Once Upon a Farm, PBC 10-Q, filed Nov 12, 2026
Once Upon a Farm, PBC (OFRM)
About this 10-Q
Once Upon a Farm, PBC filed this 10-Q on November 12, 2026, covering the quarter ended September 30, 2026.
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $89.07M
- up 34.9% from $66.04M a year earlier
- Net loss
- $3.81M
- compared with a net loss of $11.26M a year earlier
- Diluted EPS
- -$0.09
- compared with -$1.66 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
( State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of November 8, 2026, the registrant had
Table of Contents
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PART I. |
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Item 1. |
1 |
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1 |
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Condensed Consolidated Statements of Operations and Comprehensive Loss |
2 |
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Condensed Consolidated Statements of Convertible Preferred Stock And Stockholders’ Equity (Deficit) |
3 |
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5 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
6 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
23 |
Item 3. |
40 |
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Item 4. |
41 |
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PART II. |
42 |
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Item 1. |
42 |
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Item 1A. |
42 |
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Item 2. |
47 |
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Item 3. |
47 |
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Item 4. |
47 |
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Item 5. |
47 |
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Item 6. |
48 |
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49 |
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i
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements that reflect our expectations or beliefs regarding future events, including, but not limited to: statements about the markets in which we operate, including growth of our various markets, statements about potential new products and product innovation, and our expectations, beliefs, plans, strategies, objectives, prospects, assumptions, or future events or performance. These forward-looking statements, including expectations and projections about future matters, are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. We caution that such statements involve numerous risks and uncertainties and are subject to variables that could impact our future performance. These statements are based on management’s views and assumptions at the time they are made and are not guarantees of future performance. Actual future events and performance may differ materially from the expectations reflected in our forward-looking statements. We do not undertake any obligation to update forward-looking statements.
A variety of factors could materially affect future outcomes, including, but not limited to: adverse public relations, product recalls, and product liability claims arising if our products are contaminated, alleged to be contaminated, or are rumored to have adverse effects, or if our products are alleged to cause illness or injury; factors outside of our and our suppliers’ control that disrupt our operations or impact the inputs, commodities, and ingredients that we use in our business; the failure to manage our supply chain effectively, including inventory levels and transportation and freight services; the availability of natural, plant-rich, and organic ingredients; the failure to increase our cooler count or lack of productivity in our cooler base; our ability to protect personal, proprietary, and confidential information and prevent security incidents; damage to the reputation of the Company, products, management team, or co-founders; adverse weather conditions, natural disasters, pestilence, climate change, and other conditions beyond our control that could disrupt our operations; the failure to retain and motivate our management team or other key team members, including our co-founders; our reliance on a limited number of independent contract manufacturers and suppliers, including co-packers; the loss of a significant customer; changing consumer preferences, perceptions, and spending habits; the failure to successfully pursue growth or implement our growth strategy on a timely basis or at all; changes in global and domestic economic and business conditions, and financial market conditions, such as continued inflation, interest rate increases, tariffs, trade wars, recession, government or regulator shutdowns or defunding, regulatory delays or uncertainty, supply chain disruptions or agricultural labor shortages; changes in global trade policy, including the imposition of tariffs on certain goods imported into the United States of America, uncertainty regarding the timing and amount of any tariff refund payments, or resultant trade wars that may lead to reduced economic activity, increased costs, reduced demand and changes in retail consumer purchasing behaviors for some or all of our products, or other potentially adverse economic outcomes; significant volatility in the cost or availability of inputs to our business (including freight, raw materials, packaging, energy, labor and other supplies), including as a result of tariffs or inflationary pressures; the impact of various worldwide or macroeconomic events, such as the ongoing conflicts in Europe, the Middle East and South America, and the continued effects of such conflict on U.S. and global economics, our employees, suppliers, customers and end consumers, which could adversely and materially impact our business, financial condition and results of operations; the inability to compete successfully in our highly competitive markets; any damage or disruption at any facility where our finished goods inventory is located; our ability to expand existing customer relationships and acquire new customers; the failure of our enterprise resource planning system or any deficient information-sharing capabilities; the sufficiency and effectiveness of our marketing and trade spending programs and whether we are able to develop and maintain our brand; the fluctuation in our business as a result of promotional activities and seasonality; our ability to implement initiatives to improve productivity and streamline operations to control or reduce costs; our ability to achieve or sustain profitability; our compliance and the compliance of our suppliers, co-packers, and co-manufacturers with applicable governmental laws and regulations; the ability of our information technology systems, including artificial intelligence technologies, to perform adequately and accurately; changes in tax laws; our status as a public benefit corporation and our duty to balance a variety of interests as a public benefit corporation; volatility of the market price of our common stock; the incurrence of increased costs as a result of operating as a public company; and the other factors set forth under Part II, Item 1A. “Risk Factors” of this Quarterly Report on Form 10-Q, Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and other filings that we make with the Securities and Exchange Commission (the “SEC”).
This list is not exhaustive and is intended for illustrative purposes only. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.
ii
Unless otherwise specified or unless the context requires otherwise, all references in this Quarterly Report on Form 10-Q to “Once Upon a Farm,” “the Company,” “we,” “us,” and “our,” or similar references, refer to Once Upon a Farm, PBC.
iii
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
ONCE UPON A FARM, PBC
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except share amounts)
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September 30, |
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December 31, |
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2026 |
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2025 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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Inventory |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Intangible assets, net |
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Goodwill |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit) |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Total current liabilities |
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Nonconvertible debt, net |
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Convertible notes |
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Derivative liability |
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Other non-current liabilities |
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Total liabilities |
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Convertible preferred stock, $ |
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Stockholders’ equity (deficit): |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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( |
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Total stockholders’ equity (deficit) |
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( |
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Total liabilities, convertible preferred stock and stockholders’ equity (deficit) |
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$ |
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$ |
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The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
1
ONCE UPON A FARM, PBC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
(In thousands, except share and per share amounts)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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Net sales |
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$ |
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$ |
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$ |
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$ |
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Cost of goods sold |
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Gross profit |
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Selling, general and administrative expenses |
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Loss from operations |
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( |
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( |
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( |
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( |
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Other income (expense): |
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Interest expense |
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( |
) |
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( |
) |
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( |
) |
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( |
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Interest income |
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Change in fair value of derivative liability |
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( |
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( |
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Other income (expense), net |
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( |
) |
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( |
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( |
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Total other income (expense) |
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( |
) |
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( |
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Net loss before income tax provision |
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( |
) |
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( |
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( |
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( |
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Income tax provision |
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( |
) |
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( |
) |
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( |
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( |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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Net loss per share attributable to common stockholders: |
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Basic and diluted |
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$ |
( |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
Weighted-average shares used in computing net loss per share attributable to common stockholders: |
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Basic and diluted |
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The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
2
ONCE UPON A FARM, PBC
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)
(In thousands, except share amounts)
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Convertible |
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Common Stock |
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Additional |
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Accumulated |
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Total |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Deficit |
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Equity (Deficit) |
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Balances at December 31, 2025 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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Issuance of common stock upon |
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— |
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— |
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— |
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Conversion of convertible |
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( |
) |
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( |
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— |
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Conversion of convertible notes |
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— |
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— |
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— |
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— |
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Reclassification of derivative |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock upon |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balances at March 31, 2026 |
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— |
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$ |
— |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Additional offering costs related to the initial public offering |
|
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Exercise of stock options |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balances at June 30, 2026 |
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— |
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$ |
— |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Vesting of restricted stock units |
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— |
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— |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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|
( |
) |
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( |
) |
Balances at September 30, 2026 |
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— |
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$ |
— |
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$ |
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$ |
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$ |
( |
) |
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$ |
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3
ONCE UPON A FARM, PBC
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED) - CONTINUED
(In thousands, except share amounts)
|
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Convertible |
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Common Stock |
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Additional |
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Accumulated |
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Total |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Deficit |
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Deficit |
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Balances at December 31, 2024 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
|||||
Exercise of stock options |
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— |
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— |
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— |
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— |
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|||
Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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||
Net loss |
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— |
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— |
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— |
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— |
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|
— |
|
|
|
( |
) |
|
|
( |
) |
Balances at March 31, 2025 |
|
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|
|
$ |
|
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|
|
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|
$ |
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|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|||||
Exercise of stock options |
|
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— |
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|
— |
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|
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|
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— |
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|
|
|
|
|
— |
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|||
Stock-based compensation |
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— |
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|
|
— |
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|
|
— |
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|
— |
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— |
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||
Net loss |
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— |
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— |
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— |
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— |
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|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balances at June 30, 2025 |
|
|
|
|
$ |
|
|
|
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|
$ |
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|
$ |
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|
$ |
( |
) |
|
$ |
( |
) |
|||||
Exercise of stock options |
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— |
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— |
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— |
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— |
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|||
Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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|
— |
|
|
|
( |
) |
|
|
( |
) |
Balances at September 30, 2025 |
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|||||
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
4
ONCE UPON A FARM, PBC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
OPERATING ACTIVITIES |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
||
Change in fair value of derivative liability |
|
|
( |
) |
|
|
|
|
Change in fair value of convertible preferred stock warrant liability |
|
|
( |
) |
|
|
|
|
Change in fair value of SARs liability |
|
|
( |
) |
|
|
|
|
Stock-based compensation |
|
|
|
|
|
|
||
SARs issued to a customer recorded as a reduction to revenue |
|
|
|
|
|
|
||
Inventory adjustments |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Amortization of debt discounts and deferred financing costs |
|
|
|
|
|
|
||
Non-cash interest |
|
|
|
|
|
|
||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
( |
) |
|
|
( |
) |
Inventory |
|
|
( |
) |
|
|
( |
) |
Prepaid expenses and other assets |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
( |
) |
|
|
|
|
Accrued expenses and other liabilities |
|
|
|
|
|
|
||
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
INVESTING ACTIVITIES |
|
|
|
|
|
|
||
Purchase of property and equipment |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
FINANCING ACTIVITIES |
|
|
|
|
|
|
||
Proceeds from issuance of common stock |
|
|
|
|
|
|
||
Proceeds from term loan facility |
|
|
|
|
|
|
||
Proceeds from line of credit |
|
|
|
|
|
|
||
Proceeds from exercise of stock options |
|
|
|
|
|
|
||
Payment of debt issuance costs |
|
|
|
|
|
( |
) |
|
Repayment of line of credit |
|
|
( |
) |
|
|
|
|
Payment of offering costs |
|
|
( |
) |
|
|
|
|
Payment of deferred offering costs |
|
|
|
|
|
( |
) |
|
Net cash provided by financing activities |
|
|
|
|
|
|
||
Net change in cash and cash equivalents |
|
|
|
|
|
( |
) |
|
Cash and cash equivalents, beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents, end of period |
|
$ |
|
|
$ |
|
||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
|
|
$ |
|
||
Cash paid for income taxes |
|
$ |
|
|
$ |
|
||
SUPPLEMENTAL DISCLOSURE OF NON-CASH |
|
|
|
|
|
|
||
Reallocation of borrowings from term loan to line of credit |
|
$ |
|
|
$ |
|
||
Capital expenditures included in accounts payable and accrued expenses |
|
$ |
|
|
$ |
|
||
Deferred offering costs included in accounts payable and accrued expenses |
|
$ |
|
|
$ |
|
||
Deferred offering costs transferred to additional paid in capital |
|
$ |
|
|
$ |
|
||
Conversion of convertible preferred stock to common stock |
|
$ |
|
|
$ |
|
||
Conversion of convertible notes to equity |
|
$ |
|
|
$ |
|
||
Reclassification of derivative liability to equity |
|
$ |
|
|
$ |
|
||
Reclassification of convertible warrant liability to equity |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.
5
ONCE UPON A FARM, PBC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Once Upon a Farm, PBC (the “Company”) is a Delaware public benefit corporation, which began operations in
Initial Public Offering
On
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
Forward Stock Split and Change in Par Value
6
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 nine months ended September 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 September 30, 2026, the Company has not experienced any losses on its deposit accounts and money market accounts. As of September 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:
|
|
Accounts Receivable |
|
Net Sales |
||||||||
|
|
September 30, |
|
December 31, |
|
For the Three Months Ended September 30, |
|
For the Nine Months Ended September 30, |
||||
|
|
2026 |
|
2025 |
|
2026 |
|
2025 |
|
2026 |
|
2025 |
Customer A |
|
|
|
|
|
|
||||||
Customer B |
|
|
** |
|
|
|
|
|||||
Customer C |
|
|
|
|
|
|
||||||
Customer D |
|
|
|
** |
|
** |
|
** |
|
** |
||
Customer E |
|
** |
|
|
|
|
|
|||||
** Represents less than 10% of accounts receivable or net sales as applicable
7
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 $
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. As of September 30, 2026, the tariff reimbursements received or recognized to date by the Company have not been material.
Recently Adopted Accounting Pronouncements
In July 2025, the Financial Accounting Standards Board (“FASB”) issued , 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
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
8
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. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). ASU 2025-06 removes the existing project stage model and introduces new capitalization criteria based on management authorization and the probability of project completion. It also clarifies the treatment of software development uncertainty and incorporates guidance on website development costs. ASU 2025-06 is effective for the Company for annual reporting periods beginning after December 15, 2027, and interim periods within those annual periods, with early adoption permitted. ASU 2025-06 may be applied prospectively, retrospectively, or through a modified transition approach. The Company is evaluating the impact that this guidance will have on its condensed consolidated financial statements and related disclosures, including its expected transition method.
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.
The Company had
The following table presents the Company’s financial liabilities measured at fair value on a recurring basis for the period indicated (in thousands):
|
|
December 31, 2025 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative liability |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
Convertible preferred stock warrant liability |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
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”
9
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:
|
|
December 31, |
|
|
2025 |
Risk-free interest rate |
|
|
Expected term (in years) |
|
|
Volatility |
|
|
Dividend yield |
|
The following table provides a summary of the change in the estimated fair value of the Company’s derivative liability (in thousands):
Fair value as of December 31, 2025 |
|
$ |
|
|
Change in fair value |
|
|
( |
) |
Reclassification to additional paid-in capital upon conversion |
|
|
( |
) |
Fair value as of September 30, 2026 |
|
$ |
|
Fair value as of December 31, 2024 |
|
$ |
|
|
Change in fair value |
|
|
|
|
Fair value as of September 30, 2025 |
|
$ |
|
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.
10
In determining the fair value of the convertible preferred stock warrant liability, the following assumptions were used:
|
|
December 31, |
||
|
|
2025 |
||
|
|
OPM |
|
Waterfall |
Risk-free interest rate |
|
|
N/A |
|
Discount Rate |
|
N/A |
|
|
Expected term (in years) |
|
|
||
Volatility |
|
|
N/A |
|
Dividend yield |
|
|
N/A |
|
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):
Fair value as of December 31, 2025 |
|
$ |
|
|
Change in fair value |
|
|
( |
) |
Reclassification to additional paid-in capital upon net exercise |
|
|
( |
) |
Fair value as of September 30, 2026 |
|
$ |
|
Fair value as of December 31, 2024 |
|
$ |
|
|
Change in fair value |
|
|
|
|
Fair value as of September 30, 2025 |
|
$ |
|
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
The following table presents disaggregated net sales by product category (in thousands):
|
|
Three Months Ended September 30, |
|
|
|
Nine Months Ended September 30, |
|
|||||||||||
|
|
2026 |
|
|
2025 |
|
|
|
2026 |
|
|
|
2025 |
|
||||
Kid |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Pouches |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
$ |
|
|
||||
Snacks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Kid |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Baby |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Pouches |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Snacks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Baby |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
$ |
|
|
||||
11
Inventory
Inventory consists of the following (in thousands):
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Finished goods |
|
|
|
|
|
|
||
Total inventory |
|
$ |
|
|
$ |
|
||
Property and Equipment, net
Property and equipment, net consists of the following (in thousands):
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Machinery and equipment |
|
$ |
|
|
$ |
|
||
Leasehold improvements |
|
|
|
|
|
|
||
Purchased software |
|
|
|
|
|
|
||
Construction in progress |
|
|
|
|
|
|
||
Total property and equipment |
|
|
|
|
|
|
||
Accumulated depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
Total property and equipment, net |
|
$ |
|
|
$ |
|
||
Depreciation and amortization of property and equipment was $
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consists of the following (in thousands):
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Accrued promotional activities |
|
$ |
|
|
$ |
|
||
Accrued inventory purchases |
|
|
|
|
|
|
||
Accrued marketing |
|
|
|
|
|
|
||
Accrued payroll expenses |
|
|
|
|
|
|
||
Accrued third-party manufacturing fees |
|
|
|
|
|
|
||
Accrued deferred offering costs |
|
|
|
|
|
|
||
Accrued interest |
|
|
|
|
|
|
||
Accrued other expenses |
|
|
|
|
|
|
||
Operating lease liabilities, current portion |
|
|
|
|
|
|
||
Total accrued expenses and other current liabilities |
|
$ |
|
|
$ |
|
||
12
Purchase Commitments
The Company has a minimum purchase commitment with an outsourced manufacturer of its snack bars of
Year Ending December 31, |
|
Amount |
|
|
2026 (remainder) |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
Total |
|
$ |
|
|
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
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 $
Upon closing of the Nonconvertible Debt in June 2025, the Company drew $
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 $
For the three months ended September 30, 2026 and 2025, interest expense for the Nonconvertible Debt was $
13
for the Nonconvertible Debt was $
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 $
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 Warrants as of December 31, 2025 are summarized as follows:
|
|
Issuance Date |
|
Warrants |
|
|
Exercise Price |
|
|
Expiration |
||
2020 Series B-1 Warrant |
|
|
|
|
|
$ |
|
|
||||
2021 Series B-1 Warrant |
|
|
|
|
|
$ |
|
|
||||
2022 Series D Warrant |
|
|
|
|
|
$ |
|
|
||||
2022 Series D Warrant |
|
|
|
|
|
$ |
|
|
||||
Total |
|
|
|
|
|
|
|
|
|
|
||
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 $
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
14
The tables below summarize the Company’s outstanding Convertible Notes for the period indicated (in thousands, except per share amounts):
|
|
December 31, 2025 |
|
|||||||||
|
|
Carrying |
|
|
Fair Value |
|
|
Conversion |
|
|||
Series C-1 Convertible Notes |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Series C-2 Convertible Notes |
|
|
|
|
|
|
|
|
|
|||
Series D Convertible Notes |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
$ |
|
|
|
|
|||
Unamortized debt discounts |
|
|
|
|
|
|
|
|
||||
Total Convertible Notes, net |
|
$ |
|
|
|
|
|
|
|
|||
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
Convertible preferred stock consists of the following for the period indicated (in thousands, except share amounts):
|
|
As of December 31, 2025 |
|
|||||||||||||
Convertible Preferred Stock |
|
Authorized |
|
|
Issued and |
|
|
Carrying |
|
|
Liquidation |
|
||||
Series A-1 convertible preferred stock |
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|
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|
|
$ |
|
|
$ |
|
||||
Series A-2 convertible preferred stock |
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||||
Series B-1 convertible preferred stock |
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||||
Series B-2 convertible preferred stock |
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||||
Series C-1 convertible preferred stock |
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||||
Series C-2 convertible preferred stock |
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||||
Series D convertible preferred stock |
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|
|
|
||||
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||
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
15
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
The Company had reserved shares of common stock for issuance in connection with the following for the periods indicated on an as-converted basis:
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
|
|
|
|
|
|
|
||
Options outstanding |
|
|
|
|
|
|
||
Options available for future issuance under the 2026 Omnibus Plan |
|
|
|
|
|
— |
|
|
Restricted stock units outstanding |
|
|
|
|
|
— |
|
|
Conversion of outstanding shares of convertible preferred stock |
|
|
— |
|
|
|
|
|
Convertible Notes |
|
|
— |
|
|
|
|
|
Warrants issued to a customer |
|
|
— |
|
|
|
|
|
Convertible Preferred Stock Warrants |
|
|
— |
|
|
|
|
|
Options available for future issuance under the 2021 Plan |
|
|
— |
|
|
|
|
|
Total reserved shares of common stock |
|
|
|
|
|
|
||
For the three months ended September 30, 2026 and 2025, the Company recognized stock-based compensation of approximately $
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
16
The following table summarizes the stock option activity for the nine months ended September 30, 2026:
|
|
Stock Options |
|
|||||||||||||
|
|
Number of |
|
|
Weighted- |
|
|
Weighted- |
|
|
Aggregate |
|
||||
Balances as of December 31, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Options granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Options exercised |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Options forfeited and expired |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Balances as of September 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Vested and expected to vest as of September 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Options exercisable as of September 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
The intrinsic value of options exercised during the three months ended September 30, 2026 and 2025 was $
During the three months ended September 30, 2026, the weighted average grant date fair value of options granted, was $
During the three months ended September 30, 2026 and 2025, the Company recognized $
As of September 30, 2026, the unrecognized compensation related to the service-based vesting options is approximately $
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:
|
|
Nine Months Ended September 30, |
||
|
|
2026 |
|
2025 |
Risk-free interest rate |
|
|
||
Expected term (in years) |
|
|
||
Expected volatility |
|
|
||
Dividend yield |
|
|
||
17
Stock Appreciation Rights granted to employees and executives
During the nine months ended September 30, 2025, the Company granted
During the three and nine months ended September 30, 2025,
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 $
Restricted Stock Units
During the three and nine months ended September 30, 2026, the Company granted shares of restricted stock units under the 2026 Omnibus Plan (“RSUs”) to certain employees, executives and directors, including the Replacement RSUs. 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.
The following table summarizes the RSUs activity for the nine months ended September 30, 2026:
|
|
Number of |
|
|
Weighted-Average Grant Date FV |
|
||
Unvested RSUs as of December 31, 2025 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Unvested RSUs as of September 30, 2026 |
|
|
|
|
$ |
|
||
During the three and nine months ended September 30, 2026, the Company recognized stock-based compensation of $
As of September 30, 2026, the total unrecognized stock-based compensation related to the Company’s unvested RSUs was $
18
Stock Appreciation Rights issued to a customer
On March 27, 2025, the Company granted
|
|
September 30, 2026 |
|
December 31, 2025 |
|
Grant Date |
Risk-free interest rate |
|
|
|
|||
Expected term (in years) |
|
|
|
|||
Volatility |
|
|
|
|||
Expected dividend yield |
|
|
|
The aggregate grant date fair value of the SARs issued to a customer is $
Warrants issued to a customer
During 2018, 2020 and 2024, the Company granted an aggregate
As of December 31, 2025,
19
12.
Convertible Notes
At the time the were issued, the holder held more than
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 $
In May 2026, the Amended Spokesperson Agreement was further amended (the “First Amended Spokesperson Agreement”) to add $
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 $
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 was
IPO Bonus
In May 2026, the Company paid a $
20
The Company operates as a operating segment, as the (“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
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):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: |
|
|
|
|
|
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|
||||
Cost of goods sold1 |
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|
||||
Marketing |
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|
||||
Payroll expenses |
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|
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|
||||
Outbound freight |
|
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|
|
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|
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|
||||
Selling expenses |
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|
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|
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|
||||
Warehousing & distribution |
|
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|
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|
||||
General and administrative costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other segment items2 |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Segment net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
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.
|
|
Three and Nine Months Ended September 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Stock options |
|
|
|
|
|
|
||
Restricted stock units |
|
|
|
|
|
|
||
Convertible preferred stock |
|
|
|
|
|
|
||
Convertible Notes |
|
|
|
|
|
|
||
Warrants issued to a customer |
|
|
|
|
|
|
||
Convertible Preferred Stock Warrants |
|
|
|
|
|
|
||
Total common shares equivalent |
|
|
|
|
|
|
||
21
15. SuBsequent Events
On October 30, 2026, the Company announced a voluntary recall and reformulation (the "Recall") of all of its Tractor Wheels soft-baked bars ("Tractor Wheels") due to reported choking incidents. The Company has temporarily suspended shipments of Tractor Wheels and is preparing production plans to support a return to shelf for Tractor Wheels as soon as possible, once an evaluation is complete and any necessary changes for product safety have been implemented and validated. For the nine months ended September 30, 2026, Tractor Wheels accounted for approximately
The Company is currently assessing the financial impact of the Recall, which may include inventory write-downs, product disposition costs, customer refunds, consumer refunds, and operational and other Recall-related costs, net of any insurance or third-party recoveries. The Company is unable to reasonably estimate the financial impact at this time, but expects the Recall to have a significant impact on its results of operations and cash flows for the year ending December 31, 2026 and potentially subsequent periods.
22
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those set forth in Part II, Item 1A. “Risk Factors,” and “Cautionary Statement Concerning Forward-Looking Statements” in this Quarterly Report on Form 10-Q. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “Annual Report”), filed with the Securities and Exchange Commission (“SEC”) on March 16, 2026.
Overview
Once Upon a Farm is driving systemic change in childhood nutrition with real, organic, farm-fresh food made with no added sugar, no preservatives, and nothing artificial. From baby’s first bites to kid’s school-ready snacks, we are a rapidly growing leader in modern childhood nutrition that provides innovative, nutrient-packed, delicious food to on-the-go parents for their babies and kids. We revolutionized the childhood nutrition category with what we believe is the first-ever cold-pressed Pouch, setting a new standard for nutrition that parents love and kids crave. Our mission and commitment to our consumers guide every decision we make and are at the heart of our identity and journey ahead. We are a Public Benefit Corporation, which requires us to uphold high social and environmental standards and provide transparency for all of our stockholders. Additionally, we believe we are the first baby through kid parent-ally brand with a deep commitment to superior, fresh products with high nutritional standards and incredible taste. Our thoughtful recipes are crafted with high-quality organic ingredients, from cold-pressed Pouches, to Refrigerated Oat Bars and shelf-stable snacks, earning us the trust of parents, and fostering a loyal, passionate, and fast-growing consumer base.
In February 2026, we closed the initial public offering (“IPO”) of our common stock, in which we issued and sold an aggregate of 7,631,537 shares of common stock at a price to the public of $18.00 per share. Shortly following the close of the offering, the underwriters exercised their option to purchase an additional 1,649,581 shares at the initial public offering price. In the aggregate, we received net proceeds from the offering of approximately $138.5 million, after deducting underwriting discounts, commissions and offering expenses.
Recent Developments
On October 30, 2026, we announced a voluntary recall and reformulation (the “Recall”) of all our Tractor Wheels soft-baked bars ("Tractor Wheels") due to reported choking incidents. We have temporarily suspended shipments of Tractor Wheels and we are preparing production plans to support a return to shelf for Tractor Wheels as soon as possible, once an evaluation is complete and any necessary changes for product safety have been implemented and validated. Our financial results for the nine months ended September 30, 2026 do not reflect any adjustments related to the Recall.
For the nine months ended September 30, 2026, Tractor Wheels accounted for approximately 18% of our net sales. As of October 31, 2026, our inventory related to Tractor Wheels was approximately $7.9 million, consisting of raw material, packaging and finished goods, before any adjustments for obsolescence or net realizable value. Because Tractor Wheels represented a significant portion of our net sales and shipments have been temporarily suspended, we currently expect the Recall to have a significant impact on our net sales, gross profit, operating results and cash flows for the fourth quarter of 2026 and potentially subsequent periods. The magnitude and duration of this impact will depend on, among other things, the length of time Tractor Wheels remain off shelf, the timing and cost of completing our evaluation, reformulation, validation and return-to-shelf activities, retailer acceptance and timing of product relaunch, consumer response to the Recall and reformulated product, the amount and timing of inventory write-downs, product disposition costs, consumer and customer refunds, operational and professional costs, and the extent and timing of any insurance or third-party recoveries. The Company will account for the impact of the Recall in the period in which the recall was announced.
23
We are currently assessing the total financial impact of the recall, which may include product costs, consumer and customer refunds, and Recall-related costs and are unable to reasonably estimate the full financial impact at this time. For additional information, see Note 15, Subsequent Events, to our unaudited condensed consolidated financial statements in Part I, Item 1. in this Quarterly Report on Form 10-Q, and Part II, Item 1A. “Risk Factors” of this Quarterly Report
Key Factors Affecting our Performance
Our ability to achieve sustainable growth and profitability is impacted by many factors, including those described below. Certain factors are strategically tied to key metrics that define our success:
Increasing Brand Awareness and Household Penetration
Growing our brand awareness and household penetration is central to our strategy for long-term growth. Our approach and creation of great-tasting, high-quality, nutritional and organic products that kids love establishes trust in parents and fosters brand-loyalty from our customers. As we continue to expand our innovative product offerings, we plan to establish trust with parents in the early stages of their baby’s development, building brand loyalty that allows us to strategically deliver great-tasting, healthy and convenient products to kids of all ages. We plan to increase our brand awareness and household penetration by leveraging a full-funnel modern marketing approach that includes retail media networks, influencer programs, high-frequency national media campaigns, engaging social media, impactful sponsorships, and immersive activations. To grow and maintain our brand, we must invest in sales and marketing to promote word-of-mouth sharing of our brand to attract new customers. We believe that once consumers are introduced to our brand and products, we will be able to drive conversion to repeat purchases and long-term loyalty.
Investment in Retail Partnerships and Distribution Expansion
Our long-term growth strategy relies on our ability to cultivate and maintain relationships with our retail customers to expand our presence and optimize distribution across all retail stores. Our success is dependent on deepening the assortment of our product offerings and ensuring that our products are prominently displayed in both our retail customers’ brick-and-mortar stores and e-commerce platforms. Our relationships with our retail customers also allow us to deepen the assortment of our product offerings by extending our reach to new product categories and expanding the number of shelves that our products are displayed on at stores in major classes of retail, including grocery, mass, club, natural and specialty stores.
We also intend to grow our sales and in-store footprint through the expansion and productivity of our cooler program. Our coolers, which can be found replacing standard shelving in the baby aisle, as an end-cap display or free standing in the baby aisle, currently feature our widest selection of Baby Pouches and our new Meat, Meat & Bone Broth and Legume Blend pouches introduced in the quarter ended June 30, 2026. As of September 30, 2026, we have deployed over 4,600 coolers in stores to date and believe there may be an opportunity to expand the footprint to more than 15,000 coolers in stores in North America. We invest in slotting fees and offer other incentives to encourage our retail customers to place our coolers in more of their stores and display our coolers in ideal locations within their stores. As we accelerate the expansion and productivity of our cooler program, we expect to continue to see increases in overall sales velocity and believe there are further opportunities for sales velocity enhancement as our cooler base matures and we continue to optimize the product assortment offered in the cooler and encourage excitement for our product across aisles. The presence of baby coolers also drives an increase in basket size for the whole baby department, which encourages our retail customers to participate in this initiative with us. The direct impact of the new cooler additions on our net sales varies based on numerous factors including store traffic and cooler size.
In addition to our primary retail growth strategy of increasing depth of our product offerings with our existing retail customers, we believe there is a significant opportunity to increase sales through e-commerce and delivery platforms and expand into new retail customers and international markets.
24
Product Innovation and Category Leadership
We are confident that through innovation in new products, product line extensions, and packaging types, we will drive meaningful growth for our Company. Investment in strategic product innovation is vital for meeting evolving consumer needs and complementing our existing product portfolio to expand our brand’s reach. We continue to expand and enhance our product offerings, including launches of Refrigerated Oat Bars and shelf-stable snacks. During 2026 we've introduced Meat, Meat & Bone Broth, and Legume Blend pouches as well as refrigerated Electrolyte Blends pouches, to meet the evolving needs of our consumers and drive demand for our products.
Aligning our innovation pipeline with consumer demands for organic, nutritious, delicious, and convenient products has positioned us as a leader in the baby and kids’ food market. We plan to invest in exploring new flavor combinations and innovative formats that enhance taste and nutritional value, and in expanding our existing functional product offerings across various formats, such as immunity, brain health, and protein, to provide parents with the functionality they are looking for and satisfy the cravings of babies and kids.
Drive Sustainable, Profitable Growth
Our future success is dependent on our ability to drive sustainable and profitable growth. We have made significant investments in assembling our strong leadership team, implementing strategic sales management principles, and building our global procurement network infrastructure to support long-term growth and to enhance the profitability of our core operating model as we grow. We also plan to continue to invest in expansion and automation of our scalable production platform with our co-manufacturing partners to increase our capacity and operational efficiency to support our growth and achieve economies of scale. With these investments, we believe we will be well-positioned to consistently deliver the highest quality, premium products to our consumers while also ensuring profitability and sustainability.
As we extend our presence with existing retail customers, we believe there may also be opportunity to further increase our operating margins. The strength of our brand and ability to efficiently deliver industry-disrupting products to our consumers have consistently resulted in attractive gross margins.
Macroeconomic and Geopolitical Uncertainty and Supply Chain Costs
Uncertainty in the macroeconomic environment resulting from geopolitical and economic instability, including the imposition of tariffs, embargoes, or similar restrictions could cause disruption in our supply chain. For example, in 2025, the U.S. presidential administration announced the imposition of tariffs on numerous countries that trade with the United States, and in February 2026 the United States Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”). Following the Supreme Court’s decision, the U.S. presidential administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariff. On July 24, 2026, the U.S. presidential administration imposed additional tariffs on certain imports, further contributing to the evolving and uncertain tariff landscape. As the implementation of tariffs is ongoing, more tariffs may be added in the future and countermeasures may be adopted by other countries.
Following the February 2026 ruling, and effective on April 20, 2026, the U.S. Customs and Border Protection launched a platform for importers of record to begin submitting IEEPA tariff refund requests. The imposition of new tariffs (or uncertainty regarding the timing and amount of any tariff refund payments) remains uncertain as the situation is dynamic and rapidly evolving. See Note 2 (Summary of Significant Accounting Policies – Vendor Rebates) of our unaudited condensed consolidated financial statements. New or increased tariffs could also negatively affect U.S national or regional economies or lead to increased inflation or a recession, which also could negatively impact our sales growth, and our business and results of operations. Any tariffs or other barriers to trade affecting Mexico and South America in particular, two regions from which we source a significant portion of our key fruit and vegetable ingredients, could lead to, among other things, shortages and higher cost of procurement, and could negatively impact our business and profitability.
In addition, in recent years, we have experienced elevated commodity and supply chain costs, including the costs of raw materials, packaging, labor, energy, fuel, freight, and other inputs necessary for the production and
25
distribution of our products, and we expect elevated levels of inflation to continue in 2026. In particular, fuel costs have been subject to heightened volatility due to persistent inflationary pressures and ongoing geopolitical uncertainty, including disruptions to global energy markets. Such elevated commodity and supply chain costs and inflation levels did not have a material impact on our results of operations for the three and nine months ended September 30, 2026 and 2025, however, there can be no assurance that continued volatility in fuel costs driven by inflationary conditions or geopolitical developments will not have a material effect on our results of operations or financial condition in future periods. In an effort to mitigate the impact of these elevated costs, we have taken actions to: diversify the regions from which we source the raw materials used in our business, remove intermediate third parties in our supply chain, scale our business and work with co-manufacturing partners to increase our capacity and operational efficiency, including through investment in equipment used by our co-manufacturers. We also continue to monitor fuel cost trends and evaluate strategies to mitigate the impact of fuel price volatility on our operations, including optimizing distribution routes and logistics arrangements and, where appropriate, negotiating fuel surcharge provisions in our transportation contracts.
For a further discussion of the risks and challenges posed by these events, see Part II, Item 1A. “Risk Factors—Risks Relating to Our Business and Industry” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, and Part I, Item 1A. “Risk Factors—Risks Relating to Our Business and Industry” in our Annual Report on Form 10-K.
Components of Results of Operations
Net Sales
We generate revenue through sales of organic, nutrient-packed, farm-fresh Pouches, snacks, and other products for babies and kids through retail channels, which include traditional brick-and-mortar stores, e-commerce platforms, and delivery platforms, as well as directly to consumers through our direct-to-consumer (“DTC”) platform that we operate. Our revenue is recognized net of allowances for sales discounts and promotions and any sales or other similar taxes collected from consumers. We offer sales discounts and promotions to our retail and DTC customers through various programs. These programs include sales incentives, trade allowances, slotting fees, coupon offers, rebates, and term discounts. We anticipate that these sales discounts and promotions will impact our net sales and that changes in these activities could impact period over period results.
Cost of Goods Sold
Cost of goods sold consists primarily of product costs, third-party manufacturing fees, inbound freight of raw materials and finished goods, storage and handling costs during the manufacturing process, product loading and handling at our outsourced production facilities for distribution, depreciation of machinery, and equipment used in the manufacturing process as well as duties and tariffs.
We source our organic raw materials from farmers both in the United States and international markets. We also contract with outsourced partners in the United States to manufacture, package, and distribute our products to our customers.
Gross Profit and Gross Margin
Gross profit represents net sales less cost of goods sold. Gross margin is gross profit expressed as a percentage of net sales.
Our gross margin may in the future fluctuate from period to period based on a number of factors, including costs of produce and commodities, manufacturing, warehousing and transportation rates for inbound raw materials. Gross margin may also fluctuate in the future based on changes in the promotional environment in the marketplace, the expansion of our cooler program, the mix of products we sell, the channel through which we sell our products and innovation initiatives we undertake in each of our product categories, among other factors.
26
Selling, General and Administrative
Selling, general and administrative expenses primarily consist of payroll and payroll-related benefits, stock-based compensation, marketing content and agency fees, customer growth and acquisition costs, warehouse and distribution costs, and freight costs associated with shipping goods to customers. Selling, general and administrative expenses also include depreciation and amortization and product development costs.
We expect selling, general and administrative expenses to increase in the future as we continue to scale our operations to meet our product demand, continue to build our product portfolio, and add personnel to our organization. We also expect to incur additional costs associated with operating as a public company, including increased expenses related to legal, audit, accounting, regulatory, and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance costs, investor and public relations costs, and other administrative and professional services.
Other Income (Expense)
Interest income consists of interest earned on our cash and cash equivalents. Interest expense is attributable to interest on our outstanding borrowings under our Nonconvertible Debt and Convertible Notes agreements (each as defined below). Following our initial public offering, we expect our interest expense to decrease, as a portion of the proceeds from the initial public offering were used to repay borrowings then outstanding under the Revolving Credit Facility and our outstanding Convertible Notes were converted into shares prior to or at the time of the offering. However, our Revolving Credit Facility provides for availability of up to $65.0 million of borrowings and our Term Loan Facility for availability of up to $30.0 million. From time to time, we may draw amounts under our Revolving Credit Facility and our Term Loan Facility and expect to incur interest expense as a result of any such draws.
Change in fair value of derivative liability consists of adjustments to the fair value of our derivative liability. As a result of our initial public offering in February 2026 and the conversion of our outstanding Convertible Notes into shares of common stock, the derivative liability was eliminated and there will be no subsequent change in its fair value.
Other income (expense), net primarily consists of gains or losses due to adjustments to the fair value of our convertible preferred stock warrant liability. Subsequent to our initial public offering, the convertible preferred stock warrant liability was eliminated as a result of the exercise of the underlying warrants, and there will be no subsequent changes in its fair value.
27
Results of Operations
Comparison of the Three and Nine Months Ended September 30, 2026 and 2025
The results of operations data have been derived from the unaudited condensed consolidated financial statements included in Part I, Item 1. in this Quarterly Report on Form 10-Q. The following table sets forth our results of operations for the periods presented:
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
(in thousands) |
|
|||||||||||||
Net sales |
$ |
89,067 |
|
|
$ |
66,036 |
|
|
$ |
247,179 |
|
|
$ |
176,656 |
|
Cost of goods sold |
|
56,915 |
|
|
|
38,251 |
|
|
|
154,700 |
|
|
|
105,325 |
|
Gross profit |
|
32,152 |
|
|
|
27,785 |
|
|
|
92,479 |
|
|
|
71,331 |
|
Selling, general and administrative |
|
36,808 |
|
|
|
28,837 |
|
|
|
118,924 |
|
|
|
81,550 |
|
Loss from operations |
|
(4,656 |
) |
|
|
(1,052 |
) |
|
|
(26,445 |
) |
|
|
(10,219 |
) |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
(50 |
) |
|
|
(801 |
) |
|
|
(519 |
) |
|
|
(1,984 |
) |
Interest income |
|
866 |
|
|
|
59 |
|
|
|
2,200 |
|
|
|
253 |
|
Change in fair value of derivative liability |
|
— |
|
|
|
(8,460 |
) |
|
|
340 |
|
|
|
(26,320 |
) |
Other income (expense), net |
|
54 |
|
|
|
(462 |
) |
|
|
(81 |
) |
|
|
(1,447 |
) |
Total other income (expense) |
|
870 |
|
|
|
(9,664 |
) |
|
|
1,940 |
|
|
|
(29,498 |
) |
Net loss before income tax provision |
|
(3,786 |
) |
|
|
(10,716 |
) |
|
|
(24,505 |
) |
|
|
(39,717 |
) |
Income tax provision |
|
(27 |
) |
|
|
(539 |
) |
|
|
(69 |
) |
|
|
(42 |
) |
Net loss |
$ |
(3,813 |
) |
|
$ |
(11,255 |
) |
|
$ |
(24,574 |
) |
|
$ |
(39,759 |
) |
Net Sales
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||||||
|
|
(dollars in thousands) |
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
||||||||||||||||||||
Kid |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pouches |
|
$ |
37,473 |
|
|
$ |
29,956 |
|
|
$ |
7,517 |
|
|
|
25 |
% |
|
$ |
103,121 |
|
|
$ |
88,159 |
|
|
$ |
14,962 |
|
|
|
17 |
% |
Snacks |
|
|
4,767 |
|
|
|
6,163 |
|
|
|
(1,396 |
) |
|
|
(23 |
)% |
|
|
17,179 |
|
|
|
16,433 |
|
|
|
746 |
|
|
|
5 |
% |
Total Kid |
|
|
42,240 |
|
|
|
36,119 |
|
|
|
6,121 |
|
|
|
17 |
% |
|
|
120,300 |
|
|
|
104,592 |
|
|
|
15,708 |
|
|
|
15 |
% |
Baby |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pouches |
|
|
11,608 |
|
|
|
9,634 |
|
|
|
1,974 |
|
|
|
20 |
% |
|
|
34,371 |
|
|
|
21,595 |
|
|
|
12,776 |
|
|
|
59 |
% |
Snacks |
|
|
34,818 |
|
|
|
19,766 |
|
|
|
15,052 |
|
|
|
76 |
% |
|
|
91,229 |
|
|
|
48,650 |
|
|
|
42,579 |
|
|
|
88 |
% |
Other |
|
|
401 |
|
|
|
517 |
|
|
|
(116 |
) |
|
|
(22 |
)% |
|
|
1,279 |
|
|
|
1,819 |
|
|
|
(540 |
) |
|
|
(30 |
)% |
Total Baby |
|
|
46,827 |
|
|
|
29,917 |
|
|
|
16,910 |
|
|
|
57 |
% |
|
|
126,879 |
|
|
|
72,064 |
|
|
|
54,815 |
|
|
|
76 |
% |
Net sales |
|
$ |
89,067 |
|
|
$ |
66,036 |
|
|
$ |
23,031 |
|
|
|
35 |
% |
|
$ |
247,179 |
|
|
$ |
176,656 |
|
|
$ |
70,523 |
|
|
|
40 |
% |
For the three months ended September 30, 2026, net sales increased $23.0 million, or 35%, compared to the three months ended September 30, 2025, primarily due to an increase in volume growth of more than 32%, driven by both the incremental distribution of existing products and the introduction of new products into our portfolio. Additionally, since 2025, we have launched 99 new SKUs across categories, with 8 new SKUs introduced during the three months ended September 30, 2026. A “new SKU” is a unique product configuration, represented by a distinct GTIN/UPC, or barcode, that differs from existing SKUs in formulation, flavor, size, or format, and is introduced for commercial sale in our markets for the first time. Our snacks categories resulted in a net increase of $13.7 million, or 53%, increase in net sales period over period. Net sales from Pouches increased by $9.5 million, or 24% period over period. Our trade spending, which includes sales incentives, trade allowances, term discounts, and slotting fees, and is recognized as a reduction of net sales, increased for the three months ended September 30,
28
2026 compared to three months ended September 30, 2025 primarily due to promotional programs for increased distribution of our products and introduction of new products. For the three months ended September 30, 2026 and 2025, we incurred $3.6 million and $1.1 million in trade spending related to slotting fees paid to retail customers for placement of new coolers in their stores. The slotting fees paid related to placement of new coolers in stores increased compared to three months ended September 30, 2025 due to timing of installation of coolers in stores.
For the nine months ended September 30, 2026, net sales increased $70.5 million, or 40%, compared to the nine months ended September 30, 2025, primarily due to an increase in volume growth of more than 31%, driven by both the incremental distribution of existing products and the introduction of new products into our portfolio. The increase in net sales was also driven by a more favorable product mix. We have launched 54 new SKUs introduced during the nine months ended September 30, 2026. Our snacks categories resulted in a combined $43.3 million, or 67%, increase in net sales period over period. Net sales from Pouches increased by $27.7 million, or 25%, period over period. For the nine months ended September 30, 2026 and 2025, we incurred $5.7 million and $6.7 million in trade spending related to slotting fees paid to retail customers for placement of new coolers in their stores, which was recognized as a reduction of net sales. The slotting fees paid related to placement of new coolers in stores decreased compared to nine months ended September 30, 2025 due to timing of installation of coolers in stores; however, these slotting fees are expected to increase in the future as we continue the expansion of our baby cooler program and increase our presence in our retail customers' stores.
Cost of Goods Sold
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||||||||||
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||||||
|
(dollars in thousands) |
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
||||||||||||||||||||
Cost of goods sold |
$ |
56,915 |
|
|
$ |
38,251 |
|
|
$ |
18,664 |
|
|
|
49 |
% |
|
$ |
154,700 |
|
|
$ |
105,325 |
|
|
$ |
49,375 |
|
|
|
47 |
% |
Percentage of net sales |
|
64 |
% |
|
|
58 |
% |
|
|
|
|
|
6 |
% |
|
|
63 |
% |
|
|
60 |
% |
|
|
|
|
|
3 |
% |
||
For the three months ended September 30, 2026, cost of goods sold increased $18.7 million, or 49%, compared to three months ended September 30, 2025, primarily due to increased sales volume. Cost of goods sold as a percentage of net sales increased by 6% primarily due to increased trade spending, which was recognized as a reduction of net sales, and a less favorable product mix. The increase in trade spending was primarily driven by slotting fees paid for the placement of new coolers in stores and by promotional programs supporting increased distribution of our products.
For the nine months ended September 30, 2026, cost of goods sold increased $49.4 million, or 47%, compared to nine months ended September 30, 2025, primarily due to increased sales volume. Cost of goods sold as a percentage of net sales increased by 3% primarily due to less favorable product mix, partially offset by pricing and favorable customer mix.
Gross Profit and Gross Margin
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||||||||||
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||||||
|
(dollars in thousands) |
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
||||||||||||||||||||
Gross profit |
$ |
32,152 |
|
|
$ |
27,785 |
|
|
$ |
4,367 |
|
|
|
16 |
% |
|
$ |
92,479 |
|
|
$ |
71,331 |
|
|
$ |
21,148 |
|
|
|
30 |
% |
Gross margin |
|
36 |
% |
|
|
42 |
% |
|
|
|
|
|
(6 |
)% |
|
|
37 |
% |
|
|
40 |
% |
|
|
|
|
|
(3 |
)% |
||
For the three months ended September 30, 2026, gross profit increased $4.4 million, or 16%, compared to the three months ended September 30, 2025, due to higher net sales. The decrease in gross margin of 6% for the three months ended September 30, 2026, compared to the three months ended September 30, 2025 was primarily driven by increased cost of goods sold as a percentage of net sales, which resulted from increased trade spending and a less favorable product mix.
29
For the nine months ended September 30, 2026, gross profit increased $21.1 million, or 30% compared to the nine months ended September 30, 2025, due to higher net sales. The decrease in gross margin of 3% for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025 was primarily driven by increased cost of goods sold as a percentage of net sales, which resulted from a less favorable product mix.
Selling, General and Administrative
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||||||||||
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||||||
|
(dollars in thousands) |
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
||||||||||||||||||||
Selling, general and administrative |
$ |
36,808 |
|
|
$ |
28,837 |
|
|
$ |
7,971 |
|
|
|
28 |
% |
|
$ |
118,924 |
|
|
$ |
81,550 |
|
|
$ |
37,374 |
|
|
|
46 |
% |
Percentage of net sales |
|
41 |
% |
|
|
44 |
% |
|
|
|
|
|
(3 |
)% |
|
|
48 |
% |
|
|
46 |
% |
|
|
|
|
|
2 |
% |
||
For the three months ended September 30, 2026, selling, general and administrative expenses increased by $8.0 million, or 28%, compared to the three months ended September 30, 2025, primarily due to:
For the nine months ended September 30, 2026, selling, general and administrative expenses increased by $37.4 million, or 46%, compared to the nine months ended September 30, 2025, primarily due to:
30
Other Income (Expense)
Interest Expense
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||||||||||
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||||||
|
(dollars in thousands) |
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
||||||||||||||||||||
Interest expense |
$ |
(50 |
) |
|
$ |
(801 |
) |
|
$ |
751 |
|
|
|
(94 |
)% |
|
$ |
(519 |
) |
|
$ |
(1,984 |
) |
|
$ |
1,465 |
|
|
|
(74 |
)% |
For the three months ended September 30, 2026, interest expense decreased $0.8 million, or 94%, compared to the three months ended September 30, 2025. For the nine months ended September 30, 2026, interest expense decreased $1.5 million, or 74%, compared to the nine months ended September 30, 2025. These decreases in interest expense were due to repayment of borrowings in February 2026.
Interest Income
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||||||||||
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||||||
|
(dollars in thousands) |
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
||||||||||||||||||||
Interest income |
$ |
866 |
|
|
$ |
59 |
|
|
$ |
807 |
|
|
|
1,368 |
% |
|
$ |
2,200 |
|
|
$ |
253 |
|
|
$ |
1,947 |
|
|
|
770 |
% |
For the three months ended September 30, 2026, interest income increased $0.8 million, or 1,368% compared to the three months ended September 30, 2025. For the nine months ended September 30, 2026, interest income increased $1.9 million, or 770%, compared to the nine months ended September 30, 2025. These increases in interest income are due to higher average cash balances in our money market accounts, driven by IPO proceeds received in February 2026.
Change in Fair Value of Derivative Liability
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
||||||||||||||||||||||||
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
||||||
|
(dollars in thousands) |
|
|
|
|
(dollars in thousands) |
|
|
|
||||||||||||||||||
Change in fair value of derivative liability |
$ |
— |
|
|
$ |
(8,460 |
) |
|
$ |
8,460 |
|
|
** |
|
$ |
340 |
|
|
$ |
(26,320 |
) |
|
$ |
26,660 |
|
|
** |
** not meaningful
For the three and nine months ended September 30, 2026, there was no change and a $0.3 million change in fair value of our derivative liability as immediately prior to the IPO in February 2026, our Convertible Notes converted into their respective classes of convertible preferred stock, which then immediately converted into shares of our common stock. For the three and nine months ended September 30, 2025, the change in fair value of our derivative liability was driven by a change in fair value of our convertible preferred stock underlying the convertible notes.
31
Other Income (Expense), Net
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||||||||||
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||||||
|
(dollars in thousands) |
|
|
(dollars in thousands) |
|
||||||||||||||||||||||||||
Other income (expense), net |
$ |
54 |
|
|
$ |
(462 |
) |
|
$ |
516 |
|
|
|
(112 |
)% |
|
$ |
(81 |
) |
|
$ |
(1,447 |
) |
|
$ |
1,366 |
|
|
|
(94 |
)% |
For the three months ended September 30, 2026, change in other income (expense), net of $0.5 million, compared to the three months ended September 30, 2025, was primarily due to the absence of changes in the fair value of the convertible preferred stock warrant liability during the three months ended September 30, 2026, as the warrants were settled upon the closing of the IPO in February 2026.
For the nine months ended September 30, 2026, change in other expense, net of $1.4 million, compared to the nine months ended September 30, 2025, was primarily due to a decrease in the change in fair value of our convertible preferred stock warrant liability and its settlement upon the closing of the IPO in February 2026.
Liquidity and Capital Resources
On February 9, 2026, we completed an IPO in which we issued and sold 7,631,537 shares of common stock, at the public offering price of $18.00 per share, plus an additional 1,649,581 shares of common stock at a public offering price of $18.00 per share pursuant to the exercise of the underwriters’ option to purchase additional shares. We received net proceeds of approximately $138.5 million from the IPO, after deducting underwriting discounts and commissions and offering expenses payable by us. Historically, we have generated operating losses and have relied on private sales of securities and proceeds from debt financing to fund our operations. As of September 30, 2026, we had cash and cash equivalents of $106.4 million and accumulated deficit of $160.3 million. For the three and nine months ended September 30, 2026, we incurred a net loss of $3.8 million and $24.6 million and net cash flow used in operating activities totaled $4.6 million during the nine months ended September 30, 2026. We expect that our existing cash and cash equivalents, along with available borrowing capacity under the Revolving Credit Facility and Term Loan Facility, will be sufficient to support our operations for at least the next 12 months as well as to meet our cash requirements for the longer term.
Our future capital requirements will depend on many factors, including our pace of new and existing customer growth, our investments in innovation, our investment in cooler placements at retail stores, our investments in partnerships, the financial impact of the recently announced product recall and unexplored channels. We may be required to seek additional equity or debt financing. There can be no assurance that additional equity or debt financing will be available to us at terms acceptable to us, or at all and such financing will be impacted by many factors, including the liquidity of the overall capital markets and the future state of the U.S. and global economy.
Nonconvertible Debt
On June 27, 2025 (the “Initial Closing Date”), we entered into a Credit Agreement with Western Alliance Bank (the “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 had an initial funding commitment of up to $65.0 million which included (i) an initial commitment of $45.0 million and (ii) a $20.0 million uncommitted option, subject to syndication at terms acceptable to prospective lenders (with such increase implemented through the amendment executed on September 11, 2025). The Term Loan Facility had a commitment of $30.0 million which includes (i) an $18.0 million available on the Initial Closing Date and (ii) a $12.0 million available upon achieving certain milestones and lender approval (which were achieved upon the completion of the IPO). On the Initial Closing Date, we borrowed $22.0 million under the Revolving Credit Facility to repay all outstanding amounts under its previously existing debt facilities.
On September 11, 2025, the Credit Agreement was amended to, among other things, increase the Revolving Credit Facility funding commitment to up to $65.0 million. This increase reflects our lender’s commitment to fund the previously uncommitted $20.0 million option.
32
In February 2026, following completion of the IPO, we used a portion of the proceeds to repay all outstanding amounts under the Nonconvertible Debt. As of September 30, 2026, we have no outstanding debt under the Nonconvertible Debt.
Interest on borrowings under the Term Loan Facility is calculated at a rate equal to (i) 2.50% plus the highest of (w) the prime rate (as determined by reference to the Wall Street Journal), (x) the federal funds rate plus 0.50% per annum and (y) one month Term SOFR plus 1.00% per annum or (ii) one month Term SOFR plus 3.50% per annum, subject to a 2.00% Term SOFR floor. Interest-only payments are required to be made until July 10, 2027, then (i) with respect to $18.0 million of the Term Loan Facility, equal payments of outstanding principal and (ii) with respect to $12.0 million of the Term Loan Facility, 24 months after the borrowing of such amount with equal payments of outstanding principal, plus monthly interest payments, through the maturity date. As of September 30, 2026, there were no amounts outstanding under the Term Loan Facility. As of September 30, 2026, the maximum remaining capacity under the Term Loan Facility was $30.0 million.
Interest on borrowings under the Revolving Credit Facility is calculated at a rate equal to (i) 2.25% plus the highest of (w) the prime rate (as determined by reference to the Wall Street Journal), (x) the federal funds rate plus 0.50% per annum and (y) one month Term SOFR plus 1.00% per annum, or (ii) one month Term SOFR plus 3.25% per annum, subject to a 2.00% Term SOFR floor. Interest-only payments are required with a balloon principal payment on the maturity date. The interest rate applicable to borrowings under the Revolving Credit Facility was 7.0% as of December 31, 2025. As of September 30, 2026, there were no amounts outstanding under the Revolving Credit Facility.
The borrowing base for the Revolving Credit Facility requires us to maintain collateral in the form of accounts receivable and inventory. Amounts available to us are determined as the lower of (a) the current maximum capacity and (b) the sum of (i) 80% of our gross accounts receivable and (ii) 85% of the liquidation value of inventory, each subject to certain adjustments. The Nonconvertible Debt includes financial and nonfinancial covenant provisions. As of September 30, 2026, we were in compliance with all covenants related to the Nonconvertible Debt. As of September 30, 2026, the maximum remaining capacity under the Revolving Credit Facility was $65.0 million, with $58.2 million available for borrowing based on existing inventory and accounts receivable balances as described by the Credit Agreement.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(dollars in thousands) |
|
|||||
Net cash used in operating activities |
|
$ |
(4,600 |
) |
|
$ |
(23,236 |
) |
Net cash used in investing activities |
|
|
(3,438 |
) |
|
|
(3,539 |
) |
Net cash provided by financing activities |
|
|
103,586 |
|
|
|
16,881 |
|
Net change in cash and cash equivalents |
|
$ |
95,548 |
|
|
$ |
(9,894 |
) |
Operating Activities
Net cash used in operating activities of $4.6 million for the nine months ended September 30, 2026 was primarily driven by net loss of $24.6 million, non-cash adjustments of $15.9 million, and a net increase in cash related to changes in operating assets and liabilities of $4.1 million. Non-cash adjustments primarily consisted of stock-based compensation of $9.8 million, inventory adjustments of $4.4 million, and depreciation and amortization expense of $1.7 million. Changes in cash flows related to operating assets and liabilities primarily consisted of a $9.1 million increase in accounts receivable driven by growth in our net sales, a $3.0 million increase in inventory to support the increase in sales volume, and a $2.6 million increase in prepaid expenses and other assets, primarily due to increases in prepaid insurance and other receivables. These uses of cash were partially offset by a $18.8 million
33
increase in accounts payable and accrued expenses and other current liabilities, primarily related to third-party manufacturing fees and raw material purchases to support growth in sales volume.
Net cash used in operating activities of $23.2 million for the nine months ended September 30, 2025 was primarily driven by net loss of $39.8 million, non-cash adjustments of $34.1 million and a net decrease in cash related to changes in operating assets and liabilities of $17.5 million. Non-cash adjustments primarily consisted of a change in fair value of derivative liability of $26.3 million, stock-based compensation of $2.9 million, a change in fair value of convertible preferred stock warrant liability of $1.4 million, depreciation and amortization expense of $0.9 million, inventory adjustments of $1.8 million, amortization of debt discounts and deferred financing costs of $0.5 million, non-cash interest expense of $0.2 million, and a change in fair value of SARs liability of $0.1 million. Changes in cash flows related to operating assets and liabilities primarily consisted of an $19.6 million increase in inventory to support the increase in sales volume, a $12.1 million increase in accounts receivable due to growth in our net sales, and a $0.4 million increase in prepaid expenses and other assets, primarily due to increases in prepaid insurance and deferred taxes. These uses of cash were partially offset by a $14.6 million increase in accounts payable and accrued expenses and other current liabilities primarily related to increased third-party manufacturing fees, accrued trade spend, and accrued marketing costs to support the growth in sales volume.
Investing Activities
For the nine months ended September 30, 2026 and 2025, net cash used in investing activities was $3.4 million and $3.5 million, related to purchases of property and equipment used in ongoing operations.
Financing Activities
For the nine months ended September 30, 2026, net cash provided by financing activities was $103.6 million, primarily consisting of $145.8 million of proceeds from our IPO, net of underwriting discounts and offering costs paid during the period and $0.8 million in proceeds from the exercise of stock options. This source of cash was partially offset by the repayment of our outstanding borrowings under our Credit Agreement of $43.0 million.
For the nine months ended September 30, 2025, net cash provided by financing activities was $16.9 million, primarily consisting of $21.0 million in borrowings from our credit facilities and $1.4 million in proceeds from the exercise of stock options. These sources of cash were partially offset by payments of deferred offering costs of $5.1 million and payments of debt issuance costs of $0.4 million.
Non-GAAP Financial Measures
To supplement our financial statements prepared and presented in accordance with GAAP, we use the non-GAAP financial measures Contribution Margin and Adjusted EBITDA to provide investors with additional information about our financial performance and to enhance the overall understanding of our past performance and future prospects. We are presenting these non-GAAP financial measures because we believe they provide an additional tool for investors to use in comparing our core financial performance over multiple periods with the performance of other companies.
However, non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles. In addition, non-GAAP financial measures may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies. As a result, non-GAAP financial measures should be viewed as supplementing, and not as an alternative or substitute for, our financial statements prepared and presented in accordance with GAAP.
To address these limitations, we provide a reconciliation of Contribution Profit to gross profit and Adjusted EBITDA to net loss. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure, and to view Contribution Margin and Adjusted EBITDA in conjunction with their respective related GAAP financial measures.
34
Contribution Margin
We use Contribution Margin, which we define as Contribution Profit divided by net sales, to measure our financial and operating performance (“Contribution Margin”). To derive Contribution Profit, we subtract from gross profit our outbound freight costs associated with shipping goods to customers included in selling, general and administrative expenses (“Contribution Profit”).
We use Contribution Margin as part of our overall assessment of performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our board of directors (“Board of Directors") concerning our financial performance. We believe Contribution Margin is useful to investors for year-to-year comparisons of our business and in evaluating and understanding our operating results and ability to scale. Contribution Margin is also useful to investors because our management uses Contribution Margin, in conjunction with financial measures prepared in accordance with GAAP, to evaluate our operating results and financial performance.
Contribution Margin decreased by 5% for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, and by 2% for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. These decreases were primarily driven by the aforementioned factors mentioned in the discussion of gross profit in the results of operations above. These decreases were partially offset by increased order sizes and increased customer pickups, which reduced freight costs per case and positively impacted Contribution Margin.
The following table provides a calculation of Contribution Margin:
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
(dollars in thousands) |
|
|||||||||||||
Net sales |
$ |
89,067 |
|
|
$ |
66,036 |
|
|
$ |
247,179 |
|
|
$ |
176,656 |
|
Cost of goods sold |
|
56,915 |
|
|
|
38,251 |
|
|
|
154,700 |
|
|
|
105,325 |
|
Gross profit |
|
32,152 |
|
|
|
27,785 |
|
|
|
92,479 |
|
|
|
71,331 |
|
Less: Outbound freight |
|
(4,009 |
) |
|
|
(3,369 |
) |
|
|
(11,362 |
) |
|
|
(9,851 |
) |
Contribution Profit |
$ |
28,143 |
|
|
$ |
24,416 |
|
|
$ |
81,117 |
|
|
$ |
61,480 |
|
Gross margin |
|
36 |
% |
|
|
42 |
% |
|
|
37 |
% |
|
|
40 |
% |
Contribution Margin |
|
32 |
% |
|
|
37 |
% |
|
|
33 |
% |
|
|
35 |
% |
Adjusted EBITDA
We report our financial results in accordance with GAAP. However, management believes that Adjusted EBITDA, a non-GAAP financial measure, provides investors with additional useful information in evaluating our performance.
We calculate Adjusted EBITDA as net loss, adjusted to exclude: (1) change in fair value of derivative liability; (2) change in fair value of convertible preferred stock warrant liability; (3) change in fair value of stock appreciation rights ("SARs") liability; (4) stock-based compensation, including expense related to the acceleration of certain awards in connection with our IPO; (5) payroll taxes related to stock-based compensation; (6) depreciation and amortization; (7) amortization and acceleration of certain payments under the Spokesperson Agreement (as defined in Note 12, Related-Party Transactions in Part I, Item 1. of this Quarterly Report on Form 10-Q) for services received in connection with our IPO; (8) one-time bonuses related to our IPO; (9) interest expense; (10) interest income; and (11) provision for income taxes.
In the third quarter of 2026, we revised our definition of Adjusted EBITDA to exclude payroll tax expense related to stock-based compensation, which is comprised of employer taxes incurred upon (i) vesting of restricted stock units ("RSUs") and (ii) exercise of nonqualified stock options. The amount of payroll tax expense related to employee stock transactions is dependent on RSU settlements, option exercises, related stock price, and other factors that are beyond our control and that do not correlate to the operation of our business. The RSUs were granted
35
in the first quarter of 2026 and the first tranche vested upon the expiration of the lockup period on August 5, 2026, at which point these amounts became significant. Because such amounts were not significant in prior periods, prior period disclosures were not recast.
We also revised our definition of Adjusted EBITDA to exclude the change in fair value of our SARs liability. The change in fair value is driven by the change in our stock price and other factors that are beyond our control and that do not correlate to the operations of our business. These SARs were granted in the first quarter of 2025. Because the change in fair value of our SARs liability was not significant in prior periods, prior period disclosures were not recast.
Adjusted EBITDA is a financial measure that is not required by, or presented in accordance with, GAAP. We believe that Adjusted EBITDA, when taken together with our financial results presented in accordance with GAAP, provides meaningful supplemental information regarding our operating performance and facilitates internal comparisons of our historical operating performance on a more consistent basis by excluding certain items that may not be indicative of our business, results of operations, or outlook. In particular, we believe that the use of Adjusted EBITDA is helpful to our investors as it is a measure used by management in assessing the health of our business, determining incentive compensation, and evaluating our operating performance, as well as for internal planning and forecasting purposes.
Adjusted EBITDA is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Some of the limitations of Adjusted EBITDA include that (1) it does not properly reflect capital commitments to be paid in the future, (2) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures, (3) it does not consider the impact of stock-based compensation and payroll taxes related to stock-based compensation, (4) it does not reflect other non-operating expenses, including interest expense, (5) it does not consider the impact of any derivative liability valuation adjustments, (6) it does not reflect tax payments that may represent a reduction in cash available to us, and (7) it does not consider amortization of payments under the Spokesperson Agreement for services received in connection with our IPO. In addition, our use of Adjusted EBITDA may not be comparable to similarly titled measures of other companies because they may not calculate Adjusted EBITDA in the same manner, limiting its usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider Adjusted EBITDA alongside other financial measures, including our net income and other results stated in accordance with GAAP.
36
The following table presents a reconciliation of Adjusted EBITDA to net (loss) income, the most directly comparable financial measure stated in accordance with GAAP, for the periods presented:
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
(dollars in thousands) |
|
|||||||||||||
Net loss |
$ |
(3,813 |
) |
|
$ |
(11,255 |
) |
|
$ |
(24,574 |
) |
|
$ |
(39,759 |
) |
Change in fair value of derivative liability (1) |
|
— |
|
|
|
8,460 |
|
|
|
(340 |
) |
|
|
26,320 |
|
Change in fair value of convertible preferred |
|
— |
|
|
|
437 |
|
|
|
(13 |
) |
|
|
1,365 |
|
Change in fair value of SARs liability |
|
(74 |
) |
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
Stock-based compensation |
|
2,995 |
|
|
|
997 |
|
|
|
11,968 |
|
|
|
2,895 |
|
Payroll taxes related to stock-based compensation |
|
86 |
|
|
|
— |
|
|
|
86 |
|
|
|
— |
|
Depreciation and amortization |
|
608 |
|
|
|
353 |
|
|
|
1,657 |
|
|
|
907 |
|
Amortization and acceleration of |
|
— |
|
|
|
649 |
|
|
|
5,405 |
|
|
|
1,947 |
|
IPO transaction bonus |
|
— |
|
|
|
— |
|
|
|
1,699 |
|
|
|
— |
|
Interest expense |
|
50 |
|
|
|
801 |
|
|
|
519 |
|
|
|
1,984 |
|
Interest income |
|
(866 |
) |
|
|
(59 |
) |
|
|
(2,200 |
) |
|
|
(253 |
) |
Provision for income tax |
|
27 |
|
|
|
539 |
|
|
|
69 |
|
|
|
42 |
|
Adjusted EBITDA |
$ |
(987 |
) |
|
$ |
922 |
|
|
$ |
(5,726 |
) |
|
$ |
(4,552 |
) |
Critical Accounting Estimates
The preparation of our financial statements in conformity with GAAP requires us to make estimates and judgments that affect the amounts reported in the financial statements and related notes thereto. Critical accounting estimates are those estimates that, in accordance with GAAP, involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial statements. Management has determined that our most critical accounting estimates are those relating to revenue recognition, valuation of derivative liability, fair value of common stock and stock-based compensation. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making these estimates, actual results reported in future periods could differ materially from those estimates. The following is a summary of certain accounting estimates we consider critical. For further discussion about our accounting policies, see Note 2 “Summary of Significant Accounting Policies” to our financial statements in Part I, Item 1. in this Quarterly Report on Form 10-Q.
Revenue Recognition
Our revenue is generated through sales of Pouches, snacks and other products for babies and kids through retail channels, which include traditional brick-and-mortar stores and e-commerce platforms, as well as directly to consumers through our DTC platform that we operate. We recognize revenue when control of the products transfers to the customer, which occurs upon customer pickup or delivery of the products to the customer for retail sales or when the product is delivered to the carrier for DTC sales. Our revenue is recognized net of allowances for sales discounts and promotions and any taxes collected from consumers.
We offer sales discounts and promotions to our customers through various programs. These programs include sales incentives, trade allowances, slotting fees, including baby cooler slotting fees, coupon offers, rebates and term discounts. The costs of these sales discounts and promotions are accounted for as reductions in the transaction price. We estimate variable consideration related to the cost of sales discounts and promotions during the period the product is sold. We recognize an allowance for estimated trade discounts. We also recognize an accrual for the estimated sales discounts and promotional activities that have been incurred but not settled as of each balance sheet
37
date. Our estimate of trade discounts and accrued promotional activities is a management estimate based on the terms and timing of our programs offered, expected participation based on our historical experience with similar programs and forecasted sales volumes.
We do not believe it is reasonably likely that there will be a material change in the estimates or assumptions used to recognize revenue. Estimates are made based on historical experience and other factors. Typically, programs that are offered have a short duration and historical differences between actual experience compared to estimated volumes, performance and redemptions have not been significant to the annual financial statements. However, if the level of redemption rates, volumes or performance were to vary significantly from our estimates, we may be exposed to gains or losses that could be material.
Derivative Liability
Our Convertible Notes contain conversion features that meet the definition of an embedded derivative that requires bifurcation from the Convertible Notes and measurement at fair value. The derivative liability is initially measured at fair value on issuance and is subject to remeasurement at each reporting period with changes in fair value recognized in change in fair value of derivative liability in the statements of operations and comprehensive loss.
We determine the fair value of our derivative liability related to Convertible Notes using a “with-and-without” methodology. This involves valuing the instrument with and without the embedded derivative, with the difference representing the derivative liability’s fair value at issuance. Key assumptions include the estimated fair value of the underlying preferred stock, the probability and timing of conversion events, dividend yields, volatility, discount rate, risk-free rate and remaining expected life. Changes in these inputs can materially impact the fair value and reported financial results, including loss and comprehensive loss for the applicable reporting period.
Fair Value of Common Stock
Prior to our initial public offering in February 2026 the fair value of the common stock underlying our stock-based awards was determined by management with the assistance of third-party valuation specialists using a hybrid approach. Under the hybrid approach, a probability weighting was assigned to both a merger and acquisition (“M&A”) scenario and an initial public offering scenario. For the M&A scenario, management uses the Income Approach and Guideline Public Company (“GPC”) approach to determine the estimated fair value of equity, which was then allocated to the various classes of equity using the Option Pricing Method (“OPM”). Under the OPM, the shares were 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. For the initial public offering scenario, we estimated the exit value upon an initial public offering and then performed a waterfall analysis to systematically allocate the equity value across share classes according to their fully diluted ownership positions.
For the income approach, we use a discounted cash flow analysis and the significant assumptions used in determining the estimated fair value of our common stock under the income approach primarily relate to the selection of the revenue growth rate, the forecasted EBITDA margin, and the selected discount rate used to discount the future cash flows. Under the GPC approach, the selection of revenue and EBITDA multiples requires significant judgment. Under the initial public offering scenario there is significant judgment used in determining the exit value upon the completion of a successful initial public offering. There is also significant judgment in weighting the probability of the M&A scenario versus the initial public offering scenario.
Subsequent to the completion of our IPO in February 2026, our Board of Directors determines the fair value of our common stock based on the closing price of our common stock as reported on the date of grant on the primary stock exchange on which our common stock is listed.
38
Stock-Based Compensation
We recognize stock-based compensation related to equity classified awards based on the grant-date fair value of the awards. For awards that vest based only on continued service, we recognize stock-based compensation cost on a straight-line basis over the requisite service period, which is generally the vesting period of the awards. For stock options with performance vesting conditions, we recognize stock-based compensation using an accelerated attribution method when it is probable the performance condition will be achieved. The grant date fair value of stock options that contain service or performance conditions is estimated using the Black-Scholes option-pricing model. The grant date fair value of restricted stock awards that contain service vesting conditions is estimated based on the fair value of the underlying shares on grant date.
The fair value of liability classified awards such as stock appreciation rights awards, is determined using the Black-Scholes option-pricing model on the date of grant and is remeasured each reporting period through the date of settlement. Our liability classified stock appreciation rights are subject to both service and performance conditions. The performance condition, which includes either an initial public offering or a change in control event, is not considered achievable for accounting purposes until it happens. As a result, we will not recognize any compensation for these awards until it is probable that the performance condition will be met.
Determining the fair value of stock-based awards requires judgment. The Black-Scholes option-pricing model is used to estimate the fair value of stock options that have service and/or performance vesting conditions. The assumptions used in these option-pricing models require the input of subjective assumptions and are as follows:
The determination of stock-based compensation cost is inherently uncertain and subjective and involves the application of valuation models and assumptions requiring the use of judgment. If factors change and different assumptions are used, stock-based compensation and net losses could be significantly different.
We will continue to use judgment in evaluating the expected volatility and expected terms utilized in our stock-based compensation calculations on a prospective basis. As we continue to accumulate additional data related to our common stock, we may refine our estimates, which could materially impact our future stock-based compensation. See Note 11 to our unaudited condensed consolidated financial statements in Part I, Item 1. in this Quarterly Report on Form 10-Q for information concerning certain of the specific assumptions we used in applying the Black-Scholes option pricing model to determine the estimated fair value of our stock options granted in the three and nine months ended September 30, 2026 and 2025.
During the three months ended September 30, 2026 and 2025, we recorded $3.0 million and $1.0 million in stock-based compensation. There was $0.1 million and an insignificant reduction in net sales associated with stock appreciation rights issued to a customer and no reduction in net sales associated with warrants issued to a customer during the three months ended September 30, 2026 and 2025.
During the nine months ended September 30, 2026 and 2025, we recorded $12.0 million and $2.9 million in stock-based compensation. There was $0.2 million and $0.1 million reduction in net sales associated with stock
39
appreciation rights issued to a customer and no reduction in net sales associated with warrants issued to customers as no warrants to customers were issued during the nine months ended September 30, 2026 and 2025.
As of September 30, 2026, there was $10.1 million in unrecognized compensation related to unvested service-based vesting options which is expected to be recognized over a weighted-average period of 2.8 years.
As of September 30, 2026, there was $7.3 million in unrecognized compensation related to unvested RSUs which is expected to be recognized over a weighted-average period of 2.4 years.
Recent Accounting Pronouncements
See the sections titled “Summary of Significant Accounting Policies—Recently Adopted Accounting Pronouncements” and “—Recent Accounting Pronouncements Not Yet Adopted” in Note 2 to our unaudited condensed consolidated financial statements in Part I, Item 1. in this Quarterly Report on Form 10-Q for additional details.
Emerging Growth Company Status
We are an emerging growth company, as defined in the JOBS Act. Section 107 of the JOBS Act provides that an “emerging growth company” may take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933 (“Securities Act”) for complying with new or revised accounting standards. Therefore, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period under the JOBS Act. Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in raw material prices, energy, fuel costs, interest rates, and inflation.
Raw Materials Pricing Risk
Our profitability is dependent on, among other things, our ability to anticipate and react to commodity and packaging costs. The prices and availability of ingredients we use in the process of manufacturing our products are subject to many factors beyond our control, such as the number, size and production levels of farms that provide ingredients, the vagaries of these farming businesses, including poor harvests due to adverse weather conditions, natural disasters and pestilence and changes in national and world economic conditions.
In addition, we purchase some ingredients and other materials offshore. The price and availability of such ingredients and materials is affected by political events, labor shortages, transportation and logistics disruptions or other conditions in these countries or tariffs or trade wars. New or increased tariffs or resultant trade wars, as well as labor shortages or disruptions in transportation and logistics networks, could have an adverse effect on us or on our suppliers, distributors or customers, which could lead to significant increases in the costs of materials and services, resulting in product cost increases and reduced consumer demand.
A hypothetical 10% increase or decrease in the weighted-average cost of these commodities and raw materials would have resulted in an increase or decrease to cost of goods sold of approximately $2.0 million and $5.4 million for the three and nine months ended September 30, 2026. We seek to mitigate the impact of raw materials cost increases by negotiating pricing agreements and by a combination of cost savings initiatives and efficiencies and price increases to our customers.
40
Interest Rate Risk
We are subject to interest rate risk on amounts drawn under our Nonconvertible Debt, which incurs interest at variable rates. See Part I, Item 2. “Management’s Discussion of Results of Operation and Financial Condition —Liquidity and Capital Resources—Nonconvertible Debt.” Following completion of the IPO in February 2026, we used a portion of the proceeds therefrom to repay all outstanding amounts under the Nonconvertible Debt.
Our interest-earning instruments, including cash held in on demand interest-bearing accounts, also carry a degree of interest rate risk.
We do not believe that a hypothetical 100 basis points change in interest rates would have a material effect on our results of operations or financial condition.
We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure.
Inflation Risk
Inflation generally affects us by increasing our cost of labor, logistics, commodities, packaging and manufacturing costs, as well as fuel and energy costs. We do not believe that inflation has had a material effect on our business, results of operations or financial condition. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, results of operations and financial condition.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), under the supervision and with the participation of Company management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our CEO and CFO concluded that, as of September 30, 2026, our disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
For information regarding our legal proceedings, refer to Note 6 of our Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Item 1A. Risk Factors.
For a discussion of our potential risks and uncertainties, see the information under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 16, 2026, and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 filed with the SEC on May 7, 2026 (the “Quarterly Report”). Except as set forth below, there have been no material changes to the risk factors disclosed in our Annual Report or the Quarterly Report.
Risks Relating to Our Business and Industry
If our products are contaminated, alleged to be contaminated or are rumored to have adverse effects, or if our products are alleged to cause illness or injury, be mislabeled, or misbranded or fail to comply with governmental regulations, we may suffer adverse public relations, need to recall our products and experience product liability claims.
The sale of food products involves the risk of illness or injury to consumers. Such illness and injury may result from inadvertent mislabeling, tampering by unauthorized third parties, product contamination, food-borne illnesses, allergens, or spoilage. We believe our consumers rely on us to provide them with high-quality natural and organic food products. Concerns regarding the ingredients used in our products, the safety or quality of our products, or our supply chain may cause consumers to stop purchasing our products, even if the basis for the concern is unfounded, has been addressed, or is outside of our control. There can be no assurance that our products, many of which contain ingredients that we buy from third-party suppliers, will always comply with the standards set for our products. For example, genetically modified organisms may contaminate our products (including through cross-pollination) and not be easily detected, a potential issue that may be exacerbated if we are unable to trace the affected raw materials to their supplier lots. While we are subject to governmental inspection and regulations and believe our facilities and those of our co-manufacturers and suppliers, including co-packers, comply in all material respects with all applicable laws and regulations, if ingredients or materials used for our products are alleged or proved to include contaminants that affect the safety or quality of our products or are otherwise rumored to have adverse effects, for any reason, we may need to find alternate ingredients or materials for our products, delay production of our products, or discard or otherwise dispose of our products, which could adversely affect our results of operations.
We have in the past been, are currently, and may in the future be exposed to product recalls, including voluntary recalls, product withdrawals and reformulations, and adverse public relations if our products are alleged to cause illness or injury or if we are alleged to have mislabeled or misbranded our products or otherwise violated governmental regulations. We have voluntarily recalled and may also in the future voluntarily recall or withdraw products that we consider below our standards, whether for taste, appearance or otherwise, in order to protect our brand’s reputation. Product recalls or withdrawals can result in substantial and unexpected expenditures, destruction of product inventory, and lost sales due to the unavailability of the product for a period of time, which could reduce profitability and cash flow. In October 2026, we initiated a voluntary recall and reformulation of our Tractor Wheels soft-baked bars. In connection with this recall, we are assessing product, customer and recall-related costs, lost sales and potential insurance recoveries, and we cannot yet reliably estimate the total costs we expect to incur or the amount or timing of any recovery.
In addition, a product recall or withdrawal may require significant management attention, operational resources and communications with consumers, regulators, retailers and distributors. As an example, in June 2024, we initiated a voluntary recall of a single product due to potential Listeria contamination, which we discovered after conducting routine finished product testing. See Part I, Item 1. “Business—Our Product Quality and Safety.” Although we received no reports of harm to customers as a result of this potential contamination, this recall resulted in diversion
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of management time to identify and remediate the issue. We anticipate that the October 2026 recall of Tractor Wheels will similarly divert management’s attention and require significant operational resources to address.
Product recalls, product liability claims (even if unmerited or unsuccessful), or any other events that cause consumers to no longer associate our brand with high-quality may also result in adverse publicity or legal challenges, harm our reputation and hurt the value of our brand, lead to a decline in consumer confidence in and demand for our products, lead to increased scrutiny, fines, or other penalties by federal and state regulatory agencies of our operations, and could result in further volatility in the market price of our common stock, which could have a material adverse effect on our business, financial condition, and results of operations. For example, despite our rigorous testing for heavy metals (e.g., arsenic, cadmium, lead, and mercury), and our robust programs to ensure compliance with food safety laws and regulations, such as Assembly Bill 899 in California, we may fail to adequately detect such toxins before our products reach the shelf, which could subject our products to a recall, and may negatively impact consumer perception of our products and our reputation.
We also may be subject to product liability claims and adverse public relations if consumption or use of our products is alleged to cause injury or illness, and our insurance may not be adequate to cover all liabilities we may incur in connection with product liability claims. For example, punitive damages are generally not covered by insurance. In addition, we may not be able to continue to maintain our existing insurance, obtain comparable insurance at a reasonable cost, if at all, or secure additional coverage (which may result in future product liability claims being uninsured). A product liability judgment against us or an agreement to settle a product liability claim could also result in substantial and unexpected expenditures, which would reduce profitability and cash flow. In addition, even if product liability claims against us are not successful or are not fully pursued, these claims could harm our brand’s image, be costly and time-consuming and may require management to spend time defending the claims rather than operating our business. From time to time, we have and may continue to be subject to claims from competitors or consumers, including consumer class actions, alleging that our product claims are deceptive, such as products being mislabeled or misbranded. For example, we have had legal claims brought against us in California for our use of the phrases “4g Plant Protein,” “Omega-3’s,” and “Excellent Source of Choline” in describing certain of our products. These claims were ultimately resolved and settled for an immaterial amount. In addition, we have been named in a putative nationwide class action lawsuit by plaintiffs alleging that our Wild Rumpus Avocado pouch (which is a blend of organic pineapple, banana, apple, avocado and mint) should be described solely as a “Fruit Blend” rather than a “Fruit & Veggie Blend.” Regardless of their merit, these types of claims can require significant time and expense to investigate and defend. Whether or not a false marketing claim is successful, such assertions could have an adverse effect on our business, financial condition, and results of operations, and the negative publicity surrounding them could harm our reputation and brand.
Adverse publicity about the quality or safety of our products, whether or not ultimately based on fact, may discourage consumers from buying our products and have an adverse effect on our brand, reputation, and operating results, particularly if our products are perceived as posing illness or risk of injury to children. We have no control over our products once purchased by consumers. Accordingly, consumers may fail to refrigerate our products or store our products for long periods of time, which may adversely affect the quality of our products. If consumers do not perceive our products to be of high-quality, our reputation and the value of our brand could be diminished, and our business, financial condition, and results of operations would be adversely affected. Any loss of confidence on the part of consumers in the ingredients used in our products or in the safety and quality of our products would be difficult and costly to overcome. Further, the growing use of social and digital media by us, our consumers, and third parties increases the speed and extent that information or misinformation and opinions can be shared. Negative publicity about us, our brand, or our products on social or digital media could seriously damage our brand and reputation. If we do not maintain a favorable perception of our brand, our business, reputation, financial condition, and results of operations could be adversely affected. Any such adverse effect on our business, reputation, results of operations, or financial condition could be exacerbated by our position in the market as a socially conscious, Clean Label Project-certified purveyor of high-quality natural and organic food products and may significantly reduce our brand value.
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Risks Relating to Litigation and Regulation
We are subject to significant governmental regulation and failure to comply with such regulations may have a material adverse effect on our business, financial condition, and results of operations.
Our business is highly regulated at the federal, state, and local levels, and our products and distribution operations require various licenses, permits, and approvals. Given the nature of our business, the laws and regulations that we are required to comply with are constantly evolving and placing additional restrictions on the way we operate our business and produce our products. The products that we distribute in the United States are subject to inspection by the USDA. Our warehouse and distribution centers are subject to inspection by the USDA, the United States Department of Labor Occupational and Health Administration, the Environmental Protection Agency, and various state health and workplace safety authorities. Our United States transportation operations are subject to regulation by the United States Department of Transportation and the United States Federal Highway Administration. In addition, the various federal, state, and local laws, regulations, and administrative practices to which we are subject require us to comply with numerous provisions regulating areas such as environmental, health and sanitation standards, food safety, marketing of natural or organically produced food, facilities, pharmacies, equal employment opportunity, public accessibility, employee benefits, wages and hours worked, and licensing for the sale of food, among others. For example:
Environmental, Health and Safety: Our operations are subject to extensive and increasingly stringent laws and regulations pertaining to the protection of the environment, including those relating to the discharge of materials into the environment, the disposal of food by-products, the handling, treatment, and disposal of wastes, maintenance of refrigeration systems, and remediation of soil and groundwater contamination. Compliance with existing or changing environmental and safety requirements, including more stringent limitations imposed or expected to be imposed in any recently renewed or soon-to-be renewed environmental permits, may require capital expenditures. Additionally, concern over climate change, including the impact of global warming, has led to significant United States and international legislative and regulatory efforts to limit greenhouse gas emissions. Increased regulation regarding greenhouse gas emissions, particularly with respect to diesel engine emissions, could result in substantial additional operating expenses. These expenses may include an increase in the cost of the fuel and other energy we purchase, and capital costs associated with updating or replacing our vehicles sooner than planned. Until the timing, scope and extent of such regulation becomes known, we cannot predict its effect on our results of operations. It is reasonably possible, however, that it could result in material costs, which we may be unable to pass on to our customers. Further, our business may be subject to climate-related transition risks, which arise from society’s transition toward a low-carbon economy due to changes in laws or regulations, technological advancements, and investor and consumer sentiment.
While many of our initiatives will create efficiencies and return on investment, the transition to a low-carbon economy generally and our own efforts to reduce emissions could lead to increased costs to transition to or invest in renewable energy sources, including electric vehicles, increased compliance costs, including tracking and reporting systems, and increased costs of products, commodities, and energy. Further, if our tracking and reporting systems are incomplete or inaccurate, or if we fail to achieve progress with respect to our goals on a timely basis, or at all, our reputation, business, financial condition, and results of operations could be adversely impacted.
Food Safety and Marketing: There is significant governmental scrutiny, regulations, and public awareness regarding food quality and food and drug safety. We may be adversely affected if consumers lose confidence in the safety and quality of the food we manufacture or the food and drug products we distribute. In addition, we are subject to governmental scrutiny of and public awareness regarding food safety and the sale, packaging, and marketing of natural and organic products. Compliance with these laws may impose a significant burden on our operations. As a baby food company, we are also subject to Assembly Bill 899 in California, which requires manufacturers of baby food to (i) test and disclose the levels of four toxic elements (arsenic, cadmium, lead, and mercury) that may be present in baby food and (ii) meet particular labeling requirements. In addition, “Proposition 65, the Safe Drinking Water and Toxic Enforcement Act of 1986,” in California exposes all food companies to the possibility of having to provide warnings on their products in that state. If we were required to add warning labels to any of our products or place warnings in locations where our products are sold in order to comply with Proposition 65, the sales of those products and other products of our Company could suffer, not only in those locations but elsewhere. Additionally, in 2022, California enacted the Plastic Pollution Prevention and Packaging Producer Responsibility
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Act, which, among other things, requires a 25% reduction of plastics in single-use products in the state by 2032 and escalates recycling, reuse, and composting rates for single-use packaging, regardless of material, used in the state over time. Numerous other U.S. municipalities and states and certain other countries, including Canada, have also proposed or enacted legislation prohibiting or restricting the sale and use of certain foodservice products and requiring them to be replaced with recyclable or compostable alternatives. Several provinces in Canada, as well as states in the United States, have enacted legislation imposing fees or other costs on manufacturers and other suppliers of single-use packaging and foodservice products to encourage and fund recycling of those products. Any such legislation, as well as voluntary initiatives similarly aimed at reducing the level of single-use packaging waste, could reduce demand for our products and/or increase the costs of producing our products.
Wage Rates and Paid Leave: Changes in federal, state, or local minimum wage and overtime laws or employee paid leave laws could cause us to incur additional wage costs, which could adversely affect our operating margins. Failure to comply with existing or new laws or regulations could result in significant damages, penalties and/or litigation costs.
Payment Card Transactions: As a merchant that accepts debit and credit cards for payment, we are subject to the Payment Card Industry Data Security Standard (“PCI DSS”), issued by the PCI Council. Additionally, we are subject to PCI DSS as a service provider, which is a business entity that is not a payment brand directly involved in the processing, storage, or transmission of cardholder data. PCI DSS contains compliance guidelines and standards with regard to our security surrounding the physical and electronic storage, processing, and transmission of individual cardholder data. By accepting debit cards for payment, we are also subject to compliance with American National Standards Institute data encryption standards and payment network security operating guidelines. The cost of complying with stricter privacy and information security laws, standards, and guidelines, including evolving PCI DSS standards, and developing, maintaining, and upgrading technology systems to address future advances in technology, could be significant and we could experience problems and interruptions associated with the implementation of new or upgraded systems and technology or with maintenance or adequate support of existing systems. Failure to comply with such laws, standards, and guidelines or payment card industry standards such as those involving MasterCard, Visa and Europay (EMV) transactions, could have a material adverse impact on our business, financial condition, or results of operations.
Foreign Operations: Our supplier base includes both domestic and foreign suppliers. In particular, we source many of the key ingredients that we use in our products from South and Central America and Mexico. In addition, we have customers located outside the United States. Accordingly, laws and regulations affecting the importation and taxation of goods, including duties, tariffs, and quotas or changes in the enforcement of those laws and regulations could adversely impact our financial condition and results of operations. In addition, we are required to comply with laws and regulations governing export controls, and ethical, anti-bribery, and similar business practices such as the Foreign Corrupt Practices Act.
Privacy and Related Laws: We are subject to a variety of federal, state, and foreign laws and industry standards that relate to data privacy, data security, and consumer marketing. The legal and regulatory framework for these topics is rapidly evolving and may require increased monitoring and compliance costs and result in increased legal and financial exposure if we fail to remain compliant, or are alleged to be noncompliant, with such laws.
AI Technologies: There are many evolving laws, regulations, and standards regarding the development and use of AI technologies. New laws, regulations, or industry standards governing AI use could require us to modify our practices regarding AI use, increase our operating costs, or restrict our ability to use certain AI technologies in our operations in order to remain compliant with such regulations or standards.
Climate Change: Changing rules, public disclosure regulations, and stakeholder expectations related to climate change have resulted in, and may continue to result in, increased management time and attention spent complying with or meeting such regulations and expectations.
The failure to comply or maintain compliance with applicable governmental laws and regulations, including those referred to above, could result in, among other things, administrative, civil, or criminal penalties or fines (including in connection with class action lawsuits); mandatory or voluntary product recalls, withdrawals, reformulations,
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additional consumer notifications or other corrective actions; warning or other letters; cease and desist orders against operations that are not in compliance; closure of facilities or operations; the loss, revocation or modification of any existing licenses, permits, registrations or approvals; the failure to obtain additional licenses, permits, registrations, or approvals in new jurisdictions where we intend to do business; or the loss of our ability to participate in federal and state healthcare programs, any of which could make it more costly or challenging to manufacture and sell our products or otherwise have a material adverse effect on our business, financial condition, or results of operations. In addition, governmental units may make changes in the regulatory frameworks within which we operate that may require us to incur substantial increases in costs in order to comply with such laws and regulations.
Changes in existing laws or regulations, or the adoption of new laws or regulations, may increase our costs and otherwise adversely affect our business, financial condition, and results of operations.
The manufacture and marketing of food products is highly regulated. We, our farmer partners, our suppliers (including co-packers), and our co-manufacturers are subject to a variety of laws and regulations. These laws and regulations apply to many aspects of our business, including the manufacturing, packaging, labeling, distribution, advertising, sale, quality, and safety of our products, as well as the health and safety of our crew members and the protection of the environment. In the United States, we are subject to regulation by various government agencies, including the Food and Drug Administration (the “FDA”), the USDA, the Federal Trade Commission (the “FTC”), the Consumer Product Safety Commission, the Occupational Safety and Health Administration, and the Environmental Protection Agency, as well as various state and local agencies. We are also regulated outside the United States by various international regulatory bodies, including Health Canada. These regulatory agencies and bodies regularly propose rules and issue guidance, some of which are or may be relevant to our business. For example, on January 16, 2025, the FDA proposed a rule (90 Fed. Reg. 5426), which, if finalized, would require a front-of-package nutrition information box on most packaged foods to assist consumers in more easily identifying healthy foods. In addition to compliance costs associated with understanding the requirements and updating product labeling or reformulating our products, implementing this rule may negatively impact consumer perception of our products and our reputation, which could adversely affect our financial condition and results of operations. In addition, we are subject to certain standards, such as GFSI standards and review by voluntary organizations, such as the Council of Better Business Bureaus’ National Advertising Division. We could incur costs, including fines, penalties, and third-party claims, because of any violations of, or liabilities under, such requirements, including any competitor or consumer challenges relating to compliance with such requirements. For example, in connection with the marketing and advertisement of our products, we could be the target of claims relating to false or deceptive advertising, including under the auspices of the FTC and the consumer protection statutes of some states.
The regulatory environment in which we operate could change significantly and adversely in the future, particularly in light of the rapidly evolving focus on public health and food regulation by the U.S. presidential administration. For example, the U.S. presidential administration’s “Make America Healthy Again” movement may have a significant impact on the food regulatory landscape and may result in the implementation of certain food regulation changes that could be adverse to our business. Product recalls or withdrawals may also increase scrutiny of our product design, warnings, labeling, packaging, manufacturing processes, complaint handling and recall communications, which could increase our costs or delay our ability to resume shipments. If we fail to anticipate or adapt to new rules governing food manufacturing, labeling, or packaging, it may lead to an increase in costs or interruptions in production, either of which could adversely affect our operations and financial condition. Changes in marketing or labeling requirements or standards related to our products could require us to revise or discontinue making certain claims or utilizing certain branding elements, which may make our products less appealing to consumers. New or revised government laws and regulations could result in additional compliance costs and, in the event of non-compliance, civil remedies, including fines, injunctions, withdrawals, recalls or seizures, and confiscations, as well as potential criminal sanctions, any of which may adversely affect our business, financial condition, and results of operations.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Recent Sales of Unregistered Equity Securities
None.
Issuer Purchases of Equity Securities
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Rule 10b5-1 Trading Plans
In accordance with the disclosure requirements set forth in Item 408(a) of Regulation S-K, the following table discloses any officer (as defined in Rule 16a-1(f) under the Exchange Act), director, or entity controlled by such officer or director who adopted or terminated a contract, instruction, or written plan for the sale of securities of the Company intended to satisfy the affirmative defense of Rule 10b5-1(c) during the quarterly period ended September 30, 2026:
Name |
Title |
Action Taken |
Adoption Date |
Start Date of Trading Arrangement |
End Date of Trading Arrangement |
Aggregate Number of Securities to be Sold |
Up to |
||||||
Up to |
||||||
Up to |
||||||
Up to |
(1)
(2) Subsequent to the end of the quarter, on November 10, 2026, Walter Robb terminated his Rule 10b5-1 trading arrangement described above. No shares were sold under the arrangement.
Other than as disclosed above, no other officer, director or entity controlled by such officer or director
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Item 6. Exhibits.
Exhibit Number |
|
Description |
3.1 |
|
Amended and Restated Certificate of Incorporation of Once Upon a Farm, PBC (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed by the Company on February 9, 2026) |
3.2 |
|
Bylaws of Once Upon a Farm, PBC (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed by the Company on February 9, 2026)
|
31.1* |
|
|
31.2* |
|
|
32.1** |
|
|
32.2** |
|
|
101.INS* |
|
Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document |
101.SCH* |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
104* |
|
Cover page formatted as Inline XBRL and contained in Exhibit 101 |
* Filed herewith.
** This exhibit is furnished herewith and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Securities Exchange Act of 1934.
48
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Name |
|
Title |
|
Date |
/s/ John Foraker |
|
Chief Executive Officer and Chair of the Board |
|
November 12, 2026 |
John Foraker |
||||
/s/ Lawrence Waldman |
|
Chief Financial Officer |
|
November 12, 2026 |
Lawrence Waldman |
||||
/s/ Chris Folena |
|
Chief Accounting Officer |
|
November 12, 2026 |
Chris Folena |
49
Exhibit 31.1
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, John Foraker, certify that:
Date: November 12, 2026 |
|
By: |
/s/ John Foraker |
|
|
|
Chief Executive Officer |
Exhibit 31.2
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Lawrence Waldman, certify that:
Date: November 12, 2026 |
|
By: |
/s/ Lawrence Waldman |
|
|
|
Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Once Upon a Farm, PBC (the “Company”) on Form 10-Q for the quarter ended September 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
Date: November 12, 2026 |
|
By: |
/s/ John Foraker |
|
|
|
Chief Executive Officer |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Once Upon a Farm, PBC (the “Company”) on Form 10-Q for the quarter ended September 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
Date: November 12, 2026 |
|
By: |
/s/ Lawrence Waldman |
|
|
|
Chief Financial Officer |