BranchOut Food Inc.
For the period ended Jun 30, 2026. Filed Aug 13, 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.
Jun 30, 2026 · Filed Aug 13, 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 2026-03-31; filed 2026-05-14.
0001493152-26-023046
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-13.
0001493152-26-037732
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 85 previous paragraphs and 110 current paragraphs.
54 unchanged; 20 reworded; 29 added; 11 removed; 0 previous and 7 current paragraphs rearranged.
Tables are not compared: 6 previous and 8 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 (29)
Current report
As the Company scales production to support new customer programs, initial production runs are often completed on a compressed procurement timeline to meet customer delivery requirements. As a result, raw materials may be purchased at prevailing market prices rather than through advance procurement, resulting in higher input costs and gross margins below the Company’s long-term target margins for recurring products. In certain cases, initial production runs may generate minimal or negative gross margins. Management believes these initial production runs are an important part of securing long-term customer relationships and recurring production volumes, which are expected to have more favorable procurement economics.
Current report
Management intentionally prioritizes establishing new customer relationships and securing product placements with large retailers, recognizing that the economics of initial production runs may differ from those of recurring production. As customer demand becomes recurring, the Company expects to procure raw materials further in advance, negotiate more favorable pricing, and improve manufacturing efficiencies, resulting in improved gross margins. The Company has already secured future strawberry raw material supply under executed procurement contracts at prices significantly lower than the raw material costs incurred for strawberry production during the first half of 2026. While the Company currently manufactures primarily to customer order, management believes that recently launched products, including the variety pack and strawberry product offerings, will transition to recurring production, enabling the Company to procure raw materials further in advance and, over time, improve manufacturing economics.
Current report
For the six months ended June 30, 2026, gross profit (GAAP) was $0.5 million versus adjusted gross profit (non-GAAP) of $0.91 million, and gross margin was 7.0% compared to adjusted gross margin of 12.9%. For the six months ended June 30, 2025 gross profit (GAAP) was $1.1 million versus adjusted gross profit (non-GAAP) of $1.6 million, and gross margin was 17.2% compared to adjusted gross margin of 25.5%.
Current report
Gross margin and adjusted gross margin for the three-month period ended June 30, 2026 were also negatively impacted by the production of a bulk strawberry ingredient product and the delivery of a new product launched at Sam’s Club. The products incurred higher raw material costs due to a shortened procurement timeline, resulting in margins significantly below management’s long-term target margins for recurring products. Management expects margins to improve as repeat customer orders provide longer procurement lead times, enabling more efficient raw material sourcing and production planning and resulting in margins more consistent with the Company’s consumer packaged goods business.
Current report
We believe adjusted gross margin provides additional visibility into the underlying manufacturing economics of our operations by excluding certain non-cash depreciation and unusual air freight costs. As production continues to scale and customer orders transition from initial product launches to recurring production, we expect reported gross margin to improve through higher manufacturing throughput, greater operating efficiencies, and improved raw material procurement.
Current report
Our net revenue for the three months ended June 30, 2026 was $4.5 million, compared to $3.3 million for the three months ended June 30, 2025, an increase of $1.2 million, or 36%. Net revenue increased primarily due to sales of bulk strawberry ingredient and the launch of a new branded product variety at Sam’s Club. While the bulk ingredient product contributed meaningfully to revenue growth, it generated lower gross margins than the Company’s targeted recurring product margins.
Current report
Cost of goods sold for the three months ended June 30, 2026 was $4.4 million, compared to $2.7 million for the three months ended June 30, 2025, an increase of $1.7 million, or 62%. Gross profit for the three months ended June 30, 2026 was $96,825, or 2.2% of net revenue, compared to $581,667, or 17.8% of net revenue. The increase in cost of goods sold relative to net revenue was primarily attributable to product mix, including the manufacture of a bulk strawberry ingredient product. Due to a compressed procurement timeline, the Company incurred significantly higher raw material costs for this product, resulting in gross margins below the Company’s long-term target margins for recurring products.
Current report
General and administrative expense for the three months ended June 30, 2026 was $1.2 million, compared to $0.85 million for the three months June 30, 2025, an increase of $0.35 million, or 38%. The increase was primarily related to costs associated with the settlement of an employment-related legal matter involving the Company’s former Chief Financial Officer.
Current report
Shipping and handling expense for the three months ended June 30, 2026 was $0.22 million, compared to $0.16 million for the three months ended June 30, 2025, an increase of $0.06 million, or 40%. The increase was primarily due to more customer deliveries and increased shipping costs during the period.
Current report
Net loss for the three months ended June 30, 2026 was $2.7 million, compared to $1.6 million for the three months ended June 30, 2025, an increase of $1.1 million, or 70%. The increase in net loss was primarily attributable to lower gross profit, as discussed above, one-time settlement of an employment-related legal matter involving the Company’s former Chief Financial Officer, and higher personnel costs associated with increased stock-based compensation expense. Operating results continue to be influenced by production volumes, capacity utilization, product mix, and raw material procurement.
Current report
Results of Operations for the Six Months Ended June 30, 2026, and 2025
Current report
Net Revenue
Current report
Our net revenue for the six months ended June 30, 2026 was $7.1 million, compared to $6.5 million for the six months ended June 30, 2025, an increase of $0.6 million, or 10%. The increase in revenue was primarily due to sales of a bulk strawberry ingredient product and the launch of a new branded product variety at Sam’s Club. While the bulk ingredient product contributed meaningfully to revenue growth, it generated lower gross margins than the Company’s long-term target margins for recurring products.
Current report
Cost of goods sold for the six months ended June 30, 2026 was $6.6 million, compared to $5.3 million for the six months ended June 30, 2025, an increase of $1.3 million, or 23%. Gross profit for the six months ended June 30, 2026 was $0.5 million, or 7.0% of net revenue, compared to $1.1 million, or 17.2% of net revenue, for the six months ended June 30, 2025. The increase in cost of goods sold relative to net revenue was primarily attributable to product mix, including the manufacture of a bulk strawberry ingredient product. Due to a compressed procurement timeline, the Company incurred significantly higher raw material costs for this product, resulting in gross margins substantially below the Company’s long-term target margins for recurring products.
Current report
General and Administrative Expense
Current report
Salaries and Wages
Current report
Salaries and wages for the six months ended June 30, 2026 were $1.3 million, compared to $0.75 million for the six months ended June 30, 2025, an increase of $0.55 million, or 79%. The increase was primarily attributable to increases in stock-based compensation expense, together with higher payroll costs associated with additional personnel to support the Company’s continued growth.
Current report
Professional Fees
Current report
Professional fees for the six months ended June 30, 2026 were $0.57 million, compared to $0.56 million for the six months ended June 30, 2025, an increase of $0.01 million, or 3%.
Current report
Shipping and Handling
Current report
Shipping and handling expense for the six months ended June 30, 2026 was $0.38 million, compared to $0.26 million for the six months ended June 30, 2025, an increase of $0.12 million, or 42%. The increase was primarily due to more customer deliveries and increased shipping costs during the period.
Current report
Advertising and Promotions
Current report
Advertising and promotions expense for the six months ended June 30, 2026 was $0.36 million, compared to $0.26 million for the six months ended June 30, 2025, an increase of $0.1 million, or 39%. The increase was primarily due to the timing of product demonstration programs and promotional costs associated with the lunch of a new branded product at Sam’s Club.
Current report
Other Income (Expense)
Current report
For the six months ended June 30, 2026, other expense was $327,878, consisting of $359,454 of interest expense, partially offset by $1,808 of interest income and $29,768 of other income. Other income is the recognition of tariff reimbursements received related to previously paid U.S. import duties. The Company received a portion of these reimbursements during the period and recognized the related income in accordance with U.S. GAAP. For the six months ended June 30, 2025, other expense was $567,723, consisting of $579,459 of interest expense, partially offset by $11,736 of interest income. Other expense decreased by $239,845, or 42%, primarily due to lower interest expense following the repayment of certain debt financing during 2025.
Current report
Net loss
Current report
Net loss for the six months ended June 30, 2026 was $4.5 million, compared to $2.5 million for the six months ended June 30, 2025, an increase of $2.0 million, or 79%. The increase in net loss was primarily attributable to lower gross profit, as discussed above, higher idle capacity costs, higher personnel costs associated with increased stock-based compensation expense, and costs related to the settlement of an employment-related legal matter involving the Company’s former Chief Financial Officer. Operating results continue to be influenced by production volumes, capacity utilization, product mix, and raw material procurement.
Current report
As of June 30, 2026, we had working capital of $.24 million, compared to negative working capital of $0.6 million as of December 31, 2025. The Company’s working capital position at June 30, 2026 primarily reflects the financing of rapid revenue growth. Higher sales volumes increased investments in accounts receivable and inventory, while these working capital requirements were funded through increased accounts payable and borrowings under the Company’s promissory note with Kaufman Kapital.
Current report
Cash used in operating activities was $4.8 million for the six months June 30, 2026, compared to $4.0 million for the six months June 30, 2025, an increase of $0.8 million, or 23%. Cash used in operating activities increased primarily due to increased investments in working capital to support revenue growth, including higher accounts receivable and inventory balances, together with a higher net loss. These working capital investments were partially offset by increases in accounts payable and accrued expenses, reflecting the timing of vendor payments.
Removed paragraphs (11)
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous 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.
Previous report
As of March 31, 2026, we had negative working capital of $1.1 million, compared to negative working capital of $0.6 million as of December 31, 2025. The decrease in working capital was primarily driven by increased inventory levels for anticipated second quarter deliveries, continued investment in the Peru Facility and our net loss.
Previous report
Subsequent Financing Activities
Previous report
Subsequent to March 31, 2026, we borrowed $750,000 from Kaufman Kapital LLC (“Kaufman Kapital”) pursuant to a senior secured promissory note that matures on January 28, 2027 and bears interest at 8% per annum. The obligations under the note are secured by a lien on substantially all of our assets under an existing security agreement.
Previous report
Cash used in operating activities was $2.1 million for the three months March 31, 2026, compared to $1.9 million for the three months March 31, 2025, an increase of $0.2 million, or 8%. Cash used in operating activities was relatively consistent with the prior year period, as higher net losses and increased inventory investment to support anticipated second quarter deliveries were substantially offset by improved collections of accounts receivable and higher accounts payable balances.
Reworded paragraphs (20)
Previous wording
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 wording
Gross margin performance may be affected by sales mix, throughput levels, manufacturing efficiencies, uptime, yields, availability or shortages of agricultural raw materials, packaging, labor and freight costs, as well as sourcing timing and spot market purchases when necessary.
Previous wording
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 wording
Despite improvements in production volumes, throughput and manufacturing efficiencies, including gains in uptime, yields and production flow, gross margins have decreased in both the first and second quarters of 2026, due to (i) increased downtime at the plant, and lower production levels during January and February, (ii) an unfavorable sales mix driven by a higher proportion of lower-margin bulk ingredient sales, (iii) a shortened procurement timeline for a bulk strawberry ingredient product as discussed below, and (iv) the launch of a new mixed variety pack to Sam’s Club.
Previous wording
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 wording
Gross margin is 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.
Previous wording
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 wording
Operating expenses primarily reflect costs associated with supporting our Peru Facility, growth initiatives to establish new customer relationships, 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, availability of raw materials, product mix, working capital efficiency and continued access to capital.
Previous wording
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 wording
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 during the three and six months ended June 30, 2026 and 2025.
Previous wording
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 wording
A reconciliation of gross profit (GAAP) to adjusted gross profit (non-GAAP), and the related gross margin measures, for the six months ended June 30, 2026 and 2025, is presented below:
Previous wording
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 wording
Our results may fluctuate period to period due to the timing and size of customer orders, product mix, and the seasonal nature of raw material harvest cycles, among other factors.
Previous 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.
Current wording
The largest components of our general and administrative expenses were plant idle capacity, employment-related legal settlement, research and development, travel, sales commissions, and royalties as shown below.
Previous wording
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 wording
Research and development expense increased due to continued product development activities. Sales commissions decreased due to changes in customer sales mix. Travel expense remained relatively consistent, reflecting ongoing travel between the United States and Peru to support operations.
Previous wording
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 wording
Salaries and wages for the three months ended June 30, 2026 were $0.68 million, compared to $0.44 million for the prior year period, an increase of $0.24 million, or 55%. The increase was primarily attributable to increases in stock-based compensation expense, together with higher payroll costs associated with additional personnel to support the Company’s continued growth.
Previous wording
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 wording
Professional fees for the three months ended June 30, 2026 were $0.31 million, compared to $0.32 million for the three months ended June 30, 2025, a decrease of $0.01 million, or 3%.
Previous wording
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 wording
Advertising and promotions expense for the three months ended June 30, 2026 was $0.28 million, compared to $0.13 million for the three months ended June 30, 2025, an increase of $0.15 million, or 124%. The increase was primarily due to the timing of product demonstration programs and promotional costs associated with the lunch of a new branded product at Sam’s Club.
Previous 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.
Current wording
For the three months ended June 30, 2026, other expense was $154,724, consisting of $184,551 of interest expense, partially offset by $29,768 of other income and $59 of interest income. Other income is the recognition of tariff reimbursements received related to previously paid U.S. import duties. The Company received a portion of these reimbursements during the period and recognized the related income in accordance with U.S. GAAP. For the three months ended June 30, 2025, other expense was $294,512, consisting of $301,112 of interest expense, partially offset by $6,600 of interest income. Other expense decreased by $139,788, or 47%, primarily due to lower interest expense following the repayment of certain debt financing during 2025.
Previous wording
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 wording
General and administrative expense for the six months ended June 30, 2026 was $2.0 million, compared to $1.2 million for the six months June 30, 2025, an increase of $0.8 million, or 64%. The increase was primarily related to an increase in idle capacity expense during the six months ended June 30, 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 through March 31, 2025. Additionally, the Company incurred costs related to a settlement of an employment-related legal matter involving its former Chief Financial Officer.
Previous 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.
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 June 30, 2026, we had cash of $0.21 million, total liabilities of $12.8 million, and an accumulated deficit of $28.2 million, compared to cash of $0.6 million, total liabilities of $8.9 million, and an accumulated deficit of $23.7 million as of December 31, 2025.
Previous wording
Comparison of the Three Months Ended March 31, 2026, and the Three Months Ended March 31, 2025
Current wording
Comparison of the Six Months Ended June 30, 2026, and the Six Months Ended June 30, 2025
Previous wording
Cash used in investing activities was $0.5 million for the three months ended March 31, 2026, compared to $0.4 million for the three months ended March 31, 2025, an increase of $0.1 million, or 36%. The increase was primarily attributable to purchases of property and equipment related to the build-out of new production space at the Peru Facility intended to manufacture high-protein dehydrated cheese products in an allergen-free environment.
Current wording
Cash used in investing activities was $0.72 million for the six months ended June 30, 2026, compared to $0.5 million for the six months ended June 30, 2025, an increase of $0.22 million, or 47%. The increase was primarily attributable to purchases of property and equipment related to the build-out of new production space at the Peru Facility intended to manufacture high-protein dehydrated cheese products in an allergen-free environment.
Previous wording
Cash provided by financing activities was $3.0 million for the three months ended March 31, 2026, compared to $2.4 million for the three months ended March 31, 2025, an increase of $0.6 million, or 26%. The increase was primarily attributable to $1.5 million in proceeds received from a promissory note issued in January 2026, partially offset by lower proceeds from equity issuances during the current period.
Current wording
Cash provided by financing activities was $5.3 million for the six months ended June 30, 2026, compared to $2.7 million for the six months ended June 30, 2025, an increase of $2.5 million, or 92%. The increase was primarily attributable to $3.0 million in proceeds from a promissory note to fund working capital needs to support revenue growth, partially offset by lower proceeds from equity issuances during the current period.
Previous 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.
Current wording
For the six months ended June 30, 2026, exchange rate changes decreased cash and cash equivalents by $56,414, compared to an increase of $28,763 in the prior-year period. The change reflects fluctuations in the exchange rate between the Peruvian sol and 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. 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.
Current wording
Our financial results are affected by the selection and application of accounting policies and methods. In the six months ended June 30, 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 (7)
Current report — wording carried from elsewhere
For the three months ended June 30, 2026, gross profit (GAAP) was $96,825 versus adjusted gross profit (non-GAAP) of $0.37 million, and gross margin was 2.2% compared to adjusted gross margin of 8.3%. For the three months ended June 30, 2025 gross profit (GAAP) was $0.58 million versus adjusted gross profit (non-GAAP) of $0.8 million, and gross margin was 17.8% compared to adjusted gross margin of 24.3%.
Current report — wording carried from elsewhere
The following table summarizes selected items from the statement of operations for the six months ended June 30, 2025, and 2024, respectively.
Current report — wording carried from elsewhere
Our results may fluctuate period to period due to the timing and size of customer orders, product mix, and the seasonal nature of raw material harvest cycles, among other factors.
Current report — wording carried from elsewhere
Cost of Goods Sold and Gross Profit
Current report — wording carried from elsewhere
The largest components of our general and administrative expenses were plant idle capacity, employment-related legal settlement, research and development, travel, sales commissions, and royalties as shown below.
Current report — wording carried from elsewhere
Research and development expense increased due to continued product development activities. Sales commissions decreased due to changes in customer sales mix. Travel expense increased reflecting ongoing travel between the United States and Peru to support operations.
Current report — wording carried from elsewhere
Royalties increased primarily due to higher production volumes on EnWave equipment.