What changed in this filing

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Item 1. Financial Statements

2025-11-06 compared with 2025-08-13 · 162 added, 107 removed, 307 unchanged (47% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

September 30,

Current assets:

23 unchanged sentences

23,000,000 shares authorized;

15,940,261 and 14,746,172 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively

and 15,940,261 and 14,746,172 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively

Additional paid in capital

4 unchanged sentences

Total liabilities and stockholders’ equity

See the accompanying notes to the condensed consolidated financial statements

the accompanying notes to the condensed consolidated financial statements

Food Group Inc.

Consolidated Statements of Operations

the three and six months ended June 30, 2025 and 2024

For the three

months ended June 30,

the three and nine months ended September 30, 2025 and 2024

For the three months ended September 30,

For the nine months ended September 30,

Cost of revenue

7 unchanged sentences

( 1,949,000 )

( 1,450,000 )

Interest expense

6 unchanged sentences

Net loss per share

See the accompanying notes to the condensed consolidated financial statements

the accompanying notes to the condensed consolidated financial statements

Food Group Inc.

Consolidated Statements of Cash Flows

the six months ended June 30, 2025 and 2024

the nine months ended September 30, 2025 and 2024

$ ( 1,931,000 )

3 unchanged sentences

Depreciation and amortization

Gain on asset disposal

Amortization of line of credit discount

Amortization of debt discount

Changes in assets and liabilities

Accounts receivable

( 1,660,000 )

Other receivables

22 unchanged sentences

Non-cash financing and investing activities:

Convertible notes issued in exchange for trade payables

Conversion of debt and interest to equity

Financed acquisition of long-term assets

Conversion of debt and interest to equity

Convertible notes issued in exchange for trade payables

Cash paid for interest

See the accompanying notes to the condensed consolidated financial statements

the accompanying notes to the condensed consolidated financial statements

Food Group Inc.

37 unchanged sentences

Schedule of Contract Manufacturers Percentage of Finished Goods

For the three

months ended June 30,

For the three months ended September 30,

For the nine months ended September 30,

Manufacturer A

1 unchanged sentence

Other Manufacturers

Manufacturer A has notified the Company that it will

cease supplying the Twist & Go smoothie bottles in February 2026.

Manufacturer B, which currently makes Twist & Go smoothie cartons,

is currently installing bottling equipment which is expected to be operational in January 2026 with approximately 400% additional capacity

over Manufacturer A.

The Company continues to explore other arrangements to further secure its supply.

Concentration percentage

A has notified the Company that it will cease supplying smoothie bottles in February 2026.

Manufacturer B, which makes

smoothie cartons, is currently installing bottling equipment which is expected to be operational in January 2026 with approximately

400% additional capacity of bottles over Manufacturer A.

Manufacturer B will discontinue making smoothie cartons in December 2025 in

preparation for the transition to bottles.

The Company’s acquisition of Arps (Note 8) is expected to mitigate supply risks

associated with co-manufacturing arrangements.

of Significant Accounting Policies

13 unchanged sentences

losses are recorded as general and administrative expenses on our condensed consolidated statements of operations.

As of June 30, 2025

As of September 30,

2025 and December 31, 2024, there was no allowance for credit losses.

There was no credit loss expense for the three and six months ended

June 30, 2025 and 2024.

There was no credit loss expense for the three and nine months

ended September 30, 2025 and 2024.

accordance with ASC 606, Revenue from Contracts with Customers, revenue is recognized when a customer obtains ownership of promised goods.

1 unchanged sentence

The Company applies the following five steps:

Identify the contract with a customer

the contract with a customer

contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s

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supplemented by other agreements that formalize various terms and conditions with customers.

Identify the performance obligation in the contract

the performance obligation in the contract

obligations promised in a contract are identified based on the goods or services that will be transferred to the customer.

1 unchanged sentence

this consists of the delivery of frozen beverages, which provide immediate benefit to the customer.

Determine the transaction price

the transaction price

transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring goods and

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based on management’s assessment of historical and projected trends.

Allocate the transaction price to performance obligations

in the contract

the transaction price to performance obligations in the contract

the Company’s contracts contain a single performance obligation, delivery of frozen beverages, the transaction price is allocated

to that single performance obligation.

Recognize revenue when or as the Company satisfies a performance

revenue when or as the Company satisfies a performance obligation

Company recognizes revenue from the sale of frozen beverages when title and risk of loss passes and the customer accepts the goods, which

5 unchanged sentences

that are received before performance obligations are recorded are shown as current liabilities.

The Company evaluated the requirement to disaggregate revenue and concluded that substantially all of its revenue comes from a single product, frozen beverages.

Company evaluated the requirement to disaggregate revenue and concluded that substantially all of its revenue comes from a single product,

frozen beverages.

and Shipping Costs

and outbound freight costs are included in selling, marketing and distribution expense.

For the three months ending June 30, 2025 and

2024, storage and outbound freight totaled approximately $ 276,000 and $ 217,000 , respectively.

For the six months ended June 30, 2025

For the three months ending September 30, 2025

and 2024, storage and outbound freight totaled approximately $ 491,000 and $ 480,000 , respectively.

For the nine months ended September

30, 2025 and 2024, storage and outbound freight totaled approximately $ 1,157,000 and $ 1,061,000 , respectively.

and Development

1 unchanged sentence

The Company incurred approximately

$ 31,000 and $ 17,000 in research and development expense for the three months ended June 30, 2025 and 2024, respectively, and $ 49,000

and $ 47,000 for the six months ended June 30, 2025 and 2024, respectively.

the three and six months ended June 30, 2025 and 2024 common stock equivalents have not been included in the calculation of net loss

per share as their effect is anti-dilutive as a result of losses incurred.

$ 33,000 and $ 52,000 in research and development expense for the three months ended September 30, 2025 and 2024, respectively, and $ 82,000

and $ 99,000 for the nine months ended September 30, 2025 and 2024, respectively.

the three and nine months ended September 30, 2025 and 2024, common stock equivalents have not been included in the calculation of net

loss per share as their effect is anti-dilutive as a result of losses incurred.

Pronouncements

4 unchanged sentences

Schedule of Inventory

September 30,

Raw materials and packaging

4 unchanged sentences

Schedule of Property and Equipment, Net

September 30,

Manufacturing equipment

6 unchanged sentences

Property and equipment, net of depreciation

expense related to these assets was approximately $ 54,000 and $ 56,000 for the three months ended June 30, 2025 and 2024, respectively,

and $ 107,000 and $ 113,000 for the six months ended June 30, 2025 and 2024, respectively.

Depreciation expense in cost of revenue was

$ 9,000 and $ 6,000 for the three months ended June 30, 2025 and 2024, respectively, and $ 16,000 and $ 13,000 for the six months ended June

30, 2025 and 2024, respectively.

expense related to these assets was approximately $ 24,000 and $ 55,000 for the three months ended September 30, 2025 and 2024, respectively,

and $ 132,000 and $ 168,000 for the nine months ended September 30, 2025 and 2024, respectively.

Depreciation expense in cost of revenue

was $ 9,000 and $ 6,000 for the three months ended September 30, 2025 and 2024, respectively, and $ 25,000 and $ 19,000 for the nine months

ended September 30, 2025 and 2024, respectively.

Leased assets amounting to $ 454,000 are included in construction in progress at September 30, 2025.

Commitments and Contingencies

Company leases office space under a non-cancellable operating lease which expired on March 31, 2023 , and was extended in a series of

amendments through September 30, 2025 .

The Company’s periodic lease cost was approximately $ 20,000 for each of the three months

ended June 30, 2025 and 2024 and $ 40,000 for each of the six months ended June 30, 2025 and 2024.

Company leases office space under a non-cancellable operating lease which expired on March

31, 2023 , and was extended

in a series of short-term amendments through March 31, 2026 .

The Company’s periodic lease cost was approximately $ 20,000

for each of the three months ended September 30, 2025 and 2024 and $ 60,000

for each of the nine months ended September 30, 2025 and 2024.

Company’s products are produced to its specifications through several contract manufacturers.

25 unchanged sentences

The disruption in its supply

resulting from the dispute has and will continue to adversely impact the Company’s results of operations and cash flow until a

suitable resolution is reached or new sources of reliable supply at sufficient volume can be identified and developed, the timing of

which is uncertain.

The Company has mitigated the impact of the supply disruption with the introduction of its single-serve smoothie

however the product format has not been accepted by some customers or as a substitute for the bottle product in all use cases.

resulting from the dispute has adversely impacted the Company’s results of operations and cash flow.

The Company has mitigated

the impact of the supply disruption with the introduction of its single-serve smoothie cartons, the identification of other co-manufacturing

sources, and the acquisition of Arps Dairy, Inc.

(“Arps”), as described in Note 8.

legal matters

5 unchanged sentences

of a material unfavorable outcome is remote.

August 2024, the Company secured receivables financing of $ 1,500,000 (the “Facility”).

Under the Facility, the Company may

borrow up to 90% of eligible customer account balances.

Amounts outstanding bear interest at a rate prime plus 1.2% and collateral fees

of 0.15% and are secured by accounts receivable and inventory .

The Facility expires on September 5, 2025 , and renews automatically, unless

notice is given or received.

As of June 30, 2025, there were no borrowings under the Facility.

Unamortized deferred financing cost amounted

to $ 3,000 and are included in prepaid expenses and other current assets on the accompanying June 30, 2025 consolidated balance sheet.

2024, the Company entered into financing agreements to purchase equipment and software as a service, with imputed or stated interest

of 15 - 19 %.

due under the agreements are as follows as of June 30, 2025:

August 2024, the Company secured receivables financing of $ 1,500,000 (the “Facility”), and amended the facility in September

2025 to increase the available financing to $ 2,500,000 .

Under the Facility, the Company may borrow up to 90% of eligible customer account

Amounts outstanding bear interest at a rate prime plus 1.2% and collateral fees of 0.15% and are secured by accounts receivable

and inventory.

The Facility expires on September 5, 2026, and renews automatically, unless notice is given or received.

As of September

30, 2025, there was $ 1,759,000 drawn under the Facility, and $ 12,000 in unamortized discount.

2024 and 2025, the Company entered into lease and financing agreements to purchase equipment and software as a service, with

weighted average imputed or stated interest of 24 %.

due under the agreements are as follows as of September 30, 2025:

Schedule of Financing Agreements

4 unchanged sentences

Financing agreements

Commitments under lease financing arrangements amounting

to $ 196,000 and $ 304,000 are included in financing agreements – current and financing agreements, respectively, at September 30,

July 2023 to March 2024, the Company executed subscription agreements for substantially all of a $ 2,000,000 privately placed convertible

16 unchanged sentences

Stockholders’ Equity

following are changes in stockholders’ equity for the six months ended June 30, 2024 and 2025:

following are changes in stockholders’ equity for the nine months ended September 30, 2024 and 2025:

Schedule of Changes in Stockholders’ Equity

5 unchanged sentences

Registered issuance of common stock

Registered issuance of common stock, shares

( 1,973,000 )

Balance June 30, 2024

Balance September 30, 2024

$ ( 62,769,000 )

7 unchanged sentences

( 1,931,000 )

Balance June 30, 2025

Balance September 30, 2025

$ ( 65,552,000 )

2 unchanged sentences

an aggregate of 1,052,793 shares of common stock at a price of $ 2.85 per share in a registered direct offering.

are no warrants outstanding as of June 30, 2025.

are no warrants outstanding as of September 30, 2025.

Incentive Plan

of June 30, 2025, the Company has $ 867,000 of total unrecognized share-based compensation expense relative to unvested options, stock

awards and stock units, which is expected to be recognized over the remaining weighted average period of 2.2 years.

following is a summary of stock option activity for the six months ended June 30, 2025:

of September 30, 2025, the Company has $ 514,000 of total unrecognized share-based compensation expense relative to unvested options,

stock awards and stock units, which is expected to be recognized over the remaining weighted average period of 2.2 years.

following is a summary of stock option activity for the nine months ended September 30, 2025:

Schedule of Stock Options Activity

average exercise

price per share

exercise price

term in years

Outstanding on December 31, 2024

Outstanding on June 30, 2025

Exercisable, June 30, 2025

Outstanding on September 30, 2025

Exercisable, September 30, 2025

fair value of the options issued was calculated using the Black-Scholes option pricing model, based on the following:

5 unchanged sentences

Weighted average grant date fair value per share

following is a summary of restricted stock award and restricted stock unit activity for the six months ended June 30, 2025:

following is a summary of restricted stock award and restricted stock unit activity for the nine months ended

Schedule of Restricted Stock Award and Restricted Stock Unit Activity

average grant date

average grant

date fair value

Unvested at January 1, 2025

Unvested at June 30, 2025

2023 and 2024, the Company issued performance share units (“PSUs”) that represented shares potentially issuable based upon

Company and individual performance in the years of issuance.

following table summarizes the activity for the Company’s unvested PSUs for the six months ended June 30, 2025:

Unvested at September 30, 2025

Company issues performance share units (“PSUs”) that represented shares potentially issuable based upon Company and individual

performance in the years of issuance.

following table summarizes the activity for the Company’s unvested PSUs for the nine months ended September 30, 2025:

Schedule of Performance Stock Unit Activity

average grant

date fair value

Unvested January 1, 2025

Unvested at June 30, 2025

Unvested at September 30, 2025

740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of evidence, it is more than likely

2 unchanged sentences

valuation allowance on all tax assets.

As of June 30, 2025, the estimated effective tax rate for 2025 was zero .

As of September 30, 2025, the estimated effective tax rate for 2025 was zero .

are open statutes of limitations for taxing authorities in federal and state jurisdictions to audit our tax returns from 2019 through

1 unchanged sentence

Our policy is to account for income tax related interest and penalties in income tax expense in the statement of

the three and six months ended June 30, 2025 and 2024, the Company did not incur any interest and penalties associated with tax positions.

As of June 30, 2025, the Company did not have any significant unrecognized uncertain tax positions.

the six months ended June 30, 2025, the Company used $ 1,575,000 in operations.

As of June 30, 2025, the Company had $ 2,101,000 of working

capital, including $ 712,000 in cash.

the three and nine months ended September 30, 2025 and 2024, the Company did not incur any interest and penalties associated with tax

As of September 30, 2025, the Company did not have any significant unrecognized uncertain tax positions.

Subsequent Event – Business Combination

Company entered into a stock purchase agreement (the “Purchase Agreement”) dated September 15, 2025, among the Company, Arps,

and the shareholders of Arps (the “Arps Shareholders”).

On October 3, 2025, the Company, Arps and the Arps Shareholders completed

the closing under the Purchase Agreement.

As a result, Arps became a wholly-owned subsidiary of the Company.

Company repaid approximately $ 1.3

million of certain existing debt of Arps, including an asset-based revolving facility, and is in the process of refinancing a $ 2.2

million mortgage loan (the “Mortgage”).

The Company utilized a portion of its secured receivables financing facility, which had been recently

increased to $ 2.5

million, to effect the debt repayment.

To obtain the forbearance agreement from the existing mortgage lender, the Company provided

its guaranty of the Mortgage loan and issued restricted shares of its common stock, valued at $ 100,000 ,

to the Arps Shareholders in exchange for continuing their guarantees with the mortgage lender.

Prior to the closing, the Arps

Shareholders reduced the outstanding balance of the revolving facility as required by the Purchase Agreement.

The Company and Arps

have agreed to repay the advances made by the Arps Shareholders within six months of the Closing, secured by a second mortgage on

real estate owned by Arps.

which currently operates a dairy processing facility in Defiance, Ohio, had commenced construction on a 44,000 -square foot new facility

but was unable to complete construction.

The Company plans to complete construction and installation of the processing equipment in the

new facility in 2026 (the “New Facility”).

In October 2025, the Company incurred additional lease financing of $ 245,000 to

procure equipment.

Company has commenced manufacturing of certain of its own products at Arps’ existing facility and expects to expand production

during the fourth quarter of 2025 and into 2026, thereby eliminating fees previously

paid to third-party manufacturers, reducing freight costs, enabling the more efficient procurement of ingredients, and lowering cold

storage costs.

obtain the forbearance from Arps’ existing mortgage lender, WesBanco Bank, Inc., until January 1, 2026, the Company provided its

guaranty of the Mortgage loan.

The outstanding balance of the Mortgage was $ 2,198,000 as of October 3, 2025.

with the Company’s acquisition of Arps, certain advances to Arps from its former shareholders were formalized with the Company

assuming joint and several responsibility for the obligations.

The Company and Arps issued notes in the aggregate principal amount of

$ 800,000 to the Arps Shareholders, which consisted of $ 400,000 of debt previously owed by Arps (the “Existing Loans”) and

$ 400,000 representing the recent advances used to reduce the outstanding balance of the revolving facility (the “New Advances”).

The Existing Loans are to be repaid by April 3, 2026 and may be convertible into shares of the Company’s common stock at the option

of the Company, using the 15-day volume-weighted average trading price to determine the value of the shares.

If the New Advances are

not paid by January 3, 2026, interest shall accrue at the rate of 7 % per annum from October 3, 2025.

the nine months ended September 30, 2025, the Company used $ 2,173,000 in operations.

As of September 30, 2025, the Company had $ 1,626,000

in working capital, including $ 1,891,000 in cash.

As a result of the Arps acquisition (Note 8), the Company has assumed a $ 2,198,000

Mortgage that must be refinanced by January 1, 2026.

Additionally, the Company has obligations outstanding under finance agreements of

$ 841,000 , including $ 245,000 borrowed in October 2025.

Company has a history of operating losses and negative cash flow, which are expected to improve with growth.

3 unchanged sentences

mitigate the impact of procurement constraints, the Company builds inventory in anticipation of third quarter seasonal requirements,

and has invested in materials necessary to carry out trials and initial production runs at new co-manufacturers.

The Company secured

a receivables-based line of credit in August 2024 of $ 1,500,000 ,

outstanding borrowing as of June 30, 2025.

Management expects that the cash cycle will shorten as additional contracted capacity

improves production volume and efficiency in the second half of 2025.

Additionally, in May 2024, the Company obtained non-recourse

litigation financing to allow vigorous pursuit of the complaint against the Manufacturer without further expense to the Company.

Finally, as described in Note 6, the Company raised $ 3,000,000

through the sale of the Company’s common stock in February 2025.

financial position at June 30, 2025 and historical results raise substantial doubt about the Company’s ability to continue as a

going concern.

As described, the Company has completed steps to mitigate dispute related issues and raise capital.

The actions taken

have resulted in the alleviation of the substantial doubt about the Company’s ability to continue as a going concern.

and has invested in materials necessary to carry out trials and initial production runs at new co-manufacturers and acquired Arps in

October 2025.

The Company has an available receivables-based line of credit of $ 2,500,000 , with $ 1,759,000 in outstanding borrowing as

of September 30, 2025.

Management expects that the cash cycle will shorten as additional contracted and owned capacity improves production

volume and efficiency in the fourth quarter of 2025 and beyond.

Additionally, in May 2024, the Company obtained non-recourse litigation

financing to allow vigorous pursuit of the complaint against the Manufacturer without further expense to the Company.

Finally, as described

in Note 6, the Company raised $ 3,000,000 through the sale of the Company’s common stock in February 2025.

financial position at September 30, 2025, historical results and obligations incurred in association with the Arps acquisition raise

substantial doubt about the Company’s ability to continue as a going concern.

As described, the Company has completed steps to

mitigate dispute related issues and raise capital.

The Company is undertaking steps to refinance the Mortgage on a long-term basis

and complete construction of the New Facility.

The actions taken have resulted in the alleviation of the substantial doubt about the

Company’s ability to continue as a going concern.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements