AMASS Brands warns on going concern, resale update
AMASS BRANDS INC (AMSS) updated its resale registration statement covering up to 14,293,298 shares of common stock in connection with its direct listing on the Nasdaq Global Market.
AMASS BRANDS INC (AMSS) updated its resale registration statement covering up to 14,293,298 shares of common stock in connection with its direct listing on the Nasdaq Global Market. The supplement adds recent Quarterly Reports on Form 10‑Q and multiple Form 8‑Ks by incorporation.
For the quarter ended March 31, 2026, Amass generated $4.15 million in net revenues and recorded a net loss attributable to the parent of $3.04 million, or $0.87 per basic and diluted share. Total liabilities of $28.51 million exceeded total assets of $25.58 million, resulting in a stockholders’ deficit of $2.93 million and limited cash of $0.99 million.
Management states that recurring losses, negative operating cash flows, and limited capital raise substantial doubt about Amass’s ability to continue as a going concern without additional financing and improved cash generation. The company cites plans to raise capital through equity and debt, but notes there is no assurance these efforts will succeed.
Positive
- None.
Negative
- Going concern risk disclosed: Amass states that recurring losses, negative cash flows, and limited capital raise substantial doubt about its ability to continue as a going concern within one year, absent successful capital raises or significantly improved operating cash flow.
Key Figures
Key Terms
going concern financial
Simple Agreement for Future Equity (SAFE) financial
derivative liabilities financial
secured credit facility financial
direct listing market
reverse stock split financial
Offering Details
FAQ
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AI-generated analysis. How Rhea-AI works. Not financial advice.
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PROSPECTUS SUPPLEMENT NO. 4 Dated August 24, 2026 (To Prospectus Dated May 18, 2026) |
Filed Pursuant to Rule 424(b)(5) Registration No. 333-294941 |
AMASS BRANDS INC
Up to 14,293,298 Shares of Common Stock
This prospectus supplement (the “Sticker Supplement”) modifies, supersedes and supplements certain information contained in, and should be read in conjunction with, our Prospectus filed with the U.S. Securities and Exchange Commission (the “SEC”) dated May 18, 2026, as supplemented by Prospectus Supplement No. 1, dated May 29, 2026, Prospectus Supplement No. 2, dated June 12, 2026 and Prospectus Supplement No.3, dated July 10 (the “Prospectus”), related to the registration of the resale of up to 14,293,298 shares of our common stock, par value $0.00001 per share (“Common Stock”), by our stockholders identified in the Prospectus (the “Registered Stockholders”) in connection with our direct listing on the Global Market tier of the Nasdaq Stock Market LLC (the “Nasdaq Global Market”).
This Sticker Supplement is not complete without, and may not be delivered or used except in connection with, the Prospectus.
Our shares of Common Stock are listed on the Nasdaq Global Market under the symbol “AMSS.”
The information contained in this Sticker Supplement modifies and supersedes, in part, the information in the Prospectus. Any information that is modified or superseded in the Prospectus shall not be deemed to constitute a part of the Prospectus, except as modified or superseded by this Sticker Supplement. We may amend or supplement the Prospectus from time to time by filing amendments or supplements as required. You should read the entire Prospectus, and any amendments or supplements carefully before you make an investment decision.
Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 10 of the Prospectus and in documents incorporated by reference into the Prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this Sticker Supplement, or the Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
FORWARD-LOOKING STATEMENTS
You should carefully consider the risk factors set forth in the Prospectus, as well as the other information contained in or incorporated by reference into this Sticker Supplement and the Prospectus. This Sticker Supplement and the Prospectus and documents incorporated therein by reference contain forward-looking statements regarding events, conditions, and financial trends that may affect our plan of operation, business strategy, operating results, and financial position. You are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Actual results may differ materially from those included within the forward-looking statements as a result of various factors. Cautionary statements in the “Risk Factors” section of the Prospectus and in documents incorporated by reference into the Prospectus identify important risks and uncertainties affecting our future, which could cause actual results to differ materially from the forward-looking statements made or included in this Sticker Supplement and the Prospectus.
The date of this Sticker Supplement to Prospectus is August 24, 2026.
FILING OF FORM 10-Qs
On June 29, 2026, we filed our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2026 with the SEC, and on August 14, 2026, we filed our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2026 (together with our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2026, the “Form 10-Qs”). We have attached the Form 10-Qs, excluding the exhibits thereto, to this Sticker Supplement as Annex A, which is incorporated herein by reference.
FILING OF FORM 8-Ks
On each of the following dates, we filed the following Current Reports on Form 8-K (collectively, the “Form 8-Ks”) with the SEC. We have attached the Form 8-Ks to this Sticker Supplement as Annex B, which is incorporated herein by reference (excluding any information furnished rather than filed).\
| · | Form 8-K filed with the SEC on May 29, 2026 |
| · | Form 8-K filed with the SEC on June 15, 2026 |
| · | Form 8-K filed with the SEC on June 23, 2026 |
| · | Form 8-K filed with the SEC on June 30, 2026 |
| · | Form 8-K filed with the SEC on July 10, 2026 |
| · | Form 8-K filed with the SEC on July 27, 2026 |
| · | Form 8-K filed with the SEC on August 5, 2026 |
| · | Form 8-K filed with the SEC on August 21, 2026 |
Notwithstanding the statements in the preceding paragraphs, no document, report or exhibit (or portion of any of the foregoing) or any other information that we have “furnished” to the SEC pursuant to the Securities Exchange Act of 1934, as amended shall be incorporated by reference into this Sticker Supplement.
Annex A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2026
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: 001-43286
AMASS Brands Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 81-5227282 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
|
860 E Stowell Road Santa Maria, CA |
93454 | |
| (Address of principal executive offices) | (Zip Code) |
(909) 293-8495
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Stock, par value $0.00001 per share | AMSS | Nasdaq Global Market |
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. ¨ Yes x No
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). x Yes ¨ No
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 | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | x | Smaller reporting company | x |
| Emerging growth company | x |
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 x
As of June 29, 2026, the registrant had a total of 11,424,315 shares of Common Stock, $0.00001 par value, issued and outstanding.
AMASS BRANDS INC
INDEX TO FORM 10-Q
| Page | ||
| PART I - FINANCIAL INFORMATION | 1 | |
| Item 1. | Interim Financial Statements | 1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 32 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 49 |
| Item 4. | Evaluation of Disclosure Controls and Procedures | 50 |
| PART II - OTHER INFORMATION | 51 | |
| Item 1. | Legal Proceedings | 51 |
| Item 1A. | Risk Factors | 51 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 51 |
| Item 3. | Defaults Upon Senior Securities | 52 |
| Item 4. | Mine Safety Disclosures | 52 |
| Item 5. | Other Information | 52 |
| Item 6. | Exhibits | 52 |
| PART III - SIGNATURES | 53 | |
| i |
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Quarterly Report on Form 10-Q are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business plan and strategy, future revenue, timing and likelihood of success, plans and objectives of management for future operations, future results of anticipated products and prospects, plans and objectives of management are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. Forward-looking statements contained in this Quarterly Report on Form 10-Q may include, but are not limited to, statements about:
| · | the implementation of our business model and our strategic plans for our business, product, services and technology; |
| · | our commercialization and marketing capabilities and strategy; |
| · | our ability to establish or maintain collaborations or strategic relationships or obtain additional funding; |
| · | our competitive position; |
| · | the scope of protection that we able to establish and maintain for intellectual property rights covering our products, services and technology; |
| · | developments and projections relating to our competitors and our industry; |
| · | our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; |
| · | the period over which we estimate our existing cash and cash equivalents will be sufficient to fund our future operating expenses and capital expenditure requirements; and |
| · | the impact of new or existing laws and regulations on our business and strategy. |
These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors” of our Prospectus dated May 18, 2026, in any subsequent filing we make with the SEC, as well as in any documents incorporated by reference that describe risks and factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on the forward-looking statements included in this Form 10-Q as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.
| ii |
PART I - FINANCIAL INFORMATION
Item 1. Interim Financial Statements.
AMASS BRANDS INC
INDEX TO THE FINANCIAL STATEMENTS
| Page | |
| Condensed Balance Sheets as of March 31, 2026 (Unaudited) and December 31, 2025 | 2 |
| Condensed Statements of Operations for three and nine months ended March 31, 2026 | 4 |
| Condensed Statements of Changes in Shareholders’ Deficit for three and nine months ended March 31, 2026 | 5 |
| Condensed Statements of Cash Flows for the nine months ended March 31, 2026 | 6 |
| Notes to the Condensed Financial Statements (Unaudited) | 8 |
| 1 |
Amass Brands, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 991,806 | $ | 824,962 | ||||
| Accounts receivable, net | 3,107,561 | 2,317,514 | ||||||
| Due from related parties | - | 1,389,996 | ||||||
| Inventory, net | 11,940,537 | 10,873,408 | ||||||
| Interest receivable | 68,112 | 68,112 | ||||||
| Prepaid expenses and other current assets | 310,305 | 178,205 | ||||||
| Total current assets | 16,418,321 | 15,652,197 | ||||||
| Property and equipment, net | 8,287 | 12,369 | ||||||
| Intangible assets, net | 1,959,039 | 2,202,579 | ||||||
| Goodwill | 2,972,280 | 2,972,280 | ||||||
| Securities pledged as collateral, at fair value | 3,347,564 | 3,347,564 | ||||||
| Investments at cost | 862,419 | 823,746 | ||||||
| Deposits | 13,640 | 14,015 | ||||||
| Total assets | $ | 25,581,550 | $ | 25,024,750 | ||||
See accompanying notes to these condensed consolidated financial statements.
| 2 |
Amass Brands, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Liabilities and stockholders' deficit | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 9,588,404 | $ | 8,257,052 | ||||
| Accrued expenses | 5,182,409 | 4,306,428 | ||||||
| Secured credit facility, current | 2,928,161 | 3,277,034 | ||||||
| Loans payable, current | 750,000 | 897,854 | ||||||
| Contract liabilities | 2,961,166 | 3,042,044 | ||||||
| Promissory notes payable, current | 1,650,000 | 2,498,714 | ||||||
| Derivative liabilities | 1,207,705 | 37,962 | ||||||
| Customer deposits | 413,838 | 417,000 | ||||||
| Interest payable | 484,522 | 694,649 | ||||||
| Obligation under repurchase agreement | 400,000 | 400,000 | ||||||
| Total current liabilities | 25,566,205 | 23,828,737 | ||||||
| Loans payable | 681,570 | 831,568 | ||||||
| Promissory notes payable, net | - | 100,000 | ||||||
| Convertible notes payable | 1,731,710 | 378,725 | ||||||
| SAFE notes | 530,668 | 520,242 | ||||||
| Total liabilities | 28,510,153 | 25,659,272 | ||||||
| Commitments and contingencies (Note 15) | ||||||||
| Stockholders' deficit: | ||||||||
| Series B Preferred Stock, $0.00001 par, 27,789,708 shares authorized, 9,044,513 and 8,304,185 shares issued and outstanding and liquidation value of $15,718,978 and $14,634,844 as of March 31, 2026 and December 31, 2025, respectively | 89 | 82 | ||||||
| Series A Preferred Stock, $0.00001 par, 873,734 shares authorized, 873,734 shares issued and outstanding and liquidation value of $3,633,038 as of March 31, 2026 and December 31, 2025 | 9 | 9 | ||||||
| Series Seed Preferred Stock, $0.00001 par, 12,529,020 shares authorized, 12,529,020 shares issued and outstanding and liquidation value of $15,741,343 as of March 31, 2026 and December 31, 2025 | 125 | 125 | ||||||
| Common stock, 0.00001 par, 250,000,000 and 66,700,000 shares authorized, 3,600,420 and 3,364,984 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively | 38 | 34 | ||||||
| Additional paid-in capital | 39,802,580 | 37,661,354 | ||||||
| Treasury stock, 158,700 and 0 shares at cost as of March 31, 2026 and December 31, 2025, respectively | (1,393,713 | ) | - | |||||
| Accumulated other comprehensive income | 55,172 | 55,172 | ||||||
| Accumulated deficit | (43,740,731 | ) | (40,705,027 | ) | ||||
| Total Amass stockholders’ deficit | (5,276,431 | ) | (2,988,251 | ) | ||||
| Non-controlling interest | 2,347,828 | 2,353,729 | ||||||
| Total stockholders’ deficit | (2,928,603 | ) | (634,522 | ) | ||||
| Total liabilities and stockholders' deficit | $ | 25,581,550 | $ | 25,024,750 | ||||
See accompanying notes to these condensed consolidated financial statements.
| 3 |
Amass Brands, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
| For the three months ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Net revenues | ||||||||
| Spirits & wine revenues | $ | 3,986,436 | $ | 4,159,776 | ||||
| Other revenues | 162,910 | 180,768 | ||||||
| Total net revenues | 4,149,346 | 4,340,544 | ||||||
| Cost of net revenues | ||||||||
| Cost of spirits & wine revenues | 2,809,393 | 2,786,867 | ||||||
| Cost of other revenues | 267,009 | 338,917 | ||||||
| Total cost of net revenues | 3,076,402 | 3,125,784 | ||||||
| Gross profit | 1,072,944 | 1,214,760 | ||||||
| Operating expenses | ||||||||
| Sales and marketing | 967,477 | 993,405 | ||||||
| General and administrative | 2,516,805 | 2,118,102 | ||||||
| Impairment loss | 110,402 | - | ||||||
| Total operating expenses | 3,594,684 | 3,111,507 | ||||||
| Loss from operations | (2,521,740 | ) | (1,896,747 | ) | ||||
| Other income (expense) | ||||||||
| Interest income | 3,709 | 6,483 | ||||||
| Interest expense | (454,856 | ) | (1,544,260 | ) | ||||
| Change in fair value of derivative liabilities | (49,216 | ) | - | |||||
| Change in fair value of SAFEs | (10,426 | ) | - | |||||
| Other expense, net | (9,076 | ) | (285,097 | ) | ||||
| Total other income (expense) | (519,865 | ) | (1,822,874 | ) | ||||
| Net loss | (3,041,605 | ) | (3,719,621 | ) | ||||
| Net loss attributable to noncontrolling interest | (5,901 | ) | (62,579 | ) | ||||
| Net loss attributable to parent | (3,035,704 | ) | (3,657,042 | ) | ||||
| Total comprehensive loss | $ | (3,035,704 | ) | $ | (3,657,042 | ) | ||
| Weighted average common shares outstanding - basic and diluted | ||||||||
| Basic | 3,470,628 | 3,029,130 | ||||||
| Diluted | 3,470,628 | 3,029,130 | ||||||
| Net loss per common share | ||||||||
| Basic | $ | (0.87 | ) | $ | (1.21 | ) | ||
| Diluted | $ | (0.87 | ) | $ | (1.21 | ) | ||
See accompanying notes to these condensed consolidated financial statements.
| 4 |
Amass Brands, Inc. and Subsidiaries
Consolidated Statements of Stockholders’ Deficit
(Unaudited)
| Series B | Series A | Series Seed | Additional | Treasury | Other | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | Paid-In | Common Stock | Comprehensive | Accumulated | Noncontrolling | Stockholders' | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Deficit | Capital | Shares | Amount | Income | Deficit | Interest | Equity (Deficit) | ||||||||||||||||||||||||||||||||||||||||||||||
| Balances at December 31, 2024 | 8,304,185 | $ | 82 | 873,734 | $ | 9 | 12,529,020 | $ | 125 | 2,899,343 | $ | 29 | $ | 35,881,552 | - | $ | - | $ | 57,459 | $ | (26,127,313 | ) | $ | 4,987,142 | $ | 14,799,085 | ||||||||||||||||||||||||||||||||||
| Exercise of stock options | - | - | - | - | - | - | 2,084 | - | 375 | - | - | - | - | - | 375 | |||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock warrants | - | - | - | - | - | - | 214,229 | 2 | 51,406 | - | - | - | - | - | 51,408 | |||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation - options | - | - | - | - | - | - | - | - | 44,548 | - | - | - | - | - | 44,548 | |||||||||||||||||||||||||||||||||||||||||||||
| Warrants issued with promissory notes payable | - | - | - | - | - | - | - | - | 615,427 | - | - | - | - | - | 615,427 | |||||||||||||||||||||||||||||||||||||||||||||
| Offering costs | - | - | - | - | - | - | - | - | (106,970 | ) | - | - | - | - | - | (106,970 | ) | |||||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to noncontrolling interest | - | - | - | - | - | - | - | - | - | - | - | - | - | (62,579 | ) | (62,579 | ) | |||||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to controlling interest | - | - | - | - | - | - | - | - | - | - | - | - | (3,657,042 | ) | - | (3,657,042 | ) | |||||||||||||||||||||||||||||||||||||||||||
| Balances at March 31, 2025 | 8,304,185 | $ | 82 | 873,734 | $ | 9 | 12,529,020 | $ | 125 | 3,115,656 | $ | 31 | $ | 36,486,338 | - | $ | - | $ | 57,459 | $ | (29,784,355 | ) | $ | 4,924,563 | $ | 11,684,252 | ||||||||||||||||||||||||||||||||||
| Balances at December 31, 2025 | 8,304,185 | $ | 82 | 873,734 | $ | 9 | 12,529,020 | $ | 125 | 3,364,984 | $ | 34 | $ | 37,661,354 | - | $ | - | $ | 55,172 | $ | (40,705,027 | ) | $ | 2,353,729 | $ | (634,522 | ) | |||||||||||||||||||||||||||||||||
| Issuance of Common Stock | - | - | - | - | - | - | 77,776 | 1 | 693,658 | - | - | - | - | - | 693,659 | |||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | - | - | - | - | - | - | 4,667 | - | 1,260 | - | - | - | - | - | 1,260 | |||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock warrants | 740,328 | 7 | - | - | - | - | 222,026 | 2 | 986,217 | - | - | - | - | - | 986,226 | |||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for extinguishment of interest payable | - | - | - | - | - | - | 86,342 | 1 | 276,474 | - | - | - | - | - | 276,475 | |||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of Common Stock | - | - | - | - | - | - | - | - | - | (155,375 | ) | (1,393,713 | ) | - | - | - | (1,393,713 | ) | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation - options | - | - | - | - | - | - | - | - | 220,932 | - | - | - | - | - | 220,932 | |||||||||||||||||||||||||||||||||||||||||||||
| Offering costs | - | - | - | - | - | - | - | - | (37,315 | ) | - | - | - | - | - | (37,315 | ) | |||||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to noncontrolling interest | - | - | - | - | - | - | - | - | - | - | - | - | - | (5,901 | ) | (5,901 | ) | |||||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to controlling interest | - | - | - | - | - | - | - | - | - | - | - | - | (3,035,704 | ) | - | (3,035,704 | ) | |||||||||||||||||||||||||||||||||||||||||||
| Balances at March 31, 2026 | 9,044,513 | $ | 89 | 873,734 | $ | 9 | 12,529,020 | $ | 125 | 3,755,795 | $ | 38 | $ | 39,802,580 | (155,375 | ) | $ | (1,393,713 | ) | $ | 55,172 | $ | (43,740,731 | ) | $ | 2,347,828 | $ | (2,928,603 | ) | |||||||||||||||||||||||||||||||
See accompanying notes to these condensed consolidated financial statements.
| 5 |
Amass Brands, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
| For the three months ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (3,041,605 | ) | $ | (3,719,621 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation and amortization | 137,220 | 150,269 | ||||||
| Stock-based compensation | 220,932 | 44,548 | ||||||
| Issuance of advisory common stock shares | 693,659 | - | ||||||
| Amortization of debt discounts | 173,124 | 102,571 | ||||||
| Reserve for expected credit losses | 17,864 | (44,413 | ) | |||||
| Impairment of intangible assets and goodwill | 110,402 | - | ||||||
| Change in fair value of derivative liabilities | 49,216 | - | ||||||
| Change in fair value of SAFE | 10,426 | - | ||||||
| Noncash amortization of debt financing costs | 42,051 | 118,340 | ||||||
| Inventory obsolescence | (259,387 | ) | (6,615 | ) | ||||
| Loss on sale of securities at fair value | - | 280,143 | ||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | (807,911 | ) | 77,640 | |||||
| Inventory, net | (807,742 | ) | 1,032,963 | |||||
| Prepaid expenses and other current assets | (177,867 | ) | (121,239 | ) | ||||
| Accounts payable | 1,331,352 | (401,196 | ) | |||||
| Accrued expenses | 576,356 | (218,326 | ) | |||||
| Interest payable | 16,348 | 1,986,281 | ||||||
| Customer deposits | (3,162 | ) | - | |||||
| Contract liabilities | (80,878 | ) | (2,122 | ) | ||||
| Net cash used in operating activities | (1,799,602 | ) | (720,777 | ) | ||||
| Cash flows from investing activities | ||||||||
| Advances to related parties | - | (26,172 | ) | |||||
| Sale of investment | - | 500,000 | ||||||
| Proceeds from notes receivable | - | 143,517 | ||||||
| Proceeds from deposit on investment repurchase | 300,000 | - | ||||||
| Purchase of SAFE | (38,673 | ) | - | |||||
| Purchase of investment | - | (43,118 | ) | |||||
| Net cash provided by investing activities | 261,327 | 574,227 | ||||||
See accompanying notes to these condensed consolidated financial statements.
| 6 |
Amass Brands, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
| For the three months ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from financing activities | ||||||||
| Proceeds from (repayments of) secured credit facility, net | (348,873 | ) | (849,994 | ) | ||||
| Repayments of loans payable | (97,854 | ) | (61,835 | ) | ||||
| Proceeds from issuance of promissory note | - | 945,000 | ||||||
| Proceeds from issuance of convertible notes payable | 1,351,675 | - | ||||||
| Offering costs | (37,315 | ) | (106,970 | ) | ||||
| Proceeds from exercise of stock options | 1,260 | 375 | ||||||
| Proceeds from exercise of warrants | 836,226 | 51,408 | ||||||
| Net cash provided by financing activities | 1,705,119 | (22,016 | ) | |||||
| Net change in cash and cash equivalents | 166,844 | (168,566 | ) | |||||
| Cash and cash equivalents, beginning of the period | 824,962 | 693,946 | ||||||
| Cash and cash equivalents, end of the period | $ | 991,806 | $ | 525,380 | ||||
| Supplemental Disclosure of Cash Flow Information | ||||||||
| Cash paid for income taxes | $ | 15,739 | $ | 26,408 | ||||
| Cash paid for interest | $ | 96,830 | $ | 1,245,542 | ||||
| Noncash Investing and Financing Activities | ||||||||
| Conversion of promissory note to Preferred Stock | $ | - | $ | 293,398 | ||||
| Warrant exercise for reduction of loans payable | $ | 150,000 | $ | - | ||||
| Repurchase of common stock through cancellation of balance due from related-party | $ | 1,393,713 | $ | - | ||||
| Discount from derivative liability | $ | 1,120,527 | $ | - | ||||
| Issuance of SAFE for reduction of promissory note principal | $ | - | $ | 500,000 | ||||
See accompanying notes to these condensed consolidated financial statements.
| 7 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
Note 1 – Organization and Nature of Business
Amass Brands, Inc. (“Amass” or the “Company”), is a corporation formed on September 22, 2016, under the laws of the State of Delaware. Headquartered in Los Angeles, California, the Company sells primarily alcoholic and non-alcohol beverages through wholesale and online platforms globally.
In September 2024, the Company purchased 50.0001% of 222 Spirits Holdco, LLC, and its two wholly owned subsidiaries, 222 Spirits Company, LLC, and 222 Spirits Management Holdco, LLC (collectively, 222 Spirits), which is accounted for as a business acquisition.
Further, see Note 12 for effectiveness of reverse stock split.
Note 2 – Liquidity and Capital Resources
The Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company incurred losses and used cash flow from operations since inception and has limited available capital. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern for the next twelve months is dependent upon its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and/or to obtain additional working capital.
The Company plans to raise additional capital as necessary to support its operating losses through the issuances of stock and loans. No assurances can be given that the Company will be successful in these efforts. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities as a result of this uncertainty.
| 8 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
Note 3 – Summary of Significant Accounting Policies
Basis of accounting – The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as found in the Accounting Standards Codification (“ASC”) of the Financial Accounting Standards Board (“FASB”). The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the SEC applicable to interim period financial statements and do not include all of the information and disclosures required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the financial position and the results of operations for the periods presented.
These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2025. Interim results are not necessarily indicative of the results that may be expected for a full year.
Concentrations of credit risk – Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company generally maintains balances in various operating accounts at financial institutions that management believes to be of high credit quality, in amounts that may, at times, exceed federally insured limits. The Company has not experienced any losses related to its cash and cash equivalents and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. As of March 31, 2026 and December 31, 2025, all the Company’s cash and cash equivalents were held at accredited financial institutions.
Additionally, the Company had the following concentrations in net sales and accounts receivable during the three months ended March 31, 2026.
| For the three months | ||||
| ended March 31, | ||||
| 2026 | ||||
| Customer A | ||||
| Net Sales | 15.4 | % | ||
| Accounts Receivable | 15.4 | % | ||
Fair value measurements – Certain assets and liabilities of the Company are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.
Level 3 – Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies, and similar techniques.
| 9 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
Derivative liabilities, warrant liabilities, SAFEs, investments at fair value, and securities pledged as collateral are measured using Level 3 inputs. Measurement of fair value using Level 3 inputs necessitates the use of estimates and assumptions that are inherently subjective, and the values determined by management as a result of using such inputs may differ from the values that would have been used had observable quotations in an active market existed, the differences could be material.
Except for investments at fair value, securities pledged as collateral, derivative liabilities, warrant liabilities, and SAFEs, the carrying amounts of the Company’s assets and liabilities, which are defined as financial instruments pursuant to U.S. GAAP, approximate fair value due to their short-term nature.
The following tables present changes in investments in fair value, securities pledged as collateral, derivative liabilities, and SAFEs, which are Level 3 assets and liabilities measured at fair value for the three months ended March 31, 2026. Note that during the fiscal year 2025, the Company sold their Investment in De Soi as part of a secured borrowing and, as such, the investment is a security pledged as collateral as of March 31, 2026; the first table below is presented comprehensive of both financial statement line items as they are interrelated:
| Investments at Fair Value/Securities Pledged as Collateral at Fair Value | Amount | |||
| Balance, December 31, 2025 | $ | 3,347,564 | ||
| Balance, March 31, 2026 | $ | 3,347,564 | ||
| Derivative Liabilities at Fair Value | Amount | |||
| Balance, December 31, 2025 | $ | 37,962 | ||
| Issuance of Convertible Notes and Warrants | 1,120,527 | |||
| Change in fair value | 49,216 | |||
| Balance, March 31, 2026 | $ | 1,207,705 | ||
| SAFEs at Fair Value | Amount | |||
| Balance, December 31, 2025 | $ | 520,242 | ||
| Change in fair value | 10,426 | |||
| Balance, March 31, 2026 | $ | 530,668 | ||
| 10 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
Derivative liabilities arose from convertible notes November 2025 and were initially recorded at fair value of $37,046. There was a change in fair value of $916 during the year ended December 31, 2025. In 2026, there were additional derivative liabilities incurred of $1,068,790 from the issuance of more convertible notes. Additionally, stock warrants issued in connection with the Company's convertible notes from November 2025 through March 2026 are accounted for as derivative liabilities under ASC 815-40. The Company also recognized a warrant derivative liability of $51,737 during the three months ended March 31, 2026. There was a change in fair value of $49,216 for all derivative liabilities during the three months ended March 31, 2026. Further, changes in the fair value of derivative liabilities are recognized in the consolidated statements of operations within other income (expense).
In February 2025, the Company issued a Simple Agreement for Future Equity (SAFE), which was marked to the fair value of $500,000 at issuance. There was a change in fair value of $10,426 and $0 as of the three months ended March 31, 2026 and March 31, 2025, respectively. Changes in the fair value of SAFEs are recognized in the consolidated statement of operations within other income (expense).
There were no transfers between Levels 1, 2, or 3 during the three months ended March 31, 2026 nor March 31, 2025.
Valuation techniques and inputs – The Company’s financial instruments measured at fair value on a recurring basis include investments at fair value, which are classified as Level 3 due to significant unobservable inputs used in their valuation.
The fair value of the Company’s investment at fair value/securities pledged as collateral is sensitive to changes in key unobservable inputs such as public company comparables for multiples, the weighting of various models, volatilities, discount rates, and financial projections. If these assumptions were to change materially, it could significantly impact the fair value conclusions.
To value the investment at fair value, the Company used a market based approach by identifying similar companies, applying multiples of revenues and liquidation waterfall to reach the Company’s equity value in the investment, considering discounts for lack of marketability and including weighting for transactions where we sold stock. Further, the Company considers recent transactions that occurred with the investment as evidence of fair value.
The Company sold a portion of its investments during the three months ended March 31, 2025, which caused losses. These losses were incurred for strategic reasons and not necessarily the value the Company would get for its highest and best use. However, such was used as an input in determining fair value as described above.
The Company’s derivative liabilities relate to embedded features in convertible debt instruments. These instruments are measured at fair value using a with-or-without probability weighted model. Significant unobservable inputs used in valuing derivative liabilities include the probability of conversion, the timeline for which the events are expected to occur, and discount rates applied. The fair value of the derivative liabilities is sensitive to changes in these significant unobservable inputs.
Additionally, the convertible debt instruments include embedded warrants. The Company values the warrant liabilities at fair value using a Monte Carlo simulation, which captures the path-dependent cash settlement mechanic under the Exchange Cap and the probability-weighted outcomes associated with a qualified financing event. Because the valuation relies on significant unobservable inputs, the warrant derivative liability is classified within Level 3 of the fair value hierarchy.
| 11 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
The Company’s SAFE is measured at fair value using a probability-weighted expected return valuation method. Significant unobservable inputs used in valuing the SAFE include the probability of each scenario, timeline for which the events are expected to occur, and discount rates. Because these inputs are unobservable and involve management judgement, the SAFE is classified as Level 3.
The fair value of the SAFE is sensitive to changes in these significant unobservable inputs. Increases in expected volatility, expected term, discount rates or probability of outcomes would generally increase the fair value of the SAFE, while decreases in these assumptions would generally decrease the fair value.
There were no changes in the valuation techniques used to determine the fair value of Level 3 instruments during the three months ended March 31, 2026 nor the three months ended March 31, 2025.
Accounts receivable, net – Accounts receivable are derived from products and services delivered to customers and are stated at their net realizable value. The Company evaluates the creditworthiness of its customers prior to extending credit and monitors the aging and collectability of receivables on a continuous basis. Accounts receivable are generally written off when deemed uncollectible, and recoveries of receivables previously written off are recognized when received. Generally, no interest is charged on past-due accounts. The accounts receivable on Maison Thomas serve as collateral for the credit facility.
In accordance with ASC 326, the Company establishes an allowance for expected credit losses on financial assets, including trade and other receivables, at each reporting date. The allowance reflects management’s estimate of lifetime expected credit losses based on historical collection experience, the type and credit quality of the customer, the age of outstanding receivables, and current and expected future economic conditions.
Management uses the best information available to make these estimates; however, future adjustments may be required if there are significant changes in customer financial condition or broader economic trends. As of March 31, 2026 and December 31, 2025, the Company had a reserve for expected credit losses of $101,253 and $83,389, respectively.
Property and equipment, net – Property and equipment, net includes long-term fixed assets such as machinery, equipment, furniture, and fixtures reported, net of depreciation. Property and equipment are recorded at cost. Depreciation is expensed using the straight-line method over the estimated useful lives of the assets. During the three months ended March 31, 2026 and March 31, 2025, the Company’s property and equipment were depreciated over five years, and leasehold improvements are amortized over the shorter of one to five years or the lease life. Additions and improvements are capitalized, while routine repairs and maintenance are charged to expense as incurred.
Intangible assets, net – Intangible assets consist of capitalized website development costs, tradenames and transferred intellectual property, customer base, and non-competes. Intangible assets have been determined to have definite lives and are amortized on a straight-line bases over their estimated economic lives which range from 5 to 15 years. Website development costs are amortized over two years.
| 12 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
Impairment of long-lived assets – The Company accounts for the impairment and disposition of long-lived assets in accordance with ASC Subtopic 360-10-35, Property, Plant, and Equipment – Overall – Subsequent Measurement (ASC 360). In accordance with ASC 360, the Company reviews its long-lived assets, including finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company measures recoverability of assets to be held and used by comparing the carrying amount of an asset to future undiscounted net cash flows that it expects the asset to generate. When an asset is determined to be impaired, the Company recognizes the impairment amount, which is measured by the amount the carrying value of the asset exceeds its fair value. In addition, the Company evaluates goodwill for impairment in accordance with ASC 350, Intangibles-Goodwill and Other (ASC 350). Goodwill is tested at least annually, or more frequently if a triggering event occurs. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to the excess, not to exceed the total amount of goodwill. During the three months ended March 31, 2026 and March 31, 2025, impairment loss of $110,402and $0, respectively, was recognized.
Customer deposits – Customer deposits represent cash received from customers in advance of the Company satisfying its performance obligations and are recorded as a liability within accrued expenses and other current liabilities. The balance as of December 31, 2025 relates to a single customer deposit that is expected to be earned in 2026, as the related performance obligation had not been fulfilled as of year-end. The obligation was not fully satisfied as of March 31, 2026.
Revenue recognition – The Company recognizes revenue under FASB ASC 606, Revenue from Contracts with Customers. The Company derives its revenue primarily through the sale of alcohol and non-alcoholic spirits and wine products in both wholesale and direct to consumer channels. Spirits and wine end customers consist primarily of retailers, bars, and restaurants. The Company determines revenue recognition through the following steps:
| · | Identification of the contract, or contracts, with a customer, |
| · | Identification of the performance obligations in the contract, |
| · | Determination of the transaction price, |
| · | Allocation of the transaction price to the performance obligations in the contract, and |
| · | Recognition of revenue when, or as, the Company satisfies a performance obligation. |
The Company’s revenue generating activities have a single performance obligation and are recognized when the ordered goods are shipped to the end customer, which is when control transfers. Revenue is measured as the amount of consideration the Company expects to receive in exchange for the sale of its product. The Company’s sales terms do not typically allow for a right of return on sales to wholesale and distributor customers except for matters related to any manufacturing defects. Amounts billed to customers for shipping and handling are included in net revenues.
| 13 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
As the Company’s standard payment terms are less than one year, the Company has elected, as a practical expedient, to not assess whether a contract has a significant financing component. The Company allocates the transaction price to each distinct product based on its relative standalone selling price. The product price as specified on the purchase order is considered the standalone selling price as it is an observable source that depicts the price as if sold to a similar customer in similar circumstances. Incidental items that are immaterial in the context of the contract are recognized as expense. The Company does not have any significant financing component as payments are received at or shortly after the point of sale.
Costs incurred to obtain a contract are expensed as incurred when the amortization period is less than a year. The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year. The Company has concluded that none of the costs it has incurred to obtain and fulfill its sales contracts meet the capitalization criteria, and as such, there are no costs deferred and recognized as assets on the consolidated balance sheets as of March 31, 2026 and December 31, 2025.
Net revenues reflect reductions attributable to consideration given to customers in various customer incentive programs, including pricing discounts on single transactions, volume discounts, promotional and advertising allowances, coupons, and rebates. This variable consideration is recognized as a reduction of the transaction price based upon expected amounts at the time revenue for the corresponding product sale is recognized. For example, customer promotional discount programs are entered into with certain distributors for certain periods of time. The amount ultimately reimbursed to distributors is determined based upon agreed-upon promotional discounts which are applied to distributors’ sales to retailers. Other common forms of variable consideration include volume rebates for meeting established sales targets, including discounts offered to the end customer. The determination of the reduction of the transaction price for variable consideration requires certain estimates and assumptions that affect the timing and amounts of revenue and liabilities recognized. Management estimates this variable consideration by taking into account factors such as the nature of the promotional activity, historical information, and current trends, availability of actual results, and expectations of customer and consumer behavior. All such estimates were not material for the three months ended March 31, 2026 and March 31, 2025.
Further, the Company offers discounts on e-commerce transitions such as first order discounts, free shipping on sales over certain thresholds, subscription discounts, and bundled set discounts. All e-commerce discounts are included as part of net revenues on the statements of operations and known at the time of the transaction.
Sales tax collected from customers is not considered revenue and is included in accrued expenses until remitted to the taxing authorities. Excise taxes were not material to the consolidated financial statements for the three months ended March 31, 2026, nor March 31, 2025.
Cost of net revenues – Cost of net revenues consists of the costs of inventory sold, which includes inbound freight, and production and fulfillment-related payroll. Outbound freight, third-party logistics costs, customs and duties, packaging materials, payment processing fees, and other fulfillment costs are also included in cost of net revenues. Shipping and handling costs amounted to $206,508 and $111,918 for the three months ended March 31, 2026 and March 31, 2025, respectively.
Sales and marketing expenses – Sales and marketing expenses include all expenditures incurred to market or sell products. These costs include expenditures by the sales team while in the field, marketing and advertising costs, distributor costs, and payroll costs for the sales, marketing, and digital departments.
| 14 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
Advertising costs – Advertising costs are expensed in the period incurred and are included as sales and marketing expenses in the consolidated statements of operations. Advertising costs amounted to $154,038 and $30,986 for the three months ended March 31, 2026 and March 31, 2025, respectively.
Net loss per share – Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common shares outstanding during the period, excluding shares subject to redemption or forfeiture. The Company presents basic and diluted net loss per share on the consolidated statements of operations. Diluted net loss per share reflect the actual weighted average of common shares issued and outstanding during the period, adjusted for potentially dilutive securities outstanding. Potentially dilutive securities are excluded from the computation of the diluted net loss per share if their inclusion would be anti-dilutive. Potentially dilutive securities include the any options, warrants, and convertible debt. The number of shares convertible debt is convertible into is indeterminable. Options and warrants outstanding are described in Note 13.
Income taxes – In December 2023, the FASB issued a standard to enhance the transparency and decision usefulness of income tax disclosures. This standard requires public companies to disclose (i) specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold, (ii) the amount of income taxes paid disaggregated by federal, state, and foreign taxes and disaggregated by material individual jurisdictions, and (iii) income from continuing operations before income tax expense disaggregated between domestic and foreign and income tax expense from continuing operations disaggregated by federal, state, and foreign. We adopted the update on January 1, 2026. We expect this standard to impact our disclosures with no material impacts to our results of operations, cash flows, or financial condition.
Accounting pronouncements not yet adopted
Disaggregation of income statement expenses – In November 2024, the FASB issued a standard requiring disaggregated information about certain income statement expense line items to be disclosed on an annual and interim basis. We are required to adopt these disclosures for our annual period ending December 31, 2028, with early adoption permitted and this standard may be applied retrospectively. We expect this standard to impact our disclosures with no material impacts to our results of operations, cash flows, or financial condition.
Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying consolidated financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.
| 15 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
Note 4 – Inventory, net
Inventory, net consisted of the following as of March 31, 2026 and December 31, 2025:
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Raw materials | $ | 2,360,652 | $ | 2,490,030 | ||||
| Work in process | 4,249,102 | 4,627,130 | ||||||
| Finished goods | 8,530,658 | 7,215,511 | ||||||
| Inventory reserve | (3,199,875 | ) | (3,459,263 | ) | ||||
| Total inventory | $ | 11,940,537 | $ | 10,873,408 | ||||
At March 31, 2026 and March 31, 2025, the Company allocated the following amounts in inventory reserve: $371,645 and $386,439 for Raw Materials, respectively; $759,536 and $521,488 for Work in Process, respectively; and $2,068,694 and $2,551,336 for Finished Goods, respectively.
As of March 31, 2026 and December 31, 2025, the Company had no deposits for inventory purchases and production runs.
Note 5 – Long-Lived Assets
Property and equipment, net – Property and equipment, net consists of the following:
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Plant and equipment | $ | 113,159 | $ | 113,159 | ||||
| Office and storage equipment | 288 | 288 | ||||||
| Furniture and fixtures | 468 | 468 | ||||||
| Leasehold improvements | 95,372 | 95,373 | ||||||
| Property and equipment, gross | 209,287 | 209,288 | ||||||
| Less: Accumulated depreciation and amortization | (201,000 | ) | (196,919 | ) | ||||
| Property and equipment, net | $ | 8,287 | $ | 12,369 | ||||
Depreciation and amortization expenses of $4,081 and $25,645 were included in general and administrative expenses in the accompanying consolidated statements of operations for the three months ended March 31, 2026 and March 31, 2025, respectively.
| 16 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
Intangible assets, net – Intangible assets, net consist of the following:
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Website development | $ | 148,039 | $ | 148,039 | ||||
| Tradename/transferred IP | 353,224 | 457,116 | ||||||
| Customer base | 38,251 | 44,267 | ||||||
| Non-competes | 3,333 | 3,857 | ||||||
| Brand names | 3,264,000 | 3,264,000 | ||||||
| Intangible assets, gross | 3,806,847 | 3,917,279 | ||||||
| Less: Accumulated amortization | (1,847,808 | ) | (1,714,700 | ) | ||||
| Intangible assets, net | $ | 1,959,039 | $ | 2,202,579 | ||||
| Goodwill | $ | 2,972,280 | $ | 2,972,280 | ||||
Amortization expense was $133,139 and $124,624 for the three months ended March 31, 2026 and March 31, 2025, respectively, and is included in general and administrative expenses in the accompanying consolidated statements of operations.
During the three months ended March 31, 2026, the Company assessed the Gem&Bolt tradename, customer base, and non-competes for impairment. The Company concluded that due to the fact that Gem&Bolt has ceased production, the remaining carrying value of these intangible assets should be fully impaired. The total impairment loss recognized in the three months ended March 31, 2026 is $110,402, and is included in impairment loss in the accompanying consolidated statements of operations.
Note 6 – Investments
De Soi – In August 2020, the Company entered into a joint venture to create De Soi, a celebrity-founded, non-alcoholic wine product company. De Soi first made its product available for sale in January 2022 through the release of three flavors available in both bottles and cans. The Company was granted 2,500,000 of 5,000,000 shares of common stock in De Soi for no consideration. In 2022, the Company acquired certain preferred stock and sold common stock, resulting in ownership of less than 50%, at which point De Soi ceased being a joint venture, as De Soi had raised outside capital in the year and the Company owned less than 50% of De Soi. In December 2024, the Company sold 340,864 shares of Common Stock to a related party for $500,000 and recognized a loss on sale of $363,982 which is included in other expenses in the accompanying consolidated statements of operations. In January 2025, the Company sold another portion of its investment in De Soi for $500,000.
| 17 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
During 2025, the Company transferred its investment in De Soi to a related party in exchange for $400,000 in cash (Note 14). The transferee pledged the investment as collateral under a third-party secured promissory note, and the Company entered into a repurchase agreement obligating it to repurchase the investment at maturity. Based on its evaluation under ASC 860, the Company concluded that it retained effective control over the investment and, therefore, the transaction did not qualify for sale accounting. The transaction has been accounted for as a secured borrowing, with the investment remaining on the consolidated balance sheet as securities pledged as collateral and a $400,000 obligation under repurchase commitment recorded. No gain or loss was recognized.
At the valuation dates of March 31, 2026 and December 31, 2025, management used the market approach to determine the fair value of the Company’s investment in De Soi was $3,347,564, which includes common stock and Series Seed holdings. The market approach was based on valuations related to financing transactions with third-party investors and market multiples of comparable companies, adjusted for certain time and market factors. See note 3 above for fair value measurement disclosures.
Full Glass – As partial consideration for the sale of the Winc.com DTC business unit, the Company received 39,500 Common Units and warrants convertible to 40,000 Common Units of the buyer with a total implied value of $1,500,000. The warrants had an exercise price of $0.01 and have a five-year maturity. During the year ended December 31, 2023, the Company elected to record the investment at cost and evaluate the investment for impairment whenever a triggering event occurs. In February 2024, 8,892 of the Common Units were converted to Series A Preferred Units and the Company was awarded an additional 41,345 Common Units in consideration for the dilution the Company took on Full Glass’ Series A as contemplated by the original contract with Full Glass. Further in February 2024, the Company entered into a Restatement Agreement in which it forfeited its warrants in exchange for a $3,500,000 lump payment on the promissory notes. As such forfeiture represented approximately half of the initial value of the investment, the Company reduced the value of the investment by $754,717 and recorded the loss as a component of other expense, net. During the three months ended March 31, 2026, the Company received $300,000 as a deposit that is expected to reduce our investment in Full Glass. The deposit is included in accrued expenses in the accompanying balance sheets as of March 31, 2026. Therefore, as of March 31, 2026 and December 31, 2025, no triggering events occurred and the investment had a value of $745,283.
HpO – The Company received a 15% equity interest in Zerra Nutrition, Inc. (“HpO”) upon HpO’s formation in April 2025 for no consideration. During 2025, the Company made certain advances to HpO to support operations. In June 2026, the Company formalized the investment in a Simple Agreement for Future Equity (SAFE) issued by HpO for a purchase amount of up to $300,000 funded through July 2026. The SAFE is a post-money (valuation cap) instrument with a $5,000,000 post-money valuation cap and no discount, and is non-interest-bearing with no fixed maturity or repayment obligation. It carries no voting rights and entitles the Company to shares of HpO’s capital stock upon a future equity financing, or to a cash or as-converted payout upon a liquidity or dissolution event, ranking junior to indebtedness, on par with other SAFEs and preferred stock, and senior to common stock. The investment has historically been carried at cost, and its ultimate realization is contingent on a future conversion or liquidity event at the issuer. HpO is considered a related party because it is controlled by Geoff McFarlane, who is the majority owner and President of Resonant, an entity consolidated by the Company as a variable interest entity. The balance of the cost investment as of March 31, 2026 and December 31, 2025 was $117,136 and $78,463, respectively.
Note 7 – Contract Losses
The Company identified that evidence existed, including declining bulk wine market and demand concerns for finished goods wine, indicating that some of its long-term, unhedged purchase commitment contracts of bulk wine would incur losses in future periods. The identified contracts included bulk wine expected to be received in 2025. In accordance with ASC 330, Inventory, the Company records a provision when evidence exists that net realizable value is lower than the contractual price. The provision is measured at the best estimate of the expected loss, recorded in cost of net revenues, and will be reassessed each period for changes in estimates. Key estimates include remaining expected consideration and market pricing affecting net realizable value. The total liability associated with firm purchase commitment contracts was $2,961,166 and $3,042,044 as of March 31, 2026 and December 31, 2025, respectively, and is presented within contract liabilities and within current liabilities on the consolidated balance sheets.
In February 2024, the Company entered into a supplier agreement to sell finished goods wine to Full Glass at prices below cost. This contract was entered into as a mitigation tool for its long-term purchase commitment contracts above, and on-hand bulk wine in inventory, as the Company is not expecting there to be enough demand for utilization of the bulk wine commitments. The Company utilized the Full Glass supplier agreement in considering the net realizable value for finished goods produced through the long-term purchase commitments above. The Company recognizes losses on the fulfilment of this contract as incurred, which totaled $2,122 during the year ended December 31, 2025 and no losses were incurred during the three months ended March 31, 2026.
| 18 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
Note 8 – Derivative Liabilities
The Company has issued convertible notes with embedded conversion features and warrants. The notes contain embedded redemption features that do not qualify for equity classification under ASC 815, Derivatives and Hedging, and must be bifurcated and carried at fair value. As a result, the embedded redemption features are recognized as derivative liabilities, measured at fair value at issuance and at each subsequent reporting date in accordance with ASC 820, Fair Value Measurement, with changes in fair value recorded in earnings.
Additionally, the associated warrants do not qualify for equity classification because they contain settlement features and other terms that preclude equity treatment under ASC 815. As a result, the warrants are recognized as liabilities, measured at fair value at issuance and at each subsequent reporting date in accordance with ASC 820, with changes in fair value recorded in earnings. At March 31, 2026, the Company recognized the derivative liability value of the warrants on an aggregate basis at a fair value of $51,737. As of December 31, 2025, the warrant liability was determined to be negligible. Changes in the fair value of the warrant derivative liability are recognized in the consolidated statements of operations.
As of March 31, 2026 and December 31, 2025, the carrying amount of the derivative liabilities was $1,207,705 and $37,962. There were no conversions of repayments of the underlying convertible debts during the periods presents, nor were there any warrant exercises.
The derivative liability is included in the consolidated balance sheets as of March 31, 2026 and December 31, 2025. Changes in the fair value of the derivative liability for the three months ended March 31, 2026 and March 31, 2025 were $49,216 and $0, respectively, which were recognized in the consolidated statement of operations.
Note 9 – Debt
Secured credit facility – In September 2023, the Company entered into a Loan and Security Agreement to open a credit facility with the maximum aggregate principal amount of $8,000,000 (the ABL). The maximum aggregate principal amount was reduced to $5,000,000 in 2026. Interest is accrued at the greater of (i) 12% and (ii) Prime Rate (6.75% as of March 31, 2026 and December 31, 2025) plus 3.75% per annum. The ABL matures in September 2026 with an automatic renewal for one year if not terminated before 60 days before the termination date. The outstanding balance on the ABL was $2,928,161 and $3,277,034 as of March 31, 2026 and December 31, 2025, respectively. In August 2025, the Company breached a financial covenant which put the ABL into technical default. Through the date of these financial statements, the breach has not affected the functionality of the facility and both parties are actively working to resolve the matter. The Company received a waiver of their default as of December 31, 2025.
| 19 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
Loans payable – In May 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was established to provide economic relief to small businesses facing COVID-19-related economic hardships. In June 2020, the Company applied and received COVID relief funding for qualified small businesses under the Economic Injury Disaster Loan (EIDL) assistance program by the Small Business Administration (SBA). Per the terms of the EIDL agreement, the Company received total proceeds of $150,000. The loan matures in thirty years from the effective date of the loan and has a fixed interest rate of 3.75% per annum. As of March 31, 2026 and December 31, 2025, the outstanding balance was $160,389 and $160,296, inclusive of accrued interest, respectively. Interest expense for this loan was $2,286 for the three months ended March 31, 2026 and March 31, 2025.
In December 2022 and 2023, the Company obtained three Mezzanine Secured Notes with shareholders in an aggregate principal amount of $1,700,000, of which $500,000 was from a related party. The notes originally accrued interest at a rate of 15% for the first month and monthly thereafter based on a range of 12-14% per annum. The loans were past due but subsequently extended through July 2026. As of March 31, 2026 and December 31, 2025, the principal balance of Mezzanine Secured Notes was $200,000, and $297,854 respectively, of which $97,854 was due to a related party as of December 31, 2025. The balance due to a related party was fully repaid in March 2026. In February 2026, the Company extinguished $276,475 of interest in exchange for the exercise of 65,509 shares of Common Stock warrants for $26,479 and 20,833 shares of Common Stock for $249,996. As of March 31, 2026 and December 31, 2025, the accrued interest balance of Mezzanine Secured Notes was $266,827 and $524,125, respectively; none of the accrued interest was due to a related party.
In April 2024, the Company issued a Secured Promissory Note with the principal balance of $2,500,000. The note originally accrued interest at $72,917 per month with default interest of $2,000 per day with original maturity in April 2025. The note was amended during 2025, to include reduced monthly payments, extension of the note, and settlement of all default and past due interest. As consideration, the Company transferred $1,000,000 of its investment at fair value and issued a $500,000 SAFE under the Company’s subsidiary Good Twin. The Note also contains a post-closing provision requiring the Company to transfer additional equity interests in Good Twin to the Lender if the Lender's ownership interest falls below ten percent (10%) upon SAFE conversion, with the fair market value of any such shares transferred applied as a dollar-for-dollar reduction to the outstanding principal balance. The Company determined this qualified as a debt modification, with the additional consideration charged to interest expense Additionally, in January 2026, the note was amended twice:
| - | Amendment No. 3: Lender extended maturity to June 30, 2027, cancelled monthly payments due February through April 2026, waived accrued late-payment fees, released a contingent equity-transfer remedy, and set a revised payment schedule of seventeen $50,000 installments starting May 2026 plus a $417,000 balloon at maturity. Because the Company was in payment default and the lender granted concessions it would not otherwise have granted, the Company accounted for the amendment as a troubled debt restructuring under ASC 470-60. The total undiscounted cash flows under the restructured terms equal the pre-restructuring carrying amount, so no gain or loss was recognized. The effective interest rate on the restructured note is zero, and future cash payments will be applied entirely as reductions of the carrying amount. |
| - | Amendment No. 4: Lender exercised a portion of a pre-existing warrant to purchase 102,425 shares of the Company’s Series B Preferred Stock at the contractual exercise price of $1.4644 per share. The $150,000 aggregate exercise price was paid by cancelling $150,000 of principal under the Note. After this amendment, the outstanding principal balance was $1,067,000. |
| 20 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
The outstanding balance was $1,067,000 and $1,267,000 as of March 31, 2026 and December 31, 2025, respectively. The Company incurred $0 and $1,033,668 of interest and late fees on the note during the three months ended March 31, 2026 and March 31, 2025, respectively.
Promissory notes payable – In 2021 and 2022, the Company issued promissory notes with a total principal amount of $1,900,000. As of March 31, 2026 and December 31, 2025, the Company had promissory notes with the total outstanding principal balance of $1,650,000 and accrue interest at a rate of 12% per annum.
The promissory notes mature between August 2026 and September 2027. Interest accrued on the notes is paid quarterly in arrears. The notes incurred $42,862 and $48,822 of interest expense for the three months ended March 31, 2026 and March 31, 2025, respectively, of which $151,937 and $149,758 was payable at March 31, 2026 and March 31, 2025, respectively.
In January 2025, the Company issued an additional Promissory Note to a shareholder with greater than 5% ownership with a principal balance of $1,000,000. The note accrues interest at 6.25% per annum and matures in January 2026 and contained warrants further discussed below. The outstanding balance was $1,000,000 as of December 31, 2025, all of which was principal. The balance was converted to a convertible note in February 2026. The Company incurred $4,583 and $9,167 of interest on the note during the three months ended March 31, 2026 and 2025, respectively.
The promissory note contained warrants to purchase 214,229 shares of common stock at the exercise price of $0.24 or through a cashless exercise. The warrants were exercised for cash in February 2025. The warrants were allocated a relative fair value of $615,000 upon issuance, which was amortized over the life of the note. During the three months ended March 31, 2026, the Company recognized $51,286 of interest expense related to the accretion of the discount, with $0 remaining at the end of the period.
Note 10 – Convertible Debt
From November 2025 through March 2026, the Company issued unsecured convertible promissory notes (“Convertible Notes”) to investors in the principal amount of $2,766,316 and $414,641 as of March 31, 2026 and December 31, 2025, respectively. The Convertible Notes bear interest at a rate of 9% per annum and mature on the earlier of (i) 24 months from issuance or (ii) a change of control. The Convertible Notes may not be prepaid without the consent of the holder. Of the convertible notes, $1,822,415 was issued to related parties.
The Convertible Notes are convertible, at the holder’s option or automatically upon certain events, into shares of the Company’s common stock. Upon a qualified financing, the outstanding principal and accrued interest automatically convert at a price equal to 80% of the price paid by new investors. Upon a change of control, the holder may elect to receive either repayment equal to two times the outstanding balance or conversion based on an implied valuation of $30.0 million and the Company’s fully diluted capitalization as of immediately prior to the closing of the change of control transaction. If the Notes remain outstanding at maturity and no conversion event has occurred, the outstanding balance automatically converts based on the same $30.0 million valuation framework.
In connection with the issuance of the Notes, the Company also issued warrants to purchase shares of common stock with an exercise price equal to the greater of $10.00 or the volume-weighted average trading price, exercisable following the Company’s listing on Nasdaq and expiring 180 days thereafter. Issuance of shares under the Note and Warrant is subject to a 19.99% exchange cap absent stockholder approval.
| 21 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
The Company evaluated the Notes and Warrants in accordance with applicable accounting guidance and concluded that the embedded conversion feature was required to be bifurcated and held at fair value, and the warrants qualified for liability treatment due to failing indexation guidance. Accordingly, the features of the Notes and the Warrants are recorded as liabilities at fair value, with changes in fair value recognized in earnings until conversion, settlement, or expiration. See Note 3.
The Company recorded discounts from the derivative and warrant liabilities totaling $1,120,527 and $37,346 for the three months ended March 31, 2026 and the year ended December 31, 2025, respectively. See Notes 3 and 8 for valuation of derivative and warrant liabilities. As of March 31, 2026 and December 31, 2025, the net carrying value of the debt was $1,731,710 and $378,725 with remaining debt discount of $1,034,606 and $35,916 and accrued interest of $55,370 and $4,551, respectively. Interest expense from accretion of the discount during the three months ended March 31, 2026 and March 31, 2025 was $120,760 and $0, respectively. Accrued interest from the related party was $32,432.
Note 11 – Simple Agreement for Future Equity (“SAFE”)
In February 2025, the Company issued a Simple Agreement for Future Equity (“SAFE”) in Good Twin to an investor in exchange for $500,000, which was applied toward the repayment of amounts outstanding under a previously issued secured promissory note. The SAFE provides the investor with the right to receive shares of the Good Twin’s capital stock upon the occurrence of a qualifying equity financing, liquidity event, or dissolution event.
The SAFE has a post-money valuation cap of $5.0 million, does not bear interest, and has no stated maturity date. Upon an equity financing, the SAFE automatically converts into equity at a price based on the lower of the valuation cap or the price paid by new investors. In the event of a liquidity or dissolution event prior to conversion, the investor is entitled to receive the greater of the original investment amount or the value of the shares issuable under the valuation cap, subject to customary liquidation priority provisions.
The Company determined that the SAFE does not qualify for equity classification. Accordingly, the SAFE is classified as a liability and recorded at fair value, with changes in fair value recognized in earnings. As of March 31, 2026 and December 31, 2025, the carrying value of the SAFE was $530,668 and $520,242, respectively. No conversion or settlement events had occurred to date.
Note 12 – Stockholders’ Equity
Reverse stock split and capital reorganization – In January 2026, the Company filed its Seventh Amended and Restated Certificate of Incorporation with the State of Delaware, which became effective upon filing. Pursuant to the amended certificate, the Company effected a 1-for-3 reverse stock split of its issued and outstanding shares of common stock, whereby each three shares of common stock issued and outstanding immediately prior to the effective time were automatically combined into one share of common stock.
No fractional shares were issued in connection with the reverse stock split. Any fractional shares resulting from the reverse stock split were rounded up to the nearest whole share, and no cash was paid in lieu of fractional shares.
The reverse stock split did not affect the par value per share of the Company’s common stock, the total number of authorized shares of common stock, or the Company’s total stockholders’ equity. It also did not affect the outstanding preferred stock, but did affect the conversion ratio where it is now 3:1.
| 22 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
In connection with the effectiveness of the amended certificate, each outstanding share of the Company’s non-voting common stock was automatically converted on a one-for-one basis into a share of voting common stock, and the Company no longer has authority to issue shares of non-voting common stock. Accordingly non-voting and voting shares of common stock have been presented together in the stockholders’ equity (deficit).
All share and per-share amounts presented in the accompanying consolidated financial statements have been retroactively adjusted for all periods presented to reflect the reverse stock split and related reclassification.
Common stock – As of March 31, 2026 and December 31, 2025, the Company was authorized to issue a total of 250,000,000 and 66,700,000 shares of Common Stock, respectively, with $0.00001 par value, of which 250,000,000 and 63,500,000, respectively, were voting shares and 0 and 3,200,000 were non-voting shares. In January 2026, the Company eliminated the non-voting shares class and converted all outstanding shares of non-voting Common Stock to voting shares of Common Stock.
Each holder of stock (both common and preferred) is entitled to one vote for each share of stock held, with the exception of non-voting common stock. No distributions have been made as of March 31, 2026.
Preferred stock – The holders of Series B Preferred Stock are initially entitled to repayment amount at the greater of (i) the Original Issue Price of the Series B Preferred Stock, plus any dividends declared but unpaid thereon or (ii) such amount per share as would have been payable had all shares of the Series B Preferred Stock been converted into Common Stock immediately prior to such liquidation, dissolution, winding up, or Deemed Liquidation Event.
After holders of Series B Preferred Stock are repaid, the holders of shares of all other series of Preferred Stock then outstanding shall be entitled to be paid out of the consideration payable to stockholders in such Deemed Liquidation Event or out of the Available Proceeds, as applicable, on a pari passu basis among each other and before any payment shall be made to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to the greater of (i) the applicable Original Issue Price, plus any dividends declared but unpaid thereon or (ii) such amount per share as would have been payable had all shares of the applicable series of Preferred Stock been converted into Common Stock immediately prior to such liquidation, dissolution, winding up, or Deemed Liquidation Event. If upon any such liquidation, dissolution, or winding up of the Corporation or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Preferred Stock the full amount to which they shall be entitled, the holders of shares of Preferred Stock shall on a pari passu basis share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.
In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation, after the payment in full of all Liquidation Amounts required to be paid to the holders of shares of Preferred Stock, the remaining assets of the Corporation available for distribution to its stockholders or, in the case of a Deemed Liquidation Event, the consideration not payable to the holders of shares of Preferred Stock or the remaining Available Proceeds, as the case may be, shall be distributed among the holders of shares of Common Stock, pro rata based on the number of shares held by each such holder.
| 23 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
The Company authorized and had outstanding the following shares as of March 31, 2026 and December 31, 2025:
| March 31, 2026 | December 31, 2025 | |||||||||||||||
| Authorized | Outstanding | Authorized | Outstanding | |||||||||||||
| Common Stock | 250,000,000 | 3,600,420 | 63,500,000 | 3,273,965 | ||||||||||||
| Common Non-Voting Stock | - | - | 3,200,000 | 91,019 | ||||||||||||
| Series Seed-1 Preferred Stock | 2,412,297 | 2,412,297 | 2,412,297 | 2,412,297 | ||||||||||||
| Series Seed-2 Preferred Stock | 4,323,248 | 4,323,248 | 4,323,248 | 4,323,248 | ||||||||||||
| Series Seed-3 Preferred Stock | 1,579,994 | 1,579,994 | 1,579,994 | 1,579,994 | ||||||||||||
| Series Seed-4 Preferred Stock | 2,346,635 | 2,346,635 | 2,346,635 | 2,346,635 | ||||||||||||
| Series Seed-5 Preferred Stock | 504,316 | 504,316 | 504,316 | 504,316 | ||||||||||||
| Series Seed Preferred Stock | 1,362,530 | 1,362,530 | 1,362,530 | 1,362,530 | ||||||||||||
| Series A Preferred Stock | 873,734 | 873,734 | 873,734 | 873,734 | ||||||||||||
| Series B-1 Preferred Stock | 18,198,578 | 5,977,960 | 18,198,578 | 5,237,632 | ||||||||||||
| Series B-2 Preferred Stock | 4,262,724 | 104,226 | 4,262,724 | 104,226 | ||||||||||||
| Series B-3 Preferred Stock | 5,328,406 | 2,962,327 | 5,328,406 | 2,962,327 | ||||||||||||
Stock transactions for the three months ended March 31, 2025 – During the three months ended March 31, 2025, the Company issued 2,084 shares of common stock for the exercise of stock options and received cash proceeds of $375. Further, the Company issued 214,229 shares of common stock for the exercise of warrants and received cash proceeds of $51,408.
Stock transactions for the three months ended March 31, 2026 – During the three months ended March 31, 2026, the Company issued 77,331 shares of Common Stock in advisory shares and incurred an expense of $693,658. The value of the shares was based on the effective purchase price per share from the Company’s most recent regulation crowdfunding round.
During the three months ended March 31, 2026, the Company converted 91,019 shares of non-voting Common Stock into 91,464 shares of voting Common Stock and did not receive any additional proceeds.
The Company issued 4,667 shares of Common Stock for the exercise of stock options for $1,260. The Company issued 740,328 shares of Series B-1 Preferred Stock and 225,351 shares of Common Stock for the exercise of warrants for an aggregate of $986,217. 362,653 shares of Series B-1 Preferred Stock were issued upon exercise by related parties for $378,000.
The Company issued 86,342 shares of Common Stock for the extinguishment of $276,474 of Mezzanine Debt Interest Payable (Note 9).
| 24 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
Note 13 – Stock Options and Warrants
Incentive stock options and non-qualified stock options – In September 2016, the Company adopted the 2016 Stock Plan (2016 Plan), which provides for the grant of shares of stock options and restricted stock awards to employees, non-employee directors, and non-employee consultants. As of March 31, 2026, the 2016 Stock Plan, as amended, authorized 1,726,130 shares. The options typically have a contractual term of ten years. Stock options comprise all of the awards granted since the 2016 Plan’s inception. Stock options granted under the 2016 Plan typically vest over a four-year period with a one-year cliff, but also include grants that vest over shorter periods of time. As of March 31, 2026, the 2016 Plan had 271,687 shares available for future issuance.
A summary of information related to stock options is as follows:
| Weighted | ||||||||||||
| Average | Intrinsic | |||||||||||
| Options | Exercise Price | Value | ||||||||||
| Outstanding as of December 31, 2025 | 1,213,313 | 0.21 | $ | 8,856,243 | ||||||||
| Granted | - | |||||||||||
| Exercised | (4,667 | ) | 0.27 | |||||||||
| Forfeited | (22,221 | ) | 0.18 | |||||||||
| Outstanding as of March 31, 2026 | 1,186,425 | 0.21 | $ | 8,659,981 | ||||||||
| Exercisable as of March 31, 2026 | 721,964 | 0.21 | $ | 5,269,777 | ||||||||
| Exercisable and expected to vest as of March 31, 2026 | 1,186,425 | 0.21 | $ | 8,659,981 | ||||||||
The following table presents the range assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted to employees and directors in the three months ended March 31:
| 2026 | 2025 | |||||||
| Weighted average grant-date fair value of options during the period | N/A | $ | 2.54 | |||||
| Weighted average duration (years) to expiration of outstanding options at period-end | N/A | 8.25 | ||||||
There were no grants of options during the three months ended March 31, 2026. Stock-based compensation expense for stock options of $220,932 and $44,548 was recognized for the three months ended March 31, 2026 and March 31, 2025, respectively, and is included in general and administrative expenses in the accompanying consolidated statements of operations. Total unrecognized compensation cost related to non-vested stock option awards amounted to $1,802,948, as of March 31, 2026. The remaining expense is expected to be recognized over a weighted-average period of approximately 33 months.
| 25 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
Preferred Stock and Common Stock warrants – During the year ended December 31, 2025, the Company entered into arrangements with its vendors and investors in which it provided Preferred Stock and Common Stock warrants (the warrants) in lieu of cash for goods and services provided or embedded in the Company promissory notes (see Note 8). The warrants generally have a term of five to ten years and are typically fully vested at issuance.
As of December 31, 2025, there were 1,328,185 Preferred Stock warrants outstanding and exercisable with a weighted average exercise price of $1.46 per share. During the three months ended March 31, 2026, 531,274 shares were exercised for cash proceeds of $77,997 and 409,722 shares were exercised for a net 209,054 shares of Series B-1 Preferred Stock. Additionally, during the three months ended March 31, 2026, a total of 387,189 Preferred Stock warrants were converted to 129,063 Common Stock warrants. There was no gain or loss on the conversion as there were no material changes to the economics of the underlying warrants. Accordingly, there were no preferred stock warrants outstanding at March 31, 2026.
A summary of information related to Common Stock warrants is as follows:
| Common | Weighted | |||||||
| Stock | Average | |||||||
| Warrants | Exercise Price | |||||||
| Outstanding as of December 31, 2025 | 716,816 | $ | 2.19 | |||||
| Granted | 129,063 | 4.39 | ||||||
| Exercised | (290,860 | ) | 0.94 | |||||
| Forfeited | - | - | ||||||
| Outstanding as of March 31, 2026 | 555,019 | $ | 3.35 | |||||
| Exercisable as of March 31, 2026 | 555,019 | $ | 3.35 | |||||
| 2026 | 2025 | |||||||
| Weighted average grant-date fair value of warrants granted during the year | $ | 7.35 | $ | 7.35 | ||||
| Weighted average duration (years) to expiration of outstanding | 2.79 | 3.67 |
Common stock warrants were valued using the Black-Scholes model with the following inputs as of March 31:
| Common stock warrants | 2026 | 2025 | ||||||
| Risk free interest rate | 4.3 | % | 4.4 | % | ||||
| Expected dividend yield | 0.0 | % | 0.0 | % | ||||
| Expected volatility | 65.0 | % | 65.0 | % | ||||
| Expected life (years) | 10 | 10 | ||||||
| 26 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
Note 14 – Related-Party Transactions
Due from related parties – The Company’s co-founder has received various advances from the Company. In January 2022, the Company entered into a loan agreement with the founder in which the balance outstanding is incurring interest at a rate of 1.6% per annum. As of March 31, 2026 and December 31, 2025, the net amount due from the founder was $0 and $1,389,996, respectively. Interest earned during the three months ended March 31, 2026 and 2025, respectively, on the advances was not material. These advances were settled in March 2026 through the repurchase of co-founder shares. The share price used for repurchase was based on the Company’s most recent crowdfunding sales price of $8.97 per share.
Secured borrowing of investment De Soi – The Company entered into an agreement with shareholder with greater than 5% ownership to transfer its investment in De Soi. Refer to Note 6 for further details.
Loan payable – related party – As discussed in Note 9, the holders of one of the Mezzanine Secured Notes was related party. The balance of Mezzanine Secured Notes due to that related party was $0 and $97,854 as of March 31, 2026 and December 31, 2025, respectively.
Promissory notes – As discussed in Note 9, the holder of a promissory note issued in 2025 was a shareholder with greater than 5% ownership. Refer therein for further details.
Convertible debt and shareholders’ equity – As discussed in Notes 10 and 12, shareholders with greater than 5% ownership exercised warrants and was issued convertible debt in the three months ended March 31, 2026. Refer therein for further details.
Investments at cost – as discussed in Note 6, the majority shareholder of HpO is a related party.
Note 15 – Commitments and Contingencies
Lease commitments – The Company’s headquarters in Los Angeles, CA was leased on a month-to-month basis through August 2025, at which time the Company moved out of its headquarters. The Company is currently operating without a corporate office lease.
As part of the Winc acquisition in January 2023, the Company acquired contracts for two warehouses: one in Santa Maria, CA and the other in Bethel Township, PA. The Santa Maria lease expired in December 2023 and was renewed in January 2024, January 2025, and January 2026, each for a term of one year. The lease for the Bethel Township property, originally set to expire in December 2027, was terminated in July 2024. As a result, the related right-of-use (ROU) asset and lease liability were removed from the balance sheet. In addition, a lease deposit totaling $300,000 was forfeited upon termination. In March 2025, the Company entered a termination settlement agreement on the Bethel Township property in which it was required to pay an additional $75,000 between April and October 2025. The settlement agreement was fully satisfied as of December 31, 2025.
For the three months ended March 31, 2026 and March 31, 2025, the Company incurred office rent expense of $13,358 and $45,388, respectively, and warehouse rent expense of $153,169 and $210,668, respectively. Office and warehouse rent expense are components of general and administrative expenses in the accompanying consolidated statements of operations. No material obligations exist on the Company’s current operating leases as of March 31, 2026, nor December 31, 2025.
Contingencies – The Company may be subject to pending legal proceedings and regulatory actions in the ordinary course of business. The results of such proceedings cannot be predicted with certainty, but the Company does not anticipate that the final outcome, if any, arising out of any such matters will have a material adverse effect on its business, financial condition, or results of operations.
| 27 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
Note 16 – Business Segment Information
Our internal management financial reporting consists of two business divisions: (i) Wine and (ii) Spirits and we report our operating results in two segments: (i) Wine and (ii) Spirits. In the Wine segment, our portfolio consists of premium imported and domestic wine brands across multiple varietals and price points (both alcoholic and non-alcoholic). In the Spirits segment, our portfolio includes premium and craft spirits brands across categories such as gin, vodka, mezcal, tequila, and non-alcoholic. Our CODM is our Chief Executive Officer. The business segments reflect how our operations are managed, how resources are allocated, how operating performance is evaluated by senior management, and the structure of our internal financial reporting. Our CODM utilizes segment comparable operating loss performance in deciding how to deploy capital in line with disciplined and balanced priorities. These priorities largely include investing in our people and our brands, making capital investments, and strategic acquisitions. Our CODM also monitors budgeted versus actual results in assessing segment operating performance and understanding underlying business trends.
Management excludes certain non-GAAP Comparable Adjustments from its evaluation of the results of each operating segment as these Comparable Adjustments are not reflective of core operations of the segments. Segment operating performance and the incentive compensation of segment management are evaluated based on core segment operating loss which does not include the impact of these Comparable Adjustments, collectively referred to as comparable operating loss. We evaluate segment operating performance based on comparable operating loss of the respective business units.
The accounting policies of the segments are the same as those described for the Company in the Summary of Significant Accounting Policies in Note 3.
Segment information is as follows:
| Unallocated | Comparable | |||||||||||||||||||||||
| Wine | Spirits | Total segment | amounts | Adjustments(c) | Consolidated | |||||||||||||||||||
| For the three months ended March 31, 2026 | ||||||||||||||||||||||||
| Net revenues | $ | 3,688,329 | $ | 461,017 | $ | 4,149,346 | $ | - | $ | - | (a) | $ | 4,149,346 | |||||||||||
| Cost of net revenues | $ | 2,821,329 | 255,073 | 3,076,402 | - | - | (a) | 3,076,402 | ||||||||||||||||
| Gross profit, non-GAAP (d) | 867,000 | 205,944 | 1,072,944 | - | - | 1,072,944 | ||||||||||||||||||
| Sales and marketing | 862,129 | 67,199 | 929,328 | 38,149 | - | (a) | 967,477 | |||||||||||||||||
| General and administrative | 695,828 | 139,334 | 835,162 | 1,460,711 | (b) | 220,932 | (a) | 2,516,805 | ||||||||||||||||
| Research and development | - | - | - | - | - | - | ||||||||||||||||||
| Impairment loss | - | - | - | - | 110,402 | (a) | 110,402 | |||||||||||||||||
| Loss from operations | (690,957 | ) | (589 | ) | (691,546 | ) | (1,498,860 | ) | (331,334 | ) | (2,521,740 | ) | ||||||||||||
| Other income (expense) | (519,865 | ) | ||||||||||||||||||||||
| Provision for income taxes | - | |||||||||||||||||||||||
| Net loss | (3,041,605 | ) | ||||||||||||||||||||||
| Non-controlling interest net loss | (5,901 | ) | ||||||||||||||||||||||
| Net loss attributable to parent | (3,035,704 | ) | ||||||||||||||||||||||
| Foreign currency translation adjustment | ||||||||||||||||||||||||
| Total comprehensive loss | $ | (3,035,704 | ) | |||||||||||||||||||||
| 28 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
| (a) | See comparable adjustments table discussed in this footnote for explanations surrounding items included in comparable adjustments. |
| (b) | Unallocated amounts include costs held in the corporate infrastructure that are not allocated to any reporting segment. Significant items included in general and administrative expenses include $523 thousand in headcount and contractor costs, $699 thousand in professional services, and $44 thousand in amortization costs. |
| (c) | Comparable Adjustments are determined and presented on a non-GAAP basis and are intended to reflect our current operations. |
| (d) | Our presentation of gross profit is non-GAAP. Segment gross profit is reconciled to gross profit on the consolidated statement of operations with the inclusion of unallocated amounts and comparable adjustments. |
| Unallocated | Comparable | |||||||||||||||||||||||
| Wine | Spirits | Total segment | amounts | Adjustments(c) | Consolidated | |||||||||||||||||||
| For the three months ended March 31, 2025 | ||||||||||||||||||||||||
| Net revenues | $ | 3,754,755 | $ | 457,053 | $ | 4,211,808 | $ | - | $ | 128,736 | (a) | $ | 4,340,544 | |||||||||||
| Cost of net revenues | 2,575,491 | 234,798 | 2,810,289 | - | 315,495 | (a) | 3,125,784 | |||||||||||||||||
| Gross profit, non-GAAP(d) | 1,179,264 | 222,255 | 1,401,519 | - | (186,759 | ) | 1,214,760 | |||||||||||||||||
| Sales and marketing | 901,696 | 80,547 | 982,243 | 11,162 | - | (a) | 993,405 | |||||||||||||||||
| General and administrative | 952,946 | 376,602 | 1,329,548 | 685,959 | (b) | 102,595 | (a) | 2,118,102 | ||||||||||||||||
| Research and development | - | - | - | - | - | - | ||||||||||||||||||
| Impairment loss | - | - | - | - | - | (a) | - | |||||||||||||||||
| Loss from operations | (675,378 | ) | (234,894 | ) | (910,272 | ) | (697,121 | ) | (289,354 | ) | (1,896,747 | ) | ||||||||||||
| Other income (expense) | (1,822,874 | ) | ||||||||||||||||||||||
| Provision for income taxes | - | |||||||||||||||||||||||
| Net income (loss) | (3,719,621 | ) | ||||||||||||||||||||||
| Non-controlling interest net (loss) | (62,579 | ) | ||||||||||||||||||||||
| Net income (loss) attributable to parent | (3,657,042 | ) | ||||||||||||||||||||||
| Foreign currency translation adjustment | ||||||||||||||||||||||||
| Total comprehensive loss | $ | (3,657,042 | ) | |||||||||||||||||||||
| (a) | See comparable adjustments table discussed in this footnote for explanations surrounding items included in comparable adjustments. |
| (b) | Unallocated amounts include costs held in the corporate infrastructure that are not allocated to any reporting segment. Significant items included in general and administrative expenses include $375 thousand in headcount and contractor costs, $58 thousand in professional services, $144 thousand in depreciation and amortization, and $75 thousand in warehouse lease termination costs. |
| (c) | Comparable Adjustments are determined and presented on a non-GAAP basis and are intended to reflect our current operations. |
| (d) | Our presentation of gross profit is non-GAAP. Segment gross profit is reconciled to gross profit on the consolidated statement of operations with the inclusion of unallocated amounts and comparable adjustments. |
| 29 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
Comparable adjustments were as follows:
| March 31, | March 31, | |||||||
| 2026 | 2025 | |||||||
| Net revenues | ||||||||
| Sales of bulk wine (a) | - | 128,736 | ||||||
| Comparable adjustments. Net revenues | - | 128,736 | ||||||
| Cost of net revenues | ||||||||
| Cost of sales of bulk wine (a) | - | 146,565 | ||||||
| Cost of write-down of unutilized wine pre-acquisition (b) | - | 168,930 | ||||||
| Comparable adjustments, Cost of net revenues | - | 315,495 | ||||||
| General and administrative | ||||||||
| Stock-based compensation (c) | 220,932 | 44,548 | ||||||
| Storage on bulk wine (a) | - | 58,047 | ||||||
| Comparable adjustments, general and administrative | 220,932 | 102,595 | ||||||
| Impairment loss (d) | 110,402 | - | ||||||
| Comparable adjustments, Operating loss | (331,334 | ) | (289,354 | ) | ||||
| (a) | The Company sold and is expected to sell excess bulk wine for losses. These are not part of the Company’s regular operations and thus are excluded from the CODM’s review of the wine business. This includes storage costs incurred on the excess bulk wine. |
| (b) | The Company wrote-down inventory that was acquired as part of the Winc acquisition in 2023. When the Company sold the winc.com business, it lost its ability to sell wine unwanted on the wholesale channel through the winc.com channel. As such, excess bulk wine that was identified and written down in 2024 was not considered to be a core/recurring operation for the business. |
| (c) | The Company does not include stock-based compensation nor impairment losses in its evaluation of performance. |
Our principal area of operation is in the U.S. Current operations for one of the spirits brands is in Mexico. Revenues are attributed to countries based on the location of the customer.
Geographic data is as follows:
| March 31, | March 31, | |||||||
| 2026 | 2025 | |||||||
| Net revenues | ||||||||
| U.S. | $ | 4,138,442 | $ | 4,337,540 | ||||
| Non-U.S. | $ | 10,904 | $ | 3,003 | ||||
| 30 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2026 and 2025
Note 17 – Subsequent Events
Direct Listing on the Nasdaq Global Market - On May 20, 2026, the Company's common stock commenced trading on the Nasdaq Global Market under the ticker symbol "AMSS" pursuant to a direct listing (the "Direct Listing") registering the resale of up to 12,432,021 shares of common stock held by existing stockholders. The Direct Listing was not underwritten on a firm-commitment basis; Maxim Group LLC served as the Company's financial advisor under Nasdaq Rule 4120(c)(8).
Streeterville Private Placement - In connection with the Direct Listing, the Company completed a private placement (the "Private Placement") with Streeterville Capital, LLC ("Streeterville") pursuant to a Securities Purchase Agreement dated March 17, 2026, as amended by a Global Amendment dated April 7, 2026 (the "SPA"). The SPA provides for the issuance and sale by the Company of up to $30.0 million of Series C Convertible Preferred Stock (the "Series C Preferred Stock") across an initial closing (the "First Closing") and a subsequent closing (the "Second Closing").
At the First Closing on April 8, 2026, the Company issued to Streeterville (i) 28,125 shares of common stock as commitment fee shares and (ii) a warrant to purchase up to 3,500,000 shares of common stock at an exercise price equal to 110% of the Nasdaq Valuation Price, exercisable through the fifth anniversary of the listing date (subject to the Company's right to terminate the warrant after one year post-listing upon ten days' notice), for which Streeterville paid a warrant purchase price of $10,000.
At the Second Closing on May 20, 2026, the Company issued to Streeterville 7,000 shares of Series C Preferred Stock, for which Streeterville paid $6,990,000.
The Series C Preferred Stock is convertible into common stock at an initial conversion price equal to the Nasdaq Valuation Price. After the earlier of (i) six months from the listing date, (ii) a trigger event, or (iii) an event of default, the conversion price becomes the lesser of the Fixed Price and 90% of the lowest daily volume-weighted average price during the ten trading days prior to conversion, subject to a floor price equal to 40% of the Nasdaq Valuation Price. Conversions are subject to a 9.99% beneficial ownership limitation and the Exchange Cap under Nasdaq Rule 5635(d).
Stockholders’ equity – The Company opened a new Regulation Crowdfunding round in February 2026 closed in April 2026. The Company does not expect to receive funds on this round.
In connection with the Direct Listing, all outstanding shares of the Company's Series Seed, Series Seed-1 through Seed-5, Series A, and Series B-1 through B-3 Preferred Stock automatically converted into an aggregate of 7,483,093 shares of common stock pursuant to the mandatory conversion provisions of the Company's Eighth Amended and Restated Certificate of Incorporation, filed with the Delaware Secretary of State on April 30, 2026. These conversions resulted in a reclassification within stockholders' equity (deficit) with no income statement impact.
Stock-based compensation – Subsequent to March 31, 2026, and before the issuance date, warrants were exercised to 66,563 shares of Common Stock. The Company received funds of $14,211 related to the exercise of warrants.
SAFE Agreement - On June 16, 2026, the Company entered into a Simple Agreement for Future Equity (the “SAFE”) with AFTERDREAM, Inc ( “Afterdream”), pursuant to which the Company invested $1,435,000 (the “Purchase Amount”) in exchange for the right to receive shares of Afterdream’s capital stock upon the occurrence of certain future events. The SAFE includes a post-money valuation cap of $7,500,000. Capitalized words used but not defined herein shall have the meaning as set forth in the SAFE. Afterdream is a related party, as the majority owner is the Company’s CEO.
If there is an Equity Financing before the termination of the SAFE, on the initial closing of such Equity Financing, the SAFE will automatically convert into the greater of (1) the number of shares of Standard Preferred Stock equal to the Purchase Amount divided by the lowest price per share of Standard Preferred Stock, or (2) the number of shares of Safe Preferred Stock equal to the Purchase Amount divided by the Safe Price. If there is a Liquidity Event before the termination of the SAFE, the Company will automatically be entitled to receive a portion of Proceeds equal to the greater of (i) the Purchase Amount or (ii) the amount payable on the number of shares of Common Stock equal to the Purchase Amount divided by the Liquidity Price. If there is a Dissolution Event before the termination of the SAFE, the Company will automatically be entitled to receive a portion of Proceeds equal to the Purchase Amount, subject to the liquidation priority provisions set forth in the SAFE. The SAFE is not transferable or assignable by either party without the prior written consent of the other, subject to certain customary exceptions.
On June 17, 2026, the Company entered into Amendment No. 1 to the SAFE (the “Amendment”) with Afterdream. Pursuant to the Amendment, the parties agreed to increase the Purchase Amount from $1,435,000 to $1,535,000, representing an additional investment of $100,000 by the Company. The Post-Money Valuation Cap of $7,500,000 remains unchanged. All other material terms of the SAFE remain in full force and effect as originally executed, including the conversion mechanics upon an Equity Financing, Liquidity Event, or Dissolution Event.
On June 24, 2026, the Company entered into Amendment No. 2 to the SAFE (the “Amendment”) with Afterdream. Pursuant to the Amendment, the parties agreed to increase the Purchase Amount from $1,535,000 to $1,735,000, representing an additional investment of $200,000 by the Company. The Post-Money Valuation Cap of $7,500,000 remains unchanged. All other material terms of the SAFE remain in full force and effect as originally executed, including the conversion mechanics upon an Equity Financing, Liquidity Event, or Dissolution Event.
Investment in De Soi – In June 2026, the Company repaid its repurchase commitment on its investment in De Soi discussed in Notes 6 and 14. Afterdream repaid the loan for which the De Soi equity was used as collateral, which therefore resolved the requisites to release the collateral. The Company is awaiting confirmation that the securities have been released and returned to the Company.
Subsequent to March 31, 2026, certain investments were formalized into a SAFE (see Note 6).
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes and other financial information appearing elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this prospectus, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in the section entitled “Risk Factors.” This MD&A, which should be read in conjunction with our Financial Statements, is organized as follows:
Overview. This section provides a general description of our business and brief descriptions of recent goodwill and trademarks impairments, which we believe is important in understanding the results of our operations, financial condition, and potential future trends.
Strategy. This section provides a description of our strategy and a discussion of a recent development, and significant divestitures, acquisitions, and investments.
Recent developments. This section summarizes the material transactions and events that occurred during, or shortly after, the three months ended March 31, 2026.
Results of operations. This section provides an analysis of our results of operations presented on a business segment basis. In addition, a brief description of significant transactions and other items that affect the comparability of the results is provided.
Liquidity and capital resources. This section provides an analysis of our cash flows, outstanding debt, liquidity position, and commitments. Included in the analysis of outstanding debt is a discussion of the financial capacity available to fund our on-going operations and future commitments, as well as a discussion of other financing arrangements.
Critical accounting policies and estimates. This section identifies accounting policies that are considered important to our results of operations and financial condition, require significant judgment, and involve significant management estimates. Our significant accounting policies, including those considered to be critical accounting policies, are summarized in Note 1.
Emerging Growth Company and Smaller Reporting Company Status. This section discusses our reporting status.
Overview
We are a consumer packaged goods company focused on developing, marketing, and distributing a portfolio of premium beverage brands across the wine, spirits, and functional non-alcoholic categories with the ethos of meeting the needs of the modern day consumer. We have also historically offered a limited selection of personal and self-care products, but such products are not a priority on a go-forward basis as we focus on growing our beverage portfolio. Our products are primarily sold through a three-tier system to wholesale distributors, who then sell to retailers, bars, and restaurants, as well as directly to consumers through our e-commerce platforms.
Our business is driven by (i) the strength of our brands, (ii) the breadth and depth of our distribution network, (iii) consumer adoption of new product innovations, and (iv) our ability to manage costs while investing in long-term growth. We measure performance not only by revenue and profitability, but also by key operating metrics such as shipments, depletions, retail scan data, points of distribution (“PODs”), and velocity.
Our internal management financial reporting consists of two business divisions: (i) Wine and (ii) Spirits. We report our operating results in two segments: (i) Wine and (ii) Spirits.
In the Wine segment, we offer a portfolio that includes organic, biodynamic, and “better for you” premium wine brands, comprising both domestically produced and imported wines. The wine segment also includes our non-alcoholic wine business. In our Spirits segment, our portfolio includes AMASS spirits, GEM&BOLT mezcal, and Calirosa tequila. The Spirits segment also includes our non-alcoholic spirits products and, historically, a limited amount of personal and self-care products, which are not a priority on a go-forward basis. Certain items such as costs related to corporate communications, development, finance, strategy and growth, executive management, human resources, investor relations, IT, and legal are general costs applicable to the consolidated group and are not allocated to the reportable segments. These costs are not included in our Chief Operating Decision Maker’s (CODM) evaluation of the operating income (loss) performance of the other reportable segments.
| 32 |
Our business segments reflect how our operations are managed, how resources are allocated, how operating performance is evaluated by senior management, and the structure of our internal financial reporting.
Geographic Markets
Substantially all of our net revenues are currently generated in the United States, which represents our primary market across our spirits, wine, and non-alcoholic beverage portfolios. We have limited international exposure, with 99.7% of our revenues from the three months ended March 31, 2026 coming from the U.S. Certain of our brands have historically been sold in Europe, Canada, and Asia on a limited basis, primarily through third-party distributors or production-related arrangements, and such sales have not been material to our consolidated revenues. In addition, certain of our agave-based spirits products are produced in Mexico by our fully owned Mexican subsidiary and third-party production arrangements, but we do not currently operate material direct sales or distribution operations outside the United States. While our brands may reach consumers outside the United States through isolated or opportunistic transactions, we do not presently have established, ongoing commercial operations in Canada, Europe, Asia, or Latin America.
Strategy
Our long-term strategy, customer and market environment, marketing, sales, and distribution is unchanged from the strategy described in the S-1/A. For the Wine segment, our strategy is centered on generating consistent cash flow while preserving market positioning and selectively growing key brands that drive long-term enterprise value. We continue to optimize the portfolio with a focus on brands that demonstrate sustainable velocity and margin expansion, while rationalizing non-core labels to reduce complexity and improve working capital efficiency. For the Spirits segment, our strategy reflects a disciplined approach, with a near-term deprioritization in 2026 as we position the business for renewed growth in subsequent periods. We are actively managing existing brands to protect cash flow and maintain distribution presence, while deferring significant incremental investment until market conditions and capital allocation priorities support accelerated expansion.
In the first quarter of 2026, we continued to take steps in preparation for a direct listing of our common stock on a national securities exchange, including the filing of our Seventh Amended and Restated Certificate of Incorporation in January 2026 (which effected a 1-for-3 reverse stock split and converted our outstanding non-voting common stock into voting common stock) and, subsequent to quarter end, the filing of our Eighth Amended and Restated Certificate of Incorporation in April 2026.
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Recent Developments
| · | Seventh Amended and Rested Certificate of Incorporation (January 2026). On January 9, 2026, we filed with the State of Delaware, the Certificate of Incorporation, which, among other things, effected the Reverse Stock Split at a ratio of one-for-three (1-for-3), applied uniformly to all holders of Common Stock. The conversion rates of our outstanding shares of Preferred Stock were adjusted proportionately in accordance with their terms. Under US GAAP, the effects of the Reverse Stock Split are applied retrospectively to all reported financial periods. |
| · | Convertible note program (November 2025 through March 2026). From November 2025 through March 31, 2026, we issued unsecured convertible promissory notes in an aggregate principal amount of $2,766,316. The convertible notes bear simple interest at 9% per annum and mature on the earlier of (i) 24 months from issuance or (ii) a change of control. Upon a qualified financing (which would include our planned direct listing), the outstanding principal and accrued interest automatically convert at a price equal to 80% of the price paid by new investors. In connection with the issuance of the convertible notes, we also issued warrants to purchase shares of common stock, with an exercise price equal to the greater of $10.00 or the volume-weighted average trading price, exercisable following our listing on Nasdaq and expiring 180 days thereafter. Issuance of shares under the notes and warrants is subject to a 19.99% exchange cap absent stockholder approval. We have concluded that the embedded conversion feature requires bifurcation and the warrants require liability treatment. See Notes 8 and 10 to our unaudited condensed consolidated financial statements. See ‘Certain Relationships and Related Person Transactions’ and ‘Description of Capital Stock’ for the material terms of the notes and warrants. |
| · | Secured Promissory Note amendments — troubled debt restructuring (January 2026). In January 2026, we entered into two amendments to our Secured Promissory Note originally issued in April 2024: |
Amendment No. 3 extended maturity to June 30, 2027, cancelled monthly payments due February through April 2026, waived accrued late-payment fees, released a contingent equity-transfer remedy, and set a revised payment schedule of seventeen $50,000 installments starting May 2026 plus a $417,000 balloon at maturity. Because we were in payment default and the lender granted concessions it would not otherwise have granted, we accounted for the amendment as a troubled debt restructuring under ASC 470-60. The total undiscounted cash flows under the restructured terms equal the pre-restructuring carrying amount, so no gain or loss was recognized. The effective interest rate on the restructured note is zero, and future cash payments will be applied entirely as reductions of the carrying amount.
Amendment No. 4 effected a partial warrant exercise pursuant to which the lender exercised a portion of a pre-existing warrant to purchase 102,425 shares of our Series B Preferred Stock at the contractual exercise price of $1.4644 per share. The $150,000 aggregate exercise price was paid by cancelling $150,000 of principal under the Note. The warrant is equity-classified; no gain, loss, or fair value remeasurement was recognized.
After giving effect to Amendments Nos. 3 and 4, the outstanding principal balance of the Secured Promissory Note at March 31, 2026 was $1,067,000.
| · | Mezzanine Secured Notes — related-party balance repaid (March 2026); interest exchange (February 2026). In February 2026, we extinguished $276,475 of accrued interest on our Mezzanine Secured Notes in exchange for the exercise of 65,509 shares of common stock warrants for $26,479 and the issuance of 20,833 shares of common stock for $249,996. In March 2026, the remaining $97,854 of Mezzanine Secured Notes principal owed to a related-party holder was repaid in full. The aggregate Mezzanine Secured Notes principal balance at March 31, 2026 was $200,000 with $266,827 of accrued interest, none of which was due to a related party at quarter end. See Note 9 to our unaudited condensed consolidated financial statements. |
| · | Asset-based loan facility — maximum reduced; covenant waiver (2025/2026). During the first quarter of 2026, the maximum aggregate principal amount of our Loan and Security Agreement (the “ABL”) was reduced from $8,000,000 to $5,000,000. In August 2025 we breached a financial covenant under the ABL, which placed the ABL into technical default. We received a covenant waiver from the lender as of December 31, 2025, and through the date of issuance of these financial statements the parties continue to work together and the breach has not affected the functionality of the facility. The ABL matures in September 2026 with an automatic renewal for one year if not terminated before 60 days before the termination date. The outstanding ABL balance was $2,928,161 at March 31, 2026, compared with $3,277,034 at December 31, 2025. |
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| · | Eighth Amended and Restated Certificate of Incorporation (subsequent event — April 30, 2026). Subsequent to quarter end, on April 30, 2026, we filed our Eighth Amended and Restated Certificate of Incorporation with the State of Delaware, which (i) removed the one-time operative provisions effected by the Seventh A&R Certificate and (ii) granted our Board of Directors the authority, by resolution, to designate one or more additional series of preferred stock out of the authorized but unissued shares of preferred stock and to fix the voting powers, preferences, and relative, participating, optional, or other special rights of each such series. See Note 17 to our unaudited condensed consolidated financial statements. |
| · | Regulation Crowdfunding round (subsequent event — February to April 2026). In February 2026 we opened a Regulation Crowdfunding offering, which closed in April 2026. As of the date of issuance of these financial statements, no funds had been received from the offering. See Note 17. |
Results of Operations
Financial Highlights
Below is a summary of changes in net loss for the three months ended March 31, 2026 from 2025, with comparable adjustments broken out and shown separately (further discussed below):
| Three months ended | Dollar | Percent | ||||||||||||||
| 2026 | 2025 | Change | Change | |||||||||||||
| Net revenue | $ | 4,149,346 | $ | 4,340,544 | (191,198 | ) | -4 | % | ||||||||
| Cost of net revenue | 3,076,402 | 3,125,784 | (49,382 | ) | -2 | % | ||||||||||
| Gross profit | 1,072,944 | 1,214,760 | (141,816 | ) | -12 | % | ||||||||||
| Operating expenses | ||||||||||||||||
| Selling and marketing | 967,477 | 993,405 | (25,928 | ) | -3 | % | ||||||||||
| General and administrative | 2,516,805 | 2,118,102 | 398,703 | 19 | % | |||||||||||
| Research and development | — | — | — | N/A | ||||||||||||
| Impairment expense | 110,402 | — | 110,402 | N/A | ||||||||||||
| Total operating expenses | 3,594,684 | 3,111,507 | 483,177 | 16 | % | |||||||||||
| Comparable loss from operations | (2,521,740 | ) | (1,896,747 | ) | (624,993 | ) | 33 | % | ||||||||
| Other income (expense) | (519,865 | ) | (1,822,874 | ) | 1,303,009 | -71 | % | |||||||||
| Provision for income taxes | — | — | — | N/A | ||||||||||||
| Net income (loss) | $ | (3,041,605 | ) | $ | (3,719,621 | ) | $ | 678,016 | -18 | % | ||||||
Comparable Adjustments
Management excludes items that
affect comparability from its evaluation of the results of each operating segment as these Comparable Adjustments are not reflective of
core operations of the segments. Segment operating performance and the incentive compensation of segment management are evaluated based
on core segment operating loss which does not include the impact of these Comparable Adjustments.
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As more fully described herein and in the related Notes, the Comparable Adjustments that impacted comparability in our segment results for each period are as follows:
| March 31, 2026 |
March 31, 2025 |
|||||||
| Net revenues | ||||||||
| Sales of bulk wine (a) | — | 128,736 | ||||||
| Comparable adjustments, Net revenues | — | 128,736 | ||||||
| Cost of net revenues | ||||||||
| Cost of sales of bulk wine (a) | — | 146,565 | ||||||
| Cost of write-down of unutilized wine pre-acquisition (b) | — | 168,930 | ||||||
| Comparable adjustments, Cost of net revenues | — | 315,495 | ||||||
| General and administrative | ||||||||
| Stock-based compensation (c) | 220,932 | 44,548 | ||||||
| Storage on bulk wine (a) | — | 58,047 | ||||||
| Comparable adjustments, general and administrative | 220,932 | 102,595 | ||||||
| Impairment loss (d) | 110,402 | — | ||||||
| Comparable adjustments, Operating loss | (331,334 | ) | (289,354 | ) | ||||
| (a) | Sales from divested business unit relates to the sale of Winc.com in June 2023. All of those revenues pre-sale and associated costs are not part of our recurring business and are thus excluded from what the CODM views as regular operations. Along the same line, the sales from divested business unit also include sales and associated costs related to inventory sold to the buyer of winc.com post-sale. These revenues are not regular and part of the business’ long-term business plans/strategy and occur because they have been cash accretive in nature. Operating expenses related to these revenues are also excluded from performance evaluations for the segments. |
| (b) | The Company wrote-down inventory that was acquired as part of the Winc acquisition in 2023. When the Company sold the winc.com business, it lost its ability to sell wine unwanted on the wholesale channel through the winc.com channel. As such, excess bulk wine that was identified and written down in 2025 was not considered to be a core/recurring operation for the business. |
| (c) | The Company does not include stock-based compensation in its evaluation of performance. |
| (d) | The Company does not include impairment loss in its evaluation of performance. |
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Business Segments
Net revenue
| March 31, | March 31, | Dollar | Percent | |||||||||||||
| 2026 | 2025 | Change | Change | |||||||||||||
| Wine | $ | 3,688,329 | $ | 3,754,755 | $ | (66,426 | ) | -2 | % | |||||||
| Spirits | 461,017 | 457,053 | 3,964 | 1 | % | |||||||||||
| Unallocated amounts | - | - | - | N/A | ||||||||||||
| Comparable adjustments | - | 128,736 | (128,736 | ) | -100 | % | ||||||||||
| Consolidated net revenues | $ | 4,149,346 | $ | 4,340,544 | $ | (191,198 | ) | -4 | % | |||||||
The wine business declined 2% from the first quarter of 2025 to the first quarter of 2026. This decline was largely due to portfolio optimization and strategic investment in core brands. We believe this optimization will better utilize working capital and allow for more stable growth in future periods, as marketing resources and focus can be more directed to the brands we have higher conviction behind. In the first quarter of 2026, sales of our three priority core brands – Summer Water, Pizzolato MUSE, and Good Twin increased by 5.8% over 2025. As our core and priority brands continue to become a larger composition of total wine revenue, we anticipate revenue to not only grow but to be more capital efficient.
Spirits revenue increased 1% in the first quarter of 2026 compared to the first quarter of 2025. Calirosa revenue grew 5% in the first quarter of 2026 while revenue from AMASS spirits declined Company’s strategic decision to temporarily deprioritize certain legacy spirits products while management focused on integrating and rebuilding the operational and commercial platform associated with the 222 Spirits acquisition. During this Calirosa transition, the Company reduced shipment volumes as it realigned distribution and brand positioning for the portfolio and we started to see the effect of the change in this quarter.
The decline in comparable adjustments is largely due to the sale of the Winc DTC business in 2023.
Gross profit, non-GAAP
| March 31, | March 31, | Dollar | Percent | |||||||||||||
| 2026 | 2025 | Change | Change | |||||||||||||
| Wine | $ | 867,000 | $ | 1,179,264 | $ | (312,264 | ) | -26 | % | |||||||
| Spirits | 205,944 | 222,255 | (16,311 | ) | -7 | % | ||||||||||
| Comparable Adjustments | - | (186,759 | ) | 186,759 | -100 | % | ||||||||||
| Consolidated gross profit | $ | 1,072,944 | $ | 1,214,760 | $ | (141,816 | ) | -12 | % | |||||||
Our presentation of gross profit is non-GAAP. Segment gross profit is reconciled to gross profit on the consolidated statement of operations with the inclusion of unallocated amounts and comparable adjustments.
Wine segment gross profit, non-GAAP decreased 26.5% to $0.9 million (23.5% of wine net revenues) for the first quarter of 2026 from $1.2 million (31.4% of wine net revenues) for the first quarter of 2025. The decline in wine gross profit, non-GAAP was primarily driven by the overall decline in wine net revenues and a compression in gross margins reflecting changes in brand mix, increased inventory obsolescence charges ($0.2 million increase), and higher per-unit production costs related to tariffs.
Spirits segment gross profit, non-GAAP decreased by 7.3%, to $0.2 million (44.7% of spirits net revenues) for the first quarter of 2026 from $0.2 million (48.7% of spirits net revenues) for the first quarter of 2025. The reduced margin was attributable to product mix from higher-margin organic AMASS spirits to the Calirosa brand, which carries a lower gross margin profile given third-party sourcing costs and repricing initiatives required for the brand.
Comparable Adjustments in the first quarter of 2025 were a combination of bulk wine sales and write-downs of unutilized wine that did not occur during the first quarter of 2026.
Sales and marketing
| March 31, | March 31, | Dollar | Percent | |||||||||||||
| 2026 | 2025 | Change | Change | |||||||||||||
| Wine | $ | 862,129 | $ | 901,696 | $ | (39,567 | ) | -4 | % | |||||||
| Spirits | 67,199 | 80,547 | (13,348 | ) | -17 | % | ||||||||||
| Unallocated amounts | 38,149 | 11,162 | 26,987 | 242 | % | |||||||||||
| Consolidated selling and marketing | $ | 967,477 | $ | 993,405 | $ | (25,928 | ) | -3 | % | |||||||
Sales and marketing expenses decreased 2.6% to $1.0 million for the first quarter of 2026. Wine sales and marketing expense decreased 4.4%, reflecting tighter discipline around trade and promotional spend. Spirits sales and marketing expense decreased 16.6%, consistent with the near-term deprioritization of Spirits investment described under “Strategy” above. The increase in unallocated sales and marketing costs reflects incremental corporate marketing and brand-investment activity not allocated to either reportable segment.
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General and administrative
| March 31, | March 31, | Dollar | Percent | |||||||||||||
| 2026 | 2025 | Change | Change | |||||||||||||
| Wine | $ | 695,828 | $ | 952,946 | $ | (257,118 | ) | -27 | % | |||||||
| Spirits | 139,334 | 376,602 | (237,268 | ) | -63 | % | ||||||||||
| Unallocated amounts | 1,460,711 | 685,959 | 774,752 | 113 | % | |||||||||||
| Comparable Adjustments | 220,932 | 102,595 | 118,337 | 115 | % | |||||||||||
| Consolidated general and administrative | $ | 2,516,805 | $ | 2,118,102 | $ | 398,703 | 19 | % | ||||||||
Consolidated general and administrative (“G&A”) expense increased $0.4 million, or 18.8%, year-over-year. The increase was driven entirely by unallocated corporate G&A, which grew $1.0 million year-over-year and offset reductions of $0.3 million in Wine and $0.2 million in Spirits achieved through headcount actions and shared-service consolidation. The increase in unallocated G&A reflects (i) $693 thousand of advisory share-based expense recognized in the first quarter of 2026 in connection with the issuance of 77,331 shares of common stock to advisors and (ii) higher professional services costs associated with our direct listing.
Unallocated G&A for the first quarter of 2026 includes approximately $523 thousand in headcount and contractor costs, $699 thousand in professional services, and $44 thousand in amortization expense. The comparable figures for the first quarter of 2025 were $375 thousand in headcount and contractor costs, $58 thousand in professional services, $144 thousand in depreciation and amortization, and $75 thousand in warehouse lease-termination costs.
Research and development
We did not have material research and development costs in the first quarter of 2026 nor the first quarter of 2025.
Impairment
We recognized $0.1 million of impairment loss in the first quarter of 2026 (none in the first quarter of 2025), reflecting an additional impairment charge on intangible assets associated with our Gem & Bolt acquisition. Together with the goodwill and intangible-asset impairments recognized in 2024 and 2025 (described in the S-1/A), this charge reflects continued softness in certain Spirits reporting units.
Operating loss
| March 31, | March 31, | Dollar | Percent | |||||||||||||
| 2026 | 2025 | Change | Change | |||||||||||||
| Wine | $ | (690,957 | ) | $ | (675,378 | ) | $ | (15,579 | ) | 2 | % | |||||
| Spirits | (589 | ) | (234,894 | ) | 234,305 | -100 | % | |||||||||
| Unallocated amounts | (1,498,860 | ) | (697,121 | ) | (801,739 | ) | 115 | % | ||||||||
| Comparable Adjustments | (331,334 | ) | (289,354 | ) | (41,980 | ) | 15 | % | ||||||||
| Consolidated operating loss | $ | (2,521,740 | ) | $ | (1,896,747 | ) | $ | (624,993 | ) | 33 | % | |||||
Consolidated loss from operations widened $0.6 million year-over-year to $(2.5) million. Wine segment operating loss was essentially flat year-over-year, and Spirits segment operating loss narrowed by $0.2 million driven by reduced G&A. The overall increase in operating loss was driven by unallocated corporate G&A, as discussed under “General and Administrative” above.
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Other income (expense)
| March 31, | March 31, | Dollar | Percent | |||||||||||||
| 2026 | 2025 | Change | Change | |||||||||||||
| Interest income | $ | 3,709 | $ | 6,483 | $ | (2,774 | ) | -43 | % | |||||||
| Interest expense | (454,856 | ) | (1,544,260 | ) | 1,089,404 | 71 | % | |||||||||
| Change in fair value of derivative liabilities | (49,216 | ) | - | (49,216 | ) | -100 | % | |||||||||
| Change in fair value of SAFEs | (10,426 | ) | - | (10,426 | ) | -100 | % | |||||||||
| Other expense, net | (9,076 | ) | (285,097 | ) | 276,021 | 97 | % | |||||||||
| Consolidated other income (expense) | $ | (519,865 | ) | $ | (1,822,874 | ) | $ | 1,303,009 | -71 | % | ||||||
Total other income (expense) improved by $1.3 million year-over-year to $(0.5) million, driven primarily by lower interest expense. Interest expense for the first quarter of 2026 was $0.5 million, compared with $1.5 million for the first quarter of 2025 — a 70.5%, decrease. The decrease in interest expense reflects (i) lower outstanding ABL balances ($2.9 million at March 31, 2026 versus $3.7 million at March 31, 2025), (ii) the application of zero-effective-interest-rate treatment to the Secured Promissory Note following the troubled debt restructuring described under “Recent Developments” above, and (iii) the absence in the current quarter of certain interest-related charges that were recorded in the first quarter of 2025 in connection with the legacy Mezzanine Secured Notes and certain related-party promissory note arrangements.
Other expense, net of $0.1 million in the first quarter of 2026 includes the changes in fair value of our derivative liabilities and our SAFE liability, each measured at fair value under Level 3 inputs as described in Notes 3, 8, 10, and 11 to our unaudited condensed consolidated financial statements.
Liquidity and Capital Resources
Sources of Liquidity
We have historically funded our operations through issuances of stock, credit facilities, term loans, revenue producing activities, convertible debt, and SAFE agreements. In August 2025, we experienced a technical breach of certain financial covenants under our credit facility. On March 10, 2026, we entered into the Credit Facility Amendment with our lender, Merchant Factors Corp., pursuant to which the lender waived the defaults for the period from September 30, 2025 through March 10, 2026 and the parties agreed to reduce the maximum credit from $8,000,000 to $5,000,000, reset each of the Tangible Working Capital and Tangible Net Worth covenants to $2,500,000 (tested quarterly), and extend the facility term to September 30, 2026. See “—Credit Facility Covenant Breach” below for additional detail. As of March 31, 2026, we had cash and cash equivalents of $1.0 million.
Based on our recurring losses from operations incurred since inception, expectation of continuing operating losses for the foreseeable future, and the need to raise additional capital to finance our future operations and, without giving effect to this offering, we have concluded that there is substantial doubt regarding our ability to continue as a going concern within one year after the date of our audited consolidated financial statements. See the section entitled “Risk Factors — Risks Related to Our Financial Condition and Capital Requirements — We may not be able to continue as a going concern without additional financing, and if such financing is not available to us or is not available to us on acceptable terms, we may be forced to cease operations.” included elsewhere in this prospectus. Our Independent Registered Accounting Firm issued an explanatory paragraph regarding substantial doubt about the Company’s ability to continue as a going concern.
Cash Flows
The following table summarizes our sources and uses of cash for the three months ended March 31, 2026 and 2025:
| Three months ended March 31, | Dollar | Percent | ||||||||||||||
| 2026 | 2025 | Change | Change | |||||||||||||
| Net cash used in operating activities | $ | (1,799,602 | ) | $ | (720,777 | ) | $ | (1,078,825 | ) | 150 | % | |||||
| Net cash provided by investing activities | 261,327 | 574,227 | (312,900 | ) | -54 | % | ||||||||||
| Net cash provided by financing activities | 1,705,119 | (22,016 | ) | 1,727,135 | -7,845 | % | ||||||||||
| Net increase (decrease) in cash | $ | 166,844 | $ | (168,566 | ) | $ | 335,410 | -199 | % | |||||||
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Operating activities
Net cash used in operating activities was $1.8 million in the first quarter of 2026, compared with $0.7 million in the first quarter of 2025. The increase in operating cash use reflects unfavorable movements in working capital, including a $0.8 million increase in accounts receivable, a $0.8 increase in inventory, and a $0.2 increase in prepaid expenses and other current assets, partially offset by a $1.3 million increase in accounts payable and a $0.6 million increase in accrued expenses. Net loss before non-cash items improved year-over-year, reflecting the lower net loss discussed above and the inclusion of $0.7 million in noncash issuance of advisory common stock shares, $0.2 million of stock-based compensation, $0.1 million of depreciation and amortization, $0.1 million of impairment, and $49 thousand of fair-value losses on derivative liabilities.
Investing activities
Net cash provided by investing activities was $0.3 million in the first quarter of 2026, compared with $0.6 million in the first quarter of 2025. The current-period inflow reflects $0.3 million proceeds from a deposit on an investment repurchase, with $39 thousand of investing outflows in the period. The first quarter of 2025 included $0.5 million of proceeds from the sale of an investment in De Soi and $0.1 million of proceeds from a notes receivable.
Financing activities
Net cash provided by financing activities was $1.7 million in the first quarter of 2026, compared with $22 thousand used in the first quarter of 2025. The first quarter of 2026 financing activity was driven by $1.4 million of net proceeds from convertible-note issuances and $0.8 million of proceeds from warrant exercises, partially offset by $0.3 million of net repayments on the ABL, and $0.1 million of loan repayments (principally the related-party Mezzanine Secured Note repayment described under “Recent Developments”).
Streeterville Capital Prepaid Preferred Purchase
On March 17, 2026, we entered into a Securities Purchase Agreement with Streeterville for a prepaid preferred purchase of up to $30 million of Series C Convertible Preferred Stock. The initial purchase of $6,990,000 occurred at the Second Closing on May 20, 2026, net of a $30,000 Transaction Expense Amount. Subsequent purchases are at our election during the two-year commitment period, subject to conditions including minimum market capitalization of $50 million, outstanding balance below $2 million, 20-day and 60-day median and average daily trading volume of at least $250,000, stockholder equity of at least $3 million (if listed on Nasdaq Capital Markets), closing trade price at least 200% above the Floor Price for ten consecutive trading days, and an effective registration statement. We have a reinvestment right to Streeterville to purchase up to an additional $5 million.
Subsequent purchases are at our election, subject to conditions that include trading volume, market capitalization, shareholder approval for issuances exceeding Nasdaq thresholds, maintenance of sufficient authorized shares, and trading above a floor price metric. Conversions would initially be at a fixed price based on the Nasdaq listing valuation and, after the earlier of 180 days post-listing or specified trigger events, at an alternate price equal to the lower of the fixed price and 90% of the lowest daily VWAP in the ten trading days prior to conversion, in each case subject to a floor. In connection with First Closing, we issued Commitment Shares equal to $450,000 divided by the Expected Reference Price of $16.00 per share (28,125 shares), pursuant to the Amendment. At the First Closing on April 8, 2026, we also issued to Streeterville the Warrant to purchase up to 3,500,000 shares of Common Stock, cash-exercisable at 110% of the Fixed Price, for a Warrant Purchase Price of $10,000. The arrangement contemplates Streeterville consent rights over certain future debt and equity issuances and a post-listing registration of all shares issuable under the commitment; failure to cause the registration to become effective within a specified period would increase outstanding stated value by a stated percentage per month, subject to caps and tolling. We believe this facility will enhance near-term liquidity but will also result in dilution to existing stockholders and could constrain other financing alternatives.
Future funding requirements
We anticipate that we will continue to incur net losses for the foreseeable future due to the requisite investment in sales and marketing to grow our brands, costs to incubate new brands, and to potentially engage in future acquisitions. We expect our operating losses to continue until we can increase revenues to support operational costs. We also have short-term liabilities that are coming due in the near term.
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As of December 31, 2025, we had $0.8 million in cash and cash equivalents. From January 1, 2026 through March 31, 2026, we raised $0.8 million in exercised warrants and $1.4 million of notes convertible into common stock. As of March 31, 2026 we had $1.0 million in cash and cash equivalents.
We believe that our existing cash and cash equivalents will be sufficient to fund our current operating plan through at least June 2026. Based on our current operation and fundraise plan, we believe that our existing cash and cash equivalents, will allow us to fund our operations and meet our debt obligations through May 2027. Our forecast for the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially as a result of a number of factors, including the factors discussed in the section of this prospectus entitled “Risk Factors.” We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect. We expect that we will require additional funding to continue operations and fund growth objectives. Further, our operating plans and other demands on our cash resources may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned through public or private equity or debt financings or other sources, such as strategic collaborations. Such financing may result in dilution to stockholders, imposition of debt covenants and repayment obligations, or other restrictions that may affect our business. We may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. Attempting to secure additional financing may divert the attention of our management from our day-to-day activities, which may adversely affect our ability to meet our business objectives.
Material cash requirements
Our material cash requirements consist primarily of debt obligations, amounts due under convertible instruments and SAFEs upon triggering events, leases and licensing fees, payables to inventory suppliers, and payables for professional services. The timing and magnitude of these cash requirements depend on a variety of factors, including operating performance, compliance with debt covenants, access to capital, and the timing of any liquidity events.
The table below summarizes our material cash requirements as of March 31, 2026, separated between short-term (within the next 12 months) and long-term (thereafter).
| Category | Next 12 Months | Thereafter | Total | |||||||||
| Secured credit facility principal and interest (1) | $ | 2,928 | $ | - | $ | 2,928 | ||||||
| Other debt principal and interest (2) | 2,885 | 682 | 3,567 | |||||||||
| SAFEs and convertible instruments (3) | - | 531 | 531 | |||||||||
| Leases and licensing fees (4) | 380 | - | 380 | |||||||||
| Supplier payables (5) | 4,577 | - | 4,577 | |||||||||
| Professional service payables (6) | 4,998 | - | 4,998 | |||||||||
| Total material cash requirements | $ | 15,768 | $ | 1,213 | $ | 16,981 | ||||||
(amount in thousands)
Note: Amounts reflect contractual obligations and known commitments as of March 31, 2026 and do not include discretionary operating expenditures. Amounts also do not include principal and interest of approximately $2.7 million of convertible notes, including $1,000,000 issued to MVL Inc. (f/k/a Alchemi Project Inc.) in February 2026, that automatically converted into shares of Common Stock upon the consummation of the Company’s Direct Listing that occurred on May 20, 2026. The conversion occurred at a conversion price equal to 80% of the price per share of equity securities sold in the Qualified Financing.
| (1) | Represents scheduled principal and interest payments under our credit facility, assuming renewal of the credit facility in the ordinary course consistent with historical practice. Amounts are based on contractual repayment terms in effect as of the reporting date and do not reflect potential acceleration resulting from covenant breaches or events of default. The presentation also does not reflect future renewals, extensions, refinancings, or other modifications that management expects to pursue in the normal course of business. Management believes it has the intent and ability to renew the credit facility on an ongoing basis and to satisfy principal obligations as they come due through continued access to the facility, operating cash flows, and other capital-management actions. |
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| (2) | Represents scheduled principal and interest payments under our other indebtedness based on contractual terms in effect as of the reporting date. The amounts presented do not reflect potential acceleration resulting from covenant breaches or events of default, nor do they reflect any extensions, refinancings, or other modifications that management may pursue. All debt instruments scheduled to mature within the next 12 months are held by shareholders, and management is evaluating and expects to pursue a combination of equity conversions and maturity extensions to address principal obligations due within that period. |
| (3) | Our SAFEs and convertible instruments do not require scheduled cash repayment and are generally convertible into equity upon the occurrence of a qualifying financing, liquidity event, or other specified triggering events. As a result, no cash payments are reflected in the short-term column. Amounts presented in the long-term column reflect potential settlement amounts only in the event that conversion does not occur or upon the occurrence of other contingent outcomes. |
| (4) | We have an obligation to pay $42,248 per month under our Santa Maria Warehouse (as defined below) lease that ends in December 2026. We do not have any other material leases or licensing fees. |
| (5) | Represents payables to various suppliers throughout our supply chain. With respect to the two vendors with the largest outstanding balances, management is in active discussions to negotiate a settlement that would involve converting approximately $2.35 million of the outstanding payables into term debt payable over a three-year period. Management is also actively negotiating settlements and other resolutions with a majority of its remaining suppliers. |
| (6) | Represents payables to various professional service providers related primarily to legal and transaction services, which were largely incurred in connection with acquisitions completed in prior periods. Management intends to negotiate and settle these balances over the next several years through a combination of negotiated reductions and conversions to equity. |
Contractual Obligations and Commitments
Bulk wine contracts
In connection with our 2023 acquisition of Winc, we assumed a portfolio of long-term bulk wine supply contracts originally structured to support both Winc’s direct-to-consumer and wholesale operations. These agreements provide for the purchase of bulk wine through the 2025 calendar year, primarily covering the 2023 and 2024 vintage years, at contracted prices generally ranging from $9.00 to $15.50 per gallon.
Since the acquisition, market conditions in the bulk wine segment have deteriorated materially. We believe the decline is other than temporary through the dates for which the contracts apply. Wines that were previously contracted at $10–$15 per gallon now trade for as little as $2 per gallon in the spot market, reflecting approximately a 4% category-wide volume decline and oversupply across key varietals. As a result, the realizable value of the wine under contract has decreased significantly. To address these excess commitments, we are actively evaluating a range of mitigation strategies, including negotiated contract terminations, resale into the bulk market, and alternative production uses. During 2024, we recognized approximately $3.7 million in anticipated losses associated with these contracts. In 2025, we recognized an additional $0.1 million in anticipated losses associated with these contracts. No material losses were recognized in the three months ended March 31, 2026.
Supplier contracts
In June 2023, the Company entered into an Asset Purchase Agreement with Full Glass to sell substantially all assets of the Winc DTC business. The total purchase consideration was approximately $11.0 million, consisting of $0.25 million in cash, a $5.25 million senior secured promissory note, a $4.0 million subordinated note, and penny warrants in Full Glass’s parent company.
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Following the closing, the parties executed subsequent agreements to define the ongoing commercial terms and expand the relationship.
| · | February 2024: Full Glass and AMASS entered into an agreement, under which (i) the warrants issued to AMASS were permanently cancelled and forfeited, (ii) the subordinated note was cancelled, (iii) all prior defaults under the original notes were waived, and (iv) the two existing promissory notes were consolidated into a single Amended and Restated Secured Promissory Note with an initial principal balance of $1.884 million, bearing interest at 8% per annum with monthly $150 thousand payments beginning in March 2024. The restatement reflected an agreed purchase-price reduction of approximately $1.6 million, which was estimated in 2023. For such considerations, Full Glass accelerated repayment of the Secured Promissory Note that existed prior to this amendment. On the same date, AMASS and Full Glass executed a Multi-Year Wine Purchase Agreement under which Full Glass committed to purchase approximately 111,000 cases of finished wine (aggregate value ≈$4 million) through February 2026 at a price of $36 per case, subject to a semi-annual $1 million take-or-pay minimum and 30-day payment terms, thereby establishing AMASS as a continuing production partner for Full Glass’s portfolio. At this time Full Glass is in default of the production agreement and a settlement is being negotiated. |
| · | October 2024: The note balance was reduced to $718 thousand, with continued $150 thousand monthly payments and an additional $215 thousand principal pay-down linked to bank funding. A concurrent letter agreement required Full Glass to pay $695 thousand toward outstanding trade payables owed to AMASS in two tranches tied to the facility’s funding timeline. |
Afterdream services
We previously provided certain operational and administrative services to Afterdream, Inc. in connection with its efforts to scale its business. As we pursued a public listing, the Company determined to discontinue these services due to potential regulatory considerations associated with NASDAQ listing requirements relating to businesses operating in the hemp-derived cannabinoid space. Accordingly, we ceased providing services to Afterdream.
In connection with the termination and settlement of these services, we sold our remaining shares of De Soi to Afterdream for $0.4 million. The transfer was intended to provide Afterdream with sufficient collateral to obtain financing and repay its outstanding obligations to us in full. Under the terms of the agreement, we retain the right to repurchase the De Soi shares from Afterdream for the purchase price plus 9% interest per annum.
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies and adopted by us as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial statements upon adoption.
A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 3, “Summary of Significant Accounting Policies” to our consolidated financial statements included elsewhere in this prospectus.
Credit Facility Covenant Breach
In August 2025, we experienced a technical breach of certain financial covenants under our credit facility, primarily related to minimum Tangible Working Capital and Tangible Net Worth requirements. On March 10, 2026, we and our lender, Merchant Factors Corp., entered into the Credit Facility Amendment, which (i) waived defaults arising from our non-compliance with the Tangible Working Capital covenant and the Tangible Net Worth covenant for each calendar month during the period from September 30, 2025 through March 10, 2026, (ii) reduced the maximum credit available under the facility from $8,000,000 to $5,000,000, (iii) reset the minimum Tangible Working Capital and Tangible Net Worth covenants to $2,500,000 each, tested at the end of each fiscal quarter, (iv) extended the initial term of the facility to September 30, 2026, with automatic one-year renewal periods, and (v) required payment of a $5,000 amendment fee. In connection with the Credit Facility Amendment, we reaffirmed all covenants and representations under the Loan and Security Agreement and executed a general release in favor of the lender.
The Credit Facility Amendment became effective upon execution by each guarantor (including AMASS Brands, Inc. and Project Crush Acquisition Corp., LLC as corporate guarantors, and Mark T. Lynn and Geoffrey McFarlane as individual guarantors) and satisfaction of all conditions. The covenant breach and related amendment underscore our dependence on continued access to liquidity and the importance of maintaining compliance with our debt agreements. Although the prior defaults have been waived, the reduced availability under the facility may limit our borrowing capacity. Failure to maintain compliance with the amended covenants could require us to seek additional waivers, restructure our indebtedness, raise additional capital, or curtail operations.
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The covenant breach and related waiver underscore our dependence on continued access to liquidity and the importance of maintaining compliance with our debt agreements. Failure to maintain compliance could require us to seek additional waivers, restructure our indebtedness, raise additional capital, or curtail operations.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles (GAAP), which require management to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, as well as related disclosures. These estimates are inherently uncertain, and actual results may differ from those estimates. The following accounting policies and estimates are material to our financial condition and results of operations and require significant management judgment.
Critical Accounting Policies
Fair Value Option
ASC 825, Financial Instruments (ASC 825), allows for entities to elect the “fair value option,” which permits entities to choose, at specified election dates, to measure eligible financial assets and financial liabilities at fair value. The decision to elect the fair value option is: (a) applied on an instrument-by-instrument basis (except as delineated within the guidance of ASC 825); (b) irrevocable, unless a new election date occurs; and (c) applied to an entire instrument.
Entities may elect the fair value option for several defined items, including a recognized financial asset and financial liability (with certain specified exceptions). The fair value option may not be elected for several items as defined in ASC 825, including an investment in a subsidiary or an interest in a variable interest entity that is required to be consolidated.
The election of recognition under the fair value option is irrevocable unless another election date occurs. The fair value option need not be applied to all instruments issued or acquired in a single transaction. A financial instrument that is legally a single contract may not be separated into parts for purposes of applying the fair value option. An investor in an equity security may elect the fair value option for its entire investment in that security, including fractional shares.
The Company has elected the fair value option on its equity investment in De Soi, Inc. (“De Soi”). Management determined to elect the fair value option on these investments in order to provide more useful information to the shareholders regarding the performance of its investment.
Business combinations
The Company accounts for business combinations under ASC 805, Business Combinations, which requires that the assets acquired and the liabilities assumed be recorded at the date of acquisition at their respective fair value and that direct costs of acquisitions be expensed as they are incurred. The excess purchase price over the estimated fair values of the net assets acquired is recorded as goodwill.
Inventory
Inventories are stated at the lower of cost or net realizable value using the first-in, first-out (FIFO) method and consist of components, finished goods, and products in transit from the Company’s suppliers. Costs of finished goods inventories include all costs incurred to bring inventory to its current condition, including inbound freight and duties. If the Company determines that the estimated net realizable value of its inventory is less than the carrying value of such inventory, it records a charge to cost of net revenues to reflect the lower of cost or net realizable value. If actual market conditions are less favorable than those projected by the Company, further adjustments may be required that would increase the cost of goods sold in the period in which such a determination was made.
Impairment of long-lived assets
The Company accounts for the impairment and disposition of long-lived assets in accordance with ASC Subtopic 360-10-35, Property, Plant, and Equipment – Overall – Subsequent Measurement (ASC 360). In accordance with ASC 360, the Company reviews its long-lived assets, including finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company measures recoverability of assets to be held and used by comparing the carrying amount of an asset to future undiscounted net cash flows that it expects the asset to generate. When an asset is determined to be impaired, the Company recognizes the impairment amount, which is measured by the amount the carrying value of the asset exceeds its fair value. In addition, the Company evaluates goodwill for impairment in accordance with ASC 350, Intangibles-Goodwill and Other (ASC 350). Goodwill is tested at least annually, or more frequently if a triggering event occurs. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to the excess, not to exceed the total amount of goodwill.
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Stock-based compensation
The Company accounts for stock-based compensation costs under the provisions of ASC 718, Compensation—Stock Compensation, which requires the measurement and recognition of compensation expense related to the fair value of stock-based compensation awards that are ultimately expected to vest. Stock based compensation expense recognized includes the compensation cost for all stock-based payments granted to employees, officers, advisors, and directors based on the grant date fair value estimated in accordance with the provisions of ASC 718. ASC 718 is also applied to awards modified, repurchased, or cancelled during the periods reported. Stock-based compensation is recognized as expense over the employee’s requisite vesting period and over the nonemployee’s period of providing goods or services.
The Company classifies stock-based compensation expense in its consolidated statements of operations in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.
The fair value of each stock option and warrant grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company historically has been a private company and lacks company-specific historical and implied volatility information for its stock. Therefore, it estimates its expected stock price volatility based on the historical volatility of publicly traded peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends on common stock and does not expect to pay any cash dividends in the foreseeable future. Forfeitures are recognized as they occur. Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and management uses different assumptions, stock-based compensation expense could be materially different for future awards.
Revenue recognition
The Company recognizes revenue under FASB ASC 606, Revenue from Contracts with Customers. The Company derives its revenue primarily through the sale of alcohol and non-alcoholic spirits, wine, seltzers, and personal care products in both wholesale and direct to consumer channels. Spirits and wine end customers consist primarily of retailers, bars, and restaurants. The Company determines revenue recognition through the following steps:
| · | Identification of the contract, or contracts, with a customer, |
| · | Identification of the performance obligations in the contract, |
| · | Determination of the transaction price, |
| · | Allocation of the transaction price to the performance obligations in the contract, and |
| · | Recognition of revenue when, or as, the Company satisfies a performance obligation. |
The Company’s revenue generating activities have a single performance obligation and are recognized when the ordered goods are shipped to the end customer, which is when control transfers. Revenue is measured as the amount of consideration the Company expects to receive in exchange for the sale of its product. The Company’s sales terms do not typically allow for a right of return on sales to wholesale and distributor customers except for matters related to any manufacturing defects. Amounts billed to customers for shipping and handling are included in net revenues.
As the Company’s standard payment terms are less than one year, the Company has elected, as a practical expedient, to not assess whether a contract has a significant financing component. The Company allocates the transaction price to each distinct product based on its relative standalone selling price. The product price as specified on the purchase order is considered the standalone selling price as it is an observable source that depicts the price as if sold to a similar customer in similar circumstances. Incidental items that are immaterial in the context of the contract are recognized as expense. The Company does not have any significant financing component as payments are received at or shortly after the point of sale.
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Costs incurred to obtain a contract are expensed as incurred when the amortization period is less than a year. The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year. The Company has concluded that none of the costs it has incurred to obtain and fulfill its sales contracts meet the capitalization criteria, and as such, there are no costs deferred and recognized as assets on the consolidated balance sheets as of March 31, 2026 and December 31, 2025.
Net revenues reflect reductions attributable to consideration given to customers in various customer incentive programs, including pricing discounts on single transactions, volume discounts, promotional and advertising allowances, coupons, and rebates. This variable consideration is recognized as a reduction of the transaction price based upon expected amounts at the time revenue for the corresponding product sale is recognized. For example, customer promotional discount programs are entered into with certain distributors for certain periods of time. The amount ultimately reimbursed to distributors is determined based upon agreed-upon promotional discounts which are applied to distributors’ sales to retailers. Other common forms of variable consideration include volume rebates for meeting established sales targets, including discounts offered to the end customer. The determination of the reduction of the transaction price for variable consideration requires certain estimates and assumptions that affect the timing and amounts of revenue and liabilities recognized. Management estimates this variable consideration by taking into account factors such as the nature of the promotional activity, historical information, and current trends, availability of actual results, and expectations of customer and consumer behavior. All such estimates were not material for the three months ended March 31, 2026 and March 31, 2025.
Further, the Company offers discounts on e-commerce transitions such as first order discounts, free shipping on sales over certain thresholds, subscription discounts, and bundled set discounts. All e-commerce discounts are included as part of net revenues on the statements of operations and known at the time of the transaction.
Critical estimates
Inventory valuation
Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out (FIFO) method and includes materials, labor, and applicable overhead. We regularly evaluate inventory for potential obsolescence, slow-moving or excess quantities, spoilage, shrinkage, and changes in net realizable value. These estimates require management judgment and are influenced by factors such as changes in consumer demand, supply chain disruptions, inflation, and raw material price volatility, any of which could materially impact our results.
Estimation in the three months ended March 31, 2026 and 2025, as well as the years ended 2025 and 2024, included expected losses on long-term supply contracts where the net realizable value of certain inventoriable goods are believed to be below the contractual purchase price. As it pertains to the Company’s bulk wine purchase, this includes consideration of the varietal, vintage, and volume of product versus the market price.
Long-term contracts
We evaluate long-term supply and purchase contracts to determine whether the expected costs to fulfill our obligations exceed the anticipated economic benefits. When estimated costs under a supply contract exceed its realizable value, we recognize a loss for the difference in accordance with U.S. GAAP. These estimates require management judgment regarding future market prices, utilization, and recoverability, and actual results may differ from those estimates. Changes in these assumptions could materially affect the amount of expense recognized in our financial statements.
Impairment on goodwill
We allocate the purchase price in business combinations to net assets, including identifiable intangible assets and goodwill. Goodwill and indefinite-lived intangible assets are not amortized, but are tested for impairment at least annually or whenever indicators of impairment arise. Definite-lived intangible assets are amortized over their useful lives and tested for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. Inputs to impairment tests include market multiples, forecasted cash flows, growth rates, margins, allocations between reporting units, and long-term projections.
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Intangible asset valuation
The determination of the fair value of identifiable intangible assets acquired in business combinations requires significant management judgment. The Company values trademarks and other brand-related intangible assets using the relief-from-royalty method, which estimates the present value of future after-tax cash flows saved by owning the asset rather than licensing it.
Key inputs include projected revenues attributable to the acquired brands, an assumed royalty rate, and a discount rate that reflects the time value of money and the risk characteristics of the underlying cash flows. These assumptions are inherently subjective and based on management’s best estimates at the acquisition date. Changes in the royalty rate, discount rate, or projected revenue growth could materially impact the resulting fair value and related amortization or impairment conclusions.
Fair value of equity awards
We grant equity-based awards for compensation purposes. The measurement of compensation expense for these awards requires management to estimate the fair value of the underlying common stock, for which there is no market, as well as the awards on the grant date, which require assumptions regarding expected term, volatility, dividend yield, and forfeiture rates. Changes in these assumptions could materially affect the amount of expense recognized in our financial statements.
Fair value measurements of investments
The Company measures certain investments at fair value on a recurring basis under ASC 820, using Level 3 inputs due to significant unobservable assumptions. Fair value is determined using a market-based approach that considers comparable company multiples, liquidity discounts, and recent transactions, including partial investment sales. Further, the investment’s management’s projections are utilized in the analysis, which is also subject to significant estimation. Changes in these assumptions could materially affect the valuation. There were no changes in valuation methodologies during the three months ended March 31, 2026 and fiscal year 2025.
Accounts receivable
Accounts receivable are derived from products and services delivered to customers and are stated at their net realizable value. The Company evaluates the creditworthiness of its customers prior to extending credit and monitors the aging and collectability of receivables on a continuous basis. The Company establishes an allowance for expected credit losses on financial assets, including trade and other receivables, at each reporting date. The allowance reflects management’s estimate of lifetime expected credit losses based on historical collection experience, the type and credit quality of the customer, the age of outstanding receivables, and current and expected future economic conditions. Management uses the best information available to make these estimates; however, future adjustments may be required if there are significant changes in customer financial condition or broader economic trends.
Derivative liabilities
The accounting for the Company’s derivative liabilities requires the use of significant estimates and management judgment. These derivative liabilities arise from embedded features within certain convertible debt instruments and associated warrants that do not qualify for equity classification under applicable accounting guidance. As a result, the Company records these instruments as liabilities at fair value and remeasures them at each reporting date, with changes in fair value recognized in earnings. The fair value of these derivative instruments is determined using valuation models that incorporate probability-weighted scenarios, including “with and without” methodologies, to estimate potential settlement outcomes. These models require the use of significant unobservable inputs, including assumptions regarding the probability and timing of conversion or listing events, expected volatility, discount rates, and other market participant assumptions. Because these inputs are not directly observable in the market, the derivative liabilities are classified as Level 3 within the fair value hierarchy. Changes in these assumptions could materially affect the estimated fair value of the derivative liabilities and result in significant non-cash gains or losses recognized in the Company’s consolidated statements of operations.
Convertible debt
The accounting for the Company’s convertible promissory notes and associated warrants requires the application of complex accounting guidance and the use of significant estimates and assumptions. The Company evaluated the embedded conversion features and related warrants under applicable accounting standards to determine whether these instruments qualify for equity classification or must be accounted for as derivative liabilities. This evaluation requires judgment regarding the interpretation of contractual terms, the potential settlement outcomes under various triggering events, and whether the instruments may require cash settlement or variable share settlement outside the Company’s control. For those features that do not qualify for equity classification, the Company records them at fair value as derivative liabilities, with changes in fair value recognized in earnings until settlement or expiration. Estimating the fair value of these instruments requires the use of valuation models that incorporate significant assumptions, including the Company’s expected volatility, estimated equity value, probability and timing of potential financing or change-of-control events, and other market-based inputs. Changes in these assumptions could materially impact the estimated fair value of the derivative liabilities and the amount of non-cash gains or losses recognized in the Company’s results of operations.
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SAFE notes
The accounting for the Simple Agreement for Future Equity (“SAFE”) issued in connection with the Good Twin business requires the application of significant judgment and the use of estimates. The Company evaluated the contractual terms of the SAFE to determine the appropriate classification under applicable accounting guidance, including whether the instrument qualifies for equity classification or must be accounted for as a liability. Because the SAFE contains contingent settlement provisions that could require cash settlement upon certain events outside the Company’s control, the Company concluded that the instrument should be classified as a liability and measured at fair value, with changes in fair value recognized in earnings until conversion or settlement. Estimating the fair value of the SAFE requires the use of valuation models and significant assumptions, including the estimated equity value of Good Twin, expected volatility, the probability and timing of potential equity financings or liquidity events, and other market-based inputs. Changes in these assumptions could materially impact the estimated fair value of the SAFE liability and the amount of non-cash gains or losses recognized in the Company’s results of operations.
Emerging Growth Company and Smaller Reporting Company Status
The Jumpstart Our Business Startups Act of 2012 permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company. As a result of this election, our consolidated financial statements may not be comparable to other public companies that comply with new or revised accounting pronouncements as of public company effective dates. We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Global Trade Environment
We continue to monitor developments in global trade policy, including the potential for new or increased tariffs and retaliatory actions by trading partners. These factors may impact our sourcing, cost structure, and international growth strategy, and we actively evaluate mitigation strategies to limit potential adverse effects.
We expect certain market conditions and their related impacts to persist through fiscal 2026, which could materially affect our results of operations and financial condition. We will continue to closely monitor evolving consumer demand trends and broader economic conditions and assess their effects on our business. We regularly evaluate margin profiles on all of our imported products and action on mitigation strategies to reduce the impact of tariffs or other global market factors. Our mitigation strategies include pricing actions, productivity improvements, inventory management, and optimized marketing, which may not be sufficient in all cases. Additionally, severe weather events such as wildfires, droughts, floods, extreme heat, or late frosts could adversely impact both our supply chain and consumer purchasing behavior, potentially resulting in a material effect on our operations and financial results.
Inflation Risk
Inflationary pressures have the potential to adversely affect our business operations, financial condition, and results of operations. Rising costs associated with cost of labor, research and development costs, and raw materials can lead to increased production and operational expenses. If we are unable to pass these increased costs onto our customers through pricing adjustments, our profit margins may be negatively impacted.
Furthermore, inflation can influence consumer behavior, particularly in discretionary spending categories such as premium beverages. Economic pressures may lead consumers to reduce, trade down, or delay purchases of non-essential or higher-priced beverage products, which could adversely affect demand for our offerings.
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Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
In connection with the preparation of this Quarterly Report on Form 10-Q, our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2026. Based on that evaluation, and as a result of the material weaknesses in our internal control over financial reporting described below, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2026, our disclosure controls and procedures were not effective at the reasonable assurance level.
Material Weaknesses
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
In connection with the audit of our financial statements, our independent registered public accounting firm identified, and management concurred with, the following two material weaknesses in our internal control over financial reporting:
| • | Absence of a comprehensive and formalized accounting and financial reporting policies and procedures manual. We did not have a comprehensive and formalized accounting and financial reporting policies and procedures manual sufficient to ensure accurate and timely financial reporting, including with respect to periodic and year-end closing procedures, accrual and cutoff of accounts receivable and accounts payable, reconciliation of significant accounts, the establishment and review of accounting estimates, the preparation and review of closing and recurring journal entries, the documentation of the responsibilities of accounting personnel and management review procedures, and the design and maintenance of effective controls over information technology systems relevant to the preparation of financial statements. |
| • | Insufficient segregation of duties. Certain controls were concentrated in a small number of employees and members of management, primarily as a result of our size, which prevented appropriate segregation of duties and could amplify the risk arising from related party transactions. |
Notwithstanding the material weaknesses described above, our management has concluded that the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q present fairly, in all material respects, our financial position, results of operations and cash flows as of and for the periods presented in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Remediation Plan
Our management, with the oversight of the Audit Committee of our Board of Directors, has adopted a formal remediation plan (the “Remediation Plan”) designed to remediate the material weaknesses described above and to enhance our internal control over financial reporting. The Remediation Plan is organized into two workstreams, each directly addressing one of the identified material weaknesses. The Remediation Plan is being implemented under the oversight of the Audit Committee, which receives quarterly progress reports, and is monitored by a Remediation Steering Committee comprised of our Chief Financial Officer and Controller. Principal remediation activities include the following.
With respect to accounting and financial reporting policies and procedures, we are:
| • | developing, adopting and maintaining a comprehensive accounting policies and procedures manual documenting our significant accounting policies in accordance with U.S. GAAP; |
| • | establishing formalized month-end, quarter-end and year-end closing procedures and checklists, including standardized close calendars, account reconciliation requirements, materiality thresholds and reviewer sign-offs; |
| • | designing and implementing formal management review controls, including variance analysis and independent review and approval of manual, non-routine and related party journal entries; |
| • | assessing and enhancing information technology general controls over our financial reporting systems, including user access provisioning and deprovisioning and change management controls; and |
| • | performing a financial reporting risk assessment, including a fraud risk assessment, and mapping identified risks to specific controls. |
With respect to segregation of duties, we are:
| • | assessing our accounting organization and developing a formal segregation of duties matrix to identify and resolve conflicting responsibilities; |
| • | preparing formal role descriptions and authorization limits, and adding or reallocating personnel as necessary so that a secondary party reviews and/or approves transactions across all significant processes; |
| • | establishing a formal policy and process for the identification, approval, review and monitoring of related party transactions, including Audit Committee or independent director pre-approval; |
| • | reviewing and configuring user roles and permissions within our enterprise resource planning system to enforce segregation of duties; and |
| • | implementing compensating controls, including independent Chief Financial Officer review and approval of journal entries and dual-authorization requirements for disbursements above defined thresholds, together with ongoing monitoring and periodic reporting to the Audit Committee. |
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We expect to substantially complete the remediation activities within twelve months of the adoption of the Remediation Plan, but in no event later than the filing of our first Annual Report on Form 10-K that requires a management assessment of internal control over financial reporting under Section 404(a) of the Sarbanes-Oxley Act of 2002. We will not consider the material weaknesses to be remediated until the applicable controls have been designed appropriately and have operated effectively for a sufficient period of time (at a minimum, two consecutive quarterly close cycles) to permit management to conclude, through testing, that the controls are operating effectively, and until the Audit Committee has reviewed and concurred with management’s conclusion. As an “emerging growth company” within the meaning of the Jumpstart Our Business Startups Act of 2012, our independent registered public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting for so long as we qualify as an emerging growth company. We can give no assurance that our remediation efforts will be successful or that additional material weaknesses will not be identified in the future.
Changes in Internal Control Over Financial Reporting
Except for the ongoing implementation of the remediation activities described above, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
As a smaller reporting company under Rule 12b-2 of the Exchange Act, we are not required to include risk factors in this Report. For additional risks relating to our operations carefully consider the factors discussed in “Risk Factors” of our Prospectus dated May 18, 2026, which could materially affect our business, financial condition or future results. There have been no material changes during fiscal year 2026 to the risk factors that were included in the Prospectus.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On May 20, 2026, we completed the second closing (the “Second Closing”) under the Securities Purchase Agreement, dated as of March 17, 2026 (as amended by the Global Amendment dated April 7, 2026, the “SPA”), by and between the Company and Streeterville Capital, LLC, a Utah limited liability company (the “Investor”). The SPA was previously described in the Company’s Registration Statement on Form S-1 (File No. 333-294941) (the “Registration Statement”), and the description of the SPA and the Global Amendment contained therein is incorporated herein by reference. The SPA and the Global Amendment were filed as Exhibit 10.52 and Exhibit 10.59, respectively, to the Registration Statement.
At the Second Closing, we issued and sold to the Investor 7,000 shares of Series C Convertible Preferred Stock, par value $0.00001 per share (the “Initial Preferred Shares”), for an aggregate purchase price of $6,990,000.00 (the “Initial Purchase Price”), net of a $30,000 transaction expense amount payable to the Investor. The Initial Purchase Price reflects the reduction from $7,000,000.00 to $6,990,000.00 pursuant to the Global Amendment to account for the $10,000.00 Warrant Purchase Price previously paid by the Investor at the First Closing. The Initial Preferred Shares were issued in reliance on the exemption from registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D promulgated thereunder.
The Initial Preferred Shares are convertible into shares of the Company’s common stock, par value $0.00001 per share (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in the Certificate of Designation of Preferences and Rights of Series C Convertible Preferred Stock filed with the Secretary of State of the State of Delaware on May 19, 2026 (the “Certificate of Designation”). Each share of Series C Convertible Preferred Stock has a stated value of $1,086.96 per share. The conversion price is initially equal to the Fixed Price (as defined in the Certificate of Designation) and, after the earlier of six months from the Initial Listing Date, a Trigger Event or an Event of Default (each as defined in the Certificate of Designation), the lesser of the Fixed Price and the Market Price (as defined in the Certificate of Designation), subject in each case to a floor price. Conversions are subject to a 9.99% beneficial ownership limitation and the Exchange Cap under Nasdaq Listing Rule 5635(d).
The foregoing summary of the SPA, the Global Amendment, and the Certificate of Designation is not complete and is qualified in its entirety by reference to the full text of such documents, which were filed as exhibits to the Registration Statement and are incorporated herein by reference.
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Item 3. Defaults Upon Senior Securities.
None
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None
Item 6. Exhibits
| Exhibit No. |
Description | |
| 10.1 | Amendment No. 4 to Secured Promissory Note, and Consent, dated as of January 23, 2026, by and between Resonant Subholdings Inc. and Half Church Holdings Pte. Ltd. (incorporated by reference to Exhibit 10.49 of the Registration Statement on Form S-1 (File No. 333-394941)). | |
| 10.2 | Waiver and Amendment No. 1 to Loan and Security Agreement, dated as of March 10, 2026, by and between Maison Thomas, LLC, Project Crush DTC Sub LLC, and Merchant Factors Corp. (incorporated by reference to Exhibit 10.51 of the Registration Statement on Form S-1 (File No. 333-394941)). | |
| 10.3 | Securities Purchase Agreement, dated March 17, 2026, between AMASS Brands Inc. and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.52 of the Registration Statement on Form S-1 (File No. 333-394941)). | |
| 10.4 | Form of Certificate of Designation of Preferences and Rights of Series C Convertible Preferred Stock (incorporated by reference to Exhibit 10.53 of the Registration Statement on Form S-1 (File No. 333-394941)). | |
| 10.5 | Form of Warrant to Purchase Shares of Common Stock (incorporated by reference to Exhibit 10.54 of the Registration Statement on Form S-1 (File No. 333-394941)). | |
| 10.6 | Placement Agency Agreement, dated as of March 17, 2026, by and between AMASS Brands Inc. and Maxim Group LLC (incorporated by reference to Exhibit 10.55 of the Registration Statement on Form S-1 (File No. 333-394941)). | |
| 10.7 | Unsecured Convertible Note Purchase Agreement, dated February 13, 2026, by and among AMASS Brands Inc. and Alchemi Project Inc. (incorporated by reference to Exhibit 10.56 of the Registration Statement on Form S-1 (File No. 333-394941)). | |
| 10.8 | Convertible Promissory Note, dated February 13, 2026, by and between AMASS Brands Inc. and Alchemi Project Inc. (incorporated by reference to Exhibit 10.57 of the Registration Statement on Form S-1 (File No. 333-394941)). | |
| 10.9 | Warrant to Purchase Shares of Common Stock, dated February 13, 2026, issued to Alchemi Project Inc. (incorporated by reference to Exhibit 10.58 of the Registration Statement on Form S-1 (File No. 333-394941)). | |
| 10.10 | Global Amendment, dated as of April 7, 2026, by and between AMASS Brands Inc. and Streeterville Capital, LLC (incorporated by reference to Exhibit 10.59 of the Registration Statement on Form S-1 (File No. 333-394941)). | |
| 31.1 | Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2 | Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1 | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS | Inline XBRL Instance Document. | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: June 29, 2026 | AMASS Brands Inc | |
| By: | /s/ Mark T. Lynn | |
| Mark T. Lynn | ||
|
Chief Executive Officer (Principal Executive Officer) | ||
| By: | /s/ Zachary Ament | |
| Zachary Ament | ||
|
Chief Financial Officer (Principal Financial and Accounting Officer) |
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2026
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: 001-43286
AMASS Brands Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 81-5227282 | |
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
|
860 E Stowell Road, Santa Maria, CA |
93454 | |
| (Address of principal executive offices) | (Zip Code) |
(909) 293-8495
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Stock, par value $0.00001 per share | AMSS | Nasdaq Global Market |
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. Yes x No ¨
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). Yes x No ¨
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 ¨ | Accelerated filer ¨ |
| Non-accelerated filer x | Smaller reporting company x |
| Emerging growth company x |
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 x
As of August 14, 2026, the registrant had a total of 11,605,081 shares of Common Stock, $0.00001 par value, outstanding.
AMASS BRANDS INC
INDEX TO FORM 10-Q
| Page | ||
| PART I – FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements (Unaudited) | 1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 20 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 35 |
| Item 4. | Controls and Procedures | 36 |
| PART II – OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 38 |
| Item 1A. | Risk Factors | 38 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 38 |
| Item 3. | Defaults Upon Senior Securities | 38 |
| Item 4. | Mine Safety Disclosures | 38 |
| Item 5. | Other Information | 38 |
| Item 6. | Exhibits | 38 |
| PART III – SIGNATURES | ||
| i |
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Quarterly Report on Form 10-Q are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business plan and strategy, future revenue, timing and likelihood of success, plans and objectives of management for future operations, future results of anticipated products and prospects, plans and objectives of management are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. Forward-looking statements contained in this Quarterly Report on Form 10-Q may include, but are not limited to, statements about:
| · | the implementation of our business model and our strategic plans for our business, product, services and technology; |
| · | our commercialization and marketing capabilities and strategy; |
| · | our ability to establish or maintain collaborations or strategic relationships or obtain additional funding; |
| · | our competitive position; |
| · | the scope of protection that we are able to establish and maintain for intellectual property rights covering our products, services and technology; |
| · | developments and projections relating to our competitors and our industry; |
| · | our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; |
| · | the period over which we estimate our existing cash and cash equivalents will be sufficient to fund our future operating expenses and capital expenditure requirements; and |
| · | the impact of new or existing laws and regulations on our business and strategy. |
These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors” of our Prospectuses dated May 18, 2026 and July 6, 2026, in any subsequent filing we make with the SEC, as well as in any documents incorporated by reference that describe risks and factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on the forward-looking statements included in this Form 10-Q as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.
| ii |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited).
AMASS BRANDS INC
INDEX TO THE FINANCIAL STATEMENTS (UNAUDITED)
| Page | |
| Condensed Consolidated Balance Sheets as of June 30, 2026 (Unaudited) and December 31, 2025 | 2 |
| Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2026 and 2025 (Unaudited) | 3 |
| Condensed Consolidated Statements of Stockholders’ Deficit for the three and six months ended June 30, 2026 and 2025 (Unaudited) | 4 |
| Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025 (Unaudited) | 5 |
| Notes to the Condensed Consolidated Financial Statements (Unaudited) | 6 |
| 1 |
Amass Brands, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
| June 30, 2026 | December 31, 2025 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 1,570,517 | $ | 824,962 | ||||
| Accounts receivable, net | 4,043,745 | 2,317,514 | ||||||
| Due from related parties | - | 1,389,996 | ||||||
| Inventory, net | 11,208,045 | 10,873,408 | ||||||
| Interest receivable | 68,112 | 68,112 | ||||||
| Prepaid expenses and other current assets | 883,809 | 178,205 | ||||||
| Total current assets | 17,774,228 | 15,652,197 | ||||||
| Property and equipment, net | 5,044 | 12,369 | ||||||
| Intangible assets, net | 1,829,895 | 2,202,579 | ||||||
| Goodwill | 2,972,280 | 2,972,280 | ||||||
| Securities pledged as collateral, at fair value | - | 3,347,564 | ||||||
| Investments at fair value | 3,347,564 | - | ||||||
| Investments at cost | 406,000 | 823,746 | ||||||
| Related-party investment | 1,888,331 | - | ||||||
| Deposits | 16,640 | 14,015 | ||||||
| Total assets | $ | 28,239,982 | $ | 25,024,750 | ||||
| Liabilities and stockholders' equity (deficit) | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 9,619,480 | $ | 8,257,052 | ||||
| Accrued expenses | 4,480,307 | 4,306,428 | ||||||
| Secured credit facility, current | 3,788,522 | 3,277,034 | ||||||
| Loans payable, current | 1,166,998 | 897,854 | ||||||
| Contract liabilities | 2,933,102 | 3,042,044 | ||||||
| Promissory notes payable, current | 1,650,000 | 2,498,714 | ||||||
| Derivative liabilities | 883,167 | 37,962 | ||||||
| Customer deposits | 413,838 | 417,000 | ||||||
| Interest payable | 421,213 | 694,649 | ||||||
| Obligation under repurchase agreement | - | 400,000 | ||||||
| Total current liabilities | 25,356,627 | 23,828,737 | ||||||
| Loans payable | 164,570 | 831,568 | ||||||
| Promissory notes payable, net | - | 100,000 | ||||||
| Convertible notes payable | - | 378,725 | ||||||
| SAFE notes | 541,304 | 520,242 | ||||||
| Total liabilities | 26,062,501 | 25,659,272 | ||||||
| Commitments and contingencies (Note 15) | ||||||||
| Series C Convertible Preferred Stock, $0.00001 par, 7,000 shares issued and outstanding, liquidation value of $7,608,720 plus accrued and unpaid preferred return, at carrying value (mezzanine equity) | 1,184,077 | - | ||||||
| Stockholders' equity (deficit): | ||||||||
| Series B Preferred Stock, $0.00001 par; 0 and 8,304,185 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively | - | 82 | ||||||
| Series A Preferred Stock, $0.00001 par; 0 and 873,734 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively | - | 9 | ||||||
| Series Seed Preferred Stock, $0.00001 par; 0 and 12,529,020 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively | - | 125 | ||||||
| Common stock, $0.00001 par, 250,000,000 shares authorized; 11,760,456 shares issued and 11,605,081 shares outstanding as of June 30, 2026, and 3,364,984 shares issued and outstanding as of December 31, 2025 | 118 | 34 | ||||||
| Additional paid-in capital | 51,273,945 | 37,661,354 | ||||||
| Treasury stock, 155,375 and 0 shares at cost | (1,393,713 | ) | - | |||||
| Accumulated other comprehensive income | 55,172 | 55,172 | ||||||
| Accumulated deficit | (51,215,008 | ) | (40,705,027 | ) | ||||
| Total Amass stockholders’ deficit | (1,279,486 | ) | (2,988,251 | ) | ||||
| Non-controlling interest | 2,272,890 | 2,353,729 | ||||||
| Total stockholders’ equity (deficit) | 993,404 | (634,522 | ) | |||||
| Total liabilities and stockholders' equity (deficit) | $ | 28,239,982 | $ | 25,024,750 | ||||
See accompanying notes to these unaudited condensed consolidated financial statements.
| 2 |
Amass Brands, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
|
Three months ended June 30, 2026 |
Three months ended June 30, 2025 |
Six months ended June 30, 2026 |
Six months ended June 30, 2025 |
|||||||||||||
| Net revenues | ||||||||||||||||
| Spirits & wine revenues | $ | 5,404,448 | $ | 5,455,110 | $ | 9,390,882 | $ | 9,614,886 | ||||||||
| Other revenues | 188,296 | 49,722 | 351,205 | 230,489 | ||||||||||||
| Total net revenues | 5,592,744 | 5,504,832 | 9,742,087 | 9,845,375 | ||||||||||||
| Cost of net revenues | ||||||||||||||||
| Cost of spirits & wine revenues | 3,558,488 | 3,344,070 | 6,367,880 | 6,130,937 | ||||||||||||
| Cost of other revenues | 538,707 | 16,209 | 805,716 | 355,126 | ||||||||||||
| Total cost of net revenues | 4,097,195 | 3,360,279 | 7,173,596 | 6,486,063 | ||||||||||||
| Gross profit | 1,495,549 | 2,144,553 | 2,568,491 | 3,359,312 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Sales and marketing | 1,059,877 | 976,375 | 2,027,354 | 1,969,780 | ||||||||||||
| General and administrative | 6,054,188 | 1,917,192 | 8,570,993 | 4,035,292 | ||||||||||||
| Impairment loss | 339,283 | - | 449,685 | - | ||||||||||||
| Total operating expenses | 7,453,348 | 2,893,567 | 11,048,032 | 6,005,072 | ||||||||||||
| Loss from operations | (5,957,799 | ) | (749,014 | ) | (8,479,541 | ) | (2,645,760 | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest income | - | 27,752 | 3,709 | 34,235 | ||||||||||||
| Interest expense | (1,337,046 | ) | (491,992 | ) | (1,791,902 | ) | (2,036,252 | ) | ||||||||
| Change in fair value of derivative liabilities | 236,969 | - | 187,753 | - | ||||||||||||
| Change in fair value of SAFEs | (10,635 | ) | - | (21,062 | ) | - | ||||||||||
| Other income (expense), net | (480,704 | ) | (52,169 | ) | (489,779 | ) | (337,267 | ) | ||||||||
| Total other income (expense) | (1,591,416 | ) | (516,409 | ) | (2,111,281 | ) | (2,339,284 | ) | ||||||||
| Net loss | (7,549,215 | ) | (1,265,423 | ) | (10,590,822 | ) | (4,985,044 | ) | ||||||||
| Net loss attributable to non-controlling interest | (74,938 | ) | (28,840 | ) | (80,841 | ) | (91,419 | ) | ||||||||
| Net loss attributable to parent | (7,474,277 | ) | (1,236,583 | ) | (10,509,981 | ) | (4,893,625 | ) | ||||||||
| Foreign currency translation adjustment | - | - | - | - | ||||||||||||
| Total comprehensive loss | $ | (7,474,277 | ) | $ | (1,236,583 | ) | $ | (10,509,981 | ) | $ | (4,893,625 | ) | ||||
| Weighted average common shares outstanding — basic and diluted | 10,764,492 | 3,115,656 | 7,139,009 | 3,073,828 | ||||||||||||
| Net loss per common share — basic and diluted | $ | (0.69) | $ | (0.40) | $ | (1.47) | $ | (1.59) | ||||||||
See accompanying notes to these unaudited condensed consolidated financial statements.
| 3 |
Amass Brands, Inc. and Subsidiaries
Consolidated Statements of Stockholders’ Deficit
(Unaudited)
| Preferred
(Shares) | Preferred
(Amount) | Common
(Shares) | Common
(Amount) | Additional
Paid-in Capital | Accumulated
Other Comprehensive Income | Accumulated
Deficit | Non-controlling
Interest | Total Stockholders’ Equity (Deficit) | ||||||||||||||||||||||||||||
| Balances at December 31, 2024 | 21,706,939 | $ | 216 | 2,899,343 | $ | 29 | $ | 35,881,552 | $ | 57,459 | $ | (26,127,313 | ) | $ | 4,987,142 | $ | 14,799,085 | |||||||||||||||||||
| Exercise of stock options | - | - | 2,084 | - | 375 | - | - | - | 375 | |||||||||||||||||||||||||||
| Exercise of stock warrants | - | - | 214,229 | 2 | 51,406 | - | - | - | 51,408 | |||||||||||||||||||||||||||
| Stock-based compensation - options | - | - | - | - | 44,548 | - | - | - | 44,548 | |||||||||||||||||||||||||||
| Warrants issued with promissory notes payable | - | - | - | - | 615,427 | - | - | - | 615,427 | |||||||||||||||||||||||||||
| Offering costs | - | - | - | - | (106,970 | ) | - | - | - | (106,970 | ) | |||||||||||||||||||||||||
| Net loss (incl. NCI) | - | - | - | - | - | - | (3,657,042 | ) | (62,579 | ) | (3,719,621 | ) | ||||||||||||||||||||||||
| Balances at March 31, 2025 | 21,706,939 | 216 | 3,115,656 | 31 | 36,486,338 | 57,459 | (29,784,355 | ) | 4,924,563 | 11,684,252 | ||||||||||||||||||||||||||
| Stock-based compensation - options | - | - | - | - | 176,916 | - | - | - | 176,916 | |||||||||||||||||||||||||||
| Issuance of Common Stock | - | - | - | - | 470,759 | - | - | - | 470,759 | |||||||||||||||||||||||||||
| Offering costs | - | - | - | - | (289,785 | ) | - | - | - | (289,785 | ) | |||||||||||||||||||||||||
| Net loss (incl. NCI) | - | - | - | - | - | - | (1,236,583 | ) | (28,840 | ) | (1,265,423 | ) | ||||||||||||||||||||||||
| Balances at June 30, 2025 | 21,706,939 | $ | 216 | 3,115,656 | $ | 31 | $ | 36,844,228 | $ | 57,459 | $ | (31,020,938 | ) | $ | 4,895,723 | $ | 10,776,719 | |||||||||||||||||||
Preferred (Shares) |
|
|
Preferred (Amount) |
|
|
Common (Shares) |
|
|
Common (Amount) |
|
|
Additional Paid-in Capital |
Treasury
Stock (Shares) |
Treasury
Stock (Amount) |
Accumulated Other Comprehensive Income |
Accumulated Deficit |
|
|
Non-controlling Interest |
Total Stockholders’ Equity (Deficit) |
||||||||||||||||||||||||
| Balances at December 31, 2025 | 21,706,939 | $ | 216 | 3,364,984 | $ | 34 | $ | 37,661,354 | - | $ | - | $ | 55,172 | $ | (40,705,027 | ) | $ | 2,353,729 | $ | (634,522 | ) | |||||||||||||||||||||||
| Issuance of Common Stock for services | - | - | 77,776 | 1 | 693,658 | - | - | - | - | - | 693,659 | |||||||||||||||||||||||||||||||||
| Exercise of stock options | - | - | 4,667 | - | 1,260 | - | - | - | - | - | 1,260 | |||||||||||||||||||||||||||||||||
| Exercise of stock warrants | 740,328 | 7 | 222,026 | 2 | 986,217 | - | - | - | - | - | 986,226 | |||||||||||||||||||||||||||||||||
| Shares issued for extinguishment of interest payable | - | - | 86,342 | 1 | 276,474 | - | - | - | - | - | 276,475 | |||||||||||||||||||||||||||||||||
| Repurchase of Common Stock | - | - | - | - | - | (155,375 | ) | (1,393,713 | ) | - | - | - | (1,393,713 | ) | ||||||||||||||||||||||||||||||
| Stock-based compensation - options | - | - | - | - | 220,932 | - | - | - | - | - | 220,932 | |||||||||||||||||||||||||||||||||
| Offering costs | - | - | - | - | (37,315 | ) | - | - | - | - | - | (37,315 | ) | |||||||||||||||||||||||||||||||
| Net loss (incl. NCI) | - | - | - | - | - | - | - | - | (3,035,704 | ) | (5,901 | ) | (3,041,605 | ) | ||||||||||||||||||||||||||||||
| Balances at March 31, 2026 | 22,447,267 | 223 | 3,755,795 | 38 | 39,802,580 | (155,375 | ) | (1,393,713 | ) | 55,172 | (43,740,731 | ) | 2,347,828 | (2,928,603 | ) | |||||||||||||||||||||||||||||
| Conversion of Preferred Stock to Common Stock | (22,447,267 | ) | (223 | ) | 7,483,093 | 75 | 148 | - | - | - | - | - | - | |||||||||||||||||||||||||||||||
| Corrective issuance of Common Stock, net of cost | - | - | 1,805 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
| Conversion of convertible notes upon Direct Listing | - | - | 223,050 | 2 | 3,791,848 | - | - | - | - | - | 3,791,850 | |||||||||||||||||||||||||||||||||
| Exercise of stock warrants | - | - | 84,907 | 1 | 14,210 | - | - | - | - | - | 14,211 | |||||||||||||||||||||||||||||||||
| Exercise of stock options | - | - | 12,915 | - | 2,925 | - | - | - | - | - | 2,925 | |||||||||||||||||||||||||||||||||
| Warrants issued in connection with Series C Convertible Preferred Stock | - | - | - | - | 4,824,382 | - | - | - | - | - | 4,824,382 | |||||||||||||||||||||||||||||||||
| Issuance of Common Stock for services | - | - | 170,766 | 2 | 1,938,139 | - | - | - | - | - | 1,938,141 | |||||||||||||||||||||||||||||||||
| Stock-based compensation - options | - | - | - | - | 226,613 | - | - | - | - | - | 226,613 | |||||||||||||||||||||||||||||||||
| Offering costs | - | - | 28,125 | - | (272,893 | ) | - | - | - | - | - | (272,893 | ) | |||||||||||||||||||||||||||||||
| Stock warrant exercise inducement | - | - | - | - | 945,993 | - | - | - | - | - | 945,993 | |||||||||||||||||||||||||||||||||
| Net loss (incl. NCI) | - | - | - | - | - | - | - | - | (7,474,277 | ) | (74,938 | ) | (7,549,215 | ) | ||||||||||||||||||||||||||||||
| Balances at June 30, 2026 | - | $ | - | 11,760,456 | $ | 118 | $ | 51,273,945 | (155,375 | ) | $ | (1,393,713 | ) | $ | 55,172 | $ | (51,215,008 | ) | $ | 2,272,890 | $ | 993,404 | ||||||||||||||||||||||
See accompanying notes to these unaudited condensed consolidated financial statements.
| 4 |
Amass Brands, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
| Six months ended June 30, 2026 |
Six months ended June 30, 2025 |
|||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (10,590,822 | ) | $ | (4,985,044 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation and amortization | 269,607 | 335,137 | ||||||
| Stock-based compensation | 447,545 | 221,464 | ||||||
| Issuance of common stock shares for services | 2,631,799 | - | ||||||
| Amortization of debt discounts | 1,207,730 | 321,941 | ||||||
| Warrant modifications of the terminated inducement offering charged to operations | 514,313 | - | ||||||
| Reserve for expected credit losses | 17,864 | (10,298 | ) | |||||
| Impairment of intangible assets and investments | 449,685 | - | ||||||
| Change in fair value of derivative liabilities | (187,753 | ) | - | |||||
| Change in fair value of SAFE | 21,062 | - | ||||||
| Inventory obsolescence | 246,385 | 8,885 | ||||||
| Loss on sale of securities at fair value | - | 280,143 | ||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | (1,744,094 | ) | (825,207 | ) | ||||
| Inventory, net | (581,023 | ) | 2,907,233 | |||||
| Prepaid expenses and other current assets | (297,200 | ) | 11,733 | |||||
| Accounts payable | 1,359,803 | (654,654 | ) | |||||
| Accrued expenses | 173,882 | (728,991 | ) | |||||
| Interest receivable | - | (25,887 | ) | |||||
| Interest payable | 41,768 | 1,799,123 | ||||||
| Customer deposits | (3,162 | ) | - | |||||
| Contract liabilities | (108,942 | ) | (2,122 | ) | ||||
| Net cash used in operating activities | (6,131,553 | ) | (1,346,544 | ) | ||||
| Cash flows from investing activities | ||||||||
| Advances to related parties | (3,717 | ) | (87,686 | ) | ||||
| Sale of investment | - | 500,000 | ||||||
| Proceeds from notes receivable | - | 346,663 | ||||||
| Purchase of related-party investment | (1,786,593 | ) | - | |||||
| Purchases of property and equipment, net of disposals | - | 11,610 | ||||||
| Purchases / disposals of intangible assets, net | - | (17,470 | ) | |||||
| Net cash (used in) provided by investing activities | (1,790,310 | ) | 753,117 | |||||
| Cash flows from financing activities | ||||||||
| Proceeds from (repayments of) secured credit facility, net | 511,488 | (125,854 | ) | |||||
| Repayments of loans payable, net | (197,854 | ) | (137,959 | ) | ||||
| Proceeds from issuance of promissory notes | - | 945,000 | ||||||
| Proceeds from convertible notes, net | 1,351,675 | - | ||||||
| Proceeds from issuance of Series C Convertible Preferred Stock | 7,000,000 | - | ||||||
| Proceeds from issuance of Common Stock | - | 470,759 | ||||||
| Offering costs | (452,512 | ) | (396,755 | ) | ||||
| Proceeds from exercise of stock options | 4,184 | 375 | ||||||
| Proceeds from exercise of warrants | 850,437 | 51,406 | ||||||
| Obligation under repurchase agreement | (400,000 | ) | - | |||||
| Net cash provided by financing activities | 8,667,418 | 806,972 | ||||||
| Net change in cash and cash equivalents | 745,555 | 213,545 | ||||||
| Cash and cash equivalents, beginning of the period | 824,962 | 693,946 | ||||||
| Cash and cash equivalents, end of the period | $ | 1,570,517 | $ | 907,491 | ||||
| Supplemental Disclosure of Cash Flow Information | ||||||||
| Cash paid for income taxes | 9,373 | 13,833 | ||||||
| Cash paid for interest | 340,352 | 516,353 | ||||||
| Noncash Investing and Financing Activities | ||||||||
| Transfer of investment for relief of debt | - | 1,000,000 | ||||||
| Warrants issued with promissory notes | - | 615,427 | ||||||
| Exchange of shareholder promissory note for convertible note | 1,000,000 | - | ||||||
| Conversion of Convertible Notes and accrued interest into Common Stock | 3,791,850 | - | ||||||
| Common Stock issued as Series C commitment fee shares | 450,000 | - | ||||||
| Incremental fair value of Warrant modifications capitalized to deferred offering costs | 431,680 | - | ||||||
| Derivative recognized with Series C financing | 849,236 | - | ||||||
| Warrants issued with Series C Preferred Stock | 4,824,382 | - | ||||||
| Shares issued in extinguishment of accrued interest | 276,475 | - | ||||||
| Reclassification of securities pledged as collateral to investments at fair value upon De Soi collateral release | 3,347,564 | - | ||||||
| Issuance of SAFE for reduction of promissory note principal | - | 500,000 | ||||||
See accompanying notes to these unaudited condensed consolidated financial statements.
| 5 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Note 1 – Organization and Nature of Business
Amass Brands, Inc. (“Amass” or the “Company”), is a corporation formed on September 22, 2016, under the laws of the State of Delaware. Headquartered in Los Angeles, California, the Company sells primarily alcoholic and non-alcohol beverages through wholesale and online platforms globally.
In September 2024, the Company purchased 50.0001% of 222 Spirits Holdco, LLC, and its two wholly owned subsidiaries, 222 Spirits Company, LLC, and 222 Spirits Management Holdco, LLC (collectively, 222 Spirits), which is accounted for as a business acquisition.
On May 20, 2026, the Company’s common stock commenced trading on the Nasdaq Global Market under the ticker symbol “AMSS” pursuant to a direct listing (the “Direct Listing”). See Note 12.
Note 2 – Liquidity and Capital Resources
The Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company incurred losses and used cash flow from operations since inception and has limited available capital. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern for the next twelve months is dependent upon its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and/or to obtain additional working capital.
During the three months ended June 30, 2026, the Company completed its Direct Listing and received aggregate proceeds of $7,000,000 from the issuance of Series C Convertible Preferred Stock and the associated warrant at the First and Second Closings under the Streeterville Securities Purchase Agreement (see Note 12). The Company plans to raise additional capital as necessary to support its operating losses through the issuances of stock and loans, including additional purchases under the Streeterville facility, subject to the conditions described in Note 12. No assurances can be given that the Company will be successful in these efforts. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities as a result of this uncertainty.
Note 3 – Summary of Significant Accounting Policies
Basis of accounting – The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as found in the Accounting Standards Codification (“ASC”) of the Financial Accounting Standards Board (“FASB”). The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the SEC applicable to interim period financial statements and do not include all of the information and disclosures required by GAAP for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the financial position and the results of operations for the periods presented.
These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2025. Interim results are not necessarily indicative of the results that may be expected for a full year.
Concentrations of credit risk – Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company generally maintains balances in various operating accounts at financial institutions that management believes to be of high credit quality, in amounts that may, at times, exceed federally insured limits. The Company has not experienced any losses related to its cash and cash equivalents and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. As of June 30, 2026 and December 31, 2025, all the Company’s cash and cash equivalents were held at accredited financial institutions.
| 6 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Additionally, the Company had the following concentrations in net sales and accounts receivable during the three and six months ended June 30, 2026:
|
Three months ended June 30, 2026 |
Six months ended June 30, 2026 |
|||||||
| Customer A | ||||||||
| Net Sales | 12.4 | % | 13.7 | % | ||||
| Accounts Receivable | 16.2 | % | 16.2 | % | ||||
| Customer B | ||||||||
| Net Sales | 12.2 | % | 9.5 | % | ||||
| Accounts Receivable | 10.9 | % | 10.9 | % | ||||
Fair value measurements – Certain assets and liabilities of the Company are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:
| · | Level 1 – Quoted prices in active markets for identical assets or liabilities. |
| · | Level 2 – Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. |
| · | Level 3 – Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies, and similar techniques. |
Derivative liabilities, SAFEs, investments at fair value, and securities pledged as collateral are measured using Level 3 inputs. The following tables present changes in Level 3 assets and liabilities measured at fair value for the six months ended June 30, 2026. During the three months ended June 30, 2026, the De Soi collateral was released and the investment was reclassified from securities pledged as collateral to investments at fair value (see Notes 6 and 14):
| Investments at Fair Value / Securities Pledged as Collateral | Amount | |||
| Balance, December 31, 2025 (securities pledged as collateral) | 3,347,564 | |||
| Reclassification upon release of collateral (Q2 2026) | - | |||
| Balance, June 30, 2026 (investments at fair value) | $ | 3,347,564 | ||
| Derivative Liabilities at Fair Value | Amount | |||
| Balance, December 31, 2025 | 37,962 | |||
| Issuance of Convertible Notes and Warrants | 1,120,527 | |||
| Issuance of Series C Convertible Preferred Stock — conversion feature | 849,236 | |||
| Change in fair value | (187,753 | ) | ||
| Settlement upon conversion of Convertible Notes at the Direct Listing | (936,805 | ) | ||
| Balance, June 30, 2026 | $ | 883,167 | ||
| SAFEs at Fair Value | Amount | |||
| Balance, December 31, 2025 | 520,242 | |||
| Change in fair value | 21,062 | |||
| Balance, June 30, 2026 | $ | 541,304 | ||
There were no transfers between Levels 1, 2, or 3 during the six months ended June 30, 2026 nor June 30, 2025.
Valuation techniques and inputs, accounts receivable, property and equipment, intangible assets, impairment of long-lived assets, customer deposits, revenue recognition, cost of net revenues, sales and marketing expenses, net loss per share, and income taxes policies are consistent with those described in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 and the audited financial statements for the year ended December 31, 2025.
Accounts receivable – As of June 30, 2026 and December 31, 2025, the Company had a reserve for expected credit losses of $84,093 and $83,389, respectively.
Shipping, handling and advertising costs – Shipping and handling costs amounted to $206,851 and $144,315 for the three months ended June 30, 2026 and 2025, respectively, and $413,359 and $256,233 for the six months then ended. Advertising costs amounted to $169,994 and $28,989 for the three months ended June 30, 2026 and 2025, respectively, and $324,031 and $59,975 for the six months then ended.
Accounting pronouncements not yet adopted – In November 2024, the FASB issued a standard requiring disaggregated information about certain income statement expense line items to be disclosed on an annual and interim basis. We are required to adopt these disclosures for our annual period ending December 31, 2028, with early adoption permitted and this standard may be applied retrospectively. We expect this standard to impact our disclosures with no material impacts to our results of operations, cash flows, or financial condition. Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying consolidated financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.
| 7 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Note 4 – Inventory, net
Inventory, net consisted of the following as of June 30, 2026 and December 31, 2025:
| June 30, 2026 | December 31, 2025 | |||||||
| Raw materials | 2,471,428 | 2,490,030 | ||||||
| Work in process | 3,525,197 | 4,627,130 | ||||||
| Finished goods | 8,529,990 | 7,215,511 | ||||||
| Inventory reserve | (3,318,570 | ) | (3,459,263 | ) | ||||
| Total inventory | $ | 11,208,045 | $ | 10,873,408 | ||||
As of June 30, 2026 and December 31, 2025, the Company had no deposits for inventory purchases and production runs.
Note 5 – Long-Lived Assets
Property and equipment, net – Property and equipment, net consists of the following:
| June 30, 2026 | December 31, 2025 | |||||||
| Plant and equipment | 113,159 | 113,159 | ||||||
| Office and storage equipment | 288 | 288 | ||||||
| Furniture and fixtures | 468 | 468 | ||||||
| Leasehold improvements | 95,373 | 95,373 | ||||||
| Property and equipment, gross | 209,288 | 209,288 | ||||||
| Less: Accumulated depreciation and amortization | (204,244 | ) | (196,919 | ) | ||||
| Property and equipment, net | $ | 5,044 | $ | 12,369 | ||||
Depreciation expense of $3,244 and $26,144 was included in general and administrative expenses for the three months ended June 30, 2026 and 2025, respectively, and $7,325 and $51,789 for the six months then ended.
Intangible assets, net – Intangible assets, net consist of the following:
| June 30, 2026 | December 31, 2025 | |||||||
| Website development | 148,039 | 148,039 | ||||||
| Tradename/transferred IP | 353,223 | 457,116 | ||||||
| Customer base | 38,251 | 44,267 | ||||||
| Non-competes | 3,333 | 3,857 | ||||||
| Brand names | 3,264,000 | 3,264,000 | ||||||
| Intangible assets, gross | 3,806,846 | 3,917,279 | ||||||
| Less: Accumulated amortization | (1,976,951 | ) | (1,714,700 | ) | ||||
| Intangible assets, net | $ | 1,829,895 | $ | 2,202,579 | ||||
| Goodwill | $ | 2,972,280 | $ | 2,972,280 | ||||
Amortization expense was $129,143 and $158,724 for the three months ended June 30, 2026 and 2025, respectively, and $262,282 and $283,348 for the six months then ended, and is included in general and administrative expenses.
During the three months ended March 31, 2026, the Company recognized an impairment loss of $110,402 on the Gem&Bolt tradename, customer base, and non-competes following the cessation of Gem&Bolt production. No additional impairment of intangible assets or goodwill was recognized during the three months ended June 30, 2026; see Note 6 for the impairment of the Company’s investment in Full Glass recognized in the second quarter of 2026.
| 8 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Note 6 – Investments
De Soi – In August 2020, the Company entered into a joint venture to create De Soi, a celebrity-founded, non-alcoholic wine product company. The Company holds its interest in De Soi through AMASS De Soi Holdings LLC (“De Soi Holdings”). During 2025, the Company transferred its units of De Soi Holdings to AFTERDREAM, Inc. (“Afterdream”), a related party, in exchange for $400,000 in cash, with Afterdream pledging the underlying investment as collateral under a third-party secured promissory note and the Company recording a $400,000 obligation under a repurchase agreement (accounted for as a secured borrowing). In June 2026, the Company satisfied its repurchase commitment: Afterdream repaid the loan for which the De Soi equity served as collateral, the collateral was released and returned to the Company, and the obligation under the repurchase agreement was extinguished upon settlement of the $400,000 repurchase price plus accrued interest of $20,800. Accordingly, as of June 30, 2026 the investment is presented as investments at fair value ($3,347,564), compared to securities pledged as collateral at December 31, 2025 ($3,347,564). At the valuation dates of June 30, 2026 and December 31, 2025, management used the market approach to determine the fair value of the Company’s investment in De Soi of $3,347,564, which includes common stock and Series Seed holdings. See Note 3 for fair value measurement disclosures.
Full Glass – As partial consideration for the sale of the Winc.com DTC business unit, the Company received Common Units and warrants of the buyer. The investment is carried at cost and evaluated for impairment whenever a triggering event occurs. During the six months ended June 30, 2026, the Company received $395,250 as a deposit which was expected to reduce its investment in Full Glass; pending settlement. The deposit amounts received are presented within accrued expenses as of June 30, 2026. On July 29, 2026, the Company entered into a Side Letter Agreement with Full Glass under which a $406,000 deposit may, at Full Glass's election, be applied to the redemption of the Company's Series A Units and Common Units at $8.77 per unit (see Note 17). The Company concluded that the Side Letter Agreement provided additional evidence of conditions that existed as of the balance sheet date with respect to the recoverability of the investment and, accordingly, recognized an impairment loss of $339,283 during the three months ended June 30, 2026, reducing the carrying value of the investment to its estimated fair value based on the redemption terms provided in the Side Letter Agreement. As of June 30, 2026 and December 31, 2025, the carrying value of the investment was $406,000 and $745,283, respectively.
HpO – The Company received a 15% equity interest in Zerra Nutrition, Inc. (“HpO”) upon HpO’s formation in April 2025 for no consideration. During 2025, the Company made certain advances to HpO to support operations. In June 2026, the Company formalized the investment in a Simple Agreement for Future Equity (SAFE) issued by HpO for a purchase amount of up to $300,000 funded through July 2026. The SAFE is a post-money (valuation cap) instrument with a $5,000,000 post-money valuation cap and no discount, and is non-interest-bearing with no fixed maturity or repayment obligation. HpO is a related party because it is controlled by Geoff McFarlane, who is the majority owner and President of Resonant, an entity consolidated by the Company as a variable interest entity. The balance of the investment was $153,331 and $78,463 as of June 30, 2026 and December 31, 2025, respectively, presented within related-party investment at June 30, 2026 and within prepaid expenses and other current assets at December 31, 2025.
Afterdream SAFE – On June 16, 2026, the Company entered into a Simple Agreement for Future Equity (the “Afterdream SAFE”) with AFTERDREAM, Inc. (“Afterdream”), pursuant to which the Company invested $1,435,000 in exchange for the right to receive shares of Afterdream’s capital stock upon the occurrence of certain future events, with a post-money valuation cap of $7,500,000. Pursuant to Amendment No. 1 (June 17, 2026) and Amendment No. 2 (June 24, 2026), the purchase amount was increased to $1,535,000 and then to $1,735,000, with the valuation cap unchanged. Afterdream is a related party, as its majority owner is the Company’s CEO. As of June 30, 2026, the carrying value of the Afterdream SAFE investment was $1,735,000, presented as a related-party investment on the consolidated balance sheets.
The Company concluded that Afterdream is a variable interest entity in which the Company holds a variable interest but is not the primary beneficiary, because the Company does not have the power to direct the activities that most significantly affect Afterdream's economic performance. Accordingly, Afterdream is not consolidated. The SAFE does not meet the definition of a derivative, is not a debt security, and does not convey significant influence, and the Company therefore accounts for it under the measurement alternative in ASC 321 for equity securities without a readily determinable fair value: at cost, less impairment, adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer. No observable price changes and no impairment have been recognized on the investment through June 30, 2026, and cumulative impairment recognized to date is $0.
The Company's maximum exposure to loss in respect of Afterdream is limited to the funded purchase amount under the SAFE, which was $1,735,000 at June 30, 2026, and the carrying amount of the investment recorded on the consolidated balance sheet. The Company has no obligation to provide further financial support to Afterdream beyond the amounts already funded and has provided no guarantees on its behalf.
The Company assesses the investment qualitatively for impairment each reporting period. Indicators considered include Afterdream's ability to raise capital, changes in its regulatory environment (including the scheduled November 2026 federal enforcement date applicable to hemp-derived THC products), and any adverse change in its operating results or business plan. No impairment indicators were identified that required a reduction in the carrying amount at June 30, 2026.
Afterdream services – The Company previously provided operational and administrative services to Afterdream and discontinued those services in connection with its pursuit of a public listing. No services were provided to Afterdream during the three or six months ended June 30, 2026, and no services arrangement was in effect at June 30, 2026.
Note 7 – Contract Losses
The Company identified that evidence existed, including declining bulk wine market and demand concerns for finished goods wine, indicating that some of its long-term, unhedged purchase commitment contracts of bulk wine would incur losses in future periods. In accordance with ASC 330, Inventory, the Company records a provision when evidence exists that net realizable value is lower than the contractual price. The total liability associated with firm purchase commitment contracts was $2,933,102 and $3,042,044 as of June 30, 2026 and December 31, 2025, respectively, and is presented within contract liabilities on the consolidated balance sheets. No losses were incurred on the Full Glass supplier agreement during the six months ended June 30, 2026.
| 9 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Note 8 – Derivative Liabilities
The Company issued convertible notes with embedded conversion features and warrants. The embedded redemption features do not qualify for equity classification under ASC 815, Derivatives and Hedging, and were bifurcated and carried at fair value, and the associated warrants were recognized as liabilities, in each case with changes in fair value recorded in earnings.
Upon the consummation of the Direct Listing on May 20, 2026, the outstanding principal and accrued interest of the Convertible Notes automatically converted into shares of Common Stock at a price equal to 80% of the price paid by new investors in the qualified financing (see Notes 10 and 12), and the associated bifurcated conversion features were settled. As of June 30, 2026, derivative liabilities consist of the Series C Convertible Preferred Stock conversion feature derivative of $874,707 (see below) and warrant liabilities of $8,460 that remain outstanding. The carrying amount of the derivative liabilities was $883,167 and $37,962 as of June 30, 2026 and December 31, 2025, respectively. Changes in the fair value of derivative liabilities of $236,969 (net gain) and $0 were recognized for the three months ended June 30, 2026 and 2025, respectively, and $187,753 (net gain) and $0 for the six months then ended.
Series C Convertible Preferred Stock conversion feature – In connection with the issuance of 7,000 shares of Series C Convertible Preferred Stock at the Second Closing on May 20, 2026 (see Note 12), the Company evaluated the instrument’s conversion features under ASC 815, Derivatives and Hedging. Because the Series C Convertible Preferred Stock becomes convertible, after the earlier of six months from the listing date, a trigger event, or an event of default, at a variable price equal to the lesser of the Fixed Price and 90% of the lowest daily volume-weighted average price during the ten trading days prior to conversion (subject to a floor), the Company concluded that the conversion feature is required to be bifurcated from the host instrument and accounted for as a derivative liability at fair value, with changes in fair value recognized in earnings. At issuance, the Company allocated the proceeds as follows: $4,824,382 to the warrant issued to Streeterville (recorded within additional paid-in capital) based on a relative fair value basis, $849,236 to the conversion feature derivative at its issuance-date fair value, and issuance costs of $142,305 allocated to the Series C Convertible Preferred Stock. The net carrying value of the Series C Convertible Preferred Stock was $1,184,077 as of June 30, 2026 (see Note 12). During the three months ended June 30, 2026, the Company recognized a loss of $25,471 from the change in fair value of the conversion feature derivative, which had a carrying value of $874,707 as of June 30, 2026.
Note 9 – Debt
Secured credit facility – In September 2023, the Company entered into a Loan and Security Agreement to open a credit facility with a maximum aggregate principal amount of $8,000,000 (the ABL), reduced to $5,000,000 in 2026. Interest is accrued at the greater of (i) 12% and (ii) Prime Rate plus 3.75% per annum. Pursuant to the March 10, 2026 Credit Facility Amendment, the lender waived prior covenant defaults, the Tangible Working Capital and Tangible Net Worth covenants were reset to $2,500,000 each (tested quarterly), and the facility term was extended to September 30, 2026 with automatic one-year renewals. The outstanding balance on the ABL was $3,788,522 and $3,277,034 as of June 30, 2026 and December 31, 2025, respectively. The Company was in compliance with the Tangible Working Capital and Tangible Net Worth covenants, each of $2,500,000 and tested quarterly, as of June 30, 2026.
Loans payable – The Company’s SBA EIDL loan had an outstanding balance of $161,944 and $160,296, inclusive of accrued interest, as of June 30, 2026 and December 31, 2025, respectively. The loan matures thirty years from the effective date and bears interest at 3.75% per annum.
As of June 30, 2026 and December 31, 2025, the principal balance of Mezzanine Secured Notes was $200,000 and $297,854, respectively. The related-party balance of $97,854 was repaid in March 2026. In February 2026, the Company extinguished $276,475 of interest in exchange for the exercise of 65,509 shares of Common Stock warrants for $26,479 and 20,833 shares of Common Stock for $249,996. As of June 30, 2026 and December 31, 2025, the accrued interest balance of Mezzanine Secured Notes was $255,722 and $524,125, respectively; none of the accrued interest was due to a related party. The notes were past due but subsequently extended through July 2026; the extension expired in July 2026, and the notes were again past due as of the date these financial statements were available to be issued, while the Company remains in discussions with the holders regarding a further extension or repayment (see Note 17).
| 10 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
In April 2024, the Company issued a Secured Promissory Note with an original principal balance of $2,500,000. Following the January 2026 Amendment No. 3 (accounted for as a troubled debt restructuring under ASC 470-60, with a zero effective interest rate and future cash payments applied entirely as reductions of the carrying amount) and Amendment No. 4 (a $150,000 partial warrant exercise applied against principal), and after the May and June 2026 installments, eleven $50,000 monthly installments remain payable from July 2026 through May 2027, plus a $417,000 balloon payment at the June 30, 2027 maturity. The outstanding balance was $966,998 and $1,267,000 as of June 30, 2026 and December 31, 2025, respectively. The Secured Promissory Note is personally guaranteed by the Company's Chief Executive Officer.
Promissory notes payable – As of June 30, 2026 and December 31, 2025, the Company had promissory notes with a total outstanding principal balance of $1,650,000 and $2,650,000, respectively. The notes outstanding at June 30, 2026 accrue interest at a rate of 12% per annum and mature between August 2026 and September 2027. The December 31, 2025 balance also included the $1,000,000 note issued to a shareholder in January 2025, which was exchanged for a convertible note in February 2026 and converted into Common Stock upon the Direct Listing (see Note 10). Accrued interest payable on the notes was $153,548 and $149,758 at June 30, 2026 and December 31, 2025, respectively.
Note 10 – Convertible Debt
From November 2025 through March 2026, the Company issued unsecured convertible promissory notes (“Convertible Notes”) to investors in an aggregate principal amount of $2,766,316, bearing interest at 9% per annum. Of the Convertible Notes, $1,822,415 was issued to related parties. In connection with the issuances, the Company also issued warrants to purchase shares of common stock with an exercise price equal to the greater of $10.00 or the volume-weighted average trading price, exercisable following the Company’s listing on Nasdaq and expiring 180 days thereafter.
Upon the consummation of the Direct Listing on May 20, 2026, which constituted a qualified financing under the terms of the Convertible Notes, the outstanding principal and accrued interest automatically converted into 223,050 shares of Common Stock at a price equal to 80% of the price paid by new investors, and the remaining unamortized debt discount was charged to interest expense. As of June 30, 2026, no Convertible Notes remained outstanding, compared with a net carrying value of $378,725 at December 31, 2025. Interest expense recognized on the Convertible Notes (including accretion of discounts and the write-off of the unamortized discount upon conversion) was $1,067,965 and $0 for the three months ended June 30, 2026 and 2025, respectively.
Note 11 – Simple Agreement for Future Equity (“SAFE”)
In February 2025, the Company issued a Simple Agreement for Future Equity (“SAFE”) in Good Twin to an investor in exchange for $500,000, which was applied toward the repayment of amounts outstanding under a previously issued secured promissory note. The SAFE has a post-money valuation cap of $5.0 million, does not bear interest, and has no stated maturity date. The Company determined that the SAFE does not qualify for equity classification and records it as a liability at fair value, with changes in fair value recognized in earnings. As of June 30, 2026 and December 31, 2025, the carrying value of the SAFE was $541,304 and $520,242, respectively. No conversion or settlement events have occurred to date.
| 11 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Note 12 – Stockholders’ Equity
Direct Listing – On May 20, 2026, the Company’s common stock commenced trading on the Nasdaq Global Market under the ticker symbol “AMSS” pursuant to a direct listing registering the resale of up to 12,432,021 shares of common stock held by existing stockholders. The Direct Listing was not underwritten on a firm-commitment basis; the Company engaged a financial advisor in connection with the Direct Listing, as required by Nasdaq Rule 4120(c)(8).
Conversion of Preferred Stock – On April 8, 2026, concurrently with the initial public filing of the Company’s registration statement, all outstanding shares of the Company’s Series Seed, Series Seed-1 through Seed-5, Series A, and Series B-1 through B-3 Preferred Stock automatically converted into an aggregate of 7,483,093 shares of common stock pursuant to the mandatory conversion provisions of the Company’s Seventh Amended and Restated Certificate of Incorporation, filed with the Delaware Secretary of State on January 9, 2026. These conversions resulted in a reclassification within stockholders’ equity (deficit) with no income statement impact.
Eighth Amended and Restated Certificate of Incorporation – On April 30, 2026, the Company filed its Eighth Amended and Restated Certificate of Incorporation, which (i) removed the one-time operative provisions effected by the Seventh A&R Certificate and (ii) granted the Board of Directors the authority, by resolution, to designate one or more additional series of preferred stock and to fix the rights and preferences of each such series.
Series C Convertible Preferred Stock – Streeterville Private Placement – In connection with the Direct Listing, the Company completed a private placement with Streeterville Capital, LLC (“Streeterville”) pursuant to a Securities Purchase Agreement dated March 17, 2026, as amended by a Global Amendment dated April 7, 2026 (the “SPA”), providing for the issuance and sale of up to $30.0 million of Series C Convertible Preferred Stock across an initial closing and a subsequent closing. At the First Closing on April 8, 2026, the Company issued to Streeterville (i) 28,125 shares of common stock as commitment fee shares and (ii) a warrant to purchase up to 3,500,000 shares of common stock at an exercise price equal to $16.00 per share, exercisable through the fifth anniversary of the listing date, for which Streeterville paid a warrant purchase price of $10,000. At the Second Closing on May 20, 2026, the Company issued to Streeterville 7,000 shares of Series C Convertible Preferred Stock, for which Streeterville paid an aggregate purchase price of $6,990,000, less a $30,000 transaction expense amount. Each share of Series C Convertible Preferred Stock has a stated value of $1,086.96 per share. The Series C Convertible Preferred Stock has an aggregate liquidation value of $7,608,720, plus any accrued and unpaid preferred return. The aggregate proceeds from the First and Second Closings were $7,000,000 for issuance of the aforementioned securities. See Note 8 for discounts applied to the carrying balance related to warrants, derivative and offering costs.
The Series C Preferred Stock is convertible into common stock at an initial conversion price equal to the Nasdaq Valuation Price (the “Fixed Price”). After the earlier of (i) six months from the listing date, (ii) a trigger event, or (iii) an event of default, the conversion price becomes the lesser of the Fixed Price and 90% of the lowest daily volume-weighted average price during the ten trading days prior to conversion, subject to a floor price equal to 40% of the Nasdaq Valuation Price prior to the listing date and, thereafter, 40% of the “Minimum Price” (as defined in Nasdaq Rule 5635) calculated as of the most recent issuance date of Series C Convertible Preferred Stock, provided that in no event will the floor price be less than $4.00 per share. Conversions are subject to a 9.99% beneficial ownership limitation and the Exchange Cap under Nasdaq Rule 5635(d). Subsequent to the First Closing, the Company and Streeterville amended the exercise price of the warrant twice during the second quarter of 2026. Amendment No. 1, effective May 29, 2026, reduced the exercise price of the warrant from $16.00 to $5.00 per share for a period of 90 days from the effective date, and Amendment No. 2, effective June 12, 2026, further reduced it to $3.00 per share for a period of 90 days from that effective date. In each case the exercise price reverts to $16.00 per share upon the expiration or earlier termination of the reduced-price period, and the Company may terminate the reduced-price period at any time on two trading days' prior written notice. All other terms of the warrant remain unchanged. Each amendment became effective upon the filing of a related prospectus supplement. The Company accounted for each exercise-price reduction as a modification of an equity-classified instrument and recognized the incremental fair value of the modified warrant ($514,313 for Amendment No. 1 and $431,680 for Amendment No. 2) within additional paid-in capital. The incremental value of Amendment No. 1, which was superseded by Amendment No. 2, was charged to operations as failed offering costs of the terminated offering, and the incremental value of Amendment No. 2 is deferred as offering costs within prepaid expenses and other current assets as of June 30, 2026, pending the outcome of the inducement period. See Note 17 for a further amendment entered into after June 30, 2026. See Note 8 for discounts applies to the carrying balance related to warrants, derivative, and offering costs.
| 12 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Conversion of Convertible Notes – Upon the consummation of the Direct Listing, the Convertible Notes (aggregate principal of $2,766,316 plus accrued interest) automatically converted into 223,050 shares of Common Stock at a conversion price equal to 80% of the price paid in the qualified financing. See Note 10.
Regulation Crowdfunding – The Company opened a new Regulation Crowdfunding round in February 2026, which closed in April 2026. The Company did not receive funds on this round, net of costs.
Common stock – As of June 30, 2026, the Company was authorized to issue 250,000,000 shares of Common Stock with $0.00001 par value. As of June 30, 2026, 11,760,456 shares were issued and 11,605,081 shares were outstanding (net of 155,375 treasury shares); as of December 31, 2025, 3,364,984 shares were issued and outstanding. Each holder of common stock is entitled to one vote for each share held. No distributions have been made as of June 30, 2026.
Stock transactions for the three months ended June 30, 2026 – In addition to the preferred stock conversion, the Series C issuance, and the Convertible Note conversion, warrants were exercised for 84,907 shares of Common Stock, for which the Company received $14,211; 170,766 shares of Common Stock were issued for direct listing advisory fee services of $1,938,141 of Direct Listing advisory fees, which were recognized in general and administrative expenses; and 12,915 shares of Common Stock were issued upon the exercise of stock options for $2,925. During the three months ended March 31, 2026, the Company issued 77,776 shares of Common Stock as advisory shares (recognizing expense of $693,659), issued 4,667 shares of Common Stock upon the exercise of stock options for $1,260, and issued 740,328 shares of Series B-1 Preferred Stock and 222,026 shares of Common Stock upon the exercise of warrants for aggregate consideration of $986,226 (of which $150,000 was applied against loans payable).
The Company authorized and had outstanding the following shares as of June 30, 2026 and December 31, 2025:
|
June 30, 2026 Authorized |
June 30, 2026 Outstanding |
December 31, 2025 Authorized |
December 31, 2025 Outstanding |
|||||||||||||
| Common Stock | 250,000,000 | 11,605,081 | 63,500,000 | 3,273,965 | ||||||||||||
| Common Non-Voting Stock | - | - | 3,200,000 | 91,019 | ||||||||||||
| Series Seed Preferred Stock (all sub-series) | - | - | 12,529,020 | 12,529,020 | ||||||||||||
| Series A Preferred Stock | - | - | 873,734 | 873,734 | ||||||||||||
| Series B Preferred Stock (all sub-series) | - | - | 27,789,708 | 8,304,185 | ||||||||||||
| Series C Convertible Preferred Stock | 35,000 | 7,000 | - | - | ||||||||||||
| 13 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Note 13 – Stock Options and Warrants
In September 2016, the Company adopted the 2016 Stock Plan, as amended, which authorized 1,726,130 shares as of June 30, 2026. Stock options granted under the 2016 Plan typically vest over a four-year period with a one-year cliff.
| Options |
Weighted Average Exercise Price |
Intrinsic Value | ||||||||||
| Outstanding as of December 31, 2025 | 1,213,313 | $ | 0.21 | $ | 8,856,243 | |||||||
| Granted | — | — | ||||||||||
| Exercised | (17,582 | ) | $ | 0.24 | ||||||||
| Forfeited | (22,221 | ) | $ | 0.18 | ||||||||
| Outstanding as of June 30, 2026 | 1,173,510 | $ | 0.21 | $ | 2,160,068 | |||||||
| Exercisable as of June 30, 2026 | 774,791 | $ | 0.21 | $ | 1,428,393 | |||||||
Stock-based compensation expense for stock options of $226,613 and $176,916 was recognized for the three months ended June 30, 2026 and 2025, respectively, and $447,545 and $221,464 for the six months then ended, and is included in general and administrative expenses in the accompanying consolidated statements of operations. Total unrecognized compensation cost related to non-vested stock option awards amounted to $1,696,272 as of June 30, 2026.
Common Stock warrants – A summary of information related to Common Stock warrants for the six months ended June 30, 2026 is as follows:
| Shares | Weighted Average Exercise Price |
|||||||
| Outstanding as of December 31, 2025 | 716,816 | $ | 2.19 | |||||
| Granted | 3,629,063 | 15.59 | ||||||
| Exercised | (382,744 | ) | 0.94 | |||||
| Cancelled or expired | (106,447 | ) | 1.96 | |||||
| Outstanding as of June 30, 2026 | 3,856,688 | $ | 14.93 | |||||
| Exercisable as of June 30, 2026 | 3,856,688 | $ | 14.93 | |||||
Warrants granted during the period consist principally of the warrant to purchase up to 3,500,000 shares of Common Stock issued to Streeterville at the First Closing; the exercise price of the Streeterville warrant was modified during the second quarter of 2026 and again in July 2026 (see Notes 12 and 17). During the three months ended June 30, 2026, 91,884 warrant shares were exercised at a weighted average exercise price of $0.92, of which $14,211 was received in cash (settling into the issuance of 84,907 shares of Common Stock), and 106,447 warrants were cancelled or expired at a weighted average exercise price of $1.96. There were no preferred stock warrants outstanding at June 30, 2026; the 1,328,185 preferred stock warrants outstanding at December 31, 2025 were exercised or converted into Common Stock warrants during the first quarter of 2026.
Note 14 – Related-Party Transactions
The Company has entered into the following transactions with related parties. Amounts are as of, and for the periods ended, June 30, 2026 and December 31, 2025 (balance sheet) or June 30, 2026 and 2025 (results of operations), as applicable.
Due from related parties - co-founder advances
The Company’s co-founder received various advances from the Company. In January 2022, the Company entered into a loan agreement with the founder under which the outstanding balance accrued interest at 1.6% per annum. Interest earned on the advances was not material in any period presented. The net amount due from the founder was $0 and $1,389,996 as of June 30, 2026 and December 31, 2025, respectively. The advances were settled in March 2026 through the repurchase of 155,375 shares of Common Stock from the co-founder, at a price of $8.97 per share based on the Company’s most recent Regulation Crowdfunding sales price, resulting in treasury stock of $1,393,713. No amounts were outstanding at June 30, 2026.
AFTERDREAM, Inc. - services, De Soi secured borrowing and repurchase obligation
AFTERDREAM, Inc. (“Afterdream”) is a related party because its majority owner is the Company’s Chief Executive Officer. The Company previously provided certain operational and administrative services to Afterdream and discontinued those services in connection with its pursuit of a public listing, due to regulatory considerations associated with Nasdaq listing requirements relating to businesses operating in the hemp-derived cannabinoid space.
| 14 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
In connection with the termination and settlement of those services, during 2025 the Company transferred its units of AMASS De Soi Holdings LLC to Afterdream in exchange for $400,000 in cash and entered into a related repurchase obligation, accounted for as a secured borrowing. In June 2026, the collateral was released and the repurchase obligation was extinguished; the obligation was $0 and $400,000 as of June 30, 2026 and December 31, 2025, respectively. See Note 6 for a further description of these transactions.
AFTERDREAM, Inc. - Simple Agreement for Future Equity
On June 16, 2026, the Company entered into a Simple Agreement for Future Equity with Afterdream, as subsequently amended. As of June 30, 2026, the funded purchase amount and carrying value of the Afterdream SAFE investment was $1,735,000. See Note 6 for a further description.
Zerra Nutrition, Inc. (“HpO”)
HpO is a related party because it is controlled by Geoff McFarlane, who is the majority owner and President of Resonant, an entity the Company consolidates as a variable interest entity. The carrying value of the Company’s investment in HpO, formalized in June 2026 as a Simple Agreement for Future Equity, was $153,331 and $78,463 as of June 30, 2026 and December 31, 2025, respectively. See Note 6 for a further description.
Mezzanine Secured Notes - related-party holder
One of the three Mezzanine Secured Notes was held by a related party; the related-party principal balance ($97,854 at December 31, 2025) was repaid in full in March 2026, and none of the accrued interest was due to a related party at either date. See Note 9 for a further description of the Mezzanine Secured Notes.
Promissory note - greater-than-5% shareholder
In January 2025, the Company issued a promissory note with a principal balance of $1,000,000 to a shareholder holding greater than 5% of the Company’s outstanding stock. The note was exchanged for a convertible promissory note in February 2026 and, upon the consummation of the Direct Listing on May 20, 2026, converted into shares of Common Stock. The outstanding balance was $0 and $1,000,000 as of June 30, 2026 and December 31, 2025, respectively. See Notes 9 and 10 for a further description of these transactions.
Convertible notes issued to related parties
Of the $2,766,316 aggregate principal amount of Convertible Notes issued from November 2025 through March 2026, $1,822,415 was issued to related parties, including $1,000,000 to MVL Inc. (f/k/a Alchemi Project Inc.). Accrued interest due to related parties was $32,838 at March 31, 2026. Upon the consummation of the Direct Listing on May 20, 2026, all Convertible Notes, including those held by related parties, automatically converted into shares of Common Stock at a price equal to 80% of the price paid by new investors in the qualified financing. No Convertible Notes were outstanding at June 30, 2026. See Notes 10 and 12.
| 15 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Equity transactions with related parties
During the three months ended March 31, 2026, 362,653 shares of Series B-1 Preferred Stock were issued upon the exercise of warrants by related parties for aggregate proceeds of $378,000. Those shares converted into Common Stock upon the Direct Listing together with all other outstanding preferred stock. See Note 12.
Resonant Subholdings Inc.
Resonant is consolidated by the Company as a variable interest entity. Its majority owner and President, Geoff McFarlane, also controls HpO, and Resonant is a party to the Secured Promissory Note amendments described in Note 9.
Note 15 – Commitments and Contingencies
Lease commitments – The Company leases its Santa Maria, CA warehouse under a one-year lease renewed in January 2026, with an obligation of $42,248 per month through December 2026. The Company is currently operating without a corporate office lease. For the three months ended June 30, 2026 and 2025, the Company incurred office rent expense of $16,229 and $27,084, respectively, and warehouse rent expense of $144,702 and $133,827, respectively. For the six months ended June 30, 2026 and 2025, office rent expense was $29,587 and $72,472, respectively, and warehouse rent expense was $297,871 and $344,495, respectively. No material obligations exist on the Company’s current operating leases beyond the Santa Maria lease as of June 30, 2026.
Contingencies – The Company may be subject to pending legal proceedings and regulatory actions in the ordinary course of business. The results of such proceedings cannot be predicted with certainty, but the Company does not anticipate that the final outcome, if any, arising out of any such matters will have a material adverse effect on its business, financial condition, or results of operations.
| 16 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Note 16 – Business Segment Information
During the second quarter of 2026, in connection with the Company becoming a public company and the continued growth of its functional non-alcoholic beverage business, the Company’s Chief Executive Officer, its Chief Operating Decision Maker (“CODM”), realigned the Company’s internal management financial reporting. The Company now reports its operating results in two reportable segments: (i) Wine & Spirits and (ii) Non-Alcoholic and Functional. The Wine & Spirits segment comprises the Company’s alcoholic wine portfolio (including Summer Water, Pizzolato MUSE, and the Natural Merchants and AMASS wine brands) and its spirits portfolio (AMASS spirits, GEM&BOLT mezcal, and Calirosa tequila). The Non-Alcoholic and Functional segment comprises the Company’s functional non-alcoholic beverage brands: Good Twin non-alcoholic wine and AMASS Electrolytes. Prior-period segment information has been recast to conform to the new segment presentation. In prior filings, the Company reported two segments, Wine and Spirits, with the non-alcoholic businesses included within those segments.
The business segments reflect how our operations are managed, how resources are allocated, how operating performance is evaluated by senior management, and the structure of our internal financial reporting. Management excludes certain non-GAAP Comparable Adjustments from its evaluation of the results of each operating segment as these Comparable Adjustments are not reflective of core operations of the segments. Certain items such as costs related to corporate communications, development, finance, strategy and growth, executive management, human resources, investor relations, IT, and legal are general costs applicable to the consolidated group and are not allocated to the reportable segments. The accounting policies of the segments are the same as those described in Note 3. These Comparable Adjustments reflect the measure used by our chief operating decision maker to evaluate segment performance under ASC 280, and are narrower than the adjustments used in computing Adjusted EBITDA under “Adjusted EBITDA” below; the additional Adjusted EBITDA adjustments (such as inventory write-downs and variance, juice storage and one-off direct-listing costs) remain within segment and unallocated results in the tables that follow.
Segment information is as follows:
| For the three months ended June 30, 2026 |
Wine & Spirits |
Non- Alcoholic and Functional |
Total segment (a) |
Unallocated amounts (b) |
Comparable Adjustments (c) |
Consolidated | ||||||||||||||||||
| Net revenues | 5,183,325 | 409,419 | 5,592,744 | - | - | 5,592,744 | ||||||||||||||||||
| Cost of net revenues | 3,762,613 | 334,582 | 4,097,195 | - | - | 4,097,195 | ||||||||||||||||||
| Gross profit, non-GAAP (d) | 1,420,712 | 74,837 | 1,495,549 | - | - | 1,495,549 | ||||||||||||||||||
| Sales and marketing | 773,713 | 207,446 | 981,159 | 78,718 | - | 1,059,877 | ||||||||||||||||||
| General and administrative | 921,103 | 178,845 | 1,099,948 | 4,727,627 | 226,613 | 6,054,188 | ||||||||||||||||||
| Impairment loss | - | - | - | - | 339,283 | 339,283 | ||||||||||||||||||
| Loss from operations | (274,104 | ) | (311,454 | ) | (585,558 | ) | (4,806,345 | ) | (565,896 | ) | (5,957,799 | ) | ||||||||||||
| For the three months ended June 30, 2025 |
Wine & Spirits |
Non- Alcoholic and Functional |
Total segment (a) |
Unallocated amounts (b) |
Comparable Adjustments (c) |
Consolidated | ||||||||||||||||||
| Net revenues | 5,318,393 | 176,438 | 5,494,831 | 10,001 | - | 5,504,832 | ||||||||||||||||||
| Cost of net revenues | 3,245,124 | 115,155 | 3,360,279 | - | - | 3,360,279 | ||||||||||||||||||
| Gross profit, non-GAAP (d) | 2,073,269 | 61,283 | 2,134,552 | 10,001 | - | 2,144,553 | ||||||||||||||||||
| Sales and marketing | 943,782 | 31,973 | 975,755 | 620 | - | 976,375 | ||||||||||||||||||
| General and administrative | 1,003,169 | 32,970 | 1,036,139 | 615,952 | 265,101 | 1,917,192 | ||||||||||||||||||
| Impairment loss | - | - | - | - | - | - | ||||||||||||||||||
| Income (loss) from operations | 126,318 | (3,660 | ) | 122,658 | (606,571 | ) | (265,101 | ) | (749,014 | ) | ||||||||||||||
| 17 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
| For the six months ended June 30, 2026 |
Wine & Spirits |
Non- Alcoholic and Functional |
Total segment (a) |
Unallocated amounts (b) |
Comparable Adjustments (c) |
Consolidated | ||||||||||||||||||
| Net revenues | 8,809,142 | 932,945 | 9,742,087 | - | - | 9,742,087 | ||||||||||||||||||
| Cost of net revenues | 6,450,375 | 723,221 | 7,173,596 | - | - | 7,173,596 | ||||||||||||||||||
| Gross profit, non-GAAP (d) | 2,358,767 | 209,724 | 2,568,491 | - | - | 2,568,491 | ||||||||||||||||||
| Sales and marketing | 1,495,438 | 415,168 | 1,910,606 | 116,748 | - | 2,027,354 | ||||||||||||||||||
| General and administrative | 1,750,715 | 324,748 | 2,075,463 | 6,047,985 | 447,545 | 8,570,993 | ||||||||||||||||||
| Impairment loss | - | - | - | - | 449,685 | 449,685 | ||||||||||||||||||
| Loss from operations | (887,386 | ) | (530,192 | ) | (1,417,578 | ) | (6,164,733 | ) | (897,230 | ) | (8,479,541 | ) | ||||||||||||
| For the six months ended June 30, 2025 |
Wine & Spirits |
Non- Alcoholic and Functional |
Total segment (a) |
Unallocated amounts (b) |
Comparable Adjustments (c) |
Consolidated | ||||||||||||||||||
| Net revenues | 9,306,617 | 400,022 | 9,706,639 | 10,000 | 128,736 | 9,845,375 | ||||||||||||||||||
| Cost of net revenues | 5,906,329 | 264,289 | 6,170,618 | (50 | ) | 315,495 | 6,486,063 | |||||||||||||||||
| Gross profit, non-GAAP (d) | 3,400,288 | 135,733 | 3,536,021 | 10,050 | (186,759 | ) | 3,359,312 | |||||||||||||||||
| Sales and marketing | 1,840,388 | 117,686 | 1,958,074 | 11,706 | - | 1,969,780 | ||||||||||||||||||
| General and administrative | 2,386,219 | 99,981 | 2,486,200 | 1,181,284 | 367,808 | 4,035,292 | ||||||||||||||||||
| Impairment loss | - | - | - | - | - | - | ||||||||||||||||||
| Loss from operations | (826,319 | ) | (81,934 | ) | (908,253 | ) | (1,182,940 | ) | (554,567 | ) | (2,645,760 | ) | ||||||||||||
| (a) | Segment amounts are derived from the Company’s entity- and brand-level general ledger reporting: the Non-Alcoholic and Functional segment reflects the Good Twin brand activity and the Amass Electrolyte entity; the Wine & Spirits segment reflects the remaining operating entities. |
| (b) | Unallocated amounts include costs held in the corporate infrastructure that are not allocated to any reporting segment. |
| (c) | Comparable Adjustments are determined and presented on a non-GAAP basis and are intended to reflect our current operations. For 2026 they comprise stock-based compensation and impairment losses; for 2025 they comprise bulk wine sales and related costs and storage, and stock-based compensation. |
| (d) | Our presentation of gross profit is non-GAAP. Segment gross profit is reconciled to gross profit on the consolidated statement of operations with the inclusion of unallocated amounts and comparable adjustments. |
Comparable adjustments were as follows:
|
Three months ended June 30, 2026 |
Three months ended June 30, 2025 |
Six months ended June 30, 2026 |
Six months ended June 30, 2025 |
|||||||||||||
| Net revenues — sales of bulk wine (a) | - | - | - | 128,736 | ||||||||||||
| Cost of net revenues — bulk wine and write-downs (a) | - | - | - | 315,495 | ||||||||||||
| General and administrative — stock-based compensation (b) | 226,613 | 176,916 | 447,545 | 221,464 | ||||||||||||
| General and administrative — storage on bulk wine (a) | - | 88,185 | - | 146,344 | ||||||||||||
| Impairment loss (b) | 339,283 | - | 449,685 | - | ||||||||||||
| Comparable adjustments, Operating loss | (565,896 | ) | (265,101 | ) | (897,230 | ) | (554,567 | ) | ||||||||
| (a) | The Company sold and is expected to sell excess bulk wine for losses. These are not part of the Company’s regular operations and thus are excluded from the CODM’s review of the business, including related storage costs. |
| (b) | The Company does not include stock-based compensation nor impairment losses in its evaluation of performance. |
| 18 |
Amass Brands, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Our principal area of operation is in the U.S. Current operations for one of the spirits brands is in Mexico. Revenues are attributed to countries based on the location of the customer. Geographic data is as follows:
|
Three months ended June 30, 2026 |
Three months ended June 30, 2025 |
Six months ended June 30, 2026 |
Six months ended June 30, 2025 |
|||||||||||||
| Net revenues | ||||||||||||||||
| U.S. | 5,558,666 | 5,490,048 | 9,697,105 | 9,827,588 | ||||||||||||
| Non-U.S. | 34,078 | 14,784 | 44,982 | 17,787 | ||||||||||||
| Total net revenues | $ | 5,592,744 | $ | 5,504,832 | $ | 9,742,087 | $ | 9,845,375 | ||||||||
Note 17 – Subsequent Events
The Company evaluated subsequent events through August 14, 2026, the date these financial statements were issued.
HpO SAFE – Fundings under the HpO SAFE (up to $300,000) continued
through July 2026. See Note 6.
Streeterville warrant – Effective July 10, 2026, the Company and Streeterville entered into Amendment No. 3 to the common stock
purchase warrant issued at the First Closing, reducing the exercise price from $16.00 to $1.50 per share for a period of 30 days from
the effective date, after which the exercise price reverts to $16.00 per share. All other terms of the warrant remain unchanged. See Notes
12 and 13.
Nasdaq continued listing notices – On July 22, 2026, the Company received two notification letters from the Listing Qualifications Department of The Nasdaq Stock Market notifying the Company that, for the 30 consecutive business days from June 8, 2026 through July 21, 2026, the market value of the Company’s listed securities was below the $50,000,000 minimum required by Nasdaq Listing Rule 5450(b)(2)(A) and the market value of its publicly held shares was below the $15,000,000 minimum required by Nasdaq Listing Rules 5450(b)(2)(C) and 5450(b)(3)(C). The notices have no immediate effect on the listing or trading of the Common Stock. The Company has 180 calendar days, or until January 19, 2027, to regain compliance, and intends to monitor its market values and evaluate available options, including, if appropriate, applying to transfer its securities to The Nasdaq Capital Market. The Company reported the notices on a Current Report on Form 8-K filed July 27, 2026.
Series C Trigger Event – Receipt of the Nasdaq notification letters constituted a Trigger Event under the Series C Certificate of Designation. Following a Trigger Event, the Series C conversion price becomes the lesser of the Fixed Price and 90% of the lowest daily volume-weighted average price during the ten trading days prior to conversion, subject to the $4.00 floor price.
Full Glass Side Letter Agreement – On July 29, 2026, the Company entered into a Side Letter Agreement with Full Glass Wine Co., LLC and Full Glass – Licensing, LLC that modifies and ultimately terminates the Multi-Year Wine Purchase Agreement dated February 29, 2024, replacing Full Glass – Licensing’s remaining $4.0 million inventory purchase obligation with a settlement amount of $427,000, of which $406,000 constitutes a deposit that may, at Full Glass’s election, be applied to the redemption of the Company’s Series A Units and Common Units in Full Glass at $8.77 per unit, with or without an accompanying wine purchase. The parties exchanged mutual releases, and the Company acknowledged payoff of the Amended and Restated Secured Promissory Note dated February 29, 2024. Because the Side Letter Agreement provided additional evidence about the recoverability of the Company’s investment in Full Glass as of the balance sheet date, the Company recognized the related impairment loss of $339,283 in the three months ended June 30, 2026 (see Note 6). The Company reported the Side Letter Agreement on a Current Report on Form 8-K filed August 5, 2026. See Note 6.
Mezzanine Secured Notes – The extension of the Mezzanine Secured Notes expired in July 2026, and the notes were past due as of the date of this Report; the Company remains in discussions with the holders regarding a further extension or repayment. See Note 9.
Registration statements – The Company’s resale registration statement was declared effective on July 6, 2026, and on July 20, 2026 the Company filed a registration statement on Form S-8 registering shares issuable under the AMASS Brands Inc. 2026 Omnibus Incentive Plan.
| 19 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of our Prospectuses dated May 18, 2026 and July 6, 2026, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
This MD&A, which should be read in conjunction with our financial statements, is organized as follows: Overview: a general description of our business, which we believe is important in understanding the results of our operations, financial condition, and potential future trends. Strategy: a description of our strategy and a discussion of recent developments, and significant divestitures, acquisitions, and investments. Recent developments: a summary of the material transactions and events that occurred during, or shortly after, the three months ended June 30, 2026. Results of operations: an analysis of our results of operations presented on a business segment basis, including Adjusted EBITDA, a non-GAAP measure. Liquidity and capital resources: an analysis of our cash flows, outstanding debt, liquidity position, and commitments. Critical accounting policies and estimates: accounting policies that are considered important to our results of operations and financial condition, require significant judgment, and involve significant management estimates. Emerging Growth Company and Smaller Reporting Company Status: a discussion of our reporting status.
Overview
We are a consumer packaged goods company focused on developing, marketing, and distributing a portfolio of premium beverage brands across the wine, spirits, and functional non-alcoholic categories with the ethos of meeting the needs of the modern day consumer. Our products are primarily sold through a three-tier system to wholesale distributors, who then sell to retailers, bars, and restaurants, as well as directly to consumers through our e-commerce platforms. Our direct-to-consumer and e-commerce channel is growing, led by our non-alcoholic brands (Good Twin, which sells through its own e-commerce store and digital marketplaces, and AMASS Electrolytes, which launched direct-to-consumer during the second quarter of 2026), and we expect to continue developing direct sales alongside our three-tier wholesale distribution. Beginning in the second quarter of 2026, we report our operating results in two segments: (i) Wine & Spirits, comprising our alcoholic wine and spirits portfolios, and (ii) Non-Alcoholic and Functional, comprising our functional non-alcoholic beverage brands Good Twin and AMASS Electrolytes. Prior-period segment information has been recast to the new basis. See Note 16 to our unaudited condensed consolidated financial statements.
Geographic Markets
Substantially all of our net revenues are currently generated in the United States, which represents our primary market across our spirits, wine, and non-alcoholic beverage portfolios. Certain of our agave-based spirits products are produced in Mexico by our fully owned Mexican subsidiary and third-party production arrangements, but we do not currently operate material direct sales or distribution operations outside the United States.
Strategy
Our long-term strategy, customer and market environment, marketing, sales, and distribution is unchanged from the strategy described in the S-1/A. Within the Wine & Spirits segment, our wine strategy is centered on generating consistent cash flow while preserving market positioning and selectively growing key brands that drive long-term enterprise value, and our spirits strategy reflects a disciplined approach, with a near-term deprioritization in 2026 as we position the business for renewed growth in subsequent periods. In the Non-Alcoholic and Functional segment, we are investing behind Good Twin and the launch of AMASS Electrolytes to build our position in the functional non-alcoholic category. In the second quarter of 2026, we completed the Direct Listing of our common stock on the Nasdaq Global Market.
| 20 |
Recent Developments
| · | Direct Listing (May 20, 2026). On May 20, 2026, our common stock commenced trading on the Nasdaq Global Market under the ticker symbol “AMSS” pursuant to a direct listing registering the resale of up to 12,432,021 shares of common stock held by existing stockholders. We engaged a financial advisor in connection with the Direct Listing, as required by Nasdaq Rule 4120(c)(8). |
| · | Conversion of Preferred Stock (April 2026). On April 8, 2026, concurrently with the initial public filing of our registration statement, all outstanding shares of our Series Seed, Seed-1 through Seed-5, Series A, and Series B-1 through B-3 Preferred Stock automatically converted into an aggregate of 7,483,093 shares of common stock pursuant to our Seventh Amended and Restated Certificate of Incorporation. |
| · | Streeterville Series C Private Placement (April–May 2026). At the First Closing on April 8, 2026, we issued 28,125 commitment fee shares and a warrant to purchase up to 3,500,000 shares of common stock (warrant purchase price $10,000). At the Second Closing on May 20, 2026, we issued 7,000 shares of Series C Convertible Preferred Stock for $6,990,000, less a $30,000 transaction expense deduction, under the SPA (aggregate proceeds from the First and Second Closings, including the $10,000 warrant purchase price, were $7.0 million), which provides for up to $30.0 million of Series C purchases, subject to conditions. See Note 12. |
| · | Conversion of Convertible Notes (May 20, 2026). Upon the Direct Listing, which constituted a qualified financing under the notes, the outstanding principal of $2.8 million plus accrued interest automatically converted into shares of common stock at 80% of the qualified-financing price, and the remaining unamortized debt discount was charged to interest expense. See Note 10. |
| · | Secured Promissory Note installments commenced (May 2026). We made the first two $50,000 monthly installments under Amendment No. 3, reducing the outstanding balance to $966,998 at June 30, 2026. |
| · | De Soi collateral released (June 2026). Afterdream repaid the loan for which our De Soi investment served as collateral; the investment was returned to us, the $400,000 repurchase obligation was extinguished, and the investment is again presented as investments at fair value. See Notes 6 and 14. |
| · | Afterdream SAFE (June 2026). We invested an aggregate of $1.7 million in a SAFE issued by AFTERDREAM, Inc., a related party, with a $7.5 million post-money valuation cap. See Note 6. |
| · | Nasdaq continued-listing notices; Series C Trigger Event (July 2026). On July 22, 2026, we received notices from Nasdaq stating that we are not in compliance with the minimum Market Value of Listed Securities and minimum Market Value of Publicly Held Shares requirements for continued listing on the Nasdaq Global Market, with a 180-calendar-day period to regain compliance. Receipt of the notices constituted a Trigger Event under the Series C Certificate of Designation, permitting conversions of the Series C Convertible Preferred Stock at the alternate conversion price described under “Liquidity and capital resources” below. In addition, effective July 10, 2026, the exercise price of the Streeterville warrant was reduced to $1.50 per share, and the extension of the Mezzanine Secured Notes expired in July 2026, with the notes past due as of the date of this Report. See Notes 9, 13 and 17 to our unaudited condensed consolidated financial statements. |
| 21 |
Results of Operations
The following table highlights summarized components of our unaudited consolidated statements of operations for the three months ended June 30, 2026 compared to three months ended June 30, 2025:
|
Three months ended June 30, 2026 |
Three months ended June 30, 2025 |
Dollar Change |
Percent Change |
|||||||||||||
| Net revenue | 5,592,744 | 5,504,832 | 87,912 | 2 | % | |||||||||||
| Cost of net revenue | 4,097,195 | 3,360,279 | 736,916 | 22 | % | |||||||||||
| Gross profit | 1,495,549 | 2,144,553 | (649,004 | ) | -30 | % | ||||||||||
| Sales and marketing | 1,059,877 | 976,375 | 83,502 | 9 | % | |||||||||||
| General and administrative | 6,054,188 | 1,917,192 | 4,136,996 | 216 | % | |||||||||||
| Impairment expense | 339,283 | - | 339,283 | N/A | ||||||||||||
| Total operating expenses | 7,453,348 | 2,893,567 | 4,559,781 | 158 | % | |||||||||||
| Loss from operations | (5,957,799 | ) | (749,014 | ) | (5,208,785 | ) | 695 | % | ||||||||
| Other income (expense) | (1,591,416 | ) | (516,409 | ) | (1,075,007 | ) | 208 | % | ||||||||
| Net loss | (7,549,215 | ) | (1,265,423 | ) | (6,283,792 | ) | 497 | % | ||||||||
The following table highlights summarized components of our unaudited consolidated statements of operations for the six months ended June 30, 2026 compared to six months ended June 30, 2025:
|
Six months ended June 30, 2026 |
Six months ended June 30, 2025 |
Dollar Change |
Percent Change |
|||||||||||||
| Net revenue | 9,742,087 | 9,845,375 | (103,288 | ) | -1 | % | ||||||||||
| Cost of net revenue | 7,173,596 | 6,486,063 | 687,533 | 11 | % | |||||||||||
| Gross profit | 2,568,491 | 3,359,312 | (790,821 | ) | -24 | % | ||||||||||
| Sales and marketing | 2,027,354 | 1,969,780 | 57,574 | 3 | % | |||||||||||
| General and administrative | 8,570,993 | 4,035,292 | 4,535,701 | 112 | % | |||||||||||
| Impairment expense | 449,685 | - | 449,685 | N/A | ||||||||||||
| Total operating expenses | 11,048,032 | 6,005,072 | 5,042,960 | 84 | % | |||||||||||
| Loss from operations | (8,479,541 | ) | (2,645,760 | ) | (5,833,781 | ) | 220 | % | ||||||||
| Other income (expense) | (2,111,281 | ) | (2,339,284 | ) | 228,003 | -10 | % | |||||||||
| Net loss | (10,590,822 | ) | (4,985,044 | ) | (5,605,778 | ) | 112 | % | ||||||||
Comparable Adjustments
Management excludes items that affect comparability from its evaluation of the results of each operating segment as these Comparable Adjustments are not reflective of core operations of the segments. Segment operating performance and the incentive compensation of segment management are evaluated based on core segment operating loss which does not include the impact of these Comparable Adjustments.
As more fully described herein and in the related Notes, the Comparable Adjustments that impacted comparability in our segment results for each period are as follows:
|
Three months ended June 30, 2026 |
Three months ended June 30, 2025 |
Six months ended June 30, 2026 |
Six months ended June 30, 2025 |
|||||||||||||
| Net revenues | ||||||||||||||||
| Sales of bulk wine (a) | - | - | - | 128,736 | ||||||||||||
| Comparable adjustments, Net revenues | - | - | - | 128,736 | ||||||||||||
| Cost of net revenues | ||||||||||||||||
| Cost of sales of bulk wine (a) | - | - | - | 146,565 | ||||||||||||
| Cost of write-down of unutilized wine pre-acquisition (b) | - | - | - | 168,930 | ||||||||||||
| Comparable adjustments, Cost of net revenues | - | - | - | 315,495 | ||||||||||||
| General and administrative | ||||||||||||||||
| Stock-based compensation (c) | 226,613 | 176,916 | 447,545 | 221,464 | ||||||||||||
| Storage on bulk wine (a) | - | 88,185 | - | 146,344 | ||||||||||||
| Comparable adjustments, general and administrative | 226,613 | 265,101 | 447,545 | 367,808 | ||||||||||||
| Impairment loss (d) | 339,283 | - | 449,685 | - | ||||||||||||
| Comparable adjustments, Operating loss | (565,896 | ) | (265,101 | ) | (897,230 | ) | (554,567 | ) | ||||||||
(a) Sales from divested business unit relates to the sale of Winc.com in June 2023. All of those revenues pre-sale and associated costs are not part of our recurring business and are thus excluded from what the CODM views as regular operations, including storage costs incurred on the excess bulk wine. Operating expenses related to these revenues are also excluded from performance evaluations for the segments.
(b) The Company wrote-down inventory that was acquired as part of the Winc acquisition in 2023. When the Company sold the winc.com business, it lost its ability to sell wine unwanted on the wholesale channel through the winc.com channel. As such, excess bulk wine that was identified and written down was not considered to be a core/recurring operation for the business.
(c) The Company does not include stock-based compensation in its evaluation of performance.
(d) The Company does not include impairment loss in its evaluation of performance.
| 22 |
Business Segments
Net revenue
|
Three months ended June 30, 2026 |
Three months ended June 30, 2025 |
Dollar Change |
Percent Change |
|||||||||||||
| Wine & Spirits | 5,183,325 | 5,318,393 | (135,068 | ) | -3 | % | ||||||||||
| Non-Alcoholic and Functional | 409,419 | 176,438 | 232,981 | 132 | % | |||||||||||
| Unallocated amounts | - | 10,001 | (10,001 | ) | -100 | % | ||||||||||
| Comparable adjustments | - | - | - | N/A | ||||||||||||
| Consolidated net revenues | 5,592,744 | 5,504,832 | 87,912 | 2 | % | |||||||||||
|
Six months ended June 30, 2026 |
Six months ended June 30, 2025 |
Dollar Change |
Percent Change |
|||||||||||||
| Wine & Spirits | 8,809,142 | 9,306,617 | (497,475 | ) | -5 | % | ||||||||||
| Non-Alcoholic and Functional | 932,945 | 400,022 | 532,923 | 133 | % | |||||||||||
| Unallocated amounts | - | 10,000 | (10,000 | ) | -100 | % | ||||||||||
| Comparable adjustments | - | 128,736 | (128,736 | ) | -100 | % | ||||||||||
| Consolidated net revenues | 9,742,087 | 9,845,375 | (103,288 | ) | -1 | % | ||||||||||
Non-Alcoholic and Functional net revenues more than doubled to $0.4 million for the second quarter of 2026 (up 132% from $0.2 million in the prior-year quarter), and grew 133% to $0.9 million for the six-month period, driven by continued growth of Good Twin (including expanded direct-to-consumer volume) and the launch of AMASS Electrolytes, which generated its first revenues in the second quarter of 2026.
Wine & Spirits net revenues declined 3% for the second quarter of 2026 and 5% for the six-month period, reflecting continued portfolio optimization in the wine portfolio and the near-term deprioritization of certain legacy spirits products, partially offset by growth in Calirosa. We believe this optimization will better utilize working capital and allow for more stable growth in future periods, as marketing resources and focus can be more directed to the brands we have higher conviction behind.
The decline in comparable adjustments for the six-month period is due to the absence in 2026 of bulk wine sales associated with the divested Winc.com business.
Core brands
We manage our portfolio around a small number of priority core brands (Summer Water, Pizzolato MUSE, Good Twin and AMASS Electrolytes), where we concentrate marketing investment and distribution focus, and a broader set of other brands that we manage for cash flow and selective growth. Net revenues by brand grouping were as follows:
|
Three months ended June 30, 2026 |
Three months ended June 30, 2025 |
Dollar Change | Percent Change | |||||||||||||
| Core brands | 3,949,497 | 3,527,940 | 421,557 | 12 | % | |||||||||||
| Other brands | 1,754,310 | 1,924,239 | (169,929 | ) | -9 | % | ||||||||||
| Discontinued brands | 151,218 | 208,195 | (56,977 | ) | -27 | % | ||||||||||
| Revenue attributable to brands | 5,855,025 | 5,660,374 | 194,651 | 3 | % | |||||||||||
| Trade spend and other amounts not attributed to a brand | (262,281 | ) | (155,542 | ) | (106,739 | ) | 69 | % | ||||||||
| Consolidated net revenues | 5,592,744 | 5,504,832 | 87,912 | 2 | % | |||||||||||
| 23 |
|
Six months ended June 30, 2026 |
Six months ended June 30, 2025 |
Dollar Change | Percent Change | |||||||||||||
| Core brands | 6,443,873 | 5,782,440 | 661,433 | 11 | % | |||||||||||
| Other brands | 3,390,388 | 3,700,600 | (310,212 | ) | -8 | % | ||||||||||
| Discontinued brands | 299,858 | 623,366 | (323,508 | ) | -52 | % | ||||||||||
| Brand-level net revenues | 10,134,119 | 10,106,406 | 27,713 | 0 | % | |||||||||||
| Trade spend and other amounts not attributed to a brand | (392,032 | ) | (261,031 | ) | (131,001 | ) | 50 | % | ||||||||
| Consolidated net revenues | 9,742,087 | 9,845,375 | (103,288 | ) | -1 | % | ||||||||||
Net revenues from our core brands grew 12% for the three months and 11% for the six months ended June 30, 2026, and represented 67% of revenue attributable to brands for the second quarter of 2026 compared with 62% in the prior-year quarter. Pizzolato MUSE and Good Twin drove the increase, together with the launch of AMASS Electrolytes, partially offset by Summer Water, which reflects the timing of seasonal shipments. Other brands declined 9% for the quarter and 8% for the six-month period, driven primarily by Biokult, whose sales were disrupted by an inventory quality issue affecting product received at distributors, which resulted in returns and distributor billbacks, together with lower volume across the balance of the imported portfolio and the legacy AMASS wine and spirits labels, partially offset by growth in Calirosa and the launch of the Pizzolato non-alcoholic spritz line. Discontinued brands declined 27% and 52%, consistent with the portfolio optimization described under “Strategy” above, which deprioritized our spirits portfolio and certain legacy wine labels. Beginning with this Report we separately present discontinued brands (Gem&Bolt and the wine labels we have exited or are winding down, including the remaining Winc-legacy labels) so that the performance of the continuing other-brand portfolio is visible. As our core and priority brands become a larger share of total revenue, we expect revenue to become more capital efficient.
Trade spend and other amounts not attributed to a brand consist of trade spend (promotional allowances, distributor billbacks and chargebacks, and similar payments and credits to distributors and retailers that are recorded as reductions of revenue), together with other revenue adjustments that are recorded after the initial sale and are not attributed to an individual brand in our general ledger; they are presented as a single reconciling line rather than allocated to the brand groupings above. These amounts increased 69% to $0.3 million for the second quarter of 2026 and 50% to $0.4 million for the six-month period, reflecting expanded promotional programming behind wholesale placements for our core brands, deductions associated with the discounted sell-through of slower-moving inventory described under “Gross profit, non-GAAP” below, and approximately $0.1 million of nonrecurring distributor chargebacks and reconciliation items ($0.2 million for the six-month period); excluding these nonrecurring items, trade spend was approximately flat year over year.
Channel mix — direct-to-consumer and e-commerce
|
Three months ended June 30, 2026 |
Three months ended June 30, 2025 |
Six months ended June 30, 2026 |
Six months ended June 30, 2025 |
|||||||||||||
| Direct-to-consumer and e-commerce | 178,125 | 30,699 | 327,538 | 77,997 | ||||||||||||
| Wholesale and other | 5,414,619 | 5,474,133 | 9,414,549 | 9,767,378 | ||||||||||||
| Consolidated net revenues | 5,592,744 | 5,504,832 | 9,742,087 | 9,845,375 | ||||||||||||
Direct-to-consumer and e-commerce net revenues increased to $0.2 million for the second quarter of 2026 from $31 thousand in the prior-year quarter, and to $0.3 million from $0.1 million for the six-month period. All of our direct-to-consumer and e-commerce net revenues for the three and six months ended June 30, 2026 related to non-alcoholic products: Good Twin, which sells through its own e-commerce store and through digital marketplaces, and AMASS Electrolytes, which launched direct-to-consumer in the second quarter of 2026. AMASS Electrolytes also commenced wholesale distribution during the quarter; those sales are presented within wholesale and other. The prior-year periods included a negligible amount of alcoholic direct-to-consumer revenue. We no longer sell alcoholic products through this channel. While direct-to-consumer remains a small share of consolidated net revenues, it carries a direct customer relationship and is a channel we expect to continue developing alongside our three-tier wholesale distribution.
| 24 |
Gross profit, non-GAAP
|
Three months ended June 30, 2026 |
Three months ended June 30, 2025 |
Dollar Change | Percent Change | |||||||||||||
| Wine & Spirits | 1,420,712 | 2,073,269 | (652,557 | ) | -31 | % | ||||||||||
| Non-Alcoholic and Functional | 74,837 | 61,283 | 13,554 | 22 | % | |||||||||||
| Unallocated amounts | - | 10,001 | (10,001 | ) | -100 | % | ||||||||||
| Comparable adjustments | - | - | - | N/A | ||||||||||||
| Consolidated gross profit | 1,495,549 | 2,144,553 | (649,004 | ) | -30 | % | ||||||||||
|
Six months ended June 30, 2026 |
Six months ended June 30, 2025 |
Dollar Change | Percent Change | |||||||||||||
| Wine & Spirits | 2,358,767 | 3,400,288 | (1,041,521 | ) | -31 | % | ||||||||||
| Non-Alcoholic and Functional | 209,724 | 135,733 | 73,991 | 55 | % | |||||||||||
| Unallocated amounts | - | 10,050 | (10,050 | ) | -100 | |||||||||||
| Comparable adjustments | - | (186,759 | ) | 186,759 | N/M | |||||||||||
| Consolidated gross profit | 2,568,491 | 3,359,312 | (790,821 | ) | -24 | % | ||||||||||
Our presentation of gross profit is non-GAAP. Segment gross profit is reconciled to gross profit on the consolidated statement of operations with the inclusion of unallocated amounts and comparable adjustments.
Wine & Spirits gross profit, non-GAAP decreased 31% to $1.4 million (27.4% of segment net revenues) for the second quarter of 2026 from $2.1 million (39.0% of segment net revenues) for the second quarter of 2025. The largest drivers of the decline were deliberate, largely one-time actions we took to convert slower-moving inventory to cash and to rationalize the portfolio. First, we cleared slower-moving finished goods at a discount: the sale of Calirosa Añejo to a discount grocery retailer generated a gross loss, and other below-cost clearance sales added approximately $32,000 of gross loss in the quarter. Second, we recognized inventory obsolescence and write-down charges of approximately $0.1 million in the second quarter of 2026 (approximately $0.3 million for the six-month period) as we continued to clear wine inventory associated with brand rationalization and with the bulk wine and finished goods remaining from the sale of the Winc direct-to-consumer business. In addition to these items, recurring cost pressures also weighed on margin: tariffs on imported wine increased landed product cost, and freight rates rose over the prior-year period, together compressing margin on imported brands. The balance of the decline reflects unfavorable inventory variances and brand mix.
Non-Alcoholic and Functional gross profit, non-GAAP was $75 thousand (18.3% of segment net revenues) for the second quarter of 2026, compared with $61 thousand (34.7% of segment net revenues) for the second quarter of 2025; gross profit dollars grew with the revenue base while margin compressed. The compression is concentrated in Good Twin, where tariffs on imported product increased landed cost and we used expedited modes of freight to keep the brand in stock through a period of rapid growth, which increased costs. We expect these pressures to moderate as freight and inventory positions normalize.
| 25 |
Gross margin, non-GAAP, by channel
Gross margin by channel, on the same basis as the channel revenue table above, was as follows. Channel gross margins reflect costs directly attributable to each channel; inventory write-down and variance charges, which are not attributable to a specific channel, are presented separately:
|
Three months ended June 30, 2026 |
Three months ended June 30, 2025 |
Six months ended June 30, 2026 |
Six months ended June 30, 2025 |
|||||||||||||
| Direct-to-consumer and e-commerce gross profit | 29,798 | 9,419 | 39,096 | 39,852 | ||||||||||||
| Gross margin | 16.7 | % | 30.7 | % | 11.9 | % | 51.1 | % | ||||||||
| Wholesale and other gross profit | 1,836,866 | 2,134,260 | 3,028,084 | 3,496,031 | ||||||||||||
| Gross margin | 33.9 | % | 39.0 | % | 32.2 | % | 35.8 | % | ||||||||
| Inventory write-downs and other costs not attributed to a channel | (371,115 | ) | 874 | (498,689 | ) | (176,571 | ) | |||||||||
| Total gross profit | 1,495,549 | 2,144,553 | 2,568,491 | 3,359,312 | ||||||||||||
Direct-to-consumer and e-commerce gross margin was 16.7% for the second quarter of 2026 compared with 30.7% in the prior-year quarter, and 11.9% for the six-month period compared with 51.1%. The decline principally reflects outbound parcel freight (the recurring weekly e-commerce shipping cost for Good Twin and AMASS Electrolytes, which ran approximately 44% of direct-to-consumer net revenues in the quarter), together with tariffs on imported product; prior-year margins also reflect a very small revenue base. Wholesale and other gross margin was 33.9% for the second quarter of 2026 compared with 39.0% in the prior-year quarter, and 32.2% for the six-month period compared with 35.8%, reflecting the tariff, freight and clearance-sale dynamics described above.
Product margin, non-GAAP, by brand grouping
Product margin for the brand groupings presented under “Core brands” above, on the same item-level basis as the revenue attributable to brands table, with trade spend and cost of net revenues that are recorded in our general ledger without reference to a specific item (including outbound freight, third-party logistics and fulfillment fees, warehouse labor, excise taxes, and inventory write-down and variance charges) presented as a single reconciling line, was as follows:
|
|
|
Three months ended June 30, 2026 |
Three months ended June 30, 2025 |
Six months ended June 30, 2026 |
Six months ended June 30, 2025 |
|||||||||||
| Core brands product margin | 1,726,868 | 1,583,753 | 2,682,180 | 2,477,215 | ||||||||||||
| Product margin percentage | 43.7 | % | 44.9 | % | 41.6 | % | 42.8 | % | ||||||||
| Other brands product margin | 493,430 | 735,350 | 716,660 | 1,417,716 | ||||||||||||
| Product margin percentage | 28.1 | % | 38.2 | % | 21.1 | % | 38.3 | % | ||||||||
| Discontinued brands product margin | 21,430 | 72,779 | 79,154 | 126,919 | ||||||||||||
| Product margin percentage | 14.2 | % | 35.0 | % | 26.4 | % | 20.4 | % | ||||||||
| Trade spend and costs not attributed to individual items | (746,179 | ) | (247,329 | ) | (909,503 | ) | (662,538 | ) | ||||||||
| Total gross profit | 1,495,549 | 2,144,553 | 2,568,491 | 3,359,312 | ||||||||||||
Core brands carried a 43.7% product margin for the second quarter of 2026 (44.9% in the prior-year quarter) and 41.6% for the six-month period, while continuing other brands declined to 28.1% from 38.2% for the quarter (reflecting the Biokult disruption, tariffs and the clearance activity described above), and discontinued brands ran at 14.2% as they wind down. The margin pressure on the portfolio is therefore concentrated in the brands we are deprioritizing, while the core brands we are investing behind held their margin profile. The reconciling line reflects where these costs are recorded rather than a judgment that they do not relate to our brands: because they are recorded without item-level detail, they are not allocated to the brand groupings even where they are associated with particular brands. In particular, the line includes the outbound parcel freight and third-party fulfillment costs of our direct-to-consumer channel, which support our non-alcoholic core brands (Good Twin and AMASS Electrolytes); these costs are presented, together with the net revenues they support, in the direct-to-consumer and e-commerce gross profit discussion above.
Management uses product margin to evaluate the underlying unit economics of the brand portfolio and to guide marketing investment and distribution focus among brand groupings, because it isolates item-level profitability from shared fulfillment, logistics and other costs that are managed at the consolidated level. Because product margin excludes these recurring costs, it is not a measure of overall profitability and should not be considered a substitute for gross profit or gross margin determined in accordance with GAAP.
To reduce repetition across our non-GAAP presentations, we present adjusted gross profit and adjusted gross margin within this gross profit discussion. The following bridge presents consolidated gross profit excluding the cost-of-revenue items that are included in the Adjusted EBITDA adjustments described under “Adjusted EBITDA” below (inventory write-downs and variance and bulk wine, net). Adjusted gross margin is computed on consolidated net revenues without adjustment. These measures are non-GAAP; the adjustment amounts agree to the corresponding lines of the Adjusted EBITDA reconciliation.
|
Three months ended June 30, 2026 |
Three months ended June 30, 2025 |
Six months ended June 30, 2026 |
Six months ended June 30, 2025 |
|||||||||||||
| Consolidated gross profit | 1,495,549 | 2,144,553 | 2,568,491 | 3,359,312 | ||||||||||||
| Gross margin | 26.7 | % | 39.0 | % | 26.4 | % | 34.1 | % | ||||||||
| Inventory write-downs and variance, net | 140,577 | - | 268,152 | 168,930 | ||||||||||||
| Bulk wine, net | - | - | - | 17,829 | ||||||||||||
| Adjusted gross profit, non-GAAP | 1,636,126 | 2,144,553 | 2,836,643 | 3,546,071 | ||||||||||||
| Adjusted gross margin | 29.3 | % | 39.0 | % | 29.1 | % | 36.0 | % | ||||||||
On this adjusted basis, gross margin was 29.3% for the second quarter of 2026 compared with 39.0% for the prior-year quarter, and 29.1% for the six-month period compared with 36.0% in the prior year. The residual decline reflects: tariffs on imported wine and elevated freight rates; the discounted sell-through of slower-moving finished goods to convert inventory to cash, including the sale of Calirosa Añejo to a discount grocery retailer and other clearance sales made at little or no margin; the increase in trade spend, including the nonrecurring Biokult billbacks described above; and brand and channel mix.
| 26 |
Sales and marketing
|
Three months ended June 30, 2026 |
Three months ended June 30, 2025 |
Dollar Change |
Percent Change |
|||||||||||||
| Wine & Spirits | 773,713 | 943,782 | (170,069 | ) | -18 | % | ||||||||||
| Non-Alcoholic and Functional | 207,446 | 31,973 | 175,473 | 549 | % | |||||||||||
| Unallocated amounts | 78,718 | 620 | 78,098 | 12596 | % | |||||||||||
| Comparable adjustments | - | - | - | N/A | ||||||||||||
| Consolidated sales and marketing | 1,059,877 | 976,375 | 83,502 | 9 | % | |||||||||||
|
Six months ended June 30, 2026 |
Six months ended June 30, 2025 |
Dollar Change |
Percent Change |
|||||||||||||
| Wine & Spirits | 1,495,438 | 1,840,388 | (344,950 | ) | -19 | % | ||||||||||
| Non-Alcoholic and Functional | 415,168 | 117,686 | 297,482 | 253 | % | |||||||||||
| Unallocated amounts | 116,748 | 11,706 | 105,042 | 897 | % | |||||||||||
| Comparable adjustments | - | - | - | N/A | ||||||||||||
| Consolidated sales and marketing | 2,027,354 | 1,969,780 | 57,574 | 3 | % | |||||||||||
Sales and marketing expense, which includes the payroll costs of our sales, marketing and digital teams, was $1.1 million for the second quarter of 2026, an increase of 9% over the prior-year quarter, and $2.0 million for the six-month period, an increase of 3%. Non-Alcoholic and Functional sales and marketing expense increased to $0.4 million for the six months ended June 30, 2026 from $0.1 million in the prior-year period, reflecting deliberate investment behind Good Twin and the AMASS Electrolytes launch, including increased digital media spend. Wine & Spirits sales and marketing expense of $1.5 million for the six-month period decreased 19% year-over-year, reflecting tighter discipline around trade and promotional spend, which partially offset the Non-Alcoholic and Functional investment.
General and administrative
|
Three months ended June 30, 2026 |
Three months ended June 30, 2025 |
Dollar Change |
Percent Change |
|||||||||||||
| Wine & Spirits | 921,103 | 1,003,169 | (82,066 | ) | -8 | % | ||||||||||
| Non-Alcoholic and Functional | 178,845 | 32,970 | 145,875 | 442 | % | |||||||||||
| Unallocated amounts | 4,727,627 | 615,952 | 4,111,675 | 668 | % | |||||||||||
| Comparable adjustments | 226,613 | 265,101 | (38,488 | ) | -15 | % | ||||||||||
| Consolidated general and administrative | 6,054,188 | 1,917,192 | 4,136,996 | 216 | % | |||||||||||
|
Six months ended June 30, 2026 |
Six months ended June 30, 2025 |
Dollar Change |
Percent Change |
|||||||||||||
| Wine & Spirits | 1,750,715 | 2,386,219 | (635,504 | ) | -27 | % | ||||||||||
| Non-Alcoholic and Functional | 324,748 | 99,981 | 224,767 | 225 | % | |||||||||||
| Unallocated amounts | 6,047,985 | 1,181,284 | 4,866,701 | 412 | % | |||||||||||
| Comparable adjustments | 447,545 | 367,808 | 79,737 | 22 | % | |||||||||||
| Consolidated general and administrative | 8,570,993 | 4,035,292 | 4,535,701 | 112 | % | |||||||||||
Consolidated G&A expense increased $4.1 million, or 216%, for the second quarter of 2026 versus the prior-year quarter, and $4.5 million, or 112%, for the six-month period. The increase was concentrated in unallocated corporate costs associated with becoming a public company: for the six months ended June 30, 2026, legal expenses of $0.6 million (substantially all incurred in the second quarter), other professional fees of $3.4 million (including $1.9 million of Direct Listing advisory fees settled in shares of Common Stock), investor and public relations fees of $0.5 million, and accounting and tax services of $0.2 million, together with $0.4 million of stock-based compensation (a Comparable Adjustment) and $0.7 million of advisory share-based expense recognized in the first quarter. Segment G&A declined in the Wine & Spirits segment on headcount actions and shared-service consolidation, while Non-Alcoholic and Functional G&A grew with the build-out of the AMASS Electrolytes business.
Research and development
We did not have material research and development costs in the three or six months ended June 30, 2026 or June 30, 2025.
Impairment
In the second quarter of 2026, we recognized a $0.3 million impairment of our investment in Full Glass in connection with the Side Letter Agreement described in Notes 6 and 17 to our unaudited condensed consolidated financial statements. The six-month 2026 period also includes the $0.1 million first-quarter impairment charge on intangible assets associated with our Gem&Bolt acquisition. Both charges are treated as Comparable Adjustments; no impairment was recognized in 2025.
| 27 |
Operating loss
|
Three months ended June 30, 2026 |
Three months ended June 30, 2025 |
Dollar Change | Percent Change | |||||||||||||
| Wine & Spirits | (274,104 | ) | 126,318 | (400,422 | ) | N/M | ||||||||||
| Non-Alcoholic and Functional | (311,454 | ) | (3,660 | ) | (307,794 | ) | 8410 | % | ||||||||
| Unallocated amounts | (4,806,345 | ) | (606,571 | ) | (4,199,774 | ) | 692 | % | ||||||||
| Comparable adjustments | (565,896 | ) | (265,101 | ) | (300,795 | ) | 113 | % | ||||||||
| Consolidated operating loss | (5,957,799 | ) | (749,014 | ) | (5,208,785 | ) | 695 | % | ||||||||
|
Six months ended June 30, 2026 |
Six months ended June 30, 2025 |
Dollar Change | Percent Change | |||||||||||||
| Wine & Spirits | (887,386 | ) | (826,319 | ) | (61,067 | ) | 7 | % | ||||||||
| Non-Alcoholic and Functional | (530,192 | ) | (81,934 | ) | (448,258 | ) | 547 | % | ||||||||
| Unallocated amounts | (6,164,733 | ) | (1,182,940 | ) | (4,981,793 | ) | 421 | % | ||||||||
| Comparable adjustments | (897,230 | ) | (554,567 | ) | (342,663 | ) | 62 | % | ||||||||
| Consolidated operating loss | (8,479,541 | ) | (2,645,760 | ) | (5,833,781 | ) | 220 | % | ||||||||
Consolidated loss from operations widened $5.2 million year-over-year for the second quarter and $5.8 million for the six-month period, driven principally by unallocated corporate G&A associated with the Direct Listing, as discussed under “General and Administrative” above. Wine & Spirits segment results moved from operating income of $0.1 million in the second quarter of 2025 to an operating loss of $0.3 million in the second quarter of 2026 on the lower gross profit described above. Non-Alcoholic and Functional segment operating loss widened to $0.3 million for the second quarter of 2026 (from approximately break-even), reflecting the sales and marketing investment behind Good Twin and the AMASS Electrolytes launch ahead of the revenue those investments are intended to build. The increase in unallocated amounts (corporate costs not attributed to either segment) accounted for $4.2 million of the $5.2 million increase in consolidated operating loss for the quarter and $5.0 million of the $5.8 million increase for the six-month period, principally the public-company and Direct Listing-related costs described under “General and administrative” above.
Adjusted EBITDA, non-GAAP
In addition to our results determined in accordance with U.S. GAAP, we use Adjusted EBITDA, a non-GAAP financial measure, to evaluate our operating performance. We define Adjusted EBITDA as net loss before interest, income taxes, depreciation and amortization, further adjusted for a fixed set of add-backs: one-off deal and direct-listing costs; stock-based compensation; stock-settled banker fees; impairment and bad debt, net; inventory write-downs and variance; juice storage; merchant and factoring fees; the net results of bulk wine and of the divested business unit; loss on contracts; and one-time credits, which are deducted. Recurring public-company operating costs (including annual exchange listing fees, directors' and officers' insurance, incremental headcount and ongoing investor-relations costs) are not added back and remain in Adjusted EBITDA.
We present Adjusted EBITDA because management uses it to evaluate operating performance and allocate resources, and because we believe it assists investors in comparing our operating performance across periods by removing items that are non-cash, non-recurring, or not indicative of our ongoing operations. Adjusted EBITDA has limitations as an analytical tool: it excludes interest expense on indebtedness we are obligated to service, it excludes depreciation and amortization of assets that will need to be replaced, and other companies may calculate similarly titled measures differently, limiting comparability. Adjusted EBITDA should be considered in addition to, and not as a substitute for or superior to, net loss or any other measure determined in accordance with U.S. GAAP. The following table reconciles net loss, the most directly comparable GAAP measure, to Adjusted EBITDA:
|
Three months ended June 30, 2026 |
Three months ended June 30, 2025 |
Six months ended June 30, 2026 |
Six months ended June 30, 2025 |
|||||||||||||
| Net loss | (7,549,215 | ) | (1,265,423 | ) | (10,590,822 | ) | (4,985,044 | ) | ||||||||
| Interest expense | 1,337,046 | 491,992 | 1,791,902 | 2,036,252 | ||||||||||||
| Interest income | - | (27,752 | ) | (3,709 | ) | (34,235 | ) | |||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||
| Depreciation and amortization | 132,387 | 184,868 | 269,607 | 335,137 | ||||||||||||
| EBITDA | (6,079,782 | ) | (616,315 | ) | (8,533,022 | ) | (2,647,890 | ) | ||||||||
| One-off deal and direct-listing costs | 1,378,365 | - | 1,398,365 | - | ||||||||||||
| Write-off of deferred offering costs | 514,313 | - | 514,313 | - | ||||||||||||
| Stock-based compensation | 226,613 | 176,916 | 447,545 | 221,464 | ||||||||||||
| Impairment loss and bad debt, net | 339,283 | 34,114 | 467,548 | (10,298 | ) | |||||||||||
| Change in fair value of derivative liabilities | (236,969 | ) | - | (187,753 | ) | - | ||||||||||
| Change in fair value of SAFEs | 10,635 | - | 21,062 | - | ||||||||||||
| Stock-settled banker and advisory fees | 1,938,141 | - | 2,631,800 | - | ||||||||||||
| Bulk wine, net | - | - | - | 17,829 | ||||||||||||
| Inventory write-downs and variance, net | 140,577 | - | 268,152 | 168,930 | ||||||||||||
| Juice storage | 30,179 | 98,652 | (3,512 | ) | 548,739 | |||||||||||
| Merchant and factoring fees | 4,561 | 16,605 | 24,935 | 22,021 | ||||||||||||
| One-time credits, net | - | - | (111,863 | ) | - | |||||||||||
| Total adjustments | 4,345,698 | 326,287 | 5,470,592 | 968,685 | ||||||||||||
| Adjusted EBITDA | (1,734,084 | ) | (290,028 | ) | (3,062,430 | ) | (1,679,205 | ) | ||||||||
| 28 |
Adjusted EBITDA was $(1.7) million for the second quarter of 2026, compared with $(0.3) million for the second quarter of 2025, and $(3.1) million for the six months ended June 30, 2026 compared with $(1.7) million for the prior-year period. The decline principally reflects the lower gross profit discussed above together with higher ongoing public-company operating costs (annual exchange listing fees, directors’ and officers’ insurance, incremental headcount and ongoing investor-relations costs), which are not added back. One-off deal and direct-listing costs for the second quarter of 2026 comprise the placement agent cash fee ($0.8 million) and direct-listing legal fees ($0.6 million); the six-month amount also includes the initial Nasdaq listing payment. Investor- and public-relations costs are not added back and remain in Adjusted EBITDA. Stock-settled banker and advisory fees comprise the $1.9 million of Direct Listing advisory fees settled in shares during the second quarter and, for the six-month period, also the $0.7 million stock-settled placement agent fee recognized in the first quarter.
Other income (expense)
|
Three months ended June 30, 2026 |
Three months ended June 30, 2025 |
Dollar Change |
Percent Change |
|||||||||||||
| Interest income | - | 27,752 | (27,752 | ) | -100 | % | ||||||||||
| Interest expense | (1,337,046 | ) | (491,992 | ) | (845,054 | ) | 172 | % | ||||||||
| Change in fair value of derivative liabilities | 236,969 | - | 236,969 | N/A | ||||||||||||
| Change in fair value of SAFEs | (10,635 | ) | - | (10,635 | ) | N/A | ||||||||||
| Other income (expense), net | (480,704 | ) | (52,169 | ) | (428,535 | ) | N/M | |||||||||
| Consolidated other income (expense) | (1,591,416 | ) | (516,409 | ) | (1,075,007 | ) | 208 | % | ||||||||
|
Six months ended June 30, 2026 |
Six months ended June 30, 2025 |
Dollar Change |
Percent Change |
|||||||||||||
| Interest income | 3,709 | 34,235 | (30,526 | ) | -89 | % | ||||||||||
| Interest expense | (1,791,902 | ) | (2,036,252 | ) | 244,350 | -12 | % | |||||||||
| Change in fair value of derivative liabilities | 187,753 | - | 187,753 | N/A | ||||||||||||
| Change in fair value of SAFEs | (21,062 | ) | - | (21,062 | ) | N/A | ||||||||||
| Other income (expense), net | (489,779 | ) | (337,267 | ) | (152,512 | ) | N/M | |||||||||
| Consolidated other income (expense) | (2,111,281 | ) | (2,339,284 | ) | 228,003 | -10 | % | |||||||||
Total other expense was $(1.6) million for the second quarter of 2026 versus $(0.5) million for the prior-year quarter. Interest expense of $1.3 million for the second quarter of 2026 includes the noncash write-off of the remaining unamortized discount on the Convertible Notes (approximately $1.0 million) upon their automatic conversion at the Direct Listing, partially offset by a $0.2 million gain from the change in fair value of derivative liabilities settled in connection with the conversion. For the six-month period, total other expense improved $0.2 million year-over-year, as the prior-year period included interest and late-fee charges on the Secured Promissory Note prior to its restructuring. Other income (expense), net also improved year-over-year, as the prior-year periods included losses on sales of securities at fair value.
| 29 |
Liquidity and Capital Resources
Sources of Liquidity
We have historically funded our operations through issuances of stock, credit facilities, term loans, revenue producing activities, convertible debt, and SAFE agreements. During the second quarter of 2026, we received $7.0 million in aggregate from the issuance of Series C Convertible Preferred Stock and the associated warrant across the First and Second Closings (before a $30,000 transaction expense deduction) under the Streeterville SPA, and our Convertible Notes (aggregate principal of $2.8 million plus accrued interest) converted into common stock, eliminating that indebtedness. As of June 30, 2026, we had cash and cash equivalents of $1.6 million, and the outstanding balance under our ABL was $3.8 million against a maximum credit of $5.0 million (subject to borrowing-base availability).
Based on our recurring losses from operations incurred since inception, expectation of continuing operating losses for the foreseeable future, and the need to raise additional capital to finance our future operations, we have concluded that there is substantial doubt regarding our ability to continue as a going concern within one year after the date of these financial statements.
Cash Flows
|
Six months ended June 30, 2026 |
Six months ended June 30, 2025 |
Dollar Change | ||||||||||
| Net cash used in operating activities | (6,131,553 | ) | (1,346,544 | ) | (4,785,009 | ) | ||||||
| Net cash (used in) provided by investing activities | (1,790,310 | ) | 753,117 | (2,543,427 | ) | |||||||
| Net cash provided by financing activities | 8,667,418 | 806,972 | 7,860,446 | |||||||||
| Net increase in cash | 745,555 | 213,545 | 532,010 | |||||||||
Operating activities. Net cash used in operating activities was $6.1 million for the six months ended June 30, 2026, compared with $1.3 million for the prior-year period. The increase in operating cash use reflects the higher net loss, a $1.7 million increase in accounts receivable, a $0.6 million increase in inventory, and a $0.3 million increase in prepaid expenses and other current assets, partially offset by a $1.4 million increase in accounts payable.
Investing activities. Net cash used in investing activities was $1.8 million for the six months ended June 30, 2026, driven by $1.8 million of purchases of related-party investments (the Afterdream and HpO SAFEs), compared with $0.8 million provided in the prior-year period (which included $0.5 million of proceeds from investment sales and $0.3 million from notes receivable).
Financing activities. Net cash provided by financing activities was $8.7 million for the six months ended June 30, 2026, driven by the $7.0 million Series C issuance, $1.4 million of convertible note proceeds received in the first quarter, $0.9 million of warrant and option exercises, and $0.5 million of net ABL draws, partially offset by $0.5 million of offering costs paid in cash, $0.2 million of debt repayments and the $0.4 million settlement of the repurchase obligation.
Streeterville Capital Prepaid Preferred Purchase
Under the SPA, subsequent purchases of Series C Convertible Preferred Stock (up to the $30.0 million commitment) are at our election during the two-year commitment period, subject to conditions including minimum market capitalization, outstanding-balance limits, minimum median and average daily trading volumes, stockholder-equity thresholds, trading-price conditions relative to the Floor Price, and an effective registration statement. Conversions are initially at a fixed price based on the Nasdaq listing valuation and, after the earlier of 180 days post-listing or specified trigger events (a Trigger Event occurred in July 2026 in connection with the Nasdaq notices described under “Recent Developments” above; see Note 17), at an alternate price equal to the lower of the fixed price and 90% of the lowest daily VWAP in the ten trading days prior to conversion, subject to a floor. We believe this facility will enhance near-term liquidity but will also result in dilution to existing stockholders and could constrain other financing alternatives.
| 30 |
Future funding requirements
We anticipate that we will continue to incur net losses for the foreseeable future. As of December 31, 2025, we had $0.8 million in cash and cash equivalents. During the six months ended June 30, 2026, we received $7.0 million from the Series C issuance, $1.4 million from convertible notes (first quarter), and $0.9 million from warrant and option exercises. As of June 30, 2026 we had $1.6 million in cash and cash equivalents. We do not believe that our existing cash and cash equivalents, together with availability under the Streeterville facility and our ABL, will be sufficient to fund our operating plan for the twelve months following the issuance of this Report, and we will require additional capital; see the going-concern discussion below and in Note 2 to our unaudited condensed consolidated financial statements.
Our ability to continue as a going concern for the next twelve months is dependent upon our ability to generate sufficient cash flows from operations to meet our obligations, which we have not been able to accomplish to date, and/or to obtain additional working capital through equity or debt financings, refinancings or extensions of existing obligations, or reductions in operating costs.
Material cash requirements
Our material cash requirements consist primarily of debt obligations, amounts due under SAFEs upon triggering events, leases and licensing fees, payables to inventory suppliers, and payables for professional services. The table below summarizes our material cash requirements as of June 30, 2026, separated between short-term (within the next twelve months) and long-term (thereafter):
| Category |
Next 12 Months |
Thereafter | Total | |||||||||
| Secured credit facility principal and interest (1) | $ | 3,789 | $ | — | $ | 3,789 | ||||||
| Other debt principal and interest (2) | 3,226 | 177 | 3,403 | |||||||||
| SAFEs and convertible instruments (3) | — | 541 | 541 | |||||||||
| Leases and licensing fees (4) | 253 | — | 253 | |||||||||
| Supplier payables (5) | 6,125 | — | 6,125 | |||||||||
| Professional service payables (6) | 3,494 | — | 3,494 | |||||||||
| Total material cash requirements | $ | 16,887 | $ | 718 | $ | 17,605 | ||||||
(amounts in thousands)
Note: Amounts reflect contractual obligations and known commitments as of June 30, 2026 and do not include discretionary operating expenditures.
(1) Represents scheduled principal and interest payments under our credit facility, assuming renewal of the credit facility in the ordinary course consistent with historical practice. Amounts are based on contractual repayment terms in effect as of the reporting date and do not reflect potential acceleration resulting from covenant breaches or events of default.
(2) Represents scheduled principal and interest payments under our other indebtedness based on contractual terms in effect as of the reporting date, including the Secured Promissory Note installments under Amendment No. 3. The amounts presented do not reflect potential acceleration, extensions, refinancings, or other modifications that management may pursue.
(3) Our SAFEs and convertible instruments do not require scheduled cash repayment and are generally convertible into equity upon the occurrence of a qualifying financing, liquidity event, or other specified triggering events. As a result, no cash payments are reflected in the short-term column; amounts presented in the long-term column reflect potential settlement amounts only in the event that conversion does not occur.
(4) Represents the $42,248 monthly obligation under the Santa Maria warehouse lease through December 2026. We do not have any other material leases or licensing fees.
(5) Represents payables to various suppliers throughout our supply chain. Management continues to negotiate settlements and extended payment plans with certain vendors, including the conversion of a portion of outstanding payables into term debt.
(6) Represents payables to various professional service providers related primarily to legal and transaction services, including amounts payable to our direct-listing legal counsel, which management intends to negotiate and settle over the next several years through a combination of negotiated reductions and conversions to equity.
Contractual Obligations and Commitments — the Full Glass supplier contracts were amended subsequent to quarter-end by the Full Glass Side Letter Agreement dated July 29, 2026, described in Note 17. Bulk wine contracts are otherwise unchanged in substance from the disclosure in our Q1 2026 Form 10-Q, except as described in Notes 6 and 17.
Critical Accounting Policies
Fair Value Option
ASC 825, Financial Instruments (ASC 825), allows for entities to elect the “fair value option,” which permits entities to choose, at specified election dates, to measure eligible financial assets and financial liabilities at fair value. The decision to elect the fair value option is: (a) applied on an instrument-by-instrument basis (except as delineated within the guidance of ASC 825); (b) irrevocable, unless a new election date occurs; and (c) applied to an entire instrument. The Company has elected the fair value option on its equity investment in De Soi, Inc. (“De Soi”). Management determined to elect the fair value option on these investments in order to provide more useful information to the shareholders regarding the performance of its investment.
| 31 |
Business combinations
The Company accounts for business combinations under ASC 805, Business Combinations, which requires that the assets acquired and the liabilities assumed be recorded at the date of acquisition at their respective fair value and that direct costs of acquisitions be expensed as they are incurred. The excess purchase price over the estimated fair values of the net assets acquired is recorded as goodwill.
Inventory
Inventories are stated at the lower of cost or net realizable value using the first-in, first-out (FIFO) method and consist of components, finished goods, and products in transit from the Company’s suppliers. Costs of finished goods inventories include all costs incurred to bring inventory to its current condition, including inbound freight and duties. If the Company determines that the estimated net realizable value of its inventory is less than the carrying value of such inventory, it records a charge to cost of net revenues to reflect the lower of cost or net realizable value. If actual market conditions are less favorable than those projected by the Company, further adjustments may be required that would increase the cost of goods sold in the period in which such a determination was made.
Impairment of long-lived assets
The Company accounts for the impairment and disposition of long-lived assets in accordance with ASC Subtopic 360-10-35, Property, Plant, and Equipment – Overall – Subsequent Measurement (ASC 360). In accordance with ASC 360, the Company reviews its long-lived assets, including finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company measures recoverability of assets to be held and used by comparing the carrying amount of an asset to future undiscounted net cash flows that it expects the asset to generate. When an asset is determined to be impaired, the Company recognizes the impairment amount, which is measured by the amount the carrying value of the asset exceeds its fair value. In addition, the Company evaluates goodwill for impairment in accordance with ASC 350, Intangibles-Goodwill and Other (ASC 350). Goodwill is tested at least annually, or more frequently if a triggering event occurs. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to the excess, not to exceed the total amount of goodwill.
Stock-based compensation
The Company accounts for stock-based compensation costs under the provisions of ASC 718, Compensation—Stock Compensation, which requires the measurement and recognition of compensation expense related to the fair value of stock-based compensation awards that are ultimately expected to vest. Stock based compensation expense recognized includes the compensation cost for all stock-based payments granted to employees, officers, advisors, and directors based on the grant date fair value estimated in accordance with the provisions of ASC 718. Stock-based compensation is recognized as expense over the employee’s requisite vesting period and over the nonemployee’s period of providing goods or services. The fair value of each stock option and warrant grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company historically has been a private company and lacks company-specific historical and implied volatility information for its stock. Therefore, it estimates its expected stock price volatility based on the historical volatility of publicly traded peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.
Revenue recognition
The Company recognizes revenue under FASB ASC 606, Revenue from Contracts with Customers. The Company derives its revenue primarily through the sale of alcohol and non-alcoholic spirits, wine, seltzers, and personal care products in both wholesale and direct to consumer channels. The Company’s revenue generating activities have a single performance obligation and are recognized when the ordered goods are shipped to the end customer, which is when control transfers. Net revenues reflect reductions attributable to consideration given to customers in various customer incentive programs, including pricing discounts on single transactions, volume discounts, promotional and advertising allowances, coupons, and rebates. The determination of the reduction of the transaction price for variable consideration requires certain estimates and assumptions that affect the timing and amounts of revenue and liabilities recognized. All such estimates were not material for the three and six months ended June 30, 2026 and June 30, 2025.
| 32 |
Critical estimates
Inventory valuation
Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out (FIFO) method and includes materials, labor, and applicable overhead. We regularly evaluate inventory for potential obsolescence, slow-moving or excess quantities, spoilage, shrinkage, and changes in net realizable value. These estimates require management judgment and are influenced by factors such as changes in consumer demand, supply chain disruptions, inflation, and raw material price volatility, any of which could materially impact our results. Estimation in the periods presented included expected losses on long-term supply contracts where the net realizable value of certain inventoriable goods are believed to be below the contractual purchase price. As it pertains to the Company’s bulk wine purchase, this includes consideration of the varietal, vintage, and volume of product versus the market price.
Long-term contracts
We evaluate long-term supply and purchase contracts to determine whether the expected costs to fulfill our obligations exceed the anticipated economic benefits. When estimated costs under a supply contract exceed its realizable value, we recognize a loss for the difference in accordance with U.S. GAAP. These estimates require management judgment regarding future market prices, utilization, and recoverability, and actual results may differ from those estimates.
Impairment on goodwill
We allocate the purchase price in business combinations to net assets, including identifiable intangible assets and goodwill. Goodwill and indefinite-lived intangible assets are not amortized, but are tested for impairment at least annually or whenever indicators of impairment arise. Definite-lived intangible assets are amortized over their useful lives and tested for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. Inputs to impairment tests include market multiples, forecasted cash flows, growth rates, margins, allocations between reporting units, and long-term projections.
Intangible asset valuation
The determination of the fair value of identifiable intangible assets acquired in business combinations requires significant management judgment. The Company values trademarks and other brand-related intangible assets using the relief-from-royalty method, which estimates the present value of future after-tax cash flows saved by owning the asset rather than licensing it. Key inputs include projected revenues attributable to the acquired brands, an assumed royalty rate, and a discount rate that reflects the time value of money and the risk characteristics of the underlying cash flows.
Fair value of equity awards
We grant equity-based awards for compensation purposes. The measurement of compensation expense for these awards requires management to estimate the fair value of the underlying common stock (for awards granted prior to our Direct Listing), as well as the awards on the grant date, which require assumptions regarding expected term, volatility, dividend yield, and forfeiture rates. Changes in these assumptions could materially affect the amount of expense recognized in our financial statements.
Fair value measurements of investments
The Company measures certain investments at fair value on a recurring basis under ASC 820, using Level 3 inputs due to significant unobservable assumptions. Fair value is determined using a market-based approach that considers comparable company multiples, liquidity discounts, and recent transactions, including partial investment sales. Changes in these assumptions could materially affect the valuation. There were no changes in valuation methodologies during the six months ended June 30, 2026.
| 33 |
Accounts receivable
Accounts receivable are derived from products and services delivered to customers and are stated at their net realizable value. The Company establishes an allowance for expected credit losses on financial assets, including trade and other receivables, at each reporting date. The allowance reflects management’s estimate of lifetime expected credit losses based on historical collection experience, the type and credit quality of the customer, the age of outstanding receivables, and current and expected future economic conditions.
Derivative liabilities
The accounting for the Company’s derivative liabilities requires the use of significant estimates and management judgment. These derivative liabilities arise from embedded features within certain convertible debt instruments and associated warrants that do not qualify for equity classification under applicable accounting guidance. The fair value of these derivative instruments is determined using valuation models that incorporate probability-weighted scenarios, including “with and without” methodologies, to estimate potential settlement outcomes. Because these inputs are not directly observable in the market, the derivative liabilities are classified as Level 3 within the fair value hierarchy.
Convertible debt
The accounting for the Company’s convertible promissory notes and associated warrants requires the application of complex accounting guidance and the use of significant estimates and assumptions. The Company evaluated the embedded conversion features and related warrants under applicable accounting standards to determine whether these instruments qualify for equity classification or must be accounted for as derivative liabilities. For those features that do not qualify for equity classification, the Company records them at fair value as derivative liabilities, with changes in fair value recognized in earnings until settlement or expiration. The Convertible Notes converted into Common Stock upon the Direct Listing in May 2026 (see Note 10).
SAFE notes
The accounting for the Simple Agreement for Future Equity (“SAFE”) issued in connection with the Good Twin business requires the application of significant judgment and the use of estimates. Because the SAFE contains contingent settlement provisions that could require cash settlement upon certain events outside the Company’s control, the Company concluded that the instrument should be classified as a liability and measured at fair value, with changes in fair value recognized in earnings until conversion or settlement. Estimating the fair value of the SAFE requires the use of valuation models and significant assumptions, including the estimated equity value of Good Twin, expected volatility, the probability and timing of potential equity financings or liquidity events, and other market-based inputs.
Emerging Growth Company and Smaller Reporting Company Status
The Jumpstart Our Business Startups Act of 2012 permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected not to “opt out” of such extended transition period. As a result of this election, our consolidated financial statements may not be comparable to other public companies that comply with new or revised accounting pronouncements as of public company effective dates.
| 34 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Global Trade Environment
We continue to monitor developments in global trade policy, including the potential for new or increased tariffs and retaliatory actions by trading partners. These factors may impact our sourcing, cost structure, and international growth strategy, and we actively evaluate mitigation strategies to limit potential adverse effects. We expect certain market conditions and their related impacts to persist through fiscal 2026, which could materially affect our results of operations and financial condition. We regularly evaluate margin profiles on all of our imported products and action on mitigation strategies to reduce the impact of tariffs or other global market factors, including pricing actions, productivity improvements, inventory management, and optimized marketing, which may not be sufficient in all cases. Additionally, severe weather events could adversely impact both our supply chain and consumer purchasing behavior.
Inflation Risk
Inflationary pressures have the potential to adversely affect our business operations, financial condition, and results of operations. Rising costs associated with cost of labor, research and development costs, and raw materials can lead to increased production and operational expenses. If we are unable to pass these increased costs onto our customers through pricing adjustments, our profit margins may be negatively impacted. Furthermore, inflation can influence consumer behavior, particularly in discretionary spending categories such as premium beverages.
| 35 |
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
In connection with the preparation of this Quarterly Report on Form 10-Q, our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2026. Based on that evaluation, and as a result of the material weaknesses in our internal control over financial reporting described below, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2026, our disclosure controls and procedures were not effective at the reasonable assurance level.
Material Weaknesses
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
In connection with the audit of our financial statements, our independent registered public accounting firm identified, and management concurred with, the following two material weaknesses in our internal control over financial reporting:
| · | Absence of a comprehensive and formalized accounting and financial reporting policies and procedures manual. We did not have a comprehensive and formalized accounting and financial reporting policies and procedures manual sufficient to ensure accurate and timely financial reporting, including with respect to periodic and year-end closing procedures, accrual and cutoff of accounts receivable and accounts payable, reconciliation of significant accounts, the establishment and review of accounting estimates, the preparation and review of closing and recurring journal entries, the documentation of the responsibilities of accounting personnel and management review procedures, and the design and maintenance of effective controls over information technology systems relevant to the preparation of financial statements. |
| · | Insufficient segregation of duties. Certain controls were concentrated in a small number of employees and members of management, primarily as a result of our size, which prevented appropriate segregation of duties and could amplify the risk arising from related party transactions. |
Notwithstanding the material weaknesses described above, our management has concluded that the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q present fairly, in all material respects, our financial position, results of operations and cash flows as of and for the periods presented in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Remediation Plan
Our management, with the oversight of the Audit Committee of our Board of Directors, has adopted a formal remediation plan (the “Remediation Plan”) designed to remediate the material weaknesses described above and to enhance our internal control over financial reporting. The Remediation Plan is organized into two workstreams, each directly addressing one of the identified material weaknesses. The Remediation Plan is being implemented under the oversight of the Audit Committee, which receives quarterly progress reports, and is monitored by a Remediation Steering Committee comprised of our Chief Financial Officer and Controller. Principal remediation activities include the following.
With respect to accounting and financial reporting policies and procedures, we are:
| · | developing, adopting and maintaining a comprehensive accounting policies and procedures manual documenting our significant accounting policies in accordance with U.S. GAAP; |
| · | establishing formalized month-end, quarter-end and year-end closing procedures and checklists, including standardized close calendars, account reconciliation requirements, materiality thresholds and reviewer sign-offs; |
| 36 |
| · | designing and implementing formal management review controls, including variance analysis and independent review and approval of manual, non-routine and related party journal entries; |
| · | assessing and enhancing information technology general controls over our financial reporting systems, including user access provisioning and deprovisioning and change management controls; and |
| · | performing a financial reporting risk assessment, including a fraud risk assessment, and mapping identified risks to specific controls. |
With respect to segregation of duties, we are:
| · | assessing our accounting organization and developing a formal segregation of duties matrix to identify and resolve conflicting responsibilities; |
| · | preparing formal role descriptions and authorization limits, and adding or reallocating personnel as necessary so that a secondary party reviews and/or approves transactions across all significant processes; |
| · | establishing a formal policy and process for the identification, approval, review and monitoring of related party transactions, including Audit Committee or independent director pre-approval; |
| · | reviewing and configuring user roles and permissions within our enterprise resource planning system to enforce segregation of duties; and |
| · | implementing compensating controls, including independent Chief Financial Officer review and approval of journal entries and dual-authorization requirements for disbursements above defined thresholds, together with ongoing monitoring and periodic reporting to the Audit Committee. |
We expect to substantially complete the remediation activities within twelve months of the adoption of the Remediation Plan, but in no event later than the filing of our first Annual Report on Form 10-K that requires a management assessment of internal control over financial reporting under Section 404(a) of the Sarbanes-Oxley Act of 2002. We will not consider the material weaknesses to be remediated until the applicable controls have been designed appropriately and have operated effectively for a sufficient period of time (at a minimum, two consecutive quarterly close cycles) to permit management to conclude, through testing, that the controls are operating effectively, and until the Audit Committee has reviewed and concurred with management’s conclusion. As an “emerging growth company” within the meaning of the Jumpstart Our Business Startups Act of 2012, our independent registered public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting for so long as we qualify as an emerging growth company. We can give no assurance that our remediation efforts will be successful or that additional material weaknesses will not be identified in the future.
Changes in Internal Control Over Financial Reporting
Except for the ongoing implementation of the remediation activities described above, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
| 37 |
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
As a smaller reporting company under Rule 12b-2 of the Exchange Act, we are not required to include risk factors in this Report. For additional risks relating to our operations carefully consider the factors discussed in “Risk Factors” of our Prospectuses dated May 18, 2026 and July 6, 2026, which could materially affect our business, financial condition or future results. There have been no material changes during fiscal year 2026 to the risk factors that were included in such Prospectuses. The risks described in our Prospectuses and herein are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, cash flows and/or future results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On April 8, 2026, at the first closing (the “First Closing”) under the Securities Purchase Agreement, dated as of March 17, 2026 (as amended by the Global Amendment dated April 7, 2026, the “SPA”) by and between the Company and Streeterville Capital, LLC, the Company issued 28,125 shares of Common Stock to Streeterville Capital, LLC as Commitment Shares. The number of Commitment Shares was determined pursuant to the Amendment as $450,000 divided by the Expected Reference Price of $16.00 per share, rounded down to the nearest whole share. No cash consideration was received by the Company for the Commitment Shares. The Commitment Shares were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D.
On May 20, 2026, we completed the second closing (the “Second Closing”) under the SPA with Streeterville Capital, LLC. At the Second Closing, we issued and sold to the Investor 7,000 shares of Series C Convertible Preferred Stock, par value $0.00001 per share, for an aggregate purchase price of $6,990,000, less a $30,000 transaction expense amount payable to the Investor. The shares were issued in reliance on the exemption from registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D promulgated thereunder. The Second Closing was previously reported in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, filed with the SEC on June 29, 2026.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits
|
Exhibit No. |
Description | |
| 3.1 | Eighth Amended and Restated Certificate of Incorporation (Incorporated by Reference to Exhibit 3.1 to the Company’s Form S-1, filed with the SEC on April 30, 2026). | |
| 3.2 | Bylaws (Incorporated by Reference to Exhibit 3.2 to the Company’s Form S-1, filed with the SEC on April 9, 2026). | |
| 31.1 | Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2 | Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1 | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS | Inline XBRL Instance Document. | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| 38 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: August 14, 2026
| AMASS Brands Inc | ||
| By: | /s/ Mark T. Lynn | |
| Mark T. Lynn | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| By: | /s/ Zachary Ament | |
| Zachary Ament | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) | ||
| 39 |
Annex B
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 29, 2026
AMASS BRANDS INC
(Exact name of registrant as specified in its charter)
| Delaware | 001-43286 | 81-5227282 | ||
|
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) | (I.R.S. Employer Identification No.) |
|
860 E Stowell Road Santa Maria, CA |
93454 | |
| (Address of principal executive offices) | (Zip Code) |
(909) 293-8571
Registrant’s telephone number, including area code:
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Class | Trading Symbol | Name of Exchange On Which Registered | ||
| Common Stock | AMSS | Nasdaq Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company x
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. ☐
Item 1.01. Entry into a Material Definitive Agreement.
On May 29, 2026, AMASS Brands Inc (the “Company”) entered into Amendment No. 1 to the Warrant to Purchase Shares of Common Stock (the “Warrant Amendment”) with Streeterville Capital, LLC (the “Investor”). The Warrant Amendment amends the warrant to purchase shares of the Company’s common stock (the “Warrant”) originally issued to the Investor in connection with that certain Securities Purchase Agreement, dated March 17, 2026, by and between the Company and the Investor, as amended by that certain Global Amendment dated April 7, 2026.
The Warrant Amendment modifies the exercise price of the Warrant to provide for a reduced exercise price of $5.00 per share for any exercise occurring during the ninety (90) day period commencing on the effective date of the Warrant Amendment (the “Reduced Exercise Price Period”). Following the expiration or earlier termination of the Reduced Exercise Price Period, the exercise price will be $16.00 per share. The Company may terminate the Reduced Exercise Price Period at any time upon two (2) trading days’ prior written notice. All other terms and conditions of the Warrant remain unchanged and in full force and effect.
The foregoing description of the Warrant Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Warrant Amendment, a copy of which is filed as Exhibit 4.1 hereto and is incorporated herein by reference.
Item 9.01 Financial Statements, Pro Forma Financial Information, and Exhibits.
(c) Exhibits
| 4.1 | Amendment No. 1 to the Warrant to Purchase Shares of Common Stock. |
| 2 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: May 29, 2026
| AMASS BRANDS INC | ||
| By: | /s/ Mark T. Lynn | |
| Mark T. Lynn | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| 3 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 12, 2026
AMASS BRANDS INC
(Exact name of registrant as specified in its charter)
| Delaware | 001-43286 | 81-5227282 | ||
|
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) | (I.R.S. Employer Identification No.) |
|
860 E Stowell Road Santa Maria, CA |
93454 | |
| (Address of principal executive offices) | (Zip Code) |
(909) 293-8571
Registrant’s telephone number, including area code:
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Class | Trading Symbol | Name of Exchange On Which Registered | ||
| Common Stock | AMSS | Nasdaq Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company x
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. ¨
Item 1.01. Entry into a Material Definitive Agreement.
On June 12, 2026, AMASS Brands Inc (the “Company”) entered into Amendment No. 2 to the Warrant to Purchase Shares of Common Stock (the “Warrant Amendment”) with Streeterville Capital, LLC (the “Investor”). The Warrant Amendment amends the warrant to purchase shares of the Company’s common stock, as amended on May 29, 2026 (the “Warrant”) originally issued to the Investor in connection with that certain Securities Purchase Agreement, dated March 17, 2026, by and between the Company and the Investor, as amended by that certain Global Amendment dated April 7, 2026.
The Warrant Amendment modifies the exercise price of the Warrant to provide for a reduced exercise price of $3.00 per share for any exercise occurring during the ninety (90) day period commencing on the effective date of the Warrant Amendment (the “Reduced Exercise Price Period”). Following the expiration or earlier termination of the Reduced Exercise Price Period, the exercise price will be $16.00 per share. The Company may terminate the Reduced Exercise Price Period at any time upon two (2) trading days’ prior written notice. All other terms and conditions of the Warrant remain unchanged and in full force and effect.
The foregoing description of the Warrant Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Warrant Amendment, a copy of which is filed as Exhibit 4.1 hereto and is incorporated herein by reference.
Item 9.01 Financial Statements, Pro Forma Financial Information, and Exhibits.
(c) Exhibits
| 4.1 | Amendment No. 2 to the Warrant to Purchase Shares of Common Stock. |
| 2 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: June 12, 2026
| AMASS BRANDS INC | ||
| By: | /s/ Mark T. Lynn | |
| Mark T. Lynn | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| 3 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 16, 2026
AMASS BRANDS INC
(Exact name of registrant as specified in its charter)
| Delaware | 001-43286 | 81-5227282 | ||
|
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
|
860 E Stowell Road Santa Maria, CA |
93454 | |
| (Address of principal executive offices) | (Zip Code) |
(909) 293-8571
Registrant’s telephone number, including area code:
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Class | Trading Symbol | Name of Exchange On Which Registered | ||
| Common Stock | AMSS | Nasdaq Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company x
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. ¨
Item 1.01. Entry into a Material Definitive Agreement.
SAFE Agreement
On June 16, 2026, AMASS Brands Inc (the “Company”) entered into a Simple Agreement for Future Equity (the “SAFE”) with AFTERDREAM, Inc ( “AfterDream”), pursuant to which the Company invested $1,435,000 (the “Purchase Amount”) in exchange for the right to receive shares of AfterDream’s capital stock upon the occurrence of certain future events. The SAFE includes a post-money valuation cap of $7,500,000. Capitalized words used but not defined herein shall have the meaning as set forth in the SAFE.
If there is an Equity Financing before the termination of the SAFE, on the initial closing of such Equity Financing, the SAFE will automatically convert into the greater of (1) the number of shares of Standard Preferred Stock equal to the Purchase Amount divided by the lowest price per share of Standard Preferred Stock, or (2) the number of shares of Safe Preferred Stock equal to the Purchase Amount divided by the Safe Price. If there is a Liquidity Event before the termination of the SAFE, the Company will automatically be entitled to receive a portion of Proceeds equal to the greater of (i) the Purchase Amount or (ii) the amount payable on the number of shares of Common Stock equal to the Purchase Amount divided by the Liquidity Price. If there is a Dissolution Event before the termination of the SAFE, the Company will automatically be entitled to receive a portion of Proceeds equal to the Purchase Amount, subject to the liquidation priority provisions set forth in the SAFE. The SAFE is not transferable or assignable by either party without the prior written consent of the other, subject to certain customary exceptions.
The foregoing description of the SAFE does not purport to be complete and is qualified in its entirety by reference to the full text of the SAFE, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
First Amendment to SAFE Agreement
On June 17, 2026, the Company entered into Amendment No. 1 to the SAFE (the “Amendment”) with AfterDream. Pursuant to the Amendment, the parties agreed to increase the Purchase Amount from $1,435,000 to $1,535,000, representing an additional investment of $100,000 by the Company. The Post-Money Valuation Cap of $7,500,000 remains unchanged. All other material terms of the SAFE remain in full force and effect as originally executed, including the conversion mechanics upon an Equity Financing, Liquidity Event, or Dissolution Event.
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 9.01 Financial Statements, Pro Forma Financial Information, and Exhibits.
(c) Exhibits
| 10.1† | Simple Agreement for Future Equity |
| 10.2† | Amendment No. 1 to SAFE dated June 17, 2026 |
† Portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K.
| 2 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: June 23, 2026
| AMASS BRANDS INC | ||
| By: | /s/ Mark T. Lynn | |
| Mark T. Lynn | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| 3 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 25, 2026
AMASS BRANDS INC
(Exact name of registrant as specified in its charter)
| Delaware | 001-43286 | 81-5227282 | ||
|
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
|
860 E Stowell Road Santa Maria, CA |
93454 | |
| (Address of principal executive offices) | (Zip Code) |
(909) 293-8571
Registrant’s telephone number, including area code:
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Class | Trading Symbol | Name of Exchange On Which Registered | ||
| Common Stock | AMSS | Nasdaq Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company x
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. ¨
Item 1.01. Entry into a Material Definitive Agreement.
Second Amendment to SAFE Agreement
As disclosed on June 23, 2026, on June 16, 2026, AMASS Brands Inc (the “Company”) entered into a Simple Agreement for Future Equity (the “SAFE”) with AFTERDREAM, Inc (“AfterDream”), as amended by Amendment No. 1 to the SAFE dated June 17, 2026.
On June 25, 2026, the Company entered into Amendment No. 2 to the SAFE (the “Second Amendment”) with AfterDream. Pursuant to the Second Amendment, the parties agreed to increase the Purchase Amount from $1,535,000 to $1,735,000, representing an additional investment of $200,000 by the Company. The Post-Money Valuation Cap of $7,500,000 remains unchanged. All other material terms of the SAFE remain in full force and effect as originally executed, including the conversion mechanics upon an Equity Financing, Liquidity Event, or Dissolution Event.
The foregoing description of the Second Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Second Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 9.01 Financial Statements, Pro Forma Financial Information, and Exhibits.
(c) Exhibits
| 10.1† | Amendment No. 2 to SAFE dated June 25, 2026 |
† Portions of this exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K.
| 2 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: June 29, 2026
| AMASS BRANDS INC | ||
| By: | /s/ Mark T. Lynn | |
| Mark T. Lynn | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| 3 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 10, 2026
AMASS BRANDS INC
(Exact name of registrant as specified in its charter)
| Delaware | 001-43286 | 81-5227282 | ||
|
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) | (I.R.S. Employer Identification No.) |
|
860 E Stowell Road Santa Maria, CA |
93454 | |
| (Address of principal executive offices) | (Zip Code) |
(909) 293-8571
Registrant’s telephone number, including area code:
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Class | Trading Symbol | Name of Exchange On Which Registered | ||
| Common Stock | AMSS | Nasdaq Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company x
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. ¨
Item 1.01. Entry into a Material Definitive Agreement.
On July 10, 2026, AMASS Brands Inc (the “Company”) entered into Amendment No. 3 to the Warrant to Purchase Shares of Common Stock (the “Warrant Amendment”) with Streeterville Capital, LLC (the “Investor”). The Warrant Amendment amends the warrant to purchase shares of the Company’s common stock, as amended on May 29, 2026 and June 12, 2026 (the “Warrant”) originally issued to the Investor in connection with that certain Securities Purchase Agreement, dated March 17, 2026, by and between the Company and the Investor, as amended by that certain Global Amendment dated April 7, 2026.
The Warrant Amendment modifies the exercise price of the Warrant to provide for a reduced exercise price of $1.50 per share for any exercise occurring during the thirty (30) day period commencing on the effective date of the Warrant Amendment (the “Reduced Exercise Price Period”). Following the expiration or earlier termination of the Reduced Exercise Price Period, the exercise price will be $16.00 per share. The Company may terminate the Reduced Exercise Price Period at any time upon two (2) trading days’ prior written notice. All other terms and conditions of the Warrant remain unchanged and in full force and effect.
The foregoing description of the Warrant Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Warrant Amendment, a copy of which is filed as Exhibit 4.1 hereto and is incorporated herein by reference.
Item 9.01 Financial Statements, Pro Forma Financial Information, and Exhibits.
(c) Exhibits
| 4.1 | Amendment No. 3 to the Warrant to Purchase Shares of Common Stock. |
| 2 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: July 10, 2026
AMASS BRANDS INC
| By: | /s/ Mark T. Lynn | |
| Mark T. Lynn | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) |
| 3 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 22, 2026
AMASS BRANDS INC
(Exact name of registrant as specified in its charter)
| Delaware | 001-43286 | 81-5227282 | |||
|
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) | (I.R.S. Employer Identification No.) |
|
860 E Stowell Road Santa Maria, CA |
93454 | |
| (Address of principal executive offices) | (Zip Code) |
(909) 293-8571
Registrant’s telephone number, including area code:
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Class | Trading Symbol | Name of Exchange On Which Registered | ||
| Common Stock | AMSS | Nasdaq Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company x
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. ¨
Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
On July 22, 2026, AMASS Brands Inc (the “Company”) received two notification letters (the “Notification Letters”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it is not in compliance with the continued listing requirements of The Nasdaq Global Market because, for the 30 consecutive business days from June 8, 2026 through July 21, 2026, (i) the market value of the Company’s listed securities (“MVLS”) was below the minimum $50,000,000 required under Nasdaq Listing Rule 5450(b)(2)(A) and (ii) the market value of the Company’s publicly held shares (“MVPHS”) was below the minimum $15,000,000 required under Nasdaq Listing Rules 5450(b)(2)(C) and 5450(b)(3)(C). Nasdaq also noted in the MVLS Notification Letter that the Company does not meet the requirements under Nasdaq Listing Rule 5450(b)(3)(A).
The Notification Letters have no immediate effect on the listing or trading of the Company’s common stock on The Nasdaq Global Market. In accordance with Nasdaq Listing Rules 5810(c)(3)(C) and 5810(c)(3)(D), the Company has 180 calendar days, or until January 19, 2027, to regain compliance with the MVLS and MVPHS requirements. To regain compliance, the Company’s MVLS must close at $50,000,000 or more and the Company’s MVPHS must close at $15,000,000 or more, in each case for a minimum of ten consecutive business days during the compliance period. Nasdaq may, in its discretion, require the Company to satisfy the applicable price-based requirement for a period in excess of ten consecutive business days, generally not more than 20 consecutive business days, before determining that the Company has demonstrated an ability to maintain long-term compliance.
If the Company does not regain compliance with the MVLS and MVPHS requirements before January 19, 2027, Nasdaq will provide written notification that the Company’s securities are subject to delisting, at which time the Company may appeal the delisting determination to a Hearings Panel. The Company intends to monitor its MVLS and MVPHS and evaluate available options to regain compliance, including, if appropriate, applying to transfer the Company’s securities to The Nasdaq Capital Market, provided that the Company satisfies the applicable continued listing requirements for that market.
| 2 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: July 27, 2026
AMASS BRANDS INC
| By: | /s/ Mark T. Lynn | |
| Mark T. Lynn | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) |
| 3 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 29, 2026
AMASS BRANDS INC
(Exact name of registrant as specified in its charter)
| Delaware | 001-43286 | 81-5227282 | ||
|
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) | (I.R.S. Employer Identification No.) |
|
860 E Stowell Road Santa Maria, CA |
93454 | |
| (Address of principal executive offices) | (Zip Code) |
(909) 293-8571
Registrant’s telephone number, including area code:
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Class | Trading Symbol | Name of Exchange On Which Registered | ||
| Common Stock | AMSS | Nasdaq Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company x
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. ¨
Item 1.01. Entry into a Material Definitive Agreement.
On July 29, 2026, AMASS Brands Inc (the “Company”) entered into a Side Letter Agreement (the “Side Letter Agreement”) with Full Glass Wine Co., LLC, a Delaware limited liability company (“FGWC”), and Full Glass – Licensing, LLC, a Delaware limited liability company (together with FGWC, “Full Glass”). The Side Letter Agreement modifies and ultimately terminates that certain Multi-Year Wine Purchase Agreement dated February 29, 2024, by and between Full Glass – Licensing and the Company (the “Purchase Agreement”).
Under the Purchase Agreement, Full Glass – Licensing was obligated to purchase $4,000,000 worth of inventory (approximately 111,333 cases of finished wine) from the Company. Pursuant to the Side Letter Agreement, Full Glass – Licensing’s purchase obligation under the Purchase Agreement is replaced with a settlement amount of $427,000 (the “Settlement Amount”). Of the Settlement Amount, a remaining balance of $31,750 is due by July 31, 2026, upon receipt of which the Company will release certain wine inventory to Full Glass. The remaining $406,000 of the Settlement Amount constitutes a “Deposit” that may be applied, at Full Glass’s election, in one of two ways:
(i) Equity Redemption in Connection with Future Wine Purchases: Full Glass purchases 135,333.33 gallons of finished wine from the Company at $5.00 per gallon (aggregate purchase price of $676,666.66), with $270,666.66 paid in cash and the remaining $406,000 applied to the redemption of Series A Units and Common Units held by the Company in FGWC at $8.77 per unit; or
(ii) Application of Deposit to Equity Redemption Only: the $406,000 Deposit is applied exclusively to the redemption of Series A Units and Common Units held by the Company in FGWC, without any accompanying wine purchase.
The Side Letter Agreement provides that if any installment payment is late, a one-time late charge of $10,000 applies, subject to a 7-day cure period. Failure to cure permits the Company to elect to void the Side Letter Agreement and reinstate the original obligations under the Purchase Agreement.
The Side Letter Agreement also provides that if, within one year of the effective date, FGWC enters into a definitive agreement for a sale of the company (including a merger, consolidation, equity sale, asset sale, or change of control exceeding 51%), and a Redemption Agreement was previously executed, Full Glass must pay the Company the difference between what the Company would have received in such sale transaction and the Settlement Amount previously applied through redemption.
In connection with the Side Letter Agreement, the Company acknowledged that Full Glass paid all amounts owed under the Amended and Restated Secured Promissory Note dated February 29, 2024, and the Company agreed to deliver a Release of Security Interests in IP and Confirmation Payoff Letter. The parties also exchanged broad mutual releases of all claims related to the Purchase Agreement and all other agreements and dealings between the parties, including the Company’s equity ownership in FGWC, subject to receipt of the Settlement Amount. The mutual releases include a waiver of California Civil Code Section 1542.
The foregoing description of the Side Letter Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Side Letter Agreement, a copy of which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.
Item 1.02. Termination of a Material Definitive Agreement.
Effective as of July 29, 2026, the Multi-Year Wine Purchase Agreement dated February 29, 2024, by and between Full Glass – Licensing, LLC and the Company (the “Purchase Agreement”), was terminated in its entirety pursuant to the terms of the Side Letter Agreement described in Item 1.01 above. Certain provisions of the Purchase Agreement survive solely to give effect to the credit mechanics contemplated by the Side Letter Agreement, including provisions relating to purchase orders, pricing and invoicing, delivery terms, and the intellectual property license for labeling and packaging.
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Item 9.01 Financial Statements, Pro Forma Financial Information, and Exhibits.
(d) Exhibits
| 10.1 | Side Letter Agreement, dated July 29, 2026, by and among Full Glass Wine Co., LLC, Full Glass - Licensing, LLC, and AMASS Brands Inc. |
| 2 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: August 5, 2026
AMASS BRANDS INC
| By: | /s/ Mark T. Lynn | |
| Mark T. Lynn | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) |
| 3 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 19, 2026
AMASS BRANDS INC
(Exact name of registrant as specified in its charter)
| Delaware | 001-43286 | 81-5227282 | ||
|
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
|
860 E Stowell Road Santa Maria, CA |
93454 | |
| (Address of principal executive offices) | (Zip Code) |
(909) 293-8571
Registrant’s telephone number, including area code:
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Class | Trading Symbol |
Name of Exchange On Which Registered | ||
| Common Stock | AMSS | Nasdaq Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company x
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. ¨
| Item 3.03 | Material Modification to Rights of Securityholders. |
To the extent required by Item 3.03 of Form 8-K, the information contained in Item 5.03 of this Current Report on Form 8-K is incorporated by reference into this Item 3.03.
| Item 5.03 | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
Amendment and Restatement of Certificate of Designation
As previously disclosed, on May 20, 2026, AMASS Brands Inc (the “Company”) filed with the Secretary of State of Delaware a Certificate of Designation of Preferences and Rights of Series C Convertible Preferred Stock (the “Certificate of Designation”). The Certificate of Designation provides for the creation of 35,000 authorized shares of the Company’s Series C Convertible Preferred Stock, par value $0.00001 per share (the “Series C Preferred Stock”).
On August 19, 2026, upon obtaining the consent of a majority of the holders of the Series C Preferred Stock, and the approval of the Company’s Board of Directors in accordance with the Delaware General Corporation Law and the terms of the existing Certificate of Designation, the Company filed with the Secretary of State of Delaware an Amended and Restated Certificate of Designation of Preferences and Rights of Series C Convertible Preferred Stock (the “Amended and Restated Certificate of Designation”), which amended and restated in its entirety the Company’s existing Certificate of Designation.
The Amended and Restated Certificate of Designation, among other things: (1) revised certain liquidation and deemed liquidation event provisions applicable to the Series C Preferred Stock; (2) modified certain conversion rights and conversion pricing provisions particularly in connection with a limited conversion event; (3) revised the Company’s optional redemption provisions and clarifies that holders of Series C Preferred Stock do not have the right to require the Company to redeem or repurchase such shares, except in connection with an actual liquidation, dissolution or winding up of the Company; (4) revised certain event of default provisions and remedies available to holders; and (5) updated certain definitions, restrictive covenants and other rights, preferences, privileges and restrictions applicable to the Series C Preferred Stock.
The foregoing description of the Amended and Restated Certificate of Designation is qualified in its entirety by reference to the full text of the Amended and Restated Certificate of Designation, which is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference.
| Item 8.01 | Other Events. |
On August 19, 2026, pursuant to that certain Securities Purchase Agreement, dated as of March 17, 2026, and as amended by that certain Global Amendment dated April 7, 2026, by and between the Company and Streeterville Capital, LLC (the “Investor”) (as amended, supplemented or otherwise modified from time to time, the “Purchase Agreement”), the Company delivered a request to the Investor for the purchase of additional shares of the Company’s Series C Preferred Stock with an aggregate purchase price of $2,000,000. Subject to the terms and conditions of the Purchase Agreement, the Investor is obligated to purchase such additional shares of Series C Preferred Stock on the applicable closing date.
| Item 9.01 | Financial Statements, Pro Forma Financial Information, and Exhibits. |
(d) Exhibits
| 3.1 | Amended and Restated Certificate of Designation of Preferences and Rights of Series C Convertible Preferred Stock of AMASS Brands, Inc, dated August 19, 2026. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
| 2 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AMASS BRANDS INC | ||
| By: | /s/ Mark T. Lynn | |
| Mark T. Lynn | ||
| Dated: August 21, 2026 | Chief Executive Officer | |
| 3 |