Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
3 Months Ended | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2026 | ||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||
| Basis of Accounting | Basis of Accounting
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all the information and notes required by GAAP for complete financial statements.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, considered necessary to present fairly the Company’s financial position as of March 31, 2026, the results of operations for the three months ended March 31, 2026 and 2025, and cash flows for the three months ended March 31, 2026 and 2025.
The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results to be expected for the full year ended December 31, 2026 or any other interim period.
The condensed consolidated balance sheet as of December 31, 2025 has been derived from the audited consolidated financial statements as of that date. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
The Company’s significant accounting policies are described in Note 2 to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes to the Company’s significant accounting policies during the three months ended March 31, 2026.
Certain amounts presented in these condensed consolidated financial statements and accompanying notes have been rounded to the nearest thousand or million, as applicable.
|
|||||||||||||||||||||||||
| Principles of Consolidation | Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the following entities, all of which were under common control and ownership at March 31, 2026:
The condensed consolidated financial statements herein contain the operations of the wholly-owned subsidiaries listed above. The Company’s headquarters are located in Bend, Oregon.
|
|||||||||||||||||||||||||
| Going Concern | Going Concern
As shown in the accompanying condensed consolidated financial statements, as of March 31, 2026, the Company has incurred recurring losses from operations resulting in an accumulated deficit of $25.5 million, with negative working capital of $1.1 million, which may not be sufficient to sustain operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management is actively pursuing new customers and continues to expand the Company’s product mix to increase revenues. In addition, the Company is currently seeking additional sources of capital to fund short-term operations. Management believes these factors will contribute toward achieving profitability.
The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. These condensed consolidated financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities, that might be necessary should the Company be unable to continue as a going concern.
|
|||||||||||||||||||||||||
| Reclassifications | Reclassifications
Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on previously reported net loss, total assets, total liabilities, or stockholders’ equity, but affected the classification of certain amounts within the condensed consolidated statements of operations and condensed consolidated statements of cash flows.
|
|||||||||||||||||||||||||
| Use of Estimates | Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
|
|||||||||||||||||||||||||
| Segment Reporting | Segment Reporting
Under ASC 280, Segment Reporting, operating segments are defined as components of an enterprise where discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), in deciding how to allocate resources and in assessing performance. The Company has two components, consisting of its sales operations in the United States, and its production operations in Peru. Therefore, the Company’s Chief Executive Officer, who is also the CODM, makes decisions and manages the Company’s operations based on these two operating segments for the manufacture and distribution of its products.
|
|||||||||||||||||||||||||
| Fair Value of Financial Instruments | Fair Value of Financial Instruments
ASC 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.
ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tier fair value hierarchy that distinguishes between the following:
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
|
|||||||||||||||||||||||||
| Cash and Cash Equivalents | Cash and Cash Equivalents
Cash equivalents include money market accounts which have maturities of three months or less. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. Cash equivalents are stated at cost plus accrued interest, which approximates market value. There were no cash equivalents on hand on March 31, 2026 or December 31, 2025.
|
|||||||||||||||||||||||||
| Cash in Excess of FDIC Insured Limits | Cash in Excess of FDIC Insured Limits
The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000, under current regulations. The Company had $192,122 and $250,014 in excess of FDIC insured limits on March 31, 2026 and December 31, 2025, respectively, and has not experienced any losses in such accounts.
|
|||||||||||||||||||||||||
| Research and Development | Research and Development
The Company operates in a fast-moving category shaped by shifting consumer preferences, requiring continuous innovation and new product development. To support this, we rely on our proprietary GentleDry™ Technology, an advanced dehydration platform licensed exclusively from EnWave Corporation. We expect to continue investing in research and development as we scale our GentleDry™ product portfolio and bring new, innovative offerings to market that align with evolving consumer needs.
Research and development costs include salaries, building costs, utilities, administrative expenses and other corporate costs. For the three months ending March 31, 2026, our research and development expenses totaled $16,638, compared to $7,742 for the same period in 2025.
|
|||||||||||||||||||||||||
| Property and Equipment | Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation and impairment losses. The cost of property, plant and equipment is depreciated using the straight-line method based on the lesser of the estimated useful lives of the assets or the lease term based on the following life expectancy:
Construction in progress consists of costs incurred on machinery, equipment, and facility improvements that have not yet been placed into service. These costs are not depreciated until the related assets are completed and placed into service, at which time they are reclassified to the appropriate property and equipment category and depreciation begins.
Repairs and maintenance expenditures are charged to operations as incurred. Major improvements and replacements, which extend the useful life of an asset, are capitalized, and depreciated over the remaining estimated useful life of the asset. When assets are retired or sold, the cost and related accumulated depreciation are eliminated, and any resulting gain or loss is reflected in operations.
|
|||||||||||||||||||||||||
| Impairment of Long-Lived Assets | Impairment of Long-Lived Assets
Long-lived assets held and used by the Company are reviewed for possible impairment whenever events or circumstances indicate the carrying amount of an asset may not be recoverable or is impaired. Recoverability is assessed using undiscounted cash flows based upon historical results and current projections of earnings before interest and taxes. Impairment is measured using discounted cash flows of future operating results based upon a rate that corresponds to the cost of capital. Impairments are recognized in operating results to the extent that carrying value exceeds discounted cash flows of future operations.
We evaluate the recoverability of intangible assets periodically by considering events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired.
|
|||||||||||||||||||||||||
| Derivatives | Derivatives
The Company evaluates convertible notes payable, stock options, stock warrants and other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under the relevant sections of ASC Topic 815-40, Derivative Instruments and Hedging: Contracts in Entity’s Own Equity.
The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative instrument and is marked-to-market at each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or other expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Financial instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815-40 are reclassified to a liability account at the fair value of the instrument on the reclassification date.
|
|||||||||||||||||||||||||
| Cost of Goods Sold | Cost of Goods Sold
Cost of goods sold includes the direct costs associated with the production and manufacture of the Company’s products. Production costs primarily consist of direct raw materials, direct labor, and manufacturing overhead. These costs are capitalized into inventory and recognized as cost of goods sold when the related products are sold.
Manufacturing overhead is allocated to inventory based on production capacity. Overhead costs include utilities, depreciation, and other factory-related expenses. The Company allocates fixed manufacturing overhead to inventory based on the normal capacity of the production facilities in accordance with ASC 330, Inventory. Costs associated with abnormal levels of idle capacity or other abnormal production costs are expensed as incurred. The Company periodically reviews production capacity and manufacturing overhead allocations to ensure that inventory costs reflect normal production levels.
|
|||||||||||||||||||||||||
| Advertising and Promotions Costs | Advertising and Promotions Costs
The Company incurs advertising and promotional costs related primarily to product demonstrations, trade shows, and other marketing activities intended to promote the Company’s products and brand awareness. Advertising and promotional costs are expensed as incurred and are included in selling, general and administrative expenses in the condensed consolidated statements of operations.
|
|||||||||||||||||||||||||
| Stock-Based Compensation |
The Company accounts for stock-based compensation in accordance with ASC 718, Stock Compensation. Compensation expense for equity awards is measured at the grant-date fair value and recognized over the requisite service period, generally the vesting period of the award. The Company estimates the fair value of stock options using a valuation model that incorporates assumptions such as expected volatility, expected term, and the risk-free interest rate.
|
|||||||||||||||||||||||||
| Foreign Currency Translation | Foreign Currency Translation
The functional currency of the Company’s foreign subsidiary in Peru is the Peruvian sol. Assets and liabilities of foreign operations are translated into U.S. dollars at exchange rates in effect at the balance sheet date. Revenues and expenses are translated at average exchange rates prevailing during the period.
Translation adjustments resulting from this process are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity.
Transaction gains and losses resulting from foreign currency transactions denominated in currencies other than the functional currency are recognized in the condensed consolidated statements of operations as incurred.
|
|||||||||||||||||||||||||
| Income Taxes | Income Taxes
The Company accounts for income taxes in accordance with ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities, as well as for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the periods in which the temporary differences are expected to reverse.
A valuation allowance is recorded to reduce deferred tax assets to the amount that management believes is more likely than not to be realized. In assessing the need for a valuation allowance, management considers all available positive and negative evidence, including historical operating results, expectations of future taxable income, and the reversal of existing taxable temporary differences. Due to the Company’s cumulative losses since inception, management has determined that it is more likely than not that the Company’s deferred tax assets will not be realized and has recorded a full valuation allowance.
The Company recognizes the financial statement benefit of a tax position only after determining that it is more likely than not that the position will be sustained upon examination by the relevant taxing authority based on the technical merits of the position. For tax positions meeting the more-likely-than not recognition threshold, the amount recognized in the financial statements is the largest benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company evaluates uncertain tax positions on a periodic basis. There have been no material changes to the Company’s uncertain tax positions since December 31, 2025.
The Company recognizes interest and penalties related to uncertain tax positions, if any, as a component of income tax expense.
|
|||||||||||||||||||||||||
| Basic and Diluted Net Loss Per Share |
The Company computes basic net loss per common share by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding plus the effect of potentially dilutive common shares outstanding during the period using the treasury stock or if-converted methods, as applicable.
For the three months ended March 31, 2026 and 2025, the inclusion of potentially dilutive securities would have been anti-dilutive due to the Company’s net loss; therefore, diluted net loss per share is the same as basic net loss per share.
|
|||||||||||||||||||||||||
| Recent Accounting Pronouncements | Recent Accounting Pronouncements
The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”). ASUs not discussed below were assessed and determined to be either not applicable to the Company or not expected to have a material impact on the Company’s consolidated financial statements.
Recently Adopted Accounting Standards
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments require enhanced income tax disclosures, including additional disaggregation within the effective tax rate reconciliation and disclosure of income taxes paid by jurisdiction. The Company adopted ASU 2023-09 during the year ended December 31, 2025. See Note 12 – Income Taxes for additional information.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments introduce a practical expedient for estimating expected credit losses on current accounts receivable and contract assets arising from transactions accounted for under ASC 606. The Company adopted this guidance effective January 1, 2026. Adoption of the standard did not have a material impact on the Company’s consolidated financial statements.
Accounting Standards Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), and in January 2025 issued ASU 2025-01, which clarified the effective date of ASU 2024-03. The amendments require public business entities to provide additional disclosures that disaggregate certain income statement expenses, including purchases of inventory, employee compensation, depreciation, amortization, and selling expenses. The guidance is effective for annual reporting periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of this guidance on its consolidated financial statement disclosures. |