PURE 10-K & 10-Q changes, risk factors and insider trading

The above factors, along with our history and near term forecast of incurring net losses and negative operating cash flows, raise substantial doubt about our ability to continue as a going concern. If weWe do not obtaincurrently additionalhave the capital from external sources, we will not have sufficient working capitalnecessary to fund our plannedcontinuing operations orand bewe ablewill require additional capital in order to continuefund asour acontinuing going concern.operations. We cannot assure you that additional financing will be available when needed or that, if available, we can obtain financing on terms favorable to us or to our stockholders. For example, we have previously raised funds from Tom Lee, a member of our Board of Directors. If Tom Lee Iffails to continue to fund our operations, we may be required to delay or scale back our marketing, distribution and other commercialization activities or cease our operations altogether. Further, if we continue to raise additional funds from the issuance of equity securities, substantial dilution to our existing stockholders would likely continue to result. If we raise additional funds by incurring debt financing, the terms of the debt may involve significant cash payment obligations as well as covenants and specific financial ratios that may restrict our ability to operate our business. Further, any contracts or license arrangements we enter into to raise funds may require us to relinquish our rights to our products or technology, and we cannot assure you that we will be able to enter into any such contracts or license arrangements on acceptable terms, or at all. Having insufficient funds may require us to delay or scale back our marketing, distribution and other commercialization activities or cease our operations altogether.

We had a loss of $2.4 million for the fiscal year ended July 31, 2025, and a loss of $3.4 million for the fiscal year ended July 31, 2024, and a loss of $4.0 million for the fiscal year ended July 31, 2023.2024. As of July 31, 2024,2025, we have incurred a cumulative net loss of approximately $137.0$139.0 million. Although we believe we are making progress on implementing our business plan focused on the food safety market, we expect to continue to have losses in future periods. None of our existing agreements, including those with Packers Sanitation Services, Inc, Subway and Chipotle,agreements contain provisions that provide for fixed or minimum revenues. If the penetration into the marketplace of PURE Hard Surface, PURE Control and our other SDC-based products is unsuccessful, our revenue growth is slower than anticipated or our operating expenses exceed expectations, we may not achieve profitability, and we may never achieve profitability again. Slower than anticipated revenue growth could force us to reduce our sales and marketing efforts, our product testing and optimization, and our product development and regulatory initiatives, and/or force us to reduce the size and scope of our operations, to sell or license our technologies to third parties, or to cease operations altogether. Given our recent introduction of our SDC-based products in the food safety market, we are unable to predict the extent of any future income or our future losses and we may not be able to sustain or increase profitability on an ongoing basis.

Our common stock is approved for quotation on the over-the -counter,over-the-counter, or OTC Markets’ OTCQB marketplace, or OTCQB under the symbol “PURE.” The OTCQB is a regulated quotation service that displays real-time quotes, last-sale prices and volume information in over-the-counter equity securities and provides significantly less liquidity than a listing on the Nasdaq Stock Markets or other national securities exchange. The OTCQB securities are traded by a community of market makers that enter quotes and trade reports. This market is limited in comparison to the national stock exchanges and any prices quoted may not be a reliable indication of the value of our common stock. Quotes for stocks included on the OTCQB are not listed in the financial sections of newspapers as are those for the Nasdaq Stock Market or the New York Stock Exchange, or NYSE MKT. Therefore, prices for securities traded solely on the OTCQB may be difficult to obtain.

Net product sales were $1,955,000$2,198,000 and $1,871,000$1,955,000 for the fiscal years ended July 31, 20242025 and 2023,2024, respectively. The increase of $84,000$243,000 was attributable to increased sales across our end-user and distribution network servicing the food processing industry. Our top three customers accounted for $678,000$787,000 of net product sales for the fiscal year ended July 31, 2024.2025.

Cost of goods sold was $811,000$899,000 and $906,000$811,000 for the years ended July 31, 20242025 and 2023,2024, respectively. The decreaseincrease of $95,000$88,000 was primarily attributable to theincreased sale of higher margin productssales during the current fiscal year.

Gross margin, as a percentage of net product sales, was 59% and 52% for the years ended July 31, 20242025 and 2023,2024. respectively. The increase in grossGross margin percentageis wasa primarily attributable to the saleresult of product mix. Our bulk volume products have higher margin formulations compared to our smaller configurations that require increased labor and packaging configurations of our products during the fiscal year ended July 31, 2024 as compared with the current year.costs.

During the fiscal year ended July 31, 2024, management performed its annual impairment test and determined that its forecasted operations could no longer support $60,000 of computer software previously capitalized as fixed assets, and as such an impairment was recognized. There were no impairments recognized during the fiscal year ended July 31, 2025.

As of July 31, 2024,2025, we had $424,000$409,000 in cash and cash equivalents compared with $1,170,000$424,000 in cash and cash equivalents as of July 31, 2023.2024. The net decrease in cash and cash equivalents was attributable to the use of cash to fund our operations. Additionally, as of July 31, 2024,2025, we had $6,174,000 of total liabilities, including $784,000 in accounts payable, compared with $3,682,000 of total liabilities, including $601,000 in accounts payable, compared with $1,553,000 of total liabilities, including $422,000 in accounts payable as of July 31, 2023.2024. The net increase in total liabilities was due to the multiple note payable financings, summarized below, that occurred during the fiscal yearyears ended July 31, 2025, 2024 and 2023.

On March 22, 2024, the Company entered into a Note Purchase Agreement, or the 2024 Note Purchase Agreement, with certain accredited investors, investors, or 2024 Lenders, pursuant to which the Company issued the 2024 Lenders convertible promissory notes, or the 2024 Notes, collectively with the 2024 Note Purchase Agreement, the 2024 Note Documents, with an aggregate principal balance of $500,000, or the 2024 Private Placement. The 2024 Note Documents provide for subsequent closings for an aggregate offering size of $3.0 million in principal balance. Tom Y. Lee, a member of the Company’s Board of Directors, or the Board, invested $500,000 in the 2024 Private Placement, through affiliates or directly. The disinterested members of the Board approved the 2024 Private Placement. On June 21, 2024, we issued an additional 2024 Note to Mr. Lee pursuant to the 2024 Note Purchase Agreement in a subsequent closing with an aggregate principal of $500,000. The disinterested members of the Board approved the 2024 Private Placement. As of July 31, 2024,2025, $1,000,000 of principal was outstanding under the 2024 Note Documents.

In evaluating us and our common stock, we urge you to carefully consider the risks and other information in this Quarterly Report on Form 10-Q, including the risk factor included below, as well as the risk factors disclosed in Item 1A. to Part I of our Annual Report on Form 10-K for the fiscal year ended July 31, 2025, which we filed with the SEC on October 29, 20252025, (or the “Form 10-K”).10-K. Other than the risk factor included below, the risks and uncertainties described in “Item 1A — Risk Factors” of our Form 10-K have not materially changed. Any of the risks discussed in this Quarterly Report on Form 10-Q, including the risk factor included below, or any of the risks disclosed in “Item 1A — Risk Factors” of our Form 10-K, as well as additional risks and uncertainties not currently known to us or that we currently deem immaterial, could materially and adversely affect our results of operations, financial condition or prospects.

We have a history of recurring losses, and as of JanuaryApril 31,30, 2026 we have incurred a cumulativestockholder net lossdeficiency of $140,243,000.$5,839,000. During the six nine months ended April January 31,30, 2026, we recorded a net loss of $1,249,000$1,873,000 on recorded net revenue of $1,152,000.$1,658,000. In addition, during the six nine months ended April January30, 31, 2062026, we used $856,000$1,324,000 in operating activities resulting in a cash balance of $198,000$983,000 as of JanuaryApril 31,30, 2026. As a result, our existing cash resources are not sufficient to meet our anticipated needs over the next twelve months from the date hereof, and we will need to raise additional capital to continue our operations and to implement our business plan, which capital may not be available available on acceptable terms or at all.

Comparison of the Three Months Ended JanuaryApril 31,30, 2026 and 2025

Net product sales were $443,000$506,000 and $391,000$489,000 for the three months ended JanuaryApril 31,30, 2026 and 2025, respectively. The increase of $52,000$17,000 was was attributable to increased sales across our end-userdistribution network. Our top customer accounted for $33,000$78,000 of net product sales for the three months ended JanuaryApril 31,30, 2026.

For the three months ended JanuaryApril 31,30, 2025,2026, one customer accounted for 12%15% of net product sales, respectively.sales. No other individual customer accounted for 10% or more of our net product sales. All of our net product sales were U.S. based sales.

Cost of goods sold was $206,000$237,000 and $164,000$208,000 for the three months ended JanuaryApril 31,30, 2026 and 2025, respectively. The increase of $42,000$29,000 was primarily attributable to increased sales.sales during the current quarter.

Gross margin as a percentage of net product sales, or gross margin percentage, was 53% and 58%57% for the three months ended JanuaryApril 31,30, 2026 and 2025, respectively. The decrease in gross margin percentage was primarily attributable to increased sales of higherlower margin packaging configurations of our products during the thecurrent quarter ended JanuaryApril 31,30, 2025, as compared with the current period.2026.

Selling, general and administrative expense was $847,000$708,000 and $871,000$776,000 for the three months ended JanuaryApril 31,30, 2026 and 2025, respectively. The decrease decreaseof $68,000 was primarily attributabledue to decreasedreduced board fees,of director fees and personnel costs and facilities expenses. These decreases were partially offset by increased marketing expense.costs.

Share-based compensation expense, included in selling, general and administrative expense, was $58,000$55,000 and $27,000$33,000 for the three months ended JanuaryApril 31,30, 2026 and 2025, respectively. The increase of $31,000$22,000 is primarily due to the current year vesting of stock options granted to employees, directors and consultants supporting our selling, general and administrative functions.

Research and development expense, primarily consisting of third-party fees and personnel costs, was $74,000$79,000 and $81,000$91,000 for the three months ended JanuaryApril 31,30, 2026 and 2025, respectively.

Interest expense was $101,000$106,000 and $70,000$78,000 for the three months ended JanuaryApril 31,30, 2026 and 2025, respectively. The increase of $31,000$28,000 was primarily due to accrued interest on the convertible notes.notes issued in 2026, 2025, 2024 and 2023.

Comparison of the SixNine Months Ended JanuaryApril 31,30, 2026 and 2025

NetThe product sales were $1,150,000 and $946,000 for the six months ended January 31, 2026 and 2025, respectively. The increase of $204,000 $221,000 was attributable to increased sales across our end user network. Our top customer accounted for $342,000$347,000 of net product sales for the six nine months ended JanuaryApril 31,30, 2026.

For the sixnine months ended JanuaryApril 31,30, 2026, one individual customer accounted for 30%21% of our net product sales. No other individual customer accounted for 10% or more of our net product sales. All of our net product sales were U.S. based sales For the nine months ended April 30, 2025, two individual customers accounted for 13% and 10% of our net product sales. No other individual customer accounted for 10% or more of our net product sales. All of our net product sales were U.S. based sales.

During the sixnine months ended JanuaryApril 31,30, 2026 and 2025, we recognized $2,000 and $1,000$3,000 in royalties from a nonexclusive third-party distributor, respectively.

Cost of goods sold was $464,000$701,000 and $395,000$603,000 for the sixnine months ended JanuaryApril 31,30, 2026 and 2025, respectively. The increase of $69,000$98,000 was primarily was dueattributable to increased sales.sales during the current fiscal quarter.

Gross margin as a percentage of net product sales, or gross margin percentage, was 60%58% and 58% for the sixnine months ended JanuaryApril 31,30, 2026 and 2025, respectively. TheOur slightcurrent increaseyear inproduct grossmix, marginrelated percentageto sales, was primarilyrelatively attributable to the sale of higher margin packaging configurations of our products during the six months ended January 31, 2026, as comparedconsistent with the prior period.year.

Selling, general and administrative expense was $1,590,000$2,298,000 and $1,752,000$2,528,000 for the sixnine months ended JanuaryApril 31,30, 2026 and 2025, respectively. The decrease of $162,000$230,000 was primarily attributable to decreased board fees, personnel costs and facilitiesboard expenses.of director fees. These decreases were partially partially offset by increased marketingprofessional expense.service fees.

Share-based compensation expense, included in selling, general and administrative expense, was $92,000$147,000 and $84,000$117,000 for the sixnine months ended JanuaryApril 31,30, 2026 and 2025, respectively. The increase of $8,000$30,000 is primarily due to the current year vesting of stock options granted to employees, directors and consultants supporting our selling, general and administrative functions.

Research and development expense, primarily consisting of third-party fees and personnel costs, was $160,000$239,000 and $152,000$243,000 for the sixnine months ended ended JanuaryApril 31,30, 2026 and 2025, respectively.

Interest expense was $195,000$301,000 and $132,000$210,000 for the sixnine months ended JanuaryApril 31,30, 2026 and 2025, respectively. The increase of $63,000$91,000 was primarily due to accrued interest on the outstanding 2026, 2025, 2024 and 2023 convertible notes.

As of JanuaryApril 31,30, 2026, we had $273,000$983,000 in cash and cash equivalents compared with $409,000$334,000 in cash and cash equivalents as of July 31, 2025. 2025. The net decreaseincrease in cash and cash equivalents was attributable to cash received from financing activities of $1,973,000, offset by cash used to fund continuing operations offsetof by the note payable financings that occurred during the six months ended January 31, 2026.$1,324,000. Additionally, as of JanuaryApril 31,30, 2026, we had $3,055,000$3,654,000 of current liabilities, including including $767,000$719,000 in accounts payable, compared with $938,000 of current liabilities, including $784,000 in accounts payable as of July 31, 2025. The net increase in current liabilities was due to the current portion of the note payable due to related parties.

We have a history of recurring losses, and as of JanuaryApril 31,30, 2026 we have a stockholder deficiency of $6,273,000.$5,839,000. During the sixnine months ended endedApril January 31,30, 2026, we recorded a net loss of $1,249,000$1,873,000 on recorded net revenue of $1,152,000.$1,658,000. In addition, during the sixnine months ended endedApril January 31,30, 2026 we used $856,000$1,324,000 in operating activities resulting in a cash balance of $198,000$983,000 as of JanuaryApril 31,30, 2026. Our history of of recurring operating losses, and negative cash flows from operating activities give rise to substantial doubt regarding our ability to to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability recoverability and classification of assets or the amounts and classifications of liabilities that may result from our possible inability to continue as a going concern.

We recognize revenue in accordance with Financial Accounting Standards BoardBoard, (“FASB”)or FASB, Accounting Standards CodificationCodification, (“ASC”), ASC, Topic 606, Revenue from Contracts with CustomersCustomers, (“Topic 606”).606. Under Topic 606, revenue is recognized at an amount that reflects the consideration to which we expect to be entitled in exchange for transferring goods or services to a customer. This principle is applied using the following 5-step process:

TheOur Company’s licensing contracts typically provide for royalties based on the licensee’s sales of various configurations of PURE Hard Surface. We The Company records itsrecord royalty revenue in the month in which the licensee sold our products to end users. Payments are generally received in the subsequent month.