What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-06-08 compared with 2025-12-08 · 47 added, 77 removed, 67 unchanged (65% of the section changed)

5 unchanged sentences

Our vision is to become a one-stop-shop deli solutions platform, leveraging vertical integration and a diverse family of brands to offer a wide array of prepared foods to meet the changing demands of the modern consumer.

On September 2, 2025, Crown 1 Foods, Inc.

(formerly "Jubilee Acquisition, Inc."), a Nevada corporation and wholly owned direct subsidiary of the Company, acquired substantially all of the assets of Crown 1, a full-service manufacturer of value-added proteins and ready-to-heat meals, for $17.5 million, subject to working capital adjustments, cash payment.

Recent Trends

We continue to monitor commodity costs so that we can purchase ingredients, packaging and other materials required for production.

A variety of other factors may impact the cost and availability of raw materials.

Although almost all our inputs are sourced domestically and our manufacturing facilities are all in the United States, we continue to expect that recent tariff volatility will have a limited and manageable impact on the Company.

We address commodity costs primarily through competitive sourcing procedures and manufacturing and overhead cost control.

While certain ingredient costs have recently declined, we continue to face higher fuel and freight expenses as well as rising labor costs, all of which have negatively impacted profitability.

The Company looks to offset rising costs through increased efficiencies and price increases to our customers.

Market dynamics, promotional incentives, or other factors may cause our pricing actions to lag changes in supply and commodity costs.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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We do not intend to, and we disclaim any duty or obligation to, update or revise any forward-looking statements to reflect new information or future events or for any other reason.

Results of Operations for the Three Months Ended October 31, 2025 and 2024

The following table sets forth the summary of the Condensed Consolidated Statements of Operations for the three months ended October 31, 2025 and 2024 (in thousands):

Results of Operations for the Three Months Ended April 30, 2026 and 2025

The following table sets forth the summary of the Condensed Consolidated Statements of Operations for the three months ended April 30, 2026 and 2025 (in thousands):

For the Three Months Ended

October 31, 2025 October 31, 2024

April 30, 2026 April 30, 2025

Net sales $ 52,766 $ 35,255

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Net Income $ 2,057 $ 1,237

For the three months ended October 31, 2025 and 2024, the Company reported net income of approximately $0.5 million and $0.4 million, respectively.

The change in net income between the three months ended October 31, 2025 and 2024 is due to the changes in net sales, costs of sales and operating expenses described below.

Net Sales increased by approximately 50%, to $47.3 million, during the three months ended October 31, 2025, from $31.5 million during the three months ended October 31, 2024.

The increase in sales is primarily due to the acquisition of the Crown 1 business, which contributed approximately $10.0 million in net sales, volume gains at our existing customers, driven by successful trade and marketing promotions that drove velocity acceleration, selling in new items to existing customers and the introduction of new customers.

For the three months ended April 30, 2026 and 2025, the Company reported net income of approximately $2.1 million and $1.2 million, respectively.

The change in net income between the three months ended April 30, 2026 and 2025 is due to the changes in net sales, costs of sales and operating expenses described below.

Net Sales increased by approximately 50%, to $52.8 million, during the three months ended April 30, 2026, from $35.3 million during the three months ended April 30, 2025.

The increase in sales is primarily due to increased velocities of existing items driven by new marketing and trade programs, new customers, and new products associated with product innovation initiatives and the acquisistion of the Crown 1 business in the September 2025.

Costs of sales:

Costs of sales increased by approximately 48%, to $36.1 million, or 76% of Net Sales, during the three months ended October 31, 2025, from $24.4 million, or 77% of Net Sales, during the three months ended October 31, 2024.

Costs of sales increased by approximately 55%, to $40.3 million, or 76% of Net Sales, during the three months ended April 30, 2026, from $26.1 million, or 74% of Net Sales, during the three months ended April 30, 2025.

The increase in cost of sales is due to higher sales, partially offset by increased operational efficiencies resulting from increased overhead, labor and procurement efficiencies.

Gross Profit Margin:

The gross profit margin was 24% and 23% of net sales for the three months ended October 31, 2025 and 2024, respectively.

The year-over-year margin rate improvement was driven by overhead, labor and procurement efficiencies.

The gross profit margin was 24% and 26% of Net Sales for the three months ended April 30, 2026 and 2025, respectively.

The year-over-year margin rate change was primarily driven by increased labor and overhead associated with new product launches.

Operating Expenses:

Operating expenses increased approximately $3.8 million during the three months ended October 31, 2025, as compared to the three months ended October 31, 2024.

Operating expenses increased approximately $2.2 million during the three months ended April 30, 2026, as compared to the three months ended April 30, 2025.

The change in total operating expenses are primarily attributable to the following:

• Professional fees increased by approximately $1.2 million, primarily due to third party fees associated with the acquisition of the Crown 1 business;

• Payroll and Related Expenses, inclusive of stock-based compensation, increased by approximately $1.1 million mainly related to new executive hires and variable compensation arrangements;

• Freight-related expenses increased by approximately $518 thousand mainly due to increased sales;

• Commission and royalty expenses increased by approximately $458 thousand due to increased sales;

• Advertising expenses increased by approximately $93 thousand du e to new marketing strategies and enhanced distribution of our existing products;

• Other operating expenses increased by approximately $285 thousand due to additional travel, IT, and office expenses.

Other Expenses, net:

Other expenses, net increased by approximately $72 thousand, to $97 thousand, for the three months ended October 31, 2025, as compared to $25 thousand for the three months ended October 31, 2024.

The increase is primarily due to higher interest expense, which is due to a higher debt balance associated with the Crown Note .

Results of Operations for the Nine Months Ended October 31, 2025 and 2024

The following table sets forth the summary of the Condensed Consolidated Statements of Operations for the nine months ended October 31, 2025 and 2024 (in thousands):

For the Nine Months Ended

October 31, 2025 October 31, 2024

Net Sales $ 117,727 $ 89,743

Costs of Sales 88,636 68,288

Gross Profit 29,091 21,455

Operating Expenses 24,990 18,507

Other Expenses, net (213) (129)

Income Tax Expense (834) (708)

Net Income $ 3,054 $ 2,111

For the nine months ended October 31, 2025 and 2024, the Company reported net income of approximately $3.1 million and $2.1 million, respectively.

The change in net income between the nine months ended October 31, 2025 and 2024 is due to the changes in net sales, costs of sales and operating expenses described below.

Net Sales increased by approximately 31%, to $117.7 million, during the nine months ended October 31, 2025, from $89.7 million during the nine months ended October 31, 2024.

The increase in sales is primarily due to volume gains, which were driven by new products sold into existing customers, successful trade and marketing promotions, which drove velocity acceleration, and initial entry into new customers, as well as the acquisition of the Crown 1 business, which contributed approximately $10.0 million in net sales.

Costs of sales:

Costs of sales increased by approximately 30%, to $88.6 million, or 75% of Net Sales, during the nine months ended October 31, 2025, from $68.3 million, or 76% of Net Sales, during the nine months ended October 31, 2024.

The increase in costs of sales is due to higher sales volume, partially offset by increased operational efficiencies driven by increased overhead, labor, and procurement efficiencies.

Gross Profit Margin:

The gross profit margin was 25% and 24% for the nine months ended October 31, 2025 and 2024, respectively.

The year-over-year margin rate improvement was driven by overhead, labor and procurement efficiencies, partially offset by increases in commodity costs.

Operating Expenses:

Operating expenses increased approximately $6.5 million during the nine months ended October 31, 2025, as compared to the nine months ended October 31, 2024.

The change in total operating expenses is primarily attributable to the following:

• Payroll and Related Expenses, inclusive of stock-based compensation, increased by approximately $2.7 million, primarily related to new executive hires and variable compensation arrangements;

• Freight-related expenses increased by approximately $0.6 million mainly due to increased sales;

• Payroll and Related Expenses, inclusive of stock-based compensation, increased by approximately $0.6 million mainly due to additional employees associated with the acquisition of the Crown 1 business and variable compensation arrangements;

• Other operating expenses increased by approximately $0.3 million due to additional software and EDI related expenses, travel, and office expenses;

• Insurance related expenses increased by approximately $0.2 million, primarily due to the growth of the Company;

• Professional fees increased by approximately $0.2 million, primarily due to the growth of the Company;

• Commission and royalty expenses increased by approximately $0.2 million due to increased sales.

• Advertising expenses increased by approximately $799 thousand du e to new marketing strategies and enhanced distribution of existing products;

• Freight-related expenses increased by approximately $791 thousand primarily due to increased sales;

• Professional fees and director-related expenses increased by approximately $668 thousand primarily due to expenses associated with the acquisition of the Crown 1 business, partially offset by the absence of the prior year $900 thousand director settlement expense;

• Other operating expenses increased by approximately $340 thousand due to additional travel, IT, and office expenses.

Other Expenses, net:

Other expenses, net increased by approximately $84 thousand, to $213 thousand, for the nine months ended October 31, 2025, as compared to $129 thousand for the nine months ended October 31, 2024.

The increase is primarily due to higher interest expense, which is due to a higher debt balance associated with the Crown Note .

Other expenses, net decreased by approximately $31 thousand, to $30 thousand, for the three months ended April 30, 2026, as compared to $61 thousand for the three months ended April 30, 2025.

The decrease is primarily due to higher interest income, which is due to a higher average cash balance in the current year period .

Liquidity and Capital Resources

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Working Capital

The following table summarizes total current assets, liabilities and working capital at October 31, 2025 compared to January 31, 2025 (in thousands):

October 31, 2025 January 31, 2025 Change

The following table summarizes total current assets, liabilities and working capital at April 30, 2026 compared to January 31, 2026 (in thousands):

April 30, 2026 January 31, 2026 Change

Current Assets $ 48,766 $ 45,081 $ 3,685

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Working Capital $ 27,784 $ 24,310 $ 3,474

As of October 31, 2025, we had working capital of approximately $18.8 million as compared to working capital of approximately $4.9 million as of January 31, 2025.

The increase in working capital is primarily attributable to an increase of cash and cash equivalents of app roximately $10.9 million, an increase in inventory of approximately $5.5 million, an increase in accounts receivable of approximately $2.9 million, and a decrease in related party promissory notes of $1.5 million, partially offset by an increase in accounts payable and accrued expenses of approximately $6.4 million and an increase in operating lease liabilities of approximately $798 thousand.

The following table summarizes the key components of our cash flows for the nine months ended October 31, 2025 and 2024 (in thousands);

For the Nine Months Ended October 31,

As of April 30, 2026, we had working capital of approximately $27.8 million as compared to working capital of approximately $24.3 million as of January 31, 2026.

The increase in working capital is primarily attributable to an increase of cash and cash equivalents of app roximately $4.5 million, partially offset by a decrease in inventory of approximately $0.6 million and a decrease in prepaid expenses of approximately $0.3 million.

The following table summarizes the key components of our cash flows for the three months ended April 30, 2026 and 2025 (in thousands);

For the Three Months Ended April 30,

Net Cash Provided by Operating Activities $ 5,010 $ 6,005

Net Cash Used in Investing Activities (177) (539)

Net Cash Provided by (Used in) Financing Activities 21,465 (2,715)

Net Increase (Decrease) in Cash 10,918 (1,703)

Net Cash Used in Financing Activities (372) (605)

Net Increase in Cash 4,461 4,861

Cash and cash equivalents, beginning of period 19,951 7,150

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Operating activities

Net cash provided by operating activities for the nine months ended October 31, 2025 was approximately $8.2 million, which consisted of net income of approximately $3.1 million and non-cash expenses of approximately $5.0 million, partially offset by an increase in operating assets and liabilities of approximately $0.2 million.

Net cash provided by operating activities for the nine months ended October 31, 2024 was approximately $6.0 million, which consisted of net income of approximately $2.1 million and non-cash expenses of approximately $3.0 million, partially offset by an increase in operating assets and liabilities of approximately $1.0 million.

Net cash provided by operating activities for the three months ended April 30, 2026 was approximately $5.0 million, which consisted of net income of approximately $2.1 million, non-cash expenses of approximately $2.3 million, and a net positive change in operating assets and liabilities of approximately $0.6 million.

Net cash provided by operating activities for the three months ended April 30, 2025 was approximately $6.0 million, which consisted of net income of approximately $1.2 million, non-cash expenses of approximately $1.3 million, and a net positive change in operating assets and liabilities of approximately $3.5 million.

Investing activities

Net cash used in investing activities for the nine months ended October 31, 2025 was approximately $18.7 million and consisted of the purchase of Crown 1 and other purchases of fixed assets.

Net cash used in investing activities for the nine months ended October 31, 2024 was approximately $5.0 million, and consisted of purchases of fixed assets.

Net cash used in investing activities for the three months ended April 30, 2026 was approximately $0.2 million and consisted of purchases of fixed assets.

Net cash used in investing activities for the three months ended April 30, 2025 was approximately $0.5 million, and consisted of purchases of fixed assets.

Financing activities

Net cash provided by financing activities for the nine months ended October 31, 2025 was approximately $21.5 million and consisted of net proceeds from the sale of common stock of approximately $18.9 million and proceeds from the Crown Note of approximately $18.8 million, partially offset by approximately $16.0 million of payments on the Term Loan and approximately $0.3 million payments on finance leases.

Net cash used in financing activities for the nine months ended October 31, 2024 was approximately $2.7 million and consisted of approximately $1.2 million payment on a related party note, $1.3 million of payments on the Term Loan and approximately $0.3 million payments on finance leases.

Credit Facility

As of October 31, 2025, we had no borrowings outstanding under our Credit Agreeme nt and approximately $5.9 million outstanding under our Term Loan Agreement with M&T Bank ("M&T").

The Term Loan Agreement ha s a maturity date of October 1, 2030.

In addition, we have a payment of $750 thousand (plus accrued interest) due on December 29, 2025, pursuant to the promissory notes issued to the sellers of T&L and Olive Branch, as discussed in Item 1, Note 1.

Net cash used in financing activities for the three months ended April 30, 2026 was approximately $0.4 million and consisted of $0.3 million of payments on the Crown Note and approximately $0.1 million payments on finance leases.

Net cash used in financing activities for the three months ended April 30, 2025 was approximately $0.6 million and consisted of approximately $0.5 million of payments of debt and approximately $0.1 million payments on finance leases.

Credit Facility & Indebtedness

As of April 30, 2026, we had no borrowings outstanding under the revolving line of credit available under our Credit Agreement and approximately $5.3 million outstanding under our Crown Note with M&T.

The Crown Note ha s a maturity date of October 1, 2030.

We also have operating leases for offices and other facilities used for our operations and finance leases comprised primarily of machinery and equipment leases, as discussed in Item 1.

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See Note 2 of Notes to Unaudited Condensed Consolidated Financial Statements for accounting pronouncements issued but not yet adopted that may impact the Company’s condensed consolidated financial position, earnings, cash flows or disclosures.

Critical Accounting Estimates and Policies

Other than as set forth below, there have been no material changes to the critical accounting estimates previously described in our Form 10-K for the fiscal year ended January 31, 2025.

The Company applies the provisions of ASC Topic 805, Business Combinations (“ASC 805”) in the accounting for acquisitions of businesses.

ASC 805 requires the Company to use the acquisition method of accounting by recognizing the identifiable tangible and intangible assets acquired and liabilities assumed, measured at their acquisition date fair values.

Goodwill as of the acquisition date is measured as the excess of consideration transferred over the aforementioned amounts.

Acquisition costs are expensed as incurred and recorded in selling, general and administrative expenses in the consolidated statements of operations.

Critical Accounting Estimates

There have been no material changes to the critical accounting estimates previously described in our Form 10-K for the fiscal year ended January 31, 2026.

Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes to our quantitative or qualitative disclosures previously disclosed in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk of our Annual Report on Form 10-K for the fiscal year ended January 31, 2026.

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 2. Management’s Discussion and Analysis