Nature of Operations and Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2026 | |
| Accounting Policies [Abstract] | |
| Basis of presentation, consolidation and use of estimates | Basis of presentation, consolidation and use of estimates
The unaudited interim condensed consolidated financial statements as of and for the period ending June 30, 2026, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial reporting. These condensed consolidated financial statements include our accounts and those of our subsidiaries, with all intercompany transactions eliminated in consolidation.
In management’s opinion, the accompanying unaudited condensed consolidated financial statements reflect all material adjustments necessary for a fair presentation of our financial position, results of operations, and cash flows as of the dates and for the periods presented. These adjustments consist solely of normal and recurring items. The preparation of financial statements requires estimates and assumptions that impact the reported amounts of assets, liabilities, revenues, and expenses. Key areas subject to such estimates and assumptions include, but are not limited to, inventory valuation, depreciation and valuation of capital assets, accounts receivable credit loss reserve, trade promotion liabilities, stock-based compensation expense, valuation allowance for deferred income tax assets, contingencies, and forecasts supporting the going concern assumption and related disclosures. Actual results may differ from these estimates.
The operating results for interim periods are not necessarily indicative of expected results for the full fiscal year. These financial statements should be reviewed in conjunction with the audited financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
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| Reclassifications | Reclassifications
Certain amounts from prior periods have been reclassified to conform with the current period presentation.
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| Liquidity | Liquidity
As of June 30, 2026, and December 31, 2025, the Company had cash of approximately $2.4 million and $3.6 million, respectively, and working capital deficiency of approximately $0.5 million and $0.5 million, respectively. The Company reported a net loss from continuing operations of approximately $0.5 million for the six months ended June 30, 2026, compared to a net income from continuing operations of approximately $1.6 million for the six months ended June 30, 2025. As of June 30, 2026, the Company’s accumulated deficit increased to approximately $95.3 million, compared to approximately $94.7 million as of December 31, 2025.
For the six months ended June 30, 2026, net cash used in continuing operating activities was approximately $2.9 million, an increase of about $0.3 million compared with $2.6 million used for the same period in 2025. Cash flow from continuing operations prior to the impact of non-cash working capital improved by $2.0 million comparing the six months ended June 30, 2026 to the prior period. For the six months ended June 30, 2026 non-cash working capital increased by $3 million driven by investment in inventories ($2.0 million increase) to support the increase in sales compared to the prior period and decrease in accounts payable of $1 million.
For the six months ended June 30, 2026, investing activities provided net cash of approximately $1.5 million, compared to $0.6 million in 2025. The increase was primarily due to $1.4 million proceeds from sale of the note receivable.
For the six months ended June 30, 2026, net cash provided by financing activities totaled approximately $0.1 million. This amount primarily reflects net proceeds of $0.5 million from funds received from the Credit Facility (defined below), which was partially offset by a payment of approximately $0.2 million on an outstanding promissory note and $0.1 million repayments under the Company’s insurance financing agreement.
Historically, we have experienced recurring losses from operations and negative cash flows from operating activities. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The Company continues to focus on reducing its operating expenses while bringing products to market with higher margins and potentially higher customer demand. Additionally, the Company announced the closing of $1.74 million brokered private placement on July 7th, 2026 and has a $10 million credit facility with Two Shores Capital Corp (the “Credit Facility”). All advances drawn under the Credit Facility will bear interest at a rate of 13.75% per annum and all present and future obligations arising under the Credit Facility are secured by a first priority security interest in all of the assets of the Company and the Company’s United States Subsidiaries (as defined in the Credit Facility).
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| Revenue recognition | Revenue recognition
The Company’s contracts have a single performance obligation which is satisfied at the point in time when the customer has title and the significant risks and rewards of ownership of the product. Title and the significant risk and rewards of ownership are deemed to transfer when products are loaded onto a truck for shipment or Free on Board (“FOB”) shipping point. The Company primarily receives fixed consideration for sales of product, subject to adjustment as described below.
Shipping and handling costs paid by customers, primarily related to online orders, are included in revenue and totaled approximately $0.01 million and $0.01 million for the three months ended June 30, 2026, and 2025, respectively and approximately $0.1 million and $0.04 million for the six months ended June 30, 2026, and 2025, respectively. Sales tax and other similar taxes are excluded from revenue.
For further details on the Company’s revenue recognition policy, refer to Note 1 of the most recently filed Form 10-K, filed on March 31, 2026.
Revenue is recorded net of provisions for discounts, slotting fees payable by us to retailers to stock our products and promotion allowances. Discounts, slotting fees and promotional allowances vary the consideration the Company is entitled to in exchange for the sale of products to distributors. The Company estimates these discounts, slotting fees and promotional allowances in the same period that the revenue is recognized for product sales to customers. These estimates are based on contract terms and our historical experience with similar programs and require management judgement with respect to estimating customer participation and performance levels. Differences between estimated expense and actual costs are normally insignificant and are recognized in earnings in the period such differences are determined. The amount of revenue recognized represents the amount that will not be subject to a significant future reversal of revenue. The liability for promotional allowances is included in accrued expenses on the consolidated balance sheets. Amounts paid for slotting fees are recorded as prepaid expenses on the consolidated balance sheets and amortized over the corresponding term.
For the three months ended June 30, 2026 and 2025, our revenue was increased by $5.3 million and reduced by $1.8 million, respectively, and for the six months ended June 30, 2026 and 2025, our revenue was increased by $13.5 million and was reduced by $2.1 million.
All sales to distributors and customers are generally final. In limited instances we may accept returned product due to quality issues or distributor terminations, and in such situations we would have variable consideration. The Company’s customers generally pay within 30 days from the receipt of a valid invoice. The Company offers prompt pay discounts of up to 2% to certain customers typically for payments made within 15 days. Prompt pay discounts are recorded as a deduction to revenues in the accompanying consolidated statements of operations. As of June 30, 2026, and December 31, 2025, prompt payment discounts extended to these customers were considered immaterial to the related accounts receivable balances presented on the condensed consolidated balance sheets.
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| Accounts Receivable | Accounts Receivable
The accounts receivable balance primarily consists of trade receivables from distributors and retail customers. The Company’s allowance for credit losses represents management’s best estimate of probable credit losses in existing accounts receivable, determined primarily based on current trends and historical collection data. To account for potential credit losses, the Company reserves a percentage of trade receivable balances based on collection history and prevailing economic conditions expected to impact credit risk over the life of the receivables. These reserves are regularly re-evaluated and adjusted as necessary. Account balances deemed uncollectible are written off against the allowance after all collection efforts have been exhausted and the likelihood of recovery is considered remote. As of June 30, 2026, and December 31, 2025, allowances for credit losses were approximately $0.07 million and $0.05 million, respectively, and were netted against accounts receivable. No impairment losses were recognized for the three months and six months ended June 30, 2026 and 2025. Changes in accounts receivable are primarily driven by fluctuations in order volume, the timing of product transfers to distributors, and the timing of cash collections.
As of June 30, 2026, one of the Company’s independent customers accounted for approximately 22% of outstanding accounts receivable. As of December 31, 2025, a single customer represented approximately 44% of the Company’s accounts receivable balance.
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| Net earnings (loss) per share |
Basic net earnings (loss) per share is calculated using the weighted average number of common shares outstanding during the respective periods. Diluted earnings per share is computed by adjusting the weighted average number of common shares to reflect the potential net exercise or conversion of all dilutive securities.
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| Recent Accounting Guidance Not Yet Adopted | Recent Accounting Guidance Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, as clarified by ASU 2025-01. The guidance requires public business entities to disclose additional disaggregated information about certain income statement expense captions in the notes to the financial statements. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statement disclosures.
In December 2025, the FASB issued Accounting Standards Update 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The amendments clarify the scope of Topic 270, standardize the form and content requirements for interim financial statements, and consolidate interim disclosure requirements within Topic 270. The ASU also introduces a disclosure principle requiring entities to describe events occurring after the end of the most recent annual period that have a material effect on the interim financial statements. The amendments do not change the fundamental nature of interim reporting and are not expected to result in significant additional disclosures. ASU 2025-11 is effective for the Company for interim periods within fiscal years beginning after December 15, 2027, with a one-year deferral for entities that are not public business entities. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its interim financial statement presentation and disclosures, but does not expect the adoption to have a material effect on its consolidated financial statements. |