Laird Superfood, Inc.: Form 10-Q for the period ended Jun 30, 2026

The following discussion and analysis of the financial condition and results of operations of Laird Superfood, Inc. (together with its wholly owned subsidiaries on a consolidated basis, the "Company," "Laird Superfood," "our," "us," or "we") is a supplement to and should be read in conjunction with the unaudited consolidated condensed financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Form 10-K"). This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Cautionary Note Regarding Forward-Looking Statements” included elsewhere in this Quarterly Report on Form 10-Q and the section titled “Risk Factors” included herein and in the 2025 Form 10-K.

Overview

Laird Superfood is a multi-brand superfoods platform comprised of the Laird Superfood, Navitas Organics, and Terrasoul Superfoods brands. Together, our brands create clean, minimally processed, functional foods, many of which incorporate nutrient-dense superfoods and adaptogens that may be beneficial in reducing stress, improving energy levels, enhancing mental performance, mood regulation, and immune system support. Our primary products include (i) coffee solutions and (ii) functional foods. Consumer preferences within the evolving food and beverage industry are shifting away from sugar-laden food and beverage products, as well as those containing highly processed and artificial ingredients. Our long-term goal is to build and scale a widely recognized superfoods platform that authentically focuses on recognizable ingredients, nutritional density, and functionality, which we believe will allow us to maximize penetration of a multi-billion-dollar opportunity in the grocery market. We generate revenue through two channels: e-commerce and wholesale.

Our e-commerce channel consists of (i) our direct-to-consumer ("DTC") business, which includes sales through lairdsuperfood.com, navitasorganics.com, terrasoul.com, and pickybars.com, (ii) Amazon.com, and (iii) other third-party online marketplaces. Our websites offer an authentic brand experience for our consumers that drives engagement through educational content. These platforms also provide us with direct consumer feedback for future product development. We view our proprietary database of customers ordering directly from our websites as a strategic asset, as it enhances our ability to develop long-term relationships with these customers. We believe the content on our websites allows us to educate our consumers on the benefits of our products and ingredients, while providing a positive customer experience.

Our wholesale channel consists of products sold through various retail outlets, including natural, specialty, and conventional grocery stores, club stores, and food service locations. We believe the diversity of our retail outlets, together with the expanded superfoods portfolio added through our Navitas and Terrasoul acquisitions, represents a strong competitive advantage for Laird Superfood and provides us with a larger total addressable market than would be considered normal for a food brand that is singularly focused on the grocery market.

For the three and six months ended June 30, 2026, the e-commerce channel made up 49% and 48% of our net sales, respectively. For the three and six months ended June 30, 2025, the e-commerce channel made up 52% and 53% of our net sales, respectively. For the three and six months ended June 30, 2026, the wholesale channel made up 51% and 52% of our net sales, respectively. For the three and six months ended June 30, 2025, the wholesale channel made up 48% and 47% of our net sales, respectively. The shift towards Wholesale is consistent with our strategy to expand our retail distribution footprint. As our business continues to shift toward wholesale, quarter-to-quarter variability may increase due to the timing of larger orders from key customers, however, long-term, we remain confident in the underlying demand trends in this channel.

Net sales increased to $41.3 million for the three months ended June 30, 2026 ("Q2 2026"), from $12.0 million for the three months ended June 30, 2025 ("Q2 2025"), driven by the incremental sales of Navitas and Terrasoul, which contributed $29.4 million.

Net sales increased to $55.2 million for the six months ended June 30, 2026 ("YTD 2026"), from $23.6 million for the six months ended June 30, 2025 ("YTD 2025"), driven by the incremental sales of Navitas and Terrasoul, which contributed $31.1 million.

Recent Developments

The Navitas Acquisition

On the Navitas Closing Date, we completed the Navitas Acquisition, pursuant to the terms of the Navitas Acquisition Agreement following the receipt of approval from our stockholders, we acquired (i) all of the issued and outstanding units of Navitas from the Navitas Sellers and (ii) all of the issued and outstanding capital stock of GSC, from Encore for a purchase price of $40.9 million in cash, subject to customary purchase price adjustments, including a working capital adjustment. GSC is a holding company with no operations whose purpose is to hold units of Navitas.

The Nexus Investment

On the Navitas Closing Date and concurrently with the closing of the Navitas Acquisition, we completed the transactions contemplated by the Investment Agreement entered into by and among the Company and the Investor, with the Investor being an affiliate of Nexus, pursuant to which the Investor purchased an aggregate of 50,000 initial shares (the “Initial Shares”) of Series A Preferred Stock (“Series A Preferred Stock”) at a purchase price of $1,000 per share for gross proceeds of $50.0 million at closing (the “Nexus Investment”). The net proceeds from the Nexus Investment were subsequently used to complete the Navitas Acquisition (the Nexus Investment together with the Navitas Acquisition, the “Transactions”). For additional information regarding the Investment Agreement, see the information under the heading “Liquidity and Capital Resources.”

Board Appointments

We approved changes to our Board in connection with the Transactions. As of the Navitas Closing Date, the number of directors serving on the Board was increased to nine, and we appointed Doug Behrens, Michael Cohen, Kayla Dean Obia, and Kristin Patrick as representatives nominated by Nexus (the “Nexus Designees”), with Grant LaMontagne remaining on the Board and being considered the fifth Nexus Designee. In the future, the number of Nexus representatives will adjust proportionately to Nexus’s ownership thresholds, subject to applicable law and stock exchange rules. Doug Behrens resigned effective May 18, 2026.

The Terrasoul Acquisition

On the Terrasoul Closing Date, we completed the Terrasoul Acquisition for a purchase price of (i) $50.4 million in cash, subject to customary purchase price adjustments, and (ii) the estimated fair value of contingent consideration of $4.1 million in cash payable upon the achievement of specified performance-based milestones following the Terrasoul Closing Date. Terrasoul is a vertically integrated, branded superfoods platform offering a portfolio of products including nuts, seeds, dried fruits, powders, baking ingredients, and functional beverage mix-ins, sourced globally and processed and packaged in-house. We acquired Terrasoul to expand our product portfolio, broaden our distribution footprint across e-commerce, foodservice, and retail channels, and further our strategy of building a scaled platform in the superfoods and functional nutrition category.

The Subsequent Issuance

On the Terrasoul Closing Date, we concurrently completed the Subsequent Issuance pursuant to the exercise of our option under the Investment Agreement to require the Investor to purchase the Additional Shares, as approved by a majority of the disinterested directors of the Board on March 27, 2026. The net proceeds from the Subsequent Issuance were used to fund the Terrasoul Acquisition. An aggregate of 16,806,722 shares of Common Stock may be issued upon conversion of the shares of Series A Preferred Stock issued in the Subsequent Issuance.

Our Strategy and Key Factors Affecting our Future Performance

There have been no material changes to our strategy or key factors affecting our future performance from those described in Item 7 of the 2025 Form 10-K, aside from the following, in light of the acquisitions of Navitas and Terrasoul.

Ability to Integrate Our Acquisitions and Realize Anticipated Synergies

During 2026, we acquired Navitas and Terrasoul. Our future performance will be affected by our ability to successfully integrate these businesses, including their operations, supply chains, information technology and accounting systems, and business processes, on the timeline and at the cost we anticipate. Our performance will also depend on our ability to realize the anticipated benefits and synergies of these acquisitions, including cross-selling opportunities across our brands, combined purchasing and sourcing efficiencies, and shared distribution and fulfillment capabilities. We may not realize these benefits and synergies at all, or within the timeframe we expect, and the integration process may divert management attention or result in unanticipated costs or disruption to our existing business.

Ability to Manage Our Multi-Brand Portfolio

Following our recent acquisitions, we market and sell products under multiple brands, including Laird Superfood, Navitas Organics, and Terrasoul Superfoods, which span a range of product categories, price points, and consumer positioning. Our pace of growth will be affected by our ability to effectively manage this expanded brand portfolio, including allocating marketing and product development resources across brands, maintaining the distinct identity and equity of each brand, and managing potential overlap among products that serve similar consumer needs. A failure to effectively manage our brand portfolio could limit our growth or dilute the value of one or more of our brands.

Ability to Manage Our Global Supply Chain

Our ability to grow and meet future demand will be affected by our ability to adequately plan for and source inventory from a variety of suppliers located inside and outside the United States. We may encounter difficulties in sourcing products. A growing portion of our portfolio, including products sold under the Navitas and Terrasoul brands, depends on our ability to source certified organic ingredients at scale and to obtain and maintain organic and other certifications, such as USDA Organic and Non-GMO certifications, across an expanded number of products and suppliers. The availability, cost, and certification status of these ingredients may be affected by factors outside of our control, and any inability to source qualifying ingredients or to maintain required certifications could adversely affect our ability to meet demand.

Ability to Grow Our Customer Base in both E-commerce and Traditional Wholesale Distribution Channels at a Reasonable Cost

We are continuously growing our customer base through both paid and organic e-commerce channels, as well as by expanding our presence in our wholesale channel through a variety of physical retail outlets and geographical regions. We typically attract new customers in our e-commerce channel through our direct websites, lairdsuperfood.com and pickybars.com, and through Amazon. We also seek to attract new e-commerce customers through paid and unpaid social media, search, display and traditional media. Our products are also sold through a growing number of retail outlets. Customers in our wholesale channel include grocery chains, natural food outlets, club stores, and food service customers. Attracting new customers in physical retail outlets depends on, among other things, paid promotions through retailers, display, and traditional media. We believe an ability to consistently attract and retain customers at a reasonable cost relative to projected life-time value will be a key factor affecting our future performance. With the addition of the Navitas and Terrasoul brands, our growth will also depend on our ability to execute channel rollouts for each brand, including expanding the distribution of newly acquired brands into channels where they are underpenetrated and introducing our existing brands into the e-commerce, online marketplace, and wholesale channels served by the acquired brands. Each of our brands serves a different mix of e-commerce, online marketplace, and wholesale customers, and our ability to consistently and cost-effectively execute these channel expansions across our portfolio will be a key factor affecting our future performance.

Components of Results of Operations

Sales, net

We sell our products through two channels: wholesale and e-commerce. Through our wholesale channel, we sell our products to distributors and retail outlets which, in turn, sell to end consumers. Through our e-commerce channel, we derive revenue from the sale of our products directly to consumers through our direct websites, lairdsuperfood.com and pickybars.com, as well as third-party e-commerce platforms such as Amazon.com.

Cost of Goods Sold

Cost of goods sold includes the cost of raw materials and packaging, co-packing tolling fees, inbound and outbound freight costs, import duties and tariffs, indirect labor, third party labor to store and ship our products, and overhead costs incurred in the production, storage, and distribution of products sold in the period.

Operating Expenses

Our operating expenses consist of general and administrative, research and product development, and sales and marketing expenses, including non-production personnel costs.

Income Taxes

Due to our history of operating losses, we have not historically incurred significant federal income tax expense, and we have continued to owe state and local income taxes. We expect that we may begin to incur federal income tax expense in the future. Our ability to use our net operating loss carryforwards to offset future taxable income may be limited under Section 382 of the Internal Revenue Code as a result of ownership changes, and we are completing a study to determine the extent of any such limitations.

Results of Operations

Comparison of Q2 2026 and Q2 2025

For the periods indicated, the following table sets forth results of operations and the increase or decrease therewith:

Net sales increased by 244% to $41.3 million compared to $12.0 million in the corresponding prior year period. The increase was primarily attributable to distribution expansion in retail channel, continued strength in Club and contribution of Navitas and Terrasoul acquisitions.

The increase in cost of goods sold during Q2 2026 was driven primarily by the growth in gross sales volume, as well as commodity cost inflation and increased production costs relative to prior periods with the addition of Terrasoul's vertically integrated business model.

Gross profit increased 162% to $12.5 million, or 30.3% of net sales as compared to $4.8 million, or 39.9% of net sales in the corresponding prior year period. The gross margin compression was attributable to unfavorable channel and product mix, inflationary commodity costs, and lower margins associated with the Terrasoul brand.

The increase in general and administrative expenses during Q2 2026 was driven by business combination expenses, costs incurred to integrate the businesses, as well as increased amortization expenses related to the intangible assets identified in the acquisitions of Navitas and Terrasoul.

The increase in sales and marketing expenses during Q2 2026 as a result of the larger scale of the business after the acquisitions of Navitas and Terrasoul. This was driven by variable selling costs on higher sales volume, elevated people costs as we build our team to support the broader organization, and increased marketing costs across both online and retail channels.

Other income is composed of interest income and expense, rental income, and other non-operating gains and losses. The increase in other income during Q2 2026 was driven by increases in dividend income on money market funds, as the amounts carried in those accounts increased on average. This was offset in part by the periodic fair value adjustment on contingent consideration related to the acquisition of Terrasoul.

Income tax benefit (expense) is composed state and local income and franchise taxes paid and refunds received.

Comparison of YTD Q2 2026 and YTD Q2 2025

For the periods indicated, the following table sets forth results of operations and the increase or decrease therewith:

Net sales increased by 134% to $55.2 million compared to $23.6 million in the corresponding prior year period. The increase was primarily driven by distribution expansion in retail and Club channels and the contribution of Navitas and Terrasoul acquisitions.

The increase in cost of goods sold during YTD 2026 was driven primarily by growth in sales volume, inflationary commodity costs, and increased manufacturing costs associated with the Terrasoul brand.

Gross profit increased by 78% to $17.2 million, or 31.1% of net sales, compared to $9.7 million, or 40.9% of net sales, in the corresponding prior year period. The margin compression was attributable to unfavorable channel and product mix, inflationary commodity costs, as well lower margins associated with the Terrasoul brand.

The increase in general and administrative expenses during YTD 2026 was primarily driven by costs incurred related to the acquisitions of Navitas and Terrasoul, amortization expense related to the assets identified in these acquisitions, and increased personnel costs.

The increase in sales and marketing expenses during YTD 2026 was driven by selling costs on higher sales volume, as well as increased media spend, and agency fees.

Other income is composed of interest income and expense, rental income, and other non-operating gains and losses. The decrease in other income during YTD 2026 was driven by the periodic fair value adjustment of the contingent consideration related to the acquisition of Terrasoul, offset in part by increased dividend income on money market funds, as the amounts carried in those accounts increased in 2026.

The income tax benefit during YTD 2026 was driven by a discrete, non-recurring release of our valuation allowance in connection with the Navitas Acquisition, whereby approximately $4.7 million of net deferred tax liabilities were acquired. The income tax expense in the prior year related to state and local income taxes.

Cash Flows

The following table shows a summary of our cash flows for the six months ended June 30, 2026 and 2025:

The decrease in cash used in operating activities for YTD 2026 was driven primarily by elevated inventory procurement in YTD 2025 in an effort to avoid anticipated tariff costs.

Cash used in investing activities for YTD 2026 consisted primarily of consideration paid in the acquisitions of Navitas and Terrasoul.

Cash provided by financing activities for YTD 2026 consisted primarily of the proceeds from the private placement of Series A Preferred Stock, as well as stock option exercises, offset in part by payroll taxes paid related to net issuances of stock awards.

Liquidity and Capital Resources

As of June 30, 2026, we had an accumulated deficit of $111.4 million. We may incur additional operating losses as we execute our strategy to invest in the growth of our business, reinvesting any incremental profit into future top-line sales growth while holding cash reserves largely flat. We will continue to seek opportunities to optimize spending, expand gross margins, and free up cash flow through efficient working capital management. We have historically financed our operations and capital expenditures through private placements of our common stock, our initial public offering, our prior lines of credit, term loans, and from our core operating activities. Our historical uses of cash have primarily consisted of cash used in operating activities and working capital needs.

As of June 30, 2026 and December 31, 2025, we had $23.2 million and $5.3 million, respectively, of cash-on-hand, and total net working capital of $43.9 million and $11.1 million, respectively, for the same periods. As of June 30, 2026, we had access to up to $1.0 million of advances under our factoring Agreement, of which none had been utilized as of the date of this report.

As of June 30, 2026, we had no significant unused sources of liquid assets outside of our working capital.

Our future capital requirements will depend on many factors, including our growth rate, the continued expansion of sales and marketing activities, the enhancement of our product platforms, the introduction of new products, acquisition activity, as well as economic and market trends. Recent and expected working and other capital requirements, in addition to the matters above, also include the items described below:

• We have lease arrangements for corporate office space. As of June 30, 2026, we had fixed lease payment obligations of $3.8 million, with $0.8 million payable within 12 months.
• As of June 30, 2026, $20.7 million of current liabilities were accrued related to short-term operating activities and personnel costs, excluding the aforementioned current lease liabilities.
• Marketing and advertising expenditures were $3.2 million in YTD 2026 and $1.9 million in YTD 2025. We expect to continue to invest in these activities as part of the strategic expansion of sales volume, however, we have made strategic shifts to reduce and improve the efficacy of future customer acquisition costs.
• We have non-cancelable purchase contracts with certain raw material vendors. Total estimated outstanding commitments were approximately $3.6 million as of June 30, 2026. See Note 17 for further information on these purchase contracts.
• The prices of various commodities, such as coffee and cacao, have increased in the last twelve months. These inflationary pressures have impacted our working capital and our margins. Should this trend continue, our margins could be further impacted.

Based on our current business plans, we believe that our existing cash balances, including our anticipated cash flow from operations, will be sufficient to finance our operations and meet our foreseeable cash requirements through at least the next twelve months. In the future, we may raise funds by issuing debt or equity securities, or securities convertible into or exchangeable for our common stock. Such financing and other potential financing may result in dilution to shareholders, reduction in the market price of our common stock, imposition of debt covenants and repayment obligations, or other restrictions that may adversely affect our business. In addition, 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. However, we may be unable to raise additional funds or enter into such other arrangements when needed, on favorable terms, or at all.

Segment Information

We have one operating and reporting segment, for which our Chief Operating Decision Maker, our Chief Executive Officer, reviews financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance.

Critical Accounting Estimates

There have been no material changes to our critical accounting estimates from those disclosed in Item 7 of the 2025 Form 10-K, aside from the following:

Business Combinations

We account for business combinations under the acquisition method in accordance with ASC 805. Consideration transferred is allocated to the assets acquired and liabilities assumed at their acquisition-date fair values, with any excess recorded as goodwill. Acquisition-related transaction costs are expensed as incurred and included in general and administrative expenses.

Determining the fair value of acquired identifiable intangible assets — principally brand names, customer and distributor relationships, and product portfolios — requires significant management judgment. We typically engage independent valuation specialists and apply the income approach (including the multi-period excess earnings and relief-from-royalty methods), the market approach, or the cost approach, as appropriate. Key assumptions include projected revenue growth and margins, customer and distributor attrition rates, royalty rates, contributory asset charges, useful lives, and discount rates. Changes in these assumptions could result in materially different fair values, with corresponding effects on intangible assets, goodwill, deferred income taxes, and future amortization expense.

The initial accounting for a business combination may be incomplete at the reporting date. In such cases, we record provisional amounts and adjust them during the measurement period (not to exceed one year from the acquisition date) as new information about acquisition-date facts and circumstances becomes available.

During the six months ended June 30, 2026, we completed the acquisitions of Navitas and Terrasoul and recorded preliminary allocations of approximately $40.9 million and $54.5 million purchase prices, respectively, including $43.1 million of identifiable intangible assets and $31.8 million of goodwill. These allocations are preliminary and remain subject to measurement-period adjustments. See Notes 2 and 16 for additional information.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and our principal financial officer, and under the oversight of the Board of Directors, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were not effective as of June 30, 2026, due to a material weakness in our internal controls over financial reporting described below. However, our management, including our principal executive officer and our principal financial officer, has concluded that, notwithstanding the identified material weakness in our internal controls over financial reporting, the consolidated financial statements in Quarterly Report on Form 10-Q fairly presents, in all material respects, our financial position, results of operations, and cash flows for the periods presented in conformity with U.S. GAAP.

A material weakness is a deficiency, or 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 would not be prevented or detected on a timely basis.

Financial System Design. We identified a deficiency in the design of our internal controls related to the preparation and approval of journal entries within our financial systems relevant to the preparation of our consolidated financial statements. The configuration of the journal entry approval workflows in our financial accounting system was not designed to adequately enforce segregation of duties, whereby certain personnel had the ability to create, post, and edit journal entries that are not identified to be reviewed by separate individuals. This design deficiency constitutes a material weakness in internal control over financial reporting. The material weakness could result in misstatements of the consolidated financial statements or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected. Management conducted a comprehensive review of journal entry activity for the affected population and found no evidence of resulting misstatements in the financial statements.

Material Weaknesses Identified at Acquired Business. In connection with our 2026 acquisition of Terrasoul Superfoods, management identified two material weaknesses in Terrasoul's internal control over financial reporting that existed as of the acquisition date. First, Terrasoul lacked a properly designed control over segregation of duties between the preparation and posting of manual journal entries, whereby personnel could create and post journal entries not reviewed by separate individuals. This weakness is consistent with, but separate from, the previously identified weakness at the parent-company level. Second, Terrasoul lacked a properly designed control over inventory cycle counts, which could result in misstated inventory quantities and balances. Each of these weaknesses could result in a material misstatement of our consolidated financial statements that would not be prevented or detected on a timely basis

Management's Remediation Plans

Prior to March 31, 2026, management implemented a system-level configuration change that enforces segregation of duties within the journal entry approval workflow in a manner designed to address the risk pathways identified. While management believes that the changes enacted will remediate the design deficiency, management will continue to test and monitor the impacts of the changes enacted to ensure that the design is operating effectively prior to concluding whether it has been fully remediated.

Terrasoul remains on separate financial systems and processes, which we do not expect to fully integrate with ours during 2026. Our remediation plan is expected to include implementing segregation-of-duties controls over manual journal entries consistent with our parent-company remediation, overhauling Terrasoul's inventory cycle-count procedures, and performing regular inventory counts. These new controls will need to operate for a sufficient period before we can conclude they are effective.

Changes in Internal Control over Financial Reporting

Notwithstanding the aforementioned remediation activities, there have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during the quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The new remedial controls over the financial system design weakness were in place as of March 31, 2026, but had not been operating long enough to be tested for operating effectiveness. No material changes have been designed and implemented at Terrasoul as of June 30, 2026.

There were no material changes to the Risk Factors disclosed in “Item 1A. Risk Factors” in the 2025 Form 10-K during the six months ended June 30, 2026. This Quarterly Report on Form 10-Q should be read in conjunction with the risk factors previously described in the Company's 2025 Form 10-K.