Once Upon a Farm, PBC (OFRM) risk factors, FY2025 10-K

Other

1. 01Gross profit represents net sales less cost of goods sold. Gross margin is gross profit expressed as a percentage of net sales
2. 02Selling, General and Administrative
3. 03Comparison of the Fiscal Years Ended December 31, 2025 and 2024
4. 04Other income (expense), net
5. 05Liquidity and Capital Resources
6. 06As of December 31, 2025, there was $43.0 million borrowings outstanding under the Revolving Credit Facility
7. 07The Series C-1 Convertible Notes, Series C-2 Convertible Notes, and Series D Convertible Notes (collectively, the “Convertible Notes”) had a maturity date of the earliest to occur among (i) an event of default, (ii) the closing of a deemed liquidation event or (iii) the closing of a liquidation
8. 08Non-GAAP Financial Measures
9. 09There was no change to the Contribution Margin for the year ended December 31, 2025 compared to the year ended December 31, 2024. The factors impacting Contribution Margin are consistent with those discussed with respect to gross profit in the results of operations above
10. 10We report our financial results in accordance with GAAP. However, management believes that Adjusted EBITDA, a non-GAAP financial measure, provides investors with additional useful information in evaluating our performance
11. 11Critical Accounting Estimates
12. 12Fair Value of Common Stock
13. 13Expected volatility —Expected volatility is based on historical volatilities of a publicly traded peer group based on daily price observations over a period equivalent to the expected term of the awards
14. 14Expected dividend yield —The dividend yield is based on our current expectations of dividend payouts. We currently have no history or expectation of paying cash dividends on our common stock
15. 15During 2024, we recorded $1.8 million in stock-based compensation and a $0.7 million reduction in net sales associated with warrants issued to customers
16. 16Recent Accounting Pronouncements
17. 17Emerging Growth Company Status
18. 18Ite m 7A. Quantitative and Qualitative Disclosures About Market Risk
19. 19Raw Materials Pricing Risk
20. 20Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)
21. 21Opinion on the Financial Statements
22. 22Liabilities, Convertible Preferred Stock and Stockholders’ Deficit
23. 23Weighted-average shares used in computing net loss per share
24. 24Adjustments to reconcile net loss to net cash used in operating
25. 25Loss on disposal of property and equipment
26. 26Forward Stock Split and Change in Par Value
27. 27Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or an exit price, in the principal or most advantageous market for that asset or liability in an orderly transaction between market participants on the measurement date
28. 28Level 1 —Quoted prices in active markets for identical assets or liabilities
29. 29Level 3 —Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability
30. 30Cash and Cash Equivalents
31. 31Concentration of Credit Risk
32. 32Impairment of Long-Lived Assets
33. 33Selling, General and Administrative Expenses
34. 34Convertible Preferred Stock Warrant Liability
35. 35The fair value of liability classified awards, such as stock appreciation rights issued to employees non-employees, and a customer, is determined using the Black-Scholes option-pricing model on the date of grant and is remeasured each reporting period through the date of settlement
36. 36Recently Adopted Accounting Pronouncements
37. 37Recent Accounting Pronouncements Not Yet Adopted
38. 38For the year ended December 31, 2023, the Company estimated the fair values of its convertible preferred stock warrant liability using the Income Approach and GPC approach to determine the estimated fair value of equity, which was then allocated to the various classes of equity using the OPM
39. 39Property and Equipment, net
40. 40Accrued Expenses and Other Current Liabilities
41. 41Total amortization expense was $0.1 million for each of the years ended December 31, 2025, 2024 and 2023
42. 42The maximum amount available under the Revolving Credit Facility is calculated as the lower of (a) the current maximum capacity and (b) the sum of (i) 80% of the Company’s gross accounts receivable and (ii)85% of the liquidation value of inventory, each subject to certain adjustments
43. 43In November 2025 and December 2025, the Company drew a total of $14.0 million on the Revolving Credit Facility for general corporate purposes. There were no lender fees or third-party expenses incurred related to these draws
44. 44All future minimum principal payments relate to the Revolving Credit Facility and are due September 10, 2028. As of December 31, 2025, the Company has capitalized $0.5 million of debt issuance costs within other assets on the balance sheet related to the Revolving Credit Facility
45. 45Nonconvertible Debt Warrants
46. 46The above table excludes convertible preferred stock warrants issued to a customer (see Note 12, Stock-based Compensation)
47. 47The Company determined the embedded conversion feature is required to be bifurcated and accounted for as an embedded derivative at fair value
48. 48Convertible Preferred Stock
49. 49For the years ended December 31, 2025, 2024 and 2023, the Company recognized stock-based compensation of approximately $3.9 million, $1.8 million and $1.4 million, which was recognized in selling, general and administrative expenses in the statements of operations and comprehensive loss
50. 50During the years ended December 31, 2025, 2024 and 2023, the weighted average grant date fair value of options granted was $10.30, $7.18 and $2.05 per share
51. 51Risk-free Interest Rate: The risk-free interest rate is based on the yield, as of the option valuation date, by reference to the U.S. Treasury yield curve in effect at the time of the grant or the modification of the award for time periods equal to the expected term of the award
52. 52Dividend Yield: The Company does not anticipate declaring a dividend over the expected term. As such, the dividend yield is estimated to be zero
53. 53Stock Appreciation Rights granted to employees and executives
54. 54Stock Appreciation Rights issued to a customer
55. 55Warrants issued to a Customer
56. 56Provision for income taxes
57. 57Total deferred tax assets, net of allowance
58. 58Net deferred tax assets (liabilities)
59. 59The utilization of certain federal and state net operating loss and credit carryforwards are subject to annual limitations under Section 382 of the U.S. Internal Revenue Code and similar state provisions
60. 60For the years ended December 31, 2025, 2024 and 2023 the Company did not incur any interest or penalties related to unrecognized tax benefits
61. 61Related-Party Transactions
62. 62The CODM uses net loss to assess performance, evaluate cost optimization, and allocate financial, capital and personnel resources. The CODM reviews segment assets on a consolidated basis as presented on the Company’s balance sheet
63. 63Cost of goods sold excludes depreciation and amortization
64. 64Amended and Restated Certificate of Incorporation
65. 65Exercise of Convertible Preferred Stock Warrants
66. 66Repayment of Nonconvertible Debt
67. 672026 Omnibus Incentive Plan
68. 68Disclosure Controls and Procedures
69. 69This Annual Report on Form 10-K does not include a report of management’s assessment regarding internal controls over financial reporting or an attestation report of our independent registered public accounting firm due to a transition period established by the rules of the SEC for newly public companies
70. 70Changes in Internal Control Over Financial Reporting
71. 71Insider Trading Arrangements
72. 72Directors and Executive Officers
73. 73Other Key Team Members and Directors
74. 74defined under SEC rules. All members of the audit committee are able to read and understand fundamental financial statements, are familiar with finance and accounting practices and principles and are financially literate
75. 75Corporate Governance Guidelines
76. 76Code of Conduct and Ethics
77. 77Executive Sessions of, and Communications with, Independent Directors
78. 78Item 11. Executive Compensation
79. 79Amount in this column reflect the discretionary portion of Mr. Foraker’s 2025 cash bonus
80. 80Agreements with Named Executive Officers
81. 81Equity Incentive Compensation
82. 82The option award vests as to 1/48th of the total award on each monthly anniversary of the vesting commencement date, subject to Mr. Foraker’s continued service with us
83. 83The option award vests as to 1/48th of the total award on each monthly anniversary of the vesting commencement date, subject to Mr. Waldman’s continued service with us
84. 84Employee and Retirement Benefits
85. 85Potential Payments Upon Termination or Change in Control
86. 86The definitions applicable to the applicable award agreements for the 2025 stock options and Mr. Waldman’s SAR award are included below
87. 87Spokesperson Agreement with Jennifer Garner
88. 88New Director Compensation Program
89. 89Securities to be Offered; Administration
90. 90Employee Stock Purchase Plan
91. 91Shares Available for Awards; Administration
92. 92Executive Change in Control and Severance Plan
93. 93Policies and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information
94. 94Compensation Committee Interlocks and Insider Participation
95. 95Represents the Once Upon a Farm, PBC 2021 Omnibus Incentive Plan
96. 96Security Ownership of Certain Beneficial Owners and Management
97. 97each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our common stock
98. 98Consists of (i) 1,788,861 shares of common stock held by Ms. Garner, (ii) 146,683 shares of common stock held by the Jennifer Garner Trust, and (iii) 1,121,736 shares of common stock subject to outstanding options that are fully exercisable or are exercisable within 60 days of February 13, 2026
99. 99Consists of (i) 419,535 shares of common stock held by Ms. Curtis and (ii) 133,722 shares of common stock subject to outstanding options that are fully exercisable or are exercisable within 60 days of February 13, 2026
100. 100Related Party Transactions Policy
101. 101Related Party Transactions
102. 102the amounts involved exceeded or will exceed $120,000; and
103. 103Director Nomination Agreement
104. 104Registration Rights Agreement
105. 105Arrangements with Jennifer Garner
106. 106On December 26, 2024, the Company granted to Ms. Garner additional options to purchase 376,543 shares of the Company’s common stock, with a grant date fair value of $3,200,186, as calculated in accordance with Financial Accounting Standards Board’s Accounting Standards Codification Topic 718
107. 107Indemnification of Officers and Directors and Insurance
108. 108Item 14. Principal Accounting Fees and Services
109. 109Represents the aggregate fees billed for the annual audit of financial statements, reviews of quarterly financial statements, and professional services rendered in connection with the Registration Statement, including the issuance of comfort letters and consents
110. 110Audit Committee Pre-Approval of Audit and Non-Audit Services
111. 111Item 15. Exhibits, Financial Statement Schedules
112. 112Description of Capital Stock of Once Upon a Farm, PBC
113. 113Once Upon a Farm, PBC, Clawback Policy
114. 114Pursuant to the requirements of Section 13 or 15(d) 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