere
Cost of Goods Sold and Gross Profit