Once Upon a Farm, PBC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

nature of business

Once Upon a Farm, PBC (the “Company”) is a Delaware public benefit corporation, which began operations in 2014. The Company is engaged in the manufacturing; distribution; marketing and related sale of innovative, nutrient-packed, delicious food for babies and kids of on-the-go parents (under the brand name, Once Upon a Farm). The Company's products include Pouches and snacks. Sales of the Company’s products are made primarily throughout the United States. The Company's headquarters is in Berkeley, California.

Initial Public Offering

On February 9, 2026, the Company completed its initial public offering (the “IPO”) of 7,631,537 shares of its common stock at the public offering price of$18.00 per share, plus an additional 1,649,581 shares of common stock at the same public offering price pursuant to the exercise of the underwriters' option to purchase additional shares. The Company received approximately$138.5 million in aggregate proceeds, net of underwriting discounts and commissions and offering costs. In connection with the IPO, certain of the Company's stockholders (the “Selling Stockholders”) sold 3,365,672 shares of common stock. The Company did not receive any of the proceeds from the sale of shares by the Selling Stockholders.

Immediately prior to the closing of the IPO, all outstanding convertible notes (“Convertible Notes”) (See Note 8, Convertible Notes) were converted into their respective classes of convertible preferred stock, which then immediately converted into 2,819,512 shares of common stock (see Note 8, Convertible Notes). Further, all outstanding shares of the Company’s convertible preferred stock were converted into 21,779,817 shares of the Company’s common stockat the applicable conversion ratio then in effect (see Note 9, Convertible Preferred Stock) and the related carrying value of$102.0 million was reclassified from temporary equity to additional paid in capital. Subsequent to the closing of the IPO, there wereno shares of convertible preferred stock outstanding. The carrying values of the notes, together with accrued interest, and related derivative liability, which was remeasured to fair value on the IPO date, were reclassified to additional paid-in capital. Additionally, upon the consummation of the IPO, all of the then-outstanding convertible preferred stock warrants issued to a customer were automatically netexercised into 438,983 shares of common stock and theconvertible preferred stock warrants issued in connection with a credit facility were net exercised into 103,896 shares of common stock.

Forward Stock Split and Change in Par Value

On January 23, 2026, the Company effected an 18.7-for-1 forward stock split (the “Forward Stock Split”) of its issued and outstanding shares of common stock, as well as stock options to purchase shares of common stock, restricted stock awards and stock appreciation rights. In connection with the Forward Stock Split, the Company changed the par value of its capital stock from $0.001 to $0.0001 and amended its certificate of incorporation to authorize the issuance of up to 1,000,000,000 shares of common stock, $0.0001 par value per share, and 100,000,000 shares of preferred stock, $0.0001 par value per share. Accordingly, all share and per share amounts related to common stock for all periods presented in the accompanying condensed financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect the effect of the Forward Stock Split. As the number of all outstanding convertible preferred stock remained unchanged, the conversion ratios for each series of the Company’s convertible preferred stock were retroactively adjusted as a result of the Forward Stock Split.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies and estimates used in the preparation of the unaudited condensed consolidated financial statements are described in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2025, and the notes thereto, which are included in the Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 16, 2026. During the six months ended June 30, 2026, there were no significant changes to the Company’s significant accounting policies as described in the Company’s audited financial statement as of and for the year ended December 31, 2025.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The condensed consolidated financial statements include all the accounts of the Company's wholly-owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the accompanying condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of these condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions made in the accompanying condensed consolidated financial statements include, but are not limited to, net realizable value of inventory; revenue recognition, including variable consideration for sales promotions and discounts; the valuation of stock-based awards, including the valuation of common stock; useful lives and valuation of long-lived assets; intangible assets and goodwill; valuation of derivative liability; valuation of preferred stock warrant liabilities; and provision for income taxes, including related reserves. Management periodically evaluates its estimates, which are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from those estimates.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of demand deposit accounts, money market accounts and accounts receivable. The Company maintains its cash and cash equivalents, which may, at times, exceed federally insured limits, with financial institutions of high credit standing. As of June 30, 2026, the Company has not experienced any losses on its deposit accounts and money market accounts. As of June 30, 2026, the Company does not believe there is significant financial risk from nonperformance by the issuers of the Company’s deposit accounts and money market accounts.

Customers with 10% or more of the Company’s net sales or accounts receivable consist of the following for the periods indicated:

** Represents less than 10% of accounts receivable or net sales as applicable

Deferred Offering Costs

The Company capitalized certain legal, professional accounting and other third-party fees that are directly associated with its IPO as deferred offering costs until such offering is consummated. As of December 31, 2025, there was $14.0 million of deferred offering costs capitalized and included in prepaid expenses and other current assets in the condensed consolidated balance sheets. Upon closing of the IPO in February 2026, $16.9 million of offering costs, including $14.0 million of deferred offering costs capitalized as of December 31, 2025, were offset against the IPO proceeds and reclassified to additional paid-in capital.

Vendor Rebates

On February 20, 2026, the U.S. Supreme Court invalidated reciprocal tariffs collected under the International Emergency Economic Powers Act. Following subsequent Court of International Trade enforcement orders, the Company’s vendors, who passed along tariffs costs to the Company, may claim refunds through U.S. Customs and Border Protection's Consolidated Administration and Processing of Entries portal. Some of the Company’s vendors must contractually reimburse the Company a portion of passed-through tariff costs upon receiving their refund, while others have no such contractual obligation. For the latter, the Company is negotiating to receive a portion of the refunds.

The Company accounts for these tariff reimbursements as vendor rebates. Contractually required rebates are recognized as a reduction of product purchase prices (and thus costs of goods sold) when the receipt from the vendor becomes probable. For rebates received that are not required to be paid under a pre-existing contractual arrangements, when it becomes probable that the rebate will be received, the rebate will be deferred and recognized as a reduction of future purchase prices.

The Company recordedno tariff related vendor rebates during the three and six months ended June 30, 2026 and 2025.

Recently Adopted Accounting Pronouncements

In July 2025, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2025-05, Financial Instruments – Credit Losses (Topic 326):Measurement of Credit Losses for Accounts Receivable and Contract Assets(“ASU 2025-05”). ASU 2025-05 provides a practical expedient that all entities can use when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue from Contracts with Customers. Under this practical expedient, an entity is allowed to assume that the current conditions it has applied in determining credit loss allowances for current accounts receivable and current contract assets remain unchanged for the remaining life of those assets. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim reporting periods in those years. Entities that elect the practical expedient and, if applicable, make the accounting policy election are required to apply the amendments prospectively. The Company adopted ASU 2025-05 effective for the annual period beginning January 1, 2026 and itdid not have a material impact on the accompanying condensed consolidated financial statements and disclosures.

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures(“ASU 2023-09”). ASU 2023-09 enhances the transparency and decision usefulness of income tax disclosures. Adjustments to the annual disclosure of income taxes include: (1) a tabular rate reconciliation comprised of eight specific categories, (2) incomes taxes paid, disaggregated between significant national, state, and foreign jurisdictions, (3) eliminates requirements to disclose the nature and estimate of reasonably possible changes to unrecognized tax benefits in the next 12 months or that an estimated range cannot be made, and (4) adds a requirement to disclose income (or loss) from continuing operations before income tax expense (or benefit) by national and foreign; and income tax expense (or benefit) from continuing operations disaggregated between national, state and foreign. The ASU is effective for public business entities for fiscal years beginning on or after December 15, 2024, and for all other entities for fiscal years beginning on or after December 31, 2025, with early adoption permitted. Due to the Company's Emerging Growth Company status, the Company may elect not to adopt new or revised accounting standards until they become effective for private companies.

Accordingly, the Company will adopt ASU 2023-09 for its annual financial statements for the year ending December 31, 2026. The Company is currently evaluating the requirements of the new standard and the effect on its condensed consolidated financial statements and the related disclosures.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses(“ASU 2024-03”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions within the income statement. In January 2025, the FASB issued ASU No. 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) Clarifying the Effective Date. The amendments in this update may be applied either prospectively or retrospectively, and are effective for fiscal years beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is evaluating the impact that this guidance will have on its condensed consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU No. 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration From a Customer in a Revenue Contract(“ASU 2025-07”). ASU 2025-07 introduces guidance for applying derivative accounting to contracts that include features tied to the operations or activities of one of the parties to the contract. It also aims to reduce diversity in how share-based payments are accounted for in revenue contracts. ASU 2025-07 will be effective for the annual periods beginning after December 15, 2026 with early adoption permitted. The Company is evaluating the impact that this guidance will have on its condensed consolidated financial statements and related disclosures.

Fair value measurements

The Company hadno financial assets or liabilities measured at fair value on a recurring basis at June 30, 2026.

The following table presents the Company’s financial liabilities measured at fair value on a recurring basis for the period indicated (in thousands):

Derivative Liability

The Convertible Notes contained a conversion feature that met the definition of an embedded derivative that required bifurcation and measurement at fair value (Note 8, Convertible Notes). The Company estimated the fair value of the embedded derivative using a “with-and-without” model. The “with-and-without” methodology involves valuing the whole instrument on an as-is basis and then valuing the instrument without the individual embedded derivative. The difference between the entire instrument with the embedded derivative compared to the instrument without the embedded derivative was the fair value of the derivative liability on issuance. The estimated probability and timing of underlying events triggering the conversion features contained within the Convertible Notes are inputs used to determine the estimated fair value of the entire instrument with the embedded derivative. The fair values are subjective and are affected by certain significant inputs. Changes in the estimated fair value were recognized in the Company's statements of operations and comprehensive loss. Upon conversion of the Convertible Notes in connection with Company’s IPO in February 2026, the derivative liability was remeasured to fair value, and the carrying values of the Convertible Notes and the derivative liability were reclassified to additional paid-in capital.

The Company used the following assumptions to determine the fair value of the derivative liability for the period indicated:

The following table provides a summary of the change in the estimated fair value of the Company’s derivative liability (in thousands):

Convertible Preferred Stock Warrant Liability

The Company estimated the fair values of its convertible preferred stock warrant liability using a hybrid valuation approach. The hybrid approach assigns a probability weighting to both a merger and acquisition (“M&A”) scenario and an initial public offering scenario. For the M&A scenario, the Company utilized the Income Approach and Guideline Public Company (“GPC”) to determine the estimated fair value of equity, which was then allocated to the various classes of equity using approach and the Option Pricing Method (“OPM”). Under the OPM, the shares are valued by creating a series of call options with exercise prices based on the liquidation preferences and conversion terms of each equity class. The estimated fair values of the common stock, preferred stock and preferred stock warrants are then inferred by analyzing these options. The OPM assumptions are based on the individual characteristics of the warrants on the valuation date, and assumptions related to fair value of the underlying stock, risk-free rate, expected volatility, dividends and an expected term based on the estimated time to a liquidity event.

For the initial public offering scenario, the Company estimated the exit value upon an IPO and then performed a waterfall analysis to systemically allocate the equity value across share classes accordingly to their fully diluted ownership percentages. This method estimates the future value of each share class under the initial public offering scenario, adjusts for option and warrant proceeds and discounts the resulting value to present terms using an appropriate discount rate.

In determining the fair value of the convertible preferred stock warrant liability, the following assumptions were used:

The following table provides a summary of the change in the estimated fair value of the Company’s convertible preferred stock warrant liability (in thousands):

In February 2026, following the consummation of the IPO, all then-outstanding convertible preferred stock warrants issued in connection with a credit facility were net exercised, resulting in the issuance of 103,896 shares of common stock, and the related warrant liability was remeasured to fair value as of the IPO date and reclassified to stockholders’ equity (deficit) (see Note 7, Nonconvertible Debt and Warrants).

REVENUE RECOGNITION

The following table presents disaggregated net sales by product category (in thousands):

Balance Sheet Components

Inventory

Inventory consists of the following (in thousands):

Property and Equipment, net

Property and equipment, net consists of the following (in thousands):

Depreciation and amortization of property and equipment was$0.5 million and $0.3 million for thethree months ended June 30, 2026 and 2025, and$1.0 million and $0.5 million for thesix months ended June 30, 2026 and 2025.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consists of the following (in thousands):

Commitments and Contingencies

Purchase Commitments

The Company has a minimum purchase commitment with an outsourced manufacturer of its snack bars of 10,000,000 units per year, or 50,000,000 units over five years. Based on the current pricing, the remaining future minimum purchase commitment under the non-cancellable purchase agreement as of June 30, 2026 is as follows (in thousands):

Litigation

The Company may become involved in legal proceedings from time to time. The Company does not believe that any legal proceeding or claims currently pending against it, individually or in the aggregate, are material, or will have a material adverse effect on its financial condition, results of operations or cash flows.

NONCONVERTIBLE Debt AND WARRANTS

Nonconvertible Debt

In June 2025, the Company and the lender entered into an agreement to replace an existing term loan and revolving credit facility (together the “Existing Credit Agreement”) for a delayed draw term loan (the “Term Loan Facility”) and a revolving credit facility (the “Revolving Credit Facility” and together with the Term Loan Facility, the “Nonconvertible Debt”). The Revolving Credit Facility has a maximum capacity of $65.0 million. The maximum amount available under the Revolving Credit Facility is calculated as the lower of (a) the current maximum capacity and (b) the sum of (i)80% of the Company’s gross accounts receivable and (ii)85% of the liquidation value of inventory, each subject to certain adjustments. The Term Loan Facility has a maximum capacity of $30.0 million. The Term Loan Facility is available in two tranches: (i) an $18.0 million tranche that is available immediately and (ii) a $12.0 million tranche that is contingent on the Company achieving certain funding milestones prior to March 31, 2026(which were achieved upon the completion of the IPO).

Upon closing of the Nonconvertible Debt in June 2025, the Company drew $22.0 million under the Revolving Credit Facility in order to repay the outstanding balances on the Existing Credit Agreement. During the second half of 2025, the Company drew an additional $21.0 million under the Revolving Credit Facility for general corporate purposes. There were no lender fees or third-party expenses incurred related to these draws. As of December 31, 2025, $43.0 million was outstanding under the Revolving Credit Facility and the interest rate applicable to borrowings under the Revolving Credit Facility was 7.0%.

Following completion of the IPO, the Company used a portion of the proceeds to repay all outstanding amounts under the Nonconvertible Debt. Accordingly, the Company repaid $43.0 million on February 10, 2026. As of June 30, 2026, the Company hadno outstanding borrowings under the Revolving Credit Facility or the Term Loan Facility and the Company had up to $65.0 million and $30.0 million available to draw under its Revolving Credit Facility and the Term Loan Facility.

For the three months ended June 30, 2025, interest expense for the Nonconvertible Debt was $0.5 million, including amortization of debt issuance costs and discounts, which was immaterial. There wasno interest expense for the Nonconvertible Debt for the three months ended June 30, 2026. For the six months ended June 30, 2026 and 2025, interest expense for the Nonconvertible Debt was $0.4 million and $0.8 million, including amortization of debt issuance costs and discounts, which was immaterial in each period. As of June 30, 2026 and December 31, 2025, the Company had $0.3 million and $0.4 million of unamortized debt issuance costs within other assets on the balance sheet related to the Nonconvertible Debt.

The Company is subject to certain financial and nonfinancial covenants under the provisions of the Nonconvertible Debt, including maintaining a minimum cash balance with the lender of $4.0 million, restrictions on paying any dividends to its common and preferred shareholders, limits on the types of other debt financing that can be obtained and limits on certain capital expenditures, among other things. As of June 30, 2026 and December 31, 2025, the Company was in compliance with all covenants.

Nonconvertible Debt Warrants

In connection with the initial issuance and various amendments to the Existing Credit Agreement, the Company issued to the lender warrants to purchase shares of the Company's Series B-1 convertible preferred stock and Series D convertible preferred stock (the “Convertible Preferred Stock Warrants”).

The total outstanding Convertible Preferred Stock Warrantsas of December 31, 2025 are summarized as follows:

The above table excludes convertible preferred stock warrants issued to a customer (see Note 11, Stock-based Compensation).

The Convertible Preferred Stock Warrants were accounted for as a derivative liability and classified in other non-current liabilities on the balance sheets because the underlying convertible preferred stock was contingently redeemable outside of the Company's control. The aggregate estimated fair value was $1.9 million as of December 31, 2025.

In February 2026, upon the consummation of the IPO, all then-outstanding Convertible Preferred Stock Warrants issued in connection with a credit facility were net exercised, resulting in the issuance of 103,896 shares of common stock. As a result of the net exercise of the Convertible Preferred Stock warrants associated with the credit facility, the warrant liability was remeasured to fair value at the IPO date and was reclassified to stockholders’ equity (deficit).

CONVERTIBLE NOTES

The tables below summarize the Company’s outstanding Convertible Notes for the period indicated (in thousands, except per share amounts):

Immediately prior to the closing of the IPO in February 2026, the outstanding Convertible Notes were converted into their respective classes of convertible preferred stock, which then immediately converted into 2,819,512 shares of our common stock. Upon conversion, the carrying values of the Convertible Notes, together with accrued interest, and the related derivative liability, which was remeasured to fair value on the IPO date, were reclassified to additional paid-in capital.

Convertible Preferred Stock

Convertible preferred stock consists of the following for the period indicated (in thousands, except share amounts):

The Company classified its convertible preferred stock outside of total stockholders’ deficit because, in the event of certain “liquidation events” that are not solely within the control of the Company (including a merger, acquisition or sale of all or substantially all of the Company’s assets), the shares would become redeemable at the option of the holders. The Company did not adjust the carrying values of the convertible preferred stock to the deemed liquidation values of such shares since a liquidation event was not probable at any of the reporting dates. Subsequent adjustments to increase or decrease the carrying values to the ultimate liquidation values will be made only if and when it becomes probable that such liquidation event will occur.

In February 2026, immediately prior to the completion of the IPO, all of the then-outstanding shares of convertible preferred stock automatically converted into 21,779,817 shares of common stock at the applicable conversion ratio then in effect. Upon conversion, the carrying value of the convertible preferred stock was reclassified to common stock and additional paid-in capital.

Common Stock

In connection with the IPO, in February 2026, the Company filed an amended and restated certificate of incorporation effective immediately prior to the closing of the IPO that authorized the issuance of up to 1,000,000,000 shares of common stock, par value $0.0001 per share, and 100,000,000 shares of preferred stock, par value $0.0001 per share.

The Company had reserved shares of common stock for issuance in connection with the following for the periods indicated on an as-converted basis:

STOCK-BASED COMPENSATION

For the three months ended June 30, 2026 and 2025, the Company recognized stock-based compensation of approximately$2.5 million and$1.1 million which was recognized in selling, general and administrative expenses in the statements of operations and comprehensive loss. For the six months ended June 30, 2026 and 2025, the Company recognized stock-based compensation of approximately$9.0 million and$1.9 million, which was recognized in selling, general and administrative expenses in the statements of operations and comprehensive loss.

Stock Options

On February 5, 2026, the board of directors of the Company (“Board of Directors”) adopted, and the Company’s stockholders approved, the omnibus equity incentive plan (the “2026 Omnibus Plan”), which became effective on the same date. The 2026 Omnibus Plan replaced the existing omnibus equity incentive plan (“2021 Plan”), as the Board of Directors determined to not make additional grants under the 2021 Plan following the closing of the IPO. However, the 2021 Plan continues to govern outstanding stock option awards granted under the 2021 Plan. The 2026 Omnibus Plan allows the Company to grant incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other awards. The number of shares initially available for issuance under awards granted pursuant to the 2026 Omnibus Plan is 4,023,181.

The following table summarizes the stock option activity for thesix months ended June 30, 2026:

The intrinsic value of options exercised during the three months ended June 30, 2026 and 2025 was$1.2 million and$0.7 million. The intrinsic value of options exercised during the six months ended June 30, 2026 and 2025 was$1.3 million and$1.4 million. This intrinsic value represents the difference between the fair value of the Company’s common stock on the date of exercise and the exercise price of each option.

During the three months ended June 30, 2026, the weighted average grant date fair value of options granted, was $10.26 per share. There wereno options granted during the three months ended June 30, 2025. During thesix months ended June 30, 2026 and 2025, the weighted average grant date fair value of options granted, was $12.66 and $10.30 per share.

During the three months ended June 30, 2026 and 2025, the Company recognized $1.1 million and$1.1 million of stock-based compensation related to stock options. During the six months ended June 30, 2026, the Company recognized$4.6 million of stock-based compensation related to stock options including $2.6 million of stock-based compensation associated with accelerated vesting of the Spokesperson's (defined in Note 12, Related Party Transactions) stock options upon the closing of the IPO in February 2026. During the six months ended June 30, 2025, the Company recognized $1.9 million of stock-based compensation related to stock options.

As of June 30, 2026, the unrecognized compensation related to the service-based vesting options is approximately$10.7 million, which will be recognized over a weighted-average remaining requisite service period of 3.0 years. The Company recordedno income tax benefit related to these options for the three and six months ended June 30, 2026, since the Company currently maintains a full valuation allowance against its net deferred tax assets.

The fair value of each service-based vesting stock option granted during the year was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Stock Appreciation Rights granted to employees and executives

During the three and six months ended June 30, 2025, the Company granted 365,715 and 694,835 stock appreciation rights under the 2021 Plan (the“SARs”) to certain employees and executives with weighted-average exercise prices of $14.64 and $15.77 per share.

During the three and six months ended June 30, 2025,57,970 and 69,190 of SARs issued to employees were forfeited. As of June 30, 2025 there were 1,157,584 of SARs issued to employees outstanding, with a weighted-average exercise price of $13.33.

On February 5, 2026, the Company approved the cash settlement of vested SARs and the conversion of each outstanding unvested SAR held by participants as of the closing of the IPO into a number of restricted stock units (“Replacement RSUs”) to be issued under the 2026 Omnibus Plan. Accordingly, the Company paid $2.2 million of cash consideration to settle 271,760 vested SARs upon consummation of the IPO, and recognized related stock-based compensation of$2.2 million within selling, general and administrative expenses on the condensed consolidated statement of operations. A total of 992,414 outstanding unvested SARs were converted into 169,366 Replacement RSUs, of which a certain portion vests on the six month anniversary of the IPO date, with the remaining portion vesting in equal quarterly installments across the remaining service period of the original SARs. The aggregate grant date fair value of the Replacement RSUs is $3.0 million, which will be recognized on a straight-line basis over their respective service periods.

Restricted Stock Units

During the three and six months ended June 30, 2026, the Company granted 68,027 and 666,236 shares of restricted stock units under the 2026 Omnibus Plan (“RSUs”) to certain employees, executives and directors, including the Replacement RSUs, with aweighted-average grant date fair value of $14.70 and $17.84 per share. RSUs granted to employees and executives, other than the SAR Replacement RSUs, generally vest in quarterly installments on each of the first four anniversaries of the date of grant, subject to the grantee's continued service with the Company. RSUs granted to directors generally vest in full on the earlier of the first anniversary of the date of grant or the next annual stockholder meeting following the date of grant, subject to the grantee's continued service with the Company.42,442 RSUs were forfeited during three and six months ended June 30, 2026.

During the three and six months ended June 30, 2026, the Company recognized stock-based compensation of$1.4 million and$2.2 million related to RSUs.

As of June 30, 2026, no RSUs have vested and the total unrecognized stock-based compensation related to the Company’s unvested RSUs was$8.9 million, which is expected to be recognized over a weighted-average period of 2.4 years.

Stock Appreciation Rights issued to a customer

On March 27, 2025, the Company granted 187,000 SARs to a customer at an exercise price of $19.58 per share. The SARs issued to a customer vest based on the customer achieving specified milestones of sales of the Company’s products over a three year period beginning April 1, 2025 (the “Vesting Period”). Following the Vesting Period, any vested SARs issued to the customer may be exercised by the holder at any time while any unvested SARs issued to the customer will be forfeited. Any vested SARs issued to the customer will be automatically exercised on the earlier of March 27, 2035 or upon the occurrence of a change of control after the end of the Vesting Period. The SARs issued to a customer are liability-classified instruments. Such SARs are recognized as the corresponding revenue is earned, provided it is probable that the performance conditions will be satisfied, and reduce the transaction price of revenue earned under the customer contract based on the grant date fair value of the awards. Vested SARs will be remeasured each period with changes in the fair value of vested SARs recognized in other income (expense), net in the Company'scondensed consolidated statement of operations. During the three months ended June 30, 2026 and 2025,5,741 and 2,169 SARs issued to a customer vested. During the six months ended June 30, 2026 and 2025,9,444 and 2,169 SARs issued to a customer vested. As of June 30, 2026, the total of 18,345 SARs issued to a customer were vested. The assumptions used to determine the fair value of the SARs using the Black-Scholes option-pricing model are as follows:

The aggregate grant date fair value of the SARs issued to a customer is $2.1 million. For the three and six months ended June 30, 2026 and 2025, the Company recorded $0.1 million and an immaterial amount as a reduction of revenue related to the SARs issued to a customer. As of June 30, 2026, the liability related to the vested SARs issued to a customer was$0.3 million and was recorded within other non-current liabilities on the Company’s balance sheets. For the three months ended June 30, 2026 and 2025, the Company recorded $0.1 million and an immaterial amount for the changes in the fair value of vested SARs. For the six months ended June 30, 2026 and 2025, the Company recorded $0.1 million and an immaterial amount for the changes in the fair value of vested SARs.

Warrants issued to a customer

During 2018, 2020 and 2024, the Company granted an aggregate 33,046 warrants to a customer to purchase Series B-1 convertible preferred stock, which vested based on the customer achieving defined performance conditions. These warrants issued to a customer were equity-classified instruments and recognized over the applicable vesting period, provided it was probable that the performance conditions would be satisfied, reducing the transaction price of revenue earned under the customer contract. No warrants were issued to customers in the six months ended June 30, 2026 and 2025.

As of December 31, 2025,27,536 outstanding warrants issued to a customer were outstanding, all of which were vested. Upon closing of the IPO in February 2026, all of the outstanding convertible preferred stock warrants issued to a customer were net exercised into 438,983 shares of common stock.

12. Related-Party Transactions

Convertible Notes

At the time the Convertible Notes were issued, the holder held more than 10% of the voting interests in the Company; therefore, meeting the definition of a related party. At no point during thesix months ended June 30, 2026 and 2025, did the holder hold 10% or more of the Company’s voting interests. As such, the holder is not considered a related party for the periods presented.

Spokesperson Transactions

Prior to January 1, 2024, the Company contracted with a Co-Founder and board member (the “Spokesperson”) for personal branding, marketing and promotional services, as well as licensing intellectual property (the “Spokesperson Agreement”). Original compensation included cash payments contingent upon a change in control as defined by the agreement, which includes an IPO, and stock options that accelerated upon such change in control.

In January 2025, the Company amended the agreement with the Spokesperson (the “Amended Spokesperson Agreement”) and added an additional $8.0 million to the contingent cash consideration under the Spokesperson agreement the Spokesperson agreement payable in installments through December 2027, plus additional stock options, for ongoing services. The cash payments and unvested options were to accelerate upon a change in control. Consequently, in connection with the consummation of the Company’s IPO in February 2026, all remaining cash was paid and all unvested options fully vested.

In May 2026, the Amended Spokesperson Agreement was further amended (the “First Amended Spokesperson Agreement”) to add $3.0 million of cash payments payable in equal installments through January 2028 for advertising, marketing, and promotional activities. In the event of a change in control, termination without cause, or resignation for good reason, each as defined by the agreement, all unpaid cash accelerates in full and must be paid to the Spokesperson.

Cash consideration is expensed on a straight-line basis over the requisite service period. Compensation expense recognized in selling, general and administrative expenses on a straight-line basis over the requisite service period related to cash payments made to the Spokesperson were $0.4 million and $0.7 million for the three months ended June 30, 2026 and 2025. For the six months ended June 30, 2026, the Company recognized $5.8 million of expense related to cash payments made to the Spokesperson. These cash payments included $7.0 million of contingent cash consideration triggered by the IPO in February 2026. For the six months ended June 30, 2025, the Company recognized $1.3 million related to cash payments made to the Spokesperson.

Share-based Compensation

The Spokesperson holds stock options from the agreements referenced above and through grants awarded in the normal course of business and the related expense is recorded within selling, general and administrative expense on the Company’s condensed consolidated statement of operations. Stock-based compensation for stock options granted to the Spokesperson wasno amount and $0.3 million for the three months ended June 30, 2026 and 2025, and $2.6 million and $0.5 million for the six months ended June 30, 2026 and 2025.

IPO Bonus

In May 2026, the Company paid a $1.0 million one-time bonus to the Spokesperson in connection with the IPO that was included in selling, general and administrative expenses in thecondensed consolidated statement of operations. The Company also reimbursed the Spokesperson $0.2 million for expenses incurred in connection with the IPO during the six months ended June 30, 2026.

segment reporting

The Company operates as asingle operating segment, as the Chief Operating Decision Maker (“CODM”) reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. All of the Company’s long-lived assets are located in the United States and less than 1% of the Company’s net sales are from customers located outside the United States.

The CODM uses net loss to assess performance, evaluate cost optimization, and allocate financial, capital and personnel resources. The CODM reviews segment assets on a consolidated basis as presented on the Company’s balance sheet.

The following table sets forth significant expense categories and other specified amounts included in net loss that are reviewed by the CODM, or are otherwise regularly provided to the CODM (in thousands):

Cost of goods sold excludes depreciation and amortization.

Other segment items is primarily comprised of depreciation and amortization expense, interest income, interest expense, change in fair value of derivative liabilities, change in fair value of convertible preferred stock warrant liabilities, provision for income taxes and product development costs.

Net loss per share

The following outstanding balances of securities have been excluded from the calculation of diluted weighted average common shares outstanding and diluted net loss per share because the effect of including them would have been antidilutive.